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Persistence
Pays Dividends
www.fgb.net
A N N U A L R E P O R T 2 0 1 9
The graph featured on the front cover depicts Dividends Per One 1993 Common Share.
Please see the graph and accompanying footnotes found in the First Guaranty Bancshares
Financial Snapshot on page 1.
First Guaranty Bancshares, Inc.
Financial Snapshot
First Guaranty Bancshares, Inc.
Profile
At December 31, 2019, total assets were $2.12 billion, net income
was $14.2 million, earnings per common share was $1.47. Return
on average assets was 0.76% and return on average common
equity was 8.99%. First Guaranty Bancshares, Inc. shares are
traded at the NASDAQ Global Market Exchange and has paid
quarterly dividends for 106 consecutive quarters at December
31, 2019. First Guaranty Bancshares is committed to customer
service and shareholder value. Persistence pays dividends!
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 presence throughout Louisiana
and in northeast Texas, serving customers from 34 branch
locations, including one loan production office. Headquartered
in Hammond, Louisiana, the Company had 419 employees as of
December 31, 2019.
PERFORMANCE GRAPHS
Book Value Growth Per One 1993 Share[1]
(per common share)
Dividends Per One 1993 Common Share [2]
Book Value per one 1993 share has increased
from $3.70 to $49.93 since 1993.
[1] Book value has been adjusted for cumulative stock splits and dividends of 2.93 times since
1993
[2] Cash dividends from the perspective of one original common stock from 1993 to present,
this considers the impact of stock splits and stock dividends.
Cash Dividends on
Common Stock
(In thousands)
First Guaranty has paid
$78,335,000 in
Cash Dividends to common
shareholders since 1993.
1
PERSISTENCE PAYS DIVIDENDS First Guaranty Bank
Table of Contents
First Guaranty Bancshares, Inc. Financial Snapshot .............................................Page 1
Table of Contents .......................................................................................................Page 2
Persistence Pays Dividends ......................................................................................Page 3
Letter from the Chairman, Marshall T. Reynolds ..................................................Page 5
Letter from the Chief Executive Officer & President, Alton B. Lewis .................Page 6
Report from the Chief Financial Officer, Eric J. Dosch ........................................Page 7
Report from the Chief Lending Officer, Brandon C. Long ..................................Page 8
Report from the Central Louisiana President, Darrel D. Ryland ........................Page 9
Report from the Texas President, Jordan M. Lewis ...............................................Page 10
Report from the Senior Vice President, Glenn A. Duhon, Sr. ..............................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
Our Mission ................................................................................................................Page 18
Accomplishments & Highlights ..............................................................................Page 19
Texas Open Houses ...................................................................................................Page 20
Amite Grand Opening ...............................................................................................Page 22
Welcome Central Louisiana ......................................................................................Page 23
First Guaranty Bank Branch & ATM/ITM Locations ..........................................Page 24
First Guaranty Bank Departments & Branches
Departments & Main Office – Hammond ......................................................Page 26
Abbeville & Alexandria ....................................................................................Page 37
Amite & Benton ................................................................................................Page 38
Bossier City & Bunkie .......................................................................................Page 39
Denham Springs & Denton .............................................................................Page 40
Dubach & Fort Worth .......................................................................................Page 41
Garland & Greensburg .....................................................................................Page 42
Hammond – Guaranty West & Haynesville ..................................................Page 43
Hessmer & Homer ............................................................................................Page 44
Independence & Jennings ................................................................................Page 45
Kentwood & Kentwood West ..........................................................................Page 46
Lake Charles Production Office & Marksville ...............................................Page 47
Marksville Tunica & McKinney ......................................................................Page 48
Montpelier & Moreauville .................................................................................Page 49
Oil City & Pineville ...........................................................................................Page 50
Ponchatoula & Vivian ........................................................................................Page 51
Waco & Walker ...................................................................................................Page 52
Watson ................................................................................................................Page 53
Community Impact & FGB Volunteer Results ......................................................Page 54
Earnings & Dividends ...............................................................................................Page 71
Banks Headquartered in LA .....................................................................................Page 72
Financial Table of Contents ......................................................................................Page 73
Corporate Information ..............................................................................................Page 145
2
Visit www.fgb.net for additional information.
NASDAQ Stock Ticker Symbol: FGBI
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Persistence Pays Dividends
Endurance, determination and persistence are hallmarks
of First Guaranty Bancshares, Inc., resulting in consistent
financial results witnessed year after year. From the boardroom
to management team and to each branch where customers
are personally served, everyone on the First Guaranty team
comes to work each day to make First Guaranty an even better
bank than the day before, for both customers and employees.
Whether a director, teller or lending officer, each person at
First Guaranty enthusiastically helps spark awareness of the
products and services offered. Everyone looks for ways to
continuously improve. It is understood that improvement
requires adapting to change wherever it arises, be it in
the economy or one’s individual career. Persistence pays
dividends in all areas of work and life.
With direction from management, the entire First Guaranty
Bank team decides what is most important and takes
substantial action toward those ends. Results earned from
persistence often take time and trial. Experience teaches us
that trials and resistance build strength and endurance. At
First Guaranty, not only is the outcome the focus, but also
the process. Together, the “how and why” of an approach or
methodology is reviewed.
According to Napoleon Hill in Think and Grow Rich,
persistence can be developed with a four-step plan:
1. Identify a definite purpose, backed by a burning desire
for its fulfillment.
2. Determine a definite plan, expressed in continuous
action.
3. Close one’s mind tightly against negative and
discouraging influences.
4. Create a friendly alliance with one or more persons
who encourage follow-through with both the purpose
and plan.
“The difference between a
SUCCESSFUL person and others
is not a lack of knowledge, but
rather a lack in will.”
VINCE LOMBARDI, JR.
First Guaranty Bancshares' leadership subscribes to and
values comparable tenets. Dividends, the share of profits paid
to stockholders, are so highly regarded by First Guaranty
Bancshares, Inc. directors and management, that the front
cover of the annual report features the dividends graph!
This particular graph illustrates cash dividends from the
perspective of one original common stock from 1993 to 2019,
including the impact of stock splits and stock dividends. The
discipline, consistency and persistence required to attain this
level of growth and value speaks for itself.
Persistence pays dividends. Literally, persistence with
its fortress balance sheet plan resulted in outstanding
performance, allowing First Guaranty Bancshares, Inc. to
issue 106 consecutive quarters of dividends to shareholders.
Yes, 106 consecutive quarters of cash dividends!
Resilience, knowledge and passion with an overarching
desire to be valuable to other individuals and businesses
is fundamental to First Guaranty’s success. The familiar
account of Thomas Edison trying repeatedly to invent the
light bulb, never quitting and finally succeeding is a well-
known success story. Likewise, persistence in sports produces
winners and propels athletes to keep improving. From Joe
Burrow and Drew Brees in football to JJ Redick in basketball,
these exceptional players possess a work and practice ethic
that seems unmatched, combined with desire and persistence.
As quoted in SB Nation, Redick says of his quest to make
every shot he takes, “I think my mind set is always starting
with self-responsibility of working to get better and improve
myself, but also figuring out each year: how do I help whatever
team I’m on win games?” He is known to painstakingly plan
every detail.
3
PERSISTENCE PAYS DIVIDENDS Similar to these sports legends, among the questions First
Guaranty asks are:
“How can First Guaranty post its best year yet for
shareholders?”
“What more do our valued customers need from us and
how can we best fulfill our commitment to customer
service?”
“How can First Guaranty develop each employee to
their fullest potential, allowing each to achieve their
personal dreams and create an environment where
employees are encouraged to learn and grow with First
Guaranty?”
Persistence pays dividends in a myriad of ways:
• a continued focus on customer service,
“Nothing in this world can
take the place of persistence.
Talent will not; nothing is more
common than unsuccessful
people with talent. Genius
will not; unrewarded genius
is almost a proverb. Education
will not; the world is full of
educated failures. Persistence
and determination alone are
omnipotent.”
• determining consumer needs and providing solutions
in real time,
CALVIN COOLIDGE
• improving operations with cost-saving methods,
• enhancing shareholder value,
• boosting employee morale and enriching their careers
and
• measuring performance based on capital, book value,
earnings, deposits, loans, geographic growth and
other critical metrics.
It is difficult to measure the personal satisfaction derived from
a job well-done but upon achievement, no one denies the
value of these dividends. This satisfaction often encourages
one to try harder, dream bigger and achieve more, especially
when there is an opportunity to help someone.
Success depends upon drive and persistence. Desire, combined
with organized and detailed plans, cooperation and habits are
vital aspects of persistence. When obstacles and challenges
arise, these vital aspects energize those who persevere. The
book ends of “Don’t Quit!” are “Do It!” Persistence is hard
work. Persistence takes courage and fortitude. Persistence
pays dividends.
In 2018, First Guaranty Bancshares's message of “Consistency,
The Path to Continued Success” shared parallel elements of
purpose, planning and teamwork. In 2019, First Guaranty
Bancshares remained consistent and persistent. Notable 2019
events included the acquisition of The Union Bank which
added seven new branches, all located in central Louisiana.
2019 delivered a 10% stock dividend to shareholders, in
addition to the 106th quarter of cash dividends. Employee
involvement in the communities First Guaranty serves
included over 1,500 employee volunteer service hours
benefitting 142 charitable and civic organizations. Persistence
pays dividends!
First Guaranty Bancshares, Inc. is committed to customer
service and shareholder value. With the power to make
loan decisions on a local level, First Guaranty possesses the
strength to help meet the needs and expectations of our
customers. First Guaranty remains steadfast. Persistence pays
dividends.
4
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Letter from the
Chairman
FIRST GUARANTY BANCSHARES, INC.
Dear Shareholders,
We accomplished a significant number of projects in 2019. If you read the President’s
letter you will see them enumerated. Personally, I like to look to the future. What is going
to happen to First Guaranty Bancshares in 2020?
According to our projection, FGB should realize a net profit of $23 million during the
coming year. When you look at the $14 million we reported for 2019, that is approximately
a 60% increase in earnings.
When it’s all said and done, this is the most important figure in a bank’s or business’s
reporting. We will keep you apprised via our quarterly reports. I cannot wait until our first
quarter report appears.
Marshall T. Reynolds
Chairman of the Board
Page 7 – Marshall Reynolds
– Letter from the Chairman
Marshall T. Reynolds
Chairman of the Board
FIRST GUARANTY BANCSHARES, INC.
Chairman of the Board
FIRST GUARANTY BANK
PERSISTENCE PAYS DIVIDENDS
5
Letter from the
Chief Executive Officer & President
Persistence. Determination. Strength. Success. Reward.
This string of words summarizes the year 2019 for First Guaranty Bancshares, Inc. 2019 was a
year of headwinds and changes for financial institutions as interest rates dropped, as fears of
a financial downturn shook business confidence, as trade wars increased uncertainty and as
the political landscape was in constant upheaval.
Through all this, we, at First Guaranty Bancshares, Inc., kept our eyes on the goal and persisted in
following our path to success. In the end, that persistence, that determination and that strength
paid off with a strong conclusion to 2019. Fourth quarter earnings were $4,049, 000 compared
to fourth quarter earnings of 2018 of $2,618,000, a 55% increase. This brought our earnings for
the year of 2019 to a total of $14,241,000 a slight increase over 2018. A strong fourth quarter
of Lending enabled us to reach our original First Guaranty Bank lending goals for 2019. That
loan production plus the addition of The Union Bank in November of 2019 gave us a total
loan portfolio as of December 31, 2019 of $1,525,490,169 compared to $1,225,267,846 as of
December 31, 2018, an increase of $300 million or 25% year over year.
Alton B. Lewis
Chief Executive Officer & President
The strong fourth quarter brought the completion of the merger and acquisition with The
Union Bank in Marksville, Louisiana which increased our total assets to $2,117,216,000 as of
the end of 2019.
Beginning in September of 2019, we successfully implemented the Commercial loan portion
of our nCino platform. This platform will significantly reduce the number of “touches” and the amount of time required to
process a loan, will enable us to track the progress of a loan for our system, and will greatly enhance the customer service we
provide our customers. In 2020, we are implementing the retail loan portion of the system, the deposit side of the system and
online account opening and loan application.
In 2019, we contracted for the acquisition and implementation of a new online banking system which will provide to our
customers many new services and features on a much faster basis.
In 2019, we completed the construction of our new branch in Amite and put it into operation.
In 2019, we began implementations of deposit strategies aimed to significantly reduce our cost of funds and increasing our
income.
At the end of 2019, First Guaranty Bancshares, Inc. was significantly bigger in assets. At the end of 2019, First Guaranty
Bancshares, Inc. and its wholly owned subsidiary, First Guaranty Bank had a total of 34 offices in Louisiana and Texas. At the
end of 2019, First Guaranty Bancshares, Inc. made significant steps forward in keeping up with developments and technology
to better serve our customers and to be more efficient. At the end of 2019, First Guaranty Bancshares, Inc. balance sheet was
stronger as we made progress toward building a fortress balance sheet.
It took persistence, determination and strength. We were successful. At the end of 2019, our shareholders were rewarded with a
book value that had increased from $15.20 at the end of 2018 to $17.04 at the end of 2019. At the end of 2019, our shareholders
were rewarded with a 10% stock dividend which increased their number of shares by 10%. At the end of 2019, our shareholders
had been rewarded with their 103rd, 104th, 105th and 106th consecutive quarterly dividends with total cash dividends paid
during the year of $5.8 million.
Thank you for your continued support. We will continue to move toward our goals of fanatical customer service, growing First
Guaranty Bancshares, Inc. and enhancing value for our shareholders.
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
6
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Report from the
Chief Financial Officer
Persistence Pays Dividends
First Guaranty Bancshares, Inc. continued its consistent track record of loan, dividend, and
capital growth in 2019. The Texas loan portfolio grew to $204.5 million at December 31,
2019 which is a $46.6 million increase from $154.1 million at December 31, 2018. Texas
loans have grown a total of $76.5 million from $128.0 million at the acquisition date in June
2017. Texas deposits grew to $230.5 million at December 31, 2019 from $144.1 million at
December 31, 2018. Texas deposits have grown a total of $103.3 million from $127.2 million
at June 2017.
First Guaranty acquired Union Bancshares, Inc. on November 7th, 2019. The acquisition
increased First Guaranty’s loans by $183.8 million, deposits by $205.2 million and added
seven new locations in Central Louisiana. Following the Union acquisition, First Guaranty
declared its third 10% common stock dividend in December and maintained the same
$0.16 per share dividend rate. Shareholders received an additional 10% in common shares
and their cash dividends received increased by 10%. All financial statement information
reflects the adjustment for the stock dividend.
Eric J. Dosch
Chief Financial Officer
Loans, including The Union Bank acquisition, grew by 24.5% or $300.2 million from $1.23
billion in 2018 to $1.53 billion in 2019. First Guaranty increased loan interest income by
$14.0 million in 2019. First Guaranty continues to execute its plan to grow loans as a percentage of our balance sheet. Our
loan portfolio finished December 31, 2019 at 72% of total assets. Five years ago, the loan portfolio was only 52% of assets
at December 31, 2014. The loan to deposit ratio was 82.32% at December 31, 2019 which still leaves us room to grow. Our
average loan yield has remained consistently above 5.0% during the last several years. The average loan yield was 5.55% for
2018 and increased to 5.99% for 2019. The net interest margin was 3.41% for both 2018 and 2019.
Total common shareholder’s equity increased $18.8 million from $147.3 million in 2018 to $166.0 million as of December
31, 2019. Retained earnings increased $8.3 million from $34.9 million in 2018 to $43.3 million as of December 31, 2019. The
loan loss reserve was $10.9 million as of December 31, 2019.
Earnings per common share were $1.47 in 2019. Tangible book value per share increased from $14.57 at December 31, 2018
to $15.05 at December 31, 2019. Return on average assets was 0.76% for 2019. Return on average common equity was 8.99%
in 2019.
First Guaranty Bancshares paid a total of $5,803,000 in cash dividends to common shareholders in 2019 which reflected the
increase in cash dividends from the 10% common stock dividend declared at the end of the year. The Company has paid 106
consecutive quarters of dividends as of December 31, 2019.
First Guaranty continues to build strength for the future. We increased loans and capital in 2019. First Guaranty continues
to maintain a leading deposit market share in the communities that we serve in Louisiana and our branches cover all
Louisiana regions following The Union Bank acquisition. We have significantly expanded our business in Texas and will
remain persistent in our quest for additional growth. Our continuing investment in the education of our employees and our
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
PERSISTENCE PAYS DIVIDENDS
7
Report from the
Chief Lending Officer
Brandon C. Long
Senior Vice President/
Chief Lending Officer
At First Guaranty Bank we continue to see tremendous growth in our loan portfolio
and our people. 2019 was a year of expansion for the bank. We grew loans outstanding,
acquired The Union Bank, and implemented a new loan processing system to improve our
time to funding. This was a tremendous undertaking that took the focus, organization, and
persistence of everyone involved.
In 2019, our total net outstanding loans grew to $1.515 billion which was a $300 million
increase over the previous year end. This included our merger with The Union Bank in
Central Louisiana in November which held $177 million in outstanding loans at year end.
Our year over year loan growth in our heritage FGB markets was $125 million in 2019.
The addition of Union Bank, with a strong community presence in central Louisiana has
opened up strategic markets to us that were previously difficult to access. While we are
proud of our loan growth we are also proud of our overall portfolio. We continue to focus
on our loan portfolio which has diversified and become stronger. This is further reflected
with the increase in our loan yields to 5.99% for 2019 versus 5.55% for 2018. This has been
accomplished through a disciplined pricing strategy while maintaining high credit quality
standards. Our team continues to get stronger and adapt to market pressures efficiently.
In October of 2018 we opened a Loan Production Office in Lake Charles, which is one of
the fastest growing MSA’s in Louisiana. We saw immediate results in 2019, our first full year
in that community. Our market in Texas had a phenomenal year as well and we are seeing
more and more opportunity for growth in what will be our third full year in that region.
Our goals in 2020 are to continue to grow responsibly and provide excellent service to our
clients. We focus our lending in our local communities and we continue to provide training
to our employees to better serve our clients. At First Guaranty we work hard for our clients
and that work ethic not only enhances our outstanding customer relationships, it also
enables us to build relationships with new clients.
Sincerely,
Brandon C. Long
Senior Vice President/Chief Lending Officer
FIRST GUARANTY BANK
8
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Report from the
Central Louisiana Area President
Darrel D. Ryland
Director/Central Louisiana
Area President
In these days of stock market volatility and political instability, isn’t it good to know that a
strong stalwart financial institution like First Guaranty Bancshares, Inc. provides consistency
to its shareholders. You count on growth and First Guaranty delivers.
Allow me to introduce myself as I am the new kid on the block, well new member of the
board. And no, I am not a kid. My name is Darrel D. Ryland and I hail from Marksville, LA.
I have 45 years in the banking business from legal counsel to chairman and president of The
Union Bank. Through the due and diligent efforts of Marshall Reynolds, Alton Lewis, and
Eric Dosch, the First Guaranty leadership identified The Union Bank as a potential merger
partner. The Union Bank was acquired by First Guaranty in November of 2019.
This acquisition added $260 million in assets, pushing First Guaranty over the $2 Billion
threshold. It added seven additional bank branches, and an insurance agency to its Central
Louisiana market. More importantly it added 80 experienced employees to the First
Guaranty family. I agreed to remain President of the Central Louisiana Market to oversee
operations, production, and loan/asset quality control. Our local customers will continue to
see familiar faces.
In 2020 we expect to see continued growth in all aspects of our bank. For example, we can
now add larger loans to our portfolio as the financial resources of First Guaranty equips us
to compete with the biggest banks in this region. We will still focus on providing services to
small businesses and farmers, but we can now service large commercial institutions as well.
I cannot thank the leadership of First Guaranty enough for the opportunity to grow with
them. As a fellow shareholder, I look forward to continued growth and dividend return.
Now that is what I call consistency that matters.
Sincerely,
Darrel D. Ryland
Director
FIRST GUARANTY BANCSHARES, INC.
Central Louisiana Area President
FIRST GUARANTY BANK
PERSISTENCE PAYS DIVIDENDS
9
Report from the
Texas Area President
JORDAN M. LEWIS
Texas Area President
The difference between Texas and Louisiana is in the soil. While Louisiana has rich, alluvial
soil throughout much of the state, the plains of Texas are comprised primarily of hardpan
clay. While clay can also be rife with nutrients and moisture, it takes hard work and knowhow
to plant in clay and reap an abundant harvest. That sort of persistence is exactly how First
Guaranty Bank yielded a bumper crop in Texas in 2019.
As a whole, First Guaranty Bank increased its Texas loan production by 103% in 2019, closing
over $103 million in new loans, while increasing its net loan portfolio by 34.7% - from $154
million to $204 million. At the same time, Texas deposits increased 60% from $144 million
to $230 million. These incredible figures were not brought about by magic, but rather are the
result of cooperation across all departments and regions of the bank, constant refinement
of systems and communications channels, and an unwavering commitment to a culture of
customer service.
The four branches of First Guaranty Bank in Dallas-Fort Worth (DFW) saw their collective
loan portfolio increase steadily in 2019, from $140 million to almost $180 million, while
deposits grew from about $107 million to $183 million. Of these four, the Garland branch
(Dallas County, Texas) saw the greatest growth in both deposits and loans, increasing its loan
portfolio from $14 million to $61 million and its deposits from $45 million to $96 million in
12 months. Farther south, the Waco region branch grew from $37 million in deposits to $47
million, while its loan portfolio grew from $18 million to about $25 million.
While 2019 was a benchmark year for First Guaranty Bank in Texas, there is every reason
to believe that the future is now brighter than ever before. The thing about persistence is
the way it builds deep efficiencies, stubbornly refusing to give up hard fought gains and
creating smooth grooves for future progress. Though it may be gratifying to look back upon
the successes of 2019, our faces and minds are firmly set on the future, excited to see what
is ahead.
Ever onward,
Jordan M. Lewis
Texas Area President
FIRST GUARANTY BANK
10
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Report from the
Senior Vice President
Glenn A. Duhon, Sr.
Senior Vice President/
Regional Manager
The Southwest Louisiana Region of First Guaranty Bank has always been and continues to
be persistent. We encourage employees daily, to work as a team and treat customers as they
would like to be treated. A combination of loyal customers, dedicated employees, support
of management and Board of Directors has allowed continued success in this competitive
environment.
Our hotel/motel owners did well in 2019. Our competitors are usually not interested in
construction of new sites. We have seen other lending institutions compete on performing
sites due for balloon renewals. We received large payoffs in 2019 during the renewal periods.
In the future we will try and offer lower renewal rates, on sites that are doing well, to maintain
loan volume.
Our Agriculture business was affected by weather, however, most were still able to meet their
financial obligations. Farmers not meeting all obligations will require rescheduling, allowing
continuation of their farming operation. Commodity prices for rice and sugar cane, as well
as government subsidies, have remained constant.
At one point in 2019 the Abbeville Branch exceeded $100 million in loan volume. We did
not end the year at that level because of two large hotel payoffs. We are and will continue
striving to get back and exceed that number with new construction our current owner/
operators have planned. Abbeville ended the year with $77.0 million dollars in loan volume
and $137.3 million dollars in deposits. The Jennings Branch ended with $14.9 million in
loans and $40.6 million in deposits. Our Lake Charles Loan Production Office ended the
year with $17.9 million in loans. The sum of these locations ended with a loan volume of
$109.8 million. Total deposits for the Southwest Region ended with total deposits of $177.9
million. Comparing 2019 to 2018 region totals, loan volume dropped by $1.2 million and
deposits increased by $11.9 million.
Our future is bright with the present customer base, addition of potential business and
continued support of management and First Guaranty Bank's Board of Directors.
Sincerely,
Glenn A. Duhon, Sr.
Senior Vice President/Regional Manager
FIRST GUARANTY BANK
PERSISTENCE PAYS DIVIDENDS
11
First Guaranty Bank
BOARD OF DIRECTORS
Front Row (left to right): Edgar R. Smith III, Nancy C. Ribas, Gloria M. Dykes, Dr. Phillip E. Fincher
Middle Row (left to right): Andrew Gasaway, Jr., Bruce McAnally, Marshall T. Reynolds, Ann A. Smith, William K. Hood, Jack Rossi, Robert H. Gabriel
Back Row (left to right): Jack M. Reynolds, Richard W. “Dickie” Sitman, Alton B. Lewis, Edwin L. Hoover, Jr., Anthony J. Berner, Morgan S. Nalty
Not Pictured: Darrel D. Ryland, Charles Brister
ANTHONY J. BERNER, JR.
President, Pon Food 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
EDWIN L. HOOVER, JR.
President, Encore Development Corporation
12
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, Ribas Holdings LLC and University
Motors
JACK ROSSI
Chairman, Audit Committee of First Guaranty
Bancshares, Inc.
CPA, consultant
DARREL D. RYLAND
First Guaranty Bank Central Louisiana Area
President
Darrel D. Ryland, LLC, Attorney
RICHARD W. “DICKIE” SITMAN
Board President, Dixie Business Center
Dixie Electric Membership Corp. Board
Member
Past Board Member CoBank ACB (Denver,
Colorado) and Bank of Greensburg
ANN A. SMITH
Member of the Southern University Board of
Supervisors, Southern University Chairwoman
Emeritus, former member of Louisiana Office
of Student Financial Assistance Advisory Board
(LOSFA). Retired member of the Tangipahoa
Parish School Board
EDGAR R. SMITH, III
Chairman and Chief Executive Officer
Smitty’s Supply, Inc.
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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.
13
PERSISTENCE PAYS DIVIDENDS Vice Presidents
CHARLES L. BAGGS
ASHLEY N. BELL
BETTY A. BONEY
BRENDA A. BRISCOE
CHERYL Q. BRUMFIELD
TIMOTHY L. CHESNEY , JR.
ROBERT W. CLIFTON, ISO
SCHEILA M. DAVIS
MARK J. DUCOING
VIKKI M. DUPAQUIER
COLLEEN B. EBARB
RONALD W. EDMONDS
DENISE D. FLETCHER
ERIC M. FULLER, Controller
HALI GASPARD
SHIRLEY P. JONES
JOELLEN K. JUHASZ, BSA Officer
MICHAEL D. KNIGHTEN
TERRIE E. MCCARTNEY
JASON NORMAND
STEVE OSMAN
GREG PRUDHOMME
CRAIG E. SCELFO
SCOTT B. SCHILLING
LISA K. STOKER
JOHN A. SYNCO
D. LYNN TALLEY
MICHAEL A. WIGGINS
Assistant Vice Presidents
DARRYL P. BOUDREAUX
LAURYN H. COBURN
LANCE S. DAVIS
SUSAN DESOTO
LANDA G. DOMANGUE
VANESSA R. DREW
KEVIN J. FOSTER
CHRISTY L. FRIERSON
HARRISON R. GILL
BONNIE J. GRIENER
LUDRICK P. HIDALGO
LESLIE A. HINZMAN
DONNA S. HODGES
A. SHANE HUGHES
KEITH T. KLEIN
MANDY P. LEE
PAM NORMAND
DEV M. PATEL
RAHUL R. PATEL
TRACY D. PERRY
NIEKITSHA S. RIDLEY
Officers
REBECCA G. BROWN
JEANNETTE N. ERNST
DIANE PATTERSON
KRISTIN M. WILLIAMS
First Guaranty Bank
OFFICERS
EXECUTIVE
ALTON B. LEWIS*
President and CEO
ERIC J. DOSCH*
Chief Financial Officer
Senior Vice Presidents
THOMAS F. BROTHERS
Director of Internal Audit
GLENN A. DUHON, SR.
Regional Manager
Abbeville
RONALD R. FOSHEE
Regional Manager
Denham Springs
ADAM J. JOHNSTON
Regional Manager
North Louisiana
MIKKI M. KELLEY
Human Resources Department Manager
JORDAN M. LEWIS
Texas Area President
BRANDON C. LONG
Chief Lending Officer
RONALD C. PITTMAN
Special Assets Manager
DARREL D. RYLAND
Central Louisiana Area President
DESIREE B. SIMMONS
Loan Administration, Marketing &
Training
EVAN M. SINGER
Director of Mergers & Acquisitions
Regional Manager
Greensburg
J. RICHARD STARK
Operations
RANDY S. VICKNAIR
Chief Credit Officer
CHRISTY L. WELLS
Regional Manager
Hammond
*Officers of both First Guaranty Bank and First Guaranty Bancshares, Inc.
14
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT First Guaranty Bank
PERFORMANCE GRAPHS
Tangible Common Equity [3]
(in thousands)
Tangible Common Equity
(in thousands)
Total Assets
(in millions)
1993
1998
2003
2008
2013
2015
2016
2017
2018
2019
$9,005
$17,376
$43,557
$61,429
$80,033
$114,927
$121,372
$137,262
$141,108
$146,566
Tangible Common Equity
has increased
$137.6 million since 1993.
Total Assets
(in millions)
1993
1998
2003
2008
2013
2015
2016
2017
2018
2019
$159
$245
$485
$871
$1,436
$1,460
$1,501
$1,750
$1,817
$2,117
First Guaranty Assets
have increased
1,231% since 1993.
15
PERSISTENCE PAYS DIVIDENDS First Guaranty Bank
PERFORMANCE GRAPHS
Net Income
(in millions)
Total Deposits
(in millions)
16
Net Income
(in millions)
1993
1998
2003
2008
2013
2015
2016
2017
2018
2019
$2.1
$3.7
$7.0
$5.5
$9.1
$14.5
$14.1
$11.8
$14.2
$14.2
Total Deposits
(in millions)
1993
1998
2003
2008
2013
2015
2016
2017
2018
2019
$149
$257
$376
$780
$1,303
$1,296
$1,326
$1,549
$1,630
$1,853
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT First Guaranty Bank
PERFORMANCE GRAPHS
Loans, Net of Unearned Income
(in millions)
Loans, Net of Unearned Income
(in millions)
1993
1998
2003
2008
2013
2015
2016
2017
2018
2019
$105
$177
$381
$606
$703
$842
$949
$1,149
$1,225
$1,525
Investments
(in millions)
1993
1998
2003
2008
2013
2015
2016
2017
2018
2019
$30
$73
$59
$139
$635
$546
$499
$502
$405
$427
Investments [4]
(in millions)
[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
17
PERSISTENCE PAYS DIVIDENDS Our Mission
The mission of First Guaranty Bank and First Guaranty Bancshares is to increase
the shareholder value while providing financial services for and contributing to
the growth and welfare of the communities we serve.
We believe that each customer is our most important customer and
should be treated as such. We endeavor to provide levels of service that
exceed the expectations of all our customers.
We believe that our employees are our greatest asset as demonstrated
in their professionalism and dedication. We encourage open
communications and strive to cultivate an entrepreneurial environment
in which our employees feel highly responsible for the performance of
the bank, and an environment where they will contribute new ideas and
innovations that will help us excel.
We seek to enhance stockholder value by continually improving
the quality of earnings, growth in earnings, return on equity and
dividend payout.
We strive to be a socially responsible corporate citizen by supporting
community activities and encouraging our 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 goal is to participate in making our communities better places
in which to live, work and play.
18
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
First Guaranty Bank
2019 Accomplishments and Highlights
• 106th consecutive quarterly dividend
• Declared a 10% stock dividend
• Acquisition of The Union Bank and addition
of seven new Louisiana locations
• Total assets exceeded $2 billion
• Completed and opened our new Amite
Branch office
• Celebrated openings of Texas branches
• Technology Updates: FGB installed four
Interactive Teller Machines (ITMs) with
plans for five more in 2020
Interactive Teller Machine (ITM)
What transactions can be conducted at the ITM?
Ethan Sansoni – ITM agent
An ITM is an innovative new banking technology that allows
customers to conduct teller transactions via video conferencing
at the drive-thru without entering a branch. A touch screen
connects directly to an interactive teller. Secure identification
scan and a digital signature authorizes transaction requests.
The ITM is an Interactive Banker with extended hours and no
additional fees.
Most transactions that can be completed at a teller line may be
completed at an ITM:
• Checking/savings deposits
• Checking/savings withdrawals
• Balance inquiries
• Account transfers
• Check cashing
• Loan payment
19
PERSISTENCE PAYS DIVIDENDS Texas Open Houses
Each Texas location hosted a Meet & Greet Open
House with the purpose of introducing FGB to the community.
We celebrated with food trucks and friendship combined with
fun and the stars of our TV commercials in attendance! Each
branch invited three local charities to attend the event. During
each open house, the charities received a donation, the amount
determined by votes cast by guests.
Beneficiaries included:
Denton Community Food
Center
The Friendship House
The Garland Area Habitat
Health Services of North
for Humanity
Texas
Denton Public School
Foundation
Meals on Wheels
United Way
Ronald McDonald House
Achievement Center of Texas
CASA of Collin County
Hugs Café
Samaritan Inn
No Limitations Waco
Waco Humane Society
Caritas of Waco
Denton
Fort Worth
20
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Texas Open Houses
21
Garland
McKinney
Waco
PERSISTENCE PAYS DIVIDENDS Amite Grand Opening
On December 19, 2019, First Guaranty Bank celebrated the
Grand Opening and ribbon cutting of the new Amite, Louisiana branch.
Now located at 632 West Oak Street, the modern branch features ITMs and
the same great customer service.
WE’RE OPEN
Let’s celebrate!
It’s our big day and we want you here.
Join us as we celebrate the GRAND OPENING of our
new branch. There will be music, food and loads of fun.
Bring the kids, too:
• Fun Holiday Activities
• Hot Cocoa Bar
• FREE pictures with Santa
DECEMBER 19TH | 4:30PM - 6:30PM
632 W OAK ST. | AMITE, LA
HOME OF FANATICAL BANKING
888.375.3093 | fgb.net | | Member FDIC
22
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Welcome Central Louisiana
Together We Are One!
We are family: Customers, communities, employees
and shareholders.
First Guaranty Bank extends a warm and
sincere welcome to the First Guaranty Bank
family! First Guaranty announced its seven
newest branch locations throughout Central
Louisiana: Alexandria, Bunkie, Hessmer,
Marksville (two locations), Moreauville and
Pineville.
To welcome our newest Central Louisiana
customers,
employees
communities,
and shareholders, First Guaranty sent
an informative booklet to share details
regarding our accounts, services, products
and locations. First Guaranty Bank offers
SecurLock Equip, Mobile Banking, Mobile Pay in addition to loans, certificates of
deposit and traditional financial services.
Since the acquisition was made official in the fourth quarter, First Guaranty
branding will be completed soon throughout these locations.
First Guaranty Bank signage being installed at Hessmer, LA branch.
FANATICAL BANKING!
At First Guaranty Bank, we introduced
Central Louisiana to Fanatical Banking.
FGB is interested in passion, drive and total
commitment to our customers and our
community. We put our customers first,
get to know our neighbors and understand
their needs.
Fanatical is the spirit of “Let’s do this!”
It’s authentic, accessible and built on a
foundation of deep and abiding trust.
At First Guaranty Bank we’re fanatical
about, well, just about everything. From
holidays and celebrations to sharing life
with our employees and their talents, both
at work and at play. We are fanatical about
providing quality banking and financial
products and services. First Guaranty
Bank is committed to improving the
communities where we live and work
through our FGB Gives Back program.
First Guaranty Bank is fanatical about
YOU! We care about your small business,
your home, your immediate needs and
your dreams.
23
PERSISTENCE PAYS DIVIDENDS First Guaranty Bank
BANKING BRANCHES
LOUISIANA
127
24
6
7
12
14
10
26
4
21
20
23
8
13
25
16
19
3
17
18
5
15
1
2
11
22
28
9 29
26
TEXAS
30
33
31
32
34
24
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 1049205512 First Guaranty Bank
BRANCHES AND ATM/ITM LOCATIONS
BRANCHES
ATM LOCATIONS
1 Main Office Hammond, LA
– Guaranty Square
2 Hammond, LA – Guaranty
West
3 Abbeville, LA
4 Alexandria, LA
5 Amite, LA
6 Benton, LA
7 Bossier City, LA
8 Bunkie, LA
9 Denham Springs, LA
10 Dubach, LA
11 Greensburg, LA
12 Haynesville, LA
13 Hessmer, LA
14 Homer, LA
15 Independence, LA
16 Jennings, LA
17 Kentwood, LA
18 Kentwood, LA – West
19 Lake Charles, LA – Loan
Production Office
20 Marksville, LA – Main Street
21 Marksville, LA – Tunica
22 Montpelier, LA
23 Moreauville, LA
24 Oil City
25 Pineville, LA
26 Ponchatoula, LA
27 Vivian, LA
28 Walker, LA
29 Watson, LA
30 Denton, TX
31 Fort Worth, TX
32 Garland, TX
33 McKinney, TX
34 Waco, TX
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 Highway 10
HAMMOND, LA
1201 West University Avenue
2111 West Thomas Street
400 East Thomas Street
North Oaks Medical Center:
4 Medical Center Drive
North Oaks Rehabilitation
Center: 1900 South Morrison
Boulevard
INDEPENDENCE, LA
455 Railroad Avenue
JENNINGS, LA
500 North Cary Avenue
KENTWOOD, LA
723 Avenue G
HAYNESVILLE, LA
10065 Highway 79
LIVINGSTON, LA
(LPMC) Livingston Parish
Medical Center:
17199 Spring Ranch Road
LORANGER, LA
19518 Highway 40
MONTPELIER, LA
35651 Highway 16
PONCHATOULA, LA
500 West Pine Street
ROBERT, LA
Robert’s Supermarket -
22628 Highway 190
WALKER, LA
29815 Walker Road South
WATSON, LA
33818 Highway 16
NORTH
LOUISIANA
BENTON, LA
189 Burt Boulevard
BOSSIER CITY, LA
4221 Airline Drive
DUBACH, LA
117 East Hico Street
HOMER, LA
Homer Memorial Hospital
401 North 2nd Street
OIL CITY, LA
126 South Highway 1
VIVIAN, LA
102 East Louisiana Avenue
CENTRAL
LOUISIANA
ALEXANDRIA, LA
1701 Metro Drive
6201 Coliseum Boulevard
BUNKIE, LA
1110 Shirley Road
HESSMER, LA
2705 Main Street
MARKSVILLE, LA
211 East Tunica Drive
711 Paragon Place (Paragon
Casino & Resort)
MOREAUVILLE, LA
10710 Highway 1
PINEVILLE, LA
40 Pinecrest Drive
New Deposit Enabled ATMs Coming Soon!
• Waco
• McKinney
ITM LOCATIONS
AMITE, LA
632 West Oak Street
BOSSIER CITY, LA
4221 Airline Drive
DENHAM SPRINGS, LA
2231 South Range Avenue
PONCHATOULA, LA
500 West Pine Street
ITMs Coming Soon!
• Guaranty West - Hammond
• Guaranty Square - Main Office - Hammond (3 ITMs)
• Kentwood West
25
PERSISTENCE PAYS DIVIDENDS First Guaranty Bank
DEPARTMENTS & BRANCHES
Guaranty Square
(985) 345-7685
(888) 375-3093
400 East Thomas Street
Hammond, LA 70401
First Guaranty Bank, Home of Fanatical Banking!
26
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT APPRAISAL REVIEW - HAMMOND:
Starr Bernier
Not Pictured: Bailey Janke
APPRAISAL REVIEW - MARKSVILLE:
Bradley Roy
BSA/FRAUD - HAMMOND:
Front Row (left to right): Kendra Fairburn,
Linda Miller, Jonathan Fandal
Back Row (left to right): Christe Feimster,
JoEllen Juhasz, Sharmaine Robertson
BSA/FRAUD - MARKSVILLE:
Front: Lucinda Jacobs
Back: Catherine Butter
COLLATERAL:
Front Row (left to right): Paul Lee, Cate Mathes, Lauryn Coburn
Back Row (left to right): Silvia Rodriguez, Robyn Giacone, Sarah Sheridan, Beth Harper,
Emily McIntyre, Sarah Jenkins
27
PERSISTENCE PAYS DIVIDENDS COMPLIANCE - HAMMOND:
COMPLIANCE - MARKSVILLE:
Front: Rebecca Brown
Middle: Ann Morgan
Back: Colleen Ebarb
Front: Pamela Landry
Back: Stephanie Moses
CREDIT - HAMMOND:
Front Row (left to right): Madison Amos, Melanie Gottschalck, Jessica Hrenyk,
Randy Vicknair, Roshmina Thapa
Middle Row (left to right): Cristen Williams, Lynda Brumfield, Jakayla Brown
Back Row (left to right): Louis Cusimano, Corey Hayden, Justin Dubose,
Davon Mitchell, Adam Smith, Joshua Wooley, Colton McDaniel, Ian Navarre
Not Pictured: Brittanie Wallace
CREDIT - MCKINNEY:
Left to right: Keith Klein, Ben Golan
Not Pictured: Michael Wiggins
28
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT CUSTOMER SUPPORT CENTER:
Front Row (left to right): Chasity Williams,
Danyelle Green, Heather Coslan
Back Row (left to right): Cassandra Brumfield, Kay Watts
Not Pictured: Laura Ard, Pamela Stafford
DEPOSIT OPERATIONS -
HAMMOND:
Front Row (left to right): Tammy
Graves, Maya Loving, Shirley Jones
Back Row (left to right): Lori Lloyd,
Glenda Saucier, Sandra Edwards,
Divetta Stallworth,
Amanda Johnson, Letitia Cox
DEPOSIT OPERATIONS - MARKSVILLE:
Left to Right: Nickie Dauzat,
Lakin Dupont, Melissa Small
Not Pictured: Megan Dauzat
29
PERSISTENCE PAYS DIVIDENDS
EXECUTIVE:
Front : Alton Lewis, Jr.
Middle: Kristin Williams
Back: Vanessa Drew
FINANCE - MARKSVILLE:
Left to Right: Anshonarial Greenhouse,
Calvin Ducote
FINANCE -TEXAS:
Charles Baggs
FINANCE - HAMMOND:
Front Row (left to right): Michael Moye, Diane Patterson, Laquita Johnson, Donna Scamardo,
Katherine Campbell
Middle Row (left to right): Rhesha Lamonte, Pamela Giarrusso, Chandra McKinney, Chuck Lyles,
Back Row (left to right): Eric Dosch, Eric Fuller
Not Pictured: Diane Lanier
30
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT FRONT LINE:
Front Row (left to right): Shari Wheeler, Tylishia Randell,
Ashley Oliver
Back Row (left to right): Latonia Cotton,
Destiny Bankston, Richard Hamilton, Philana Servin,
Christine Zeringue, Jeannette Ernst
Not Pictured: Landon Clements
HUMAN RESOURCES - HAMMOND:
Front Row (left to right): Mandi Aguillard, Landa Domangue,
Hannah Castolenia
Back Row (left to right): Mikki Kelley, Danielle Willie
HUMAN RESOURCES - MARKSVILLE:
Jason Normand
INTERACTIVE BANKERS:
Front Row (left to right): James Lewis,
Danyelle Green, Samantha Petracek
Back Row (left to right): Lauren Bush,
Jessica West, Ethan Sansoni, Elizabeth Cantwell
31
PERSISTENCE PAYS DIVIDENDS
INTERNAL AUDIT, LOAN REVIEW, &
INFORMATION SECURITY:
Front Row (left to right): Tae Anderson,
Lana Quinn, Hannah Primes
Back Row (left to right): Tahj Williams,
Michelle Dionne, Casey Turner, Robert Clifton,
Tom Brothers, Nancy Rodriguez
Not Pictured: Bill Worthy
IT/DATA PROCESSING -
MARKSVILLE:
Front: Tyler Roy
Back: Merill Magday
Not Pictured: Juan Bautista
IT/DATA PROCESSING - WACO:
Left to Right: Kenny Wilson, Federico Guerrero
IT/DATA PROCESSING - HAMMOND:
Front Row (left to right): Star Lala, David Couvillon, Timothy Chesney, Moises Rodriguez,
Nicholas Schmitt
Middle Row (left to right): Keith Mills, Christopher Sharp, Carlos Davenport, Joshua Valladares,
Matthew Bettencourtt
Back Row (left to right): Averi Dickerson, CJ Ardoin, Austin Grant
32
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT LENDING:
Front Row (left to right): Brandon Long,
Vickie Jenkins, Jason Wilson
Back Row (left to right): Michael Knighten,
Catherine Egnew, Christy Wells,
Evan Singer, Joedi Snipes, Laura Lacoste,
Joshua Hajiakbarifini
Not Pictured: Jane Wear
LOAN OPERATIONS - MARKSVILLE:
Front: Samantha Lachney
Back (left to Right): Christy Marcotte,
Carolyn Bordelon, Brittany Dauzat
LOAN OPERATIONS - MCKINNEY:
Seated: Lisa Stoker
Front Row (left to right): Jenny Bae, Senaida Martinez
Back Row (left to right): Carmen Murphy, Jan Brownd
33
LOAN OPERATIONS:
Front Row (left to right): Lynn Talley, Bonnie Griener, Darlene Albert, Audrey Carter, Allison Duke,
Kellie Demarco
Back Row (left to right): Christy Frierson, Juliette Carmo, Luke Lavergne, Trinitrius Brown,
Sharon Rogers
Not Pictured: Donna Hodges
PERSISTENCE PAYS DIVIDENDS
MARKETING:
Front: Allison Ryan
Middle Row (left to right): Casie Qualls, April Alford
Back Row (left to right): Brian Friel, Carl Duplessis, Desiree Simmons
MERGERS AND ACQUISITIONS:
Front: Evan Singer
Back: Joshua Hajiakbarifini
MORTGAGE - TEXAS:
Victor Hall
MORTGAGE - HAMMOND:
Front Row (left to right): Megan Braden, Mandy Lee, April Slayter, Melissa Duchmann
Back Row (left to right): Susan Fitzgerald, Lisa Armstrong, Sheena Lewis, Nikki Hall
34
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT OPERATIONS - HAMMOND:
Front Row (left to right): Travis Hester, Jessica Spears, Jamie Wempren, Carla Cook, Betty Boney, Kerri Gladney,
Denise Rehage
Back Row (left to right): Tracey Robertson, Scheila Davis, Richard Stark, Hoyt Verburg, Debbie Dubuisson,
Susan Kimmerling, Julie Nevels
Not Pictured: Elisa Costanza
PURCHASING - MARKSVILLE:
Front: Armenio Magday
Back: Stravis St. Romain
PURCHASING - HAMMOND:
Front: Joseph Ernest II
Back Row (left to right): Darryl Boudreaux, Donna Turnage
OPERATIONS -
MARKSVILLE:
Hali Gaspard
OPERATIONS - MCKINNEY:
Ashley Bell
OPERATIONS - NORTH
LOUISIANA:
Shane Hughes
35
PERSISTENCE PAYS DIVIDENDS
SALES MANAGEMENT & PUBLIC FUNDS -
HAMMOND:
Front Row (left to right): Brandi Steffek, Mark Ducoing,
Holly Tamburello
Back: Steve Osman
SALES MANAGEMENT
& PUBLIC FUNDS -
FORT WORTH:
Letriche Miller
SPECIAL ASSETS - MARKSVILLE:
Left to Right: Benjamin Wood, Joann Moreau
SPECIAL ASSETS - HAMMOND
Front Row (left to right): Luke Hammonds, Lee Ann Sibley,
Kriss Patterson, Ronnie Pittman
LEARNING AND DEVELOPMENT:
Left to Right: Miranda Derveloy, Vikki Dupaquier, Kendra Durham, Amber Smith, Casey Waters
36
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Abbeville Branch
(337) 893-1777 / (800) 306-3276
799 West Summers Drive
Abbeville, LA 70510
Alexandria Branch
(318) 443-8994
1701 Metro Drive
Alexandria, LA 70301
Front Row (left to right): Charisse Stevens-Cormier, Lisa Kritzer
Back Row (left to right): Cody Gil, Diane Frederick, Terry Fendley, Tanya Menard,
Glenn Duhon, Gretchen Meaux, Amy Broussard
Front: Cynthia Sandoval
Middle Row (left to right): Courtney Mott, Kasey Perkins
Back: Latrice Winegeart
Not Pictured: Austin Mathews
37
PERSISTENCE PAYS DIVIDENDS Amite Branch
(985) 748-5111
632 West Oak Street
Amite, LA 70422
Benton Branch
(318) 965-2221
189 Burt Boulevard
Benton, LA 71006
38
Front Row (left to right): Nicole Dunaway, Brittany Morgan, Shana Wells,
Saleatha Gordon, Tammy Chavers
Back Row (left to right): Jenny Sue Weedmen, Marsha Spring, Scott Schilling,
Stephanie Campo, Miranda Rainey
Left to Right: Monique Rochelle, Larry Ross, Jr, Stephanie Brackens
Not Pictured: Alisha Blankenship, Donna Cummings
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Bossier City Branch
(318) 383-5234
4221 Airline Drive
Bossier City, LA 71111
Adam Johnston
Bunkie Branch
(318) 346-4981
1110 Shirley Road
Bunkie, LA 71322
Front Row (left to right): Lynn Henry, Erika Taylor, Benita Douglas, Robin Brownmiller
Back Row (left to right): Matt Hudnall, Courtney Tramiel, Marley Walters, Daniel Loe
Front Row (left to right): Dominique Wilson, Rikki Deaville
Back Row (left to right): Kim Ferguson, Cheri Moses, Rebekah Turner
39
PERSISTENCE PAYS DIVIDENDS Denham Springs Branch
(225) 791-7964
2231 South Range Avenue
Denham Springs, LA 70726
Ludrick Hidalgo
Ronnie Foshee
Denton Branch
(940) 383-0700
2209 West University Drive
Denton, TX 76201
Front: Courtney Lachney
Middle Row (left to right): Danna Jo Erwin, Michelle O'Quin
Back Row (left to right): Kathie Alimia, Clint Trant, Sharon Moore
Not Pictured: Kevin Foster
Front Row (left to right): Leslie Hinzman, Karen Stevenson
Back Row (left to right): Sandra Whittington, Daniel Prince
Not Pictured: Evan Baranosky
40
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Dubach Branch
(318) 777-3461
117 East Hico Street
Dubach, LA 71235
Fort Worth Branch
(817) 502-6611
2001 North Handley Ederville Road
Fort Worth, TX 76118
Front Row (left to right): Sue Yates, Heather Sullivant, Diane Shoemaker
Back Row (left to right): Kemberlin Locks, Kristy Puckett, Laura Pair
Front Row (left to right): Alyssa Al Sabi, Maty Sanchez
Back Row (left to right): Briana Ochoa, Indra Pant, Amanda Arizpe
Not picture: Dot Frazier
41
PERSISTENCE PAYS DIVIDENDS Garland Branch
(214) 227-4550
603 Main Street #101
Garland, TX 75040
Greensburg Branch
(225) 222-6101 / (800) 227-6101
6151 Highway 10
Greensburg, LA 70441
42
Seated: Brenda Briscoe
Front Row (left to right): Jennifer Petty, Amy Turner
Back Row (left to right): Perla Alvizo, Tracy Perry
Front Row (left to right): Melissa Smith, Michelle Brasseaux
Back Row (left to right): Rhonda Miller, Harrison Gill, Deionna Frank
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Left to Right: Danielle Day, Heather Lawrence, Janelle Vicaro, Janelle Heard, Brittany Gill
Hammond – Guaranty West
Branch
(985) 375-0371
2111 West Thomas Street
Hammond, LA 70401
Haynesville Branch
(318) 624-1171
10065 Highway 79
Haynesville, LA 70138
Left to Right: Jasmine Penn, Julia Tabor, Hailee Ray
Not Pictured: Tammy Burley
43
PERSISTENCE PAYS DIVIDENDS Hessmer Branch
(318) 563-4583
2705 Main Street
Hessmer, LA 71341
Homer Branch
(318) 927-3000
401 North 2nd Street
Homer, LA 71040
44
Front Row (left to right): Kathy Ponthieux, Courtney Lacombe
Back Row (left to right): Taylor Mire, Vicki Clopton
Not Pictured: Sandy Dauzat
Front Row (left to right): Candie White, Ron Edmonds, Debra Spigener
Back Row (left to right): Cnya Anderson, Aleshia Lee, Ashley Bailey, John Synco,
Kitsha Ridley, Caree Bailey, Jamie Williams
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Independence Branch
(985) 878-6777
455 West Railroad Avenue
Independence, LA 70443
Jennings Branch
(337) 824-1712
500 North Cary Avenue
Jennings, LA 70546
Front Row (left to right): Peggy Garon, Cheryl Brumfield
Back Row (left to right): Karen Paille, Carmella Coslan, Caitlin Doty, Sonja Johnson,
Chelsey Weedman
Front Row (left to right): Keisha Miller, Chanyon Robinson
Back Row (left to right): Gwendolyn Pete, Melina West, Lani Thompson, Melissa Daley,
Amanda Crochet
45
PERSISTENCE PAYS DIVIDENDS Kentwood Branch
(888) 375-3093
301 Avenue F
Kentwood, LA 70444
Kentwood West Branch
(985) 229-6101
723 Avenue G
Kentwood, LA 70444
Front Row (left to right): Lance Davis, Karen Griffin, Connie Butler
Back Row (left to right): Jhameilla McCray Anderson, Lindsey George, Lisa Rushing,
Kelsey Travis, Astrid Diaz
Left to Right: Ruby Carter, Allison Keating
Not Pictured: Rebecca Phelps
46
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Lake Charles - Loan
Production Office
(337) 824-1712
4740 Nelson Road, #320
Lake Charles, LA 70605
Lobby Hours: By Appointment
Marksville Branch
(318) 253-4531
305 North Main Street
Marksville, LA 71351
Rahul Patel, Commercial Lender
Front Row (left to right): Greg Prudhomme, Josiah Blood, Jana Joshua, Ronnie Chatelain,
Robert Robinson
Middle Row (left to right): Mary Sampson, Carlyn Barron, Ann Tassin, Sheila Smith
Back: Hali Gaspard
Not Pictured: Colleen McGehee, Jeanne Lemoine
47
PERSISTENCE PAYS DIVIDENDS Marksville - Tunica Branch
(318) 253-9835
211 East Tunica Drive
Marksville, LA 71351
Front Row (left to right): Elizabeth Bordelon, Melissa Alexander
Back Row (left to right): Cynthia Wyatt, Jill Lemoine, Hannah Lemoine, Stephanie Bergeron
TAG & TITLE/INSURANCE
Front: Minnie Deshotel
Back: Kenneth Ducote
McKinney Branch
(972) 562-1400
8951 Synergy Drive, #100
McKinney, TX 75070
Front Row (left to right): Rebecca McKenna, Deborah King
Back Row (left to right): Conrad Arrambide, Krista Peterson
Not Pictured: Kathy Willett
Jordan Lewis
48
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Montpelier Branch
(225) 777-4304
35651 Highway 16
Montpelier, LA 70422
Moreauville Branch
(318) 985-2299
10710 Highway 1
Moreauville, LA 71355
Front row: Christina Lacara, Elizabeth Zito
Back Row (left to right): Betsy Ehret, Trella Page
Front Row (left to right): Liz Lemoine, Susan Desoto
Back Row (left to right): Nancy Volentine, Tristen Steven, Johnette Lemoine, Laura Dufour
49
PERSISTENCE PAYS DIVIDENDS Oil City Branch
(318) 995-6682
126 South Highway 1
Oil City, LA 71061
Pineville Branch
(318) 641-7564
40 Pinecrest Drive
Pineville, LA 71360
50
Front Row (left to right): Glenda Graham, Dollie Olgetree, Tina Gay
Back: Emma Rolling
Front Row (left to right): Jeanette Brown, Rachel Hazelton
Back Row (left to right): Jajuanna Pardue, Pam Normand
Not Pictured: Crystal Smiley
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Ponchatoula Branch
(888) 375-3093
500 West Pine Street
Ponchatoula, LA 70454
Vivian Branch
(318) 375-3202
102 East Louisiana Avenue
Vivian, LA 71082
Front Row (left to right): Craig Scelfo, Philip Jeanfreau, III
Back Row (left to right): Misty Chauvin, Amiee Gervais, Renee Stewart, Denise Fletcher,
Brandon Wear, Keema Muse
Front Row (left to right): Nancy Garsee, Caroline Caldwell, Brandy Moon, Glenda Sepulveda
Back Row (left to right): Heather Webb, Stacy Thompson
Not Pictured: Shawn Hall
51
PERSISTENCE PAYS DIVIDENDS Waco Branch
(254) 399-0700
7600 Woodway Drive
Waco, TX 76712
Walker Branch
(225) 664-5549
29815 Walker Road South
Walker, LA 70785
52
Front Row (left to right): Lisa Lawrence, Amy Dennis, Lucinda Marquez
Back Row (left to right): Angelia Simmers, Pam Lambert, Amy Myers
Not Pictured: Terrie McCartney
Left to Right: Sheila Lofton, Sylvia Moore, Sara El Kadi, Maryan Jillo
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Watson Branch
(225) 665-0400
33818 Highway 16
Denham Springs, LA 70706
Front: Krystal Dunaway
Middle: Ludrick Hidalgo
Back Row (left to right): Dev Patel, Emily Glaviano
Not Pictured: Judy Hughes
53
PERSISTENCE PAYS DIVIDENDS 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 2019.
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.
First Guaranty Bank contributions for community support exceeded $500,000 in 2019.
The Oil City employees presented a contribution for Christmas on Caddo. Left to right: Andie Bruno,
Dollie Ogletree, Casey Boddie Hartley (Christmas on Caddo), Glenda Graham, Mary Dunn (Christmas
on Caddo), Heather Webb and Tina Gay.
Scott Schilling presented a contribution to head
football coach Drew Misita for the Oak Forest
Athletics Sponsorship.
A contribution was presented to Dubach School for the Adopt-A-School
program. Left to right: Sue Yates, First Guaranty Bank, Pam Pardue,
Principal and Diane Shoemaker, First Guaranty Bank.
Eric Dosch presented a contribution to DeMarquis Burise, Coordinator, for the
Hammond Recreation Branch.
54
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Community IMPACT
Melina West presented a contribution to Linda LeBlanc,
Director for Jeff Davis Chamber of Commerce.
Matt Hudnall presented a contribution to Principal Hawkins (left) and Assistant
Principal White (right) on their “Farm Day” at Benton Elementary School.
Harrison Gill presented a contribution to Steve Miller, Youth
Minister for First Baptist Church of Greensburg.
Christine Zeringue presented
a contribution to Hammond
Westside Magnet Whirlbots.
PERSISTENCE PAYS DIVIDENDS
55
Community IMPACT
A contribution was made to the Tangipahoa African American Heritage
Museum. Left to right: First Row Cheryl Brumfield, Delmas Dunn, President.
Back Row: Dr. Jesse Howard, Linda Parrish, Dr. John Hatcher, III, Cierra
Tillman and Ty Randell.
Caroline Caldwell presented a contribution to Annie Cherry, Principal of
North Caddo High School for the football program.
Lance Davis and Ann Smith, First Guaranty Bank Director, presented a contribution to Jonathan Foster,
Kentwood High School Head Football Coach.
Amanda Crochet presented a contribution to
Felicity LeLeaux for the Jennings Jazzers.
56
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Community IMPACT
Lance Davis presented a contribution to Viral Patel
of Gujarati Samaj of Mississippi, for an annual
banquet.
Denise Fletcher presented a contribution to Brigette
Delatte Hyde for the 2019 Ponchatoula High School
Project Graduation.
Elaine Atencio presented a contribution to Ms. Iris
Linder, Committee Member for the Claiborne Charity
Golf Tournament.
Alton Lewis presented a contribution to Jay Artigue, Athletic Director and Kennedi Lee,
cheerleader, for the Southeastern Louisiana University Athletics.
Vanessa Drew
presented a
contribution to Patti
Roubique, Executive
Director, for the
Louisiana Children’s
Discovery Museum.
Sylvester Williams
presented a
contribution to Coach
Phillip Hawke and
Athletic Director
Brandon White for Lee
High School Baseball.
PERSISTENCE PAYS DIVIDENDS
57
Community IMPACT
A contribution was
presented to Fraternal
Order of Police Lodge,
#34 for the Back the
Blue Sporting Clays
Tournament. Left to
right: Freeman Ramsey,
II, Corey Morse, Melanie
Gottschalck, Myles Miller
and Ronney Domiano.
A contribution was presented for the Kentwood Community School
Supply Giveaway. Left to right: Terrell Hookfin, Kentwood Councilman,
Evelyn Williams, Kentwood Housing Director, Lance Davis, First
Guaranty Bank and Rochelle Bates, Kentwood Mayor.
Kristin Williams presented a contribution to Erin Fleming and Lou Glover, of
Hammond Eastside Magnet Parent Teacher Organization, for the Fall Festival.
Ronnie Pittman presented a contribution to
Vicky Blaze, Administration of Tangipahoa
Parish Crime Stoppers for the Safe Schools
Initiative.
Casie Qualls presented a contribution to Charlie
Vance for the Talented Theatre Program.
Elaine Atencio presented a contribution to Patricia
Bates, Director, for Seeds of Light.
58
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Community IMPACT
Jason Wilson presented a contribution to Erica Kelt, Director of Development for Mary Bird Perkins.
Jeannette Ernst presented a contribution to Sammy
Buono for the Hammond Knights of Columbus.
Scott Schilling presented a contribution to Principal Brennan
McCurley and Head Coach Zephaniah Powell for Amite High
Magnet School.
A contribution was presented to the Assist Agency. Left to right:
Melissa Daley, First Guaranty Bank, Melina West, First Guaranty
Bank, Mardessa Poydras, ASSIST Agency Personnel/Physical
Resource Officer, Vera Abraham, Volunteer and Keisha Miller, First
Guaranty Bank.
Brenda Briscoe and Tracy Perry presented a contribution to Gwen Daniels of NAACP.
PERSISTENCE PAYS DIVIDENDS
59
Community IMPACT
Randy Vicknair presented a contribution to Lynn Horgan and Jay Johnson, Assistant Dean of the
College of Business, for Business Week at Southeastern Louisiana University.
Melanie Gottschalck presented a contribution to Charlie
Diliberto for the Hammond Union of Police Policeman’s
Ball.
Leslie Hinzman presented a contribution to Pam Barnes
for Taste of North Texas to Denton Kiwanis Noon Club.
Elaine Atencio presented a contribution to
Amanda Lord, Business Development Director for
the Claiborne Memorial Medical Branch’s Go Red
for Women's Health Banquet.
Alton Lewis and Desiree Simmons presented a contribution to Mayor Pete Panepinto and Guy
Recotta for the Hammond Northshore Regional Airshow Sponsorship.
60
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Community IMPACT
Harrison Gill presented a contribution
to Idora Solomon, Director of St. Helena
Summer Camp.
Elaine Atencio presented a contribution to the Tanique Beene Prom committee.
Cheryl Brumfield presented a contribution to
Elder Timothy B. Richardson, Pastor for Faith
Temple Ministries Church of God in Christ.
Amy Broussard and April Frederick presented a contribution
to Andrew Granger with LSU Ag Branch for 2019 Rice
Educational activities.
A contribution was presented to Dubach Restoration and Beautification Organization for
the Chicken Festival. Left to right: Diane Shoemaker, First Guaranty Bank, Renee Simpson,
DRABO Secretary and Sue Yates, First Guaranty Bank.
PERSISTENCE PAYS DIVIDENDS
61
Community IMPACT
Eric Dosch presented a contribution to Lynn Horgan
and Ashlin Nicosia, Development Coordinator, for
the Chefs Evening event at Southeastern Louisiana
University.
Leslie Hinzman, Jordan Lewis and Evan Baranosky presented a contribution to Bunny Hodges,
Director for Ruth’s Room.
April Alford presented a contribution to Randy
Settoon, Director, for the Southeastern Channel.
Jason Wilson presented a contribution to Amber Andrews, CSP Deputy Director/Programs
Director and Ryan Barker, Director of Chappapeela for the Share the Game Campaign.
Elaine Atencio presented a contribution to William Kennedy,
Superintendent for Claiborne Parish Schools.
62
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Community IMPACT
A contribution was
presented to The
Ballangee Foundation
for the Partners in
Prevention 2019. Left to
right: Aelania Auzene,
Joedi Snipes, Meghan
Johnston and Hannah
Teutsch.
Denise Fletcher presented a contribution to Candice Richardson,
Member of the Flag Corp, for the Ponchatoula Band Boosters.
Randy Vicknair presented a contribution to Dr. Jay Johnson, Assistant Dean College of
Business and Dr. Thomas Meyer, Finance Professor for Business Week at Southeastern
Louisiana University.
Lance Davis presented a contribution to Bobby Bingham, County
Agent at the LSU Ag Branch, for the Florida Parishes Dairy Day.
Christy Wells presented a contribution to Donna Olivia, RN House administrator,
Jodee Hoover, Executive Director and Sarah Drude, Chairman of the Richard Murphy
Hospice Foundation Board of Trustees for the Richard Murphy Hospice Gala.
PERSISTENCE PAYS DIVIDENDS
63
Community IMPACT
Elaine Atencio was recognized by Elizabeth Cascio
for the contribution made to Homer High School
FFA.
Cheryl Brumfield and Karen Paille presented
a contribution to Sandra Kopfler, President for
Society of St. Vincent DePaul.
Chanyon Robinson presented a contribution to Lacey Guidry, Jeff Davis CADA Director, for Jeff
Davis Communities Against Domestic Abuse.
Donna Hodges presented a contribution to Captain Miley and Captain Maurer
for the Hammond Firefighters Association.
A contribution was made to Haynesville Elementary. Left to right: Julia
Tabor, First Guaranty Bank, Jane Brown, Haynesville Elementary Principal,
Caree Bailey, First Guaranty Bank and Judy Holly, Vice Principal Haynesville
Elementary.
Cheryl Brumfield presented a contribution to Deanne Foster, Assistant
Principal, D. J. Cannon, Boys Head Basketball Coach, Cheryl Brumfield,
First Guaranty Bank, Belancia Ray, Girls Head Basketball Coach
and Amanda McDaniel, Disciplinarian, for the Hammond Westside
Montessori School’s Basketball team.
64
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Community IMPACT
Lucas Hammonds presented a contribution to
Maureen Joyce for the Brews Arts Festival.
Cheryl Brumfield presented
a contribution to Head
Coach Tyra Starkey and
the Volleyball players of
Loranger High School, for the
Volleyball Team.
Jason Wilson presented a
contribution to Melissa
Bordelon, CEO and Seth
Bleakly, Member Relations
Manager, of the Hammond
Chamber of Commerce
for the “Chillin’ with the
Chamber” event.
A contribution was presented to Lincoln Parish Senior Expo. Left to right: Sue
Yates, First Guaranty Bank, Deputy Stephen Quinnelly, Community Services,
Emma Williams, Elder Service Officer and Diane Shoemaker, First Guaranty
Bank.
Brandi Steffek presented a contribution to Lynn Horgan, Director of
Corporate and Foundation Relations and Vanessa Prentice, Director of
Development for Annual Giving, for Southeastern Louisiana University.
PERSISTENCE PAYS DIVIDENDS
65
Community IMPACT
Elaine F. Atencio presented a contribution to William
Kennedy Superintendent of Claiborne Parish School Board
for their Professional Development Day lunch.
Jordan Lewis presented a contribution to Chad Kauffman, Chief Development Officer,
Junior Achievement of Dallas.
Danielle Willie and Jane Wear presented a contribution to
Jivka Duke for Southeastern Louisiana University Musician
School.
Jason Wilson presented a contribution to Ryan Barker, Director of Chappapeela Sports Park
for annual sponsorship.
A contribution was presented for the Kentwood High School
Track Team. Left to right: Ann Smith, First Guaranty Bank
Director, Jeremy Brown, Kentwood High Track Coach and
Lance Davis, First Guaranty Bank.
66
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Community IMPACT
A contribution was presented to Columbia Theatre. Left to right: Michelle
Biggs, Columbia Theatre Advisory Board member, Lynn Horgan, Director of
Corporate and Foundation Relations, Vanessa Drew, First Guaranty Bank,
Jim Winter, Interim Artistic Director of Columbia Theatre and Michelle
Reeves, Business Manager of Columbia Theatre.
Cheryl Brumfield and Karen Paille presented a contribution to Cheryl
Santangelo, Principal of Mater Dolorosa Catholic School for the MDS
Annual Steak Dinner.
Joedi Snipes presented a contribution to
Mary Helen Marrs, Executive Director, for the
Downtown Shreveport Unlimited.
Elaine Atencio and Niekitsha Ridley presented
a contribution to Van McDaniel, Police Chief of
Homer to purchase fans for the elderly.
April Alford presented a contribution to Patti Roubique, Executive Director of the Louisiana
Children’s Discovery Branch for the Bubble Exhibit.
PERSISTENCE PAYS DIVIDENDS
67
Community IMPACT
Matt Hudnall presented a contribution to Philip Rodgers,
Owner of Rodgers Homes and Construction for St. Jude's
Dream Home Giveaway.
DD Bruchhaus presented a contribution to Linda
Leblanc, Director for the Jeff Davis Chamber.
Leslie Hinzman presented a contribution to Kimberly Karl, Event Chair and Roy Metzler,
President of MKOC for Monsignor King Outreach Branch in Denton’s “Saddle Up for The
Homeless” fundraiser.
Adam Johnston presented a contribution to Coach
Stephens for the Bossier Parish Jamboree.
Cheryl Brumfield presented a contribution to Delmas Dunn, President of the Tangipahoa
African American Heritage Museum for the Black Tie Affair event.
68
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Community IMPACT
A
Achievement Center of Texas, Inc.
– Garland Open House
Advocates for Community
Transformation – Justice Summer
Series
Alpha Kappa Alpha Sorority, Inc. –
Pink & Green Gala
ALSAC/St. Jude’s Hospital – Family
Room Sponsorship
American Banker’s Association –
Voter Education
American Legion Post #47
(Ponchatoula) – Boys State &
Girls State
American Legion Post #141
(Vivian) – Boys State
Amite High School –
Championship Rings/Watches
Amite Oyster Festival – Pearl
Sponsor
Assist Agency - Jennings Summer
Camp
B
Benton Elementary Schools – Fall
Run Sponsor
Benton High School – Baseball
Sponsor
Bossier Arts Council – Artini
Sponsor
Boys and Girls Club of Acadiana
Boys and Girls Club of Timber
Ridge
Boy Scouts of America
City of Bunkie – Annual City
Fireworks Display
C
Cada – Taste N Tell Fundraiser
Caddo Parish School Board
– Herndon Magnet School
Technology
Caritas of Waco
CASA Services, Inc. (Court
Appointed Special Advocates) –
Pinwheel Garden & Contribution
Centenary College of Louisiana –
Cent Tank Competition
Children’s Advocacy Branch of
Collin County – Back to School
Packs
Christmas on Caddo – Fireworks
Fest Sponsor
Claiborne Academy – Golf
Tournament, Sports Signage and
Booster Club
Claiborne Charity Inc. – Golf
Tournament Sponsor
Claiborne Memorial Medical
Branch – GO RED and Men’s
Night Out
Claiborne Parish Council on Aging
Claiborne Parish Fair – 4H
Livestock Auction
Claiborne Parish School Board
– Leap Score Award and Sound
Equipment
Claiborne Scholastic Banquet
Community Renewal International
– Croquet Classic
Crimestoppers of Tangipahoa
D
Denton Community Food Center
Denton Parks Foundation
Denton Public School Foundation
– New Employee Reception and
Open House
Downtown Shreveport Unlimited
– Mudbug Madness Sponsor
Dubach Restoration and
Beautification Organization –
Chicken Festival Sponsor
Dubach School – Adopt-A-School
E
East Baton Rouge Parish School
System – Baseball Team
Corporate Sponsor
Elton Elementary School – Teacher
Appreciation Week
F
Faith Temple Ministries – Family
Fun Day
First Baptist Church – Greensburg
– Golf Tournament
Friendship House – Garland Open
House
Fuzzy Friends Rescue – Bone A
Fide Sponsor
G
Gingerbread House Bossier/Caddo
– Partners in Prevention
Grace at the Greenlight Inc.
Greenville Park Leadership
Academy – Teacher Appreciation
Gujarati Samaj of Mississippi –
Banquet Sponsor
H
Habitat for Humanity – Greater
Garland
City of Hammond – Back to
School Bash & Fireworks Display
Hammond Area Recreation
District
Hammond Blues & BBQ Challenge
Hammond Chamber of Commerce
Hammond Eastside Magnet School
– Beta Convention, Fall Fest,
Basketball Program
Hammond Firefighters Association
– 5K Memorial Run
Hammond Fraternal Order of
Police
Hammond High Magnet School
– Football Stadium Sign, Boys
Basketball, Volleyball Program
Hammond Police Union Local 345
Hammond-Ponchatoula Sunriser
Rotary – Chili Cook-Off Sponsor
Hammond Regional Arts Branch –
Brews Arts
Hammond Westside Montessori –
Basketball Uniforms and Robotics
Team Sponsor
Hathaway High School – Safe &
Sober After Prom
Haynesville Beautification
Committee
Haynesville High School – Shoot-
A-Way Machine
Health Services of North Texas Inc.
Holden High School – Softball
Championship Rings
Homer Golf Club – Tee Box Sign
Homer High School – FFA Chapter
Sponsor, Football Sign Sponsor
and Prom
Homer Police Department
Hugs Café Inc. – McKinney Open
House
Humane Society of Central Texas
I
Independence High School –
Football Signage & Program,
Senior Awards
Independence Sicilian Heritage
Festival
Independence Summer Baseball
Program Sponsor
Independence Volunteer Fire –
Smokin’ on the Tracks Sponsor
Town of Independence – July 4th
Fest Sponsor
The Italian Festival
J
Jeff Davis Chamber of Commerce
Jeff Davis Council on Aging
Jennings High School – Jazzers
Junior Achievement of Dallas Inc.
K
Kentwood Baseball/Softball
Association – Signage
Kentwood High Magnet School –
State Championship Rings, Beta
Club, Baseball Banner
Kentwood Rotary Club
Town of Kentwood - School Supply
Giveaway
Kiwanis Club of Denham Springs
Kiwanis Club of Denton – Taste of
North Texas
Kiwanis Club of Hammond
Knights of Columbus
KRLQ/KWXM Radio – Dubach
Chicken Festival
L
Lake Arthur High School – Safe
and Sober Event
Lake Charles Racquet Club
Lake Claiborne Inc. – 4th of July
Fireworks Sponsor
Lallie Kemp Foundation – Gala
Sponsor
Leadership Excel
Lincoln Parish Sheriff – Senior
Expo Sponsor
Live Oak High School –
Cheerleader Golf Tournament
Livingston Parish Chamber
of Commerce – Dodgeball
Tournament
Livingston Parish Council on
Aging
Livingston Parish School Board
– Holiday Luncheon and Spring
Conference
Loranger High School – Softball,
Volleyball and Ladies State
Championship Rings
Louisiana Bankers Association
Louisiana Children’s Discovery
Branch – Mad Hatter Brunch and
Bubble Zone Sponsor
Louisiana 4-H Foundation
Louisiana Marathon
LSU Ag Branch – Jeff Davis Parish
Rice and Soybean Clinic
M
Magnolia State Peace Officers
Association
Main Street Homer – Harvest Fest
Marksville Senior Health Bingo
Mary Bird Perkins Cancer Branch
– Geaux Yoga Balance
Mater Dolorosa Catholic School
Meals on Wheels – Tarrant County
Charles Robert Miller, Jr. – Seafood
Dinner Fundraiser
69
PERSISTENCE PAYS DIVIDENDS Community IMPACT
Monsignor King Outreach Branch
Monterey Country Club – Golf
Tournament Sponsor
Village of Moreauville
Richard Murphy Hospice
Foundation
N
NAACP – Freedom Fund Brunch
Janey Neyrey – Costume
No Limitations Inc. – Waco Open
House
Janey Neyrey – Nutcracker
Sponsor
North Caddo Magnet High School
– Football Program and Poster
Ads
North Caddo Medical Branch
Foundation – Gala Fundraiser
North Oaks Foundation – Neuro
Bi-Plane Machine
O
Oak Forest Academy – Golf
Tournament
Oak Grove Church of Christ
Operation Graduation - Jennings
Options, Inc.
Osyka Civic Club – Road to a Cure
P
Piggly Wiggly
Ponchatoula Area Recreation –
Gold Corporate Sponsor
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 Football Booster Club
PHS Soccer Booster Club
Ponchatoula Lions Club
Ponchatoula Youth Baseball
Q
Quinn Chapel AME Church
R
Layton Ricks Campaign Fund
Ronald McDonald House of Fort
Worth
Rosaryville Spirit Life Branch –
Nun Run
Rotary Club of Amite – Golf
Tournament
Rotary Club of Hammond –
Shamrock Run
Rotary Club of Oil City –
Fundraiser Auction
Ruth’s Room Inc.
S
St. Helena Central High School –
Marching Band
St. Helena/Tangipahoa Dairy Days
St. Thomas Aquinas High School –
State Championship Rings
Samaritan Inn
Seeds of Light Inc. – Campout
Night
Downtown Shreveport Unlimited
– Mud Bug Madness Sponsor
Southeastern Louisiana University
Alumni Association – FE Lion
Event, Awards Evening Sponsor
Southeastern Louisiana University
Athletic Association – Salute the
Lions Sponsor, Champagne Bingo,
Sports Package and Playoff
Tickets
Southeastern Louisiana University
Columbia Theatre for the Arts
Southeastern Louisiana
University Foundation – Chef ’s
Evening Sponsor, SLU Channel
Programming, College of
Business, Community Music
School, Partner and Columbia
Theater for the Arts Sponsor
Special Olympics Louisiana –
Trivia Night/Silent Auction
Sponsor
Springfield High School
Stirling Properties LLC – Stirling
Fest Golf Tournament
Summerfield High School –
Baseball and Softball Signs
Sumner High School
70
V
Vivian Athletic Association –
Ballpark Sign
Vivian Chamber of Commerce
– Christmas T-Shirt
Volunteers for Youth Justice
W
Waco Chamber of Commerce –
Teen Leadership
Walker High School – Ladycat
Basketball
Welsh High School – Safe and
Sober Event
Y
Yellow Rose Gala Foundation
T
TARC – Radiothon
Tangi Parish Convention & Visitors
Bureau
Tangi Professional Women’s
Organization – Leadership
Sponsor
Tangipahoa African American
Heritage Museum & Veterans
Archive – Black Tie Gala Gold
Sponsor
Tangipahoa Master Gardener
Association
Tangipahoa Parish Fair ($-H)
Tangipahoa Parish School System
– Talented Theatre and Spring
Conference
Tangipahoa Parish Sheriff 's Office
– Mounted Division Rodeo
Tangipahoa Voluntary Council on
Aging
Triad/SALT AARP – Expo
U
United Way of Southeast Louisiana
– Employee Match and Corporate
Contributions
United Way of Tarrant County
2019 FGB Volunteer Results
Total Employee Community
Service Hours Completed
1,553
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e
o
a
f
c
h
e
d
mployee Volunteers
Total Number of
6
9
1
E
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
EARNINGS & DIVIDENDS
Earnings
$2.1 million
$1.7 million
$2.1 million
$3.3 million
$3.4 million
$3.4 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
$1,223,000
$1,316,000
$(4,984,000)
$(3,879,070)
$(2,796,000)
$ (774,000)
$ 1,205,000
$ 3,482,000
$ 4,473,000
■■ Investors purchased $3.6 million of common stock
■■ Investors purchased $337,000 of common stock
■■ Three-for-two stock split
■■ 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 totaling $2.8
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
$3,558,000
$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
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
2014
$9.1 million
$4,027,000
$11.2 million
$4,027,000
$58,102,000
$64,905,000
■■ Total loans exceeded $700 million
■■ Retained earnings grew by $6.8 million
2015
$14.5 million
$4,247,000
$73,445,000
■■ 10% common stock dividend
■■ Listed in NASDAQ
■■ Redeemed SBLF Preferred Stock
2016
$14.1 million
$4,870,000
$82,668,000
■■ Loans totaled $949 million
2017
$11.8 million
$5,210,000
$89,209,000
■■ Acquisition of Synergy Bank and addition of five new Texas
locations
■■ 50% ownership in Centurion Insurance Services allowing First
Guaranty to sell insurance products
2018
$14.2 million
$5,636,000
$97,786,00
■■ Total loans surpassed $1.2 billion
2019
$14.2 million
$5,820,000
$106,207,000
■■ 106th consecutive quarterly dividend
■■ Declared a 10% stock dividend
■■ Acquisition of The Union Bank and addition of seven new
Louisiana locations
■■ Total assets exceeded $2 billion
■■ Completed and opened our new Amite Branch office
$206.0 million
$78,352,000
* 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.
71
PERSISTENCE PAYS DIVIDENDS Banks Headquartered in Louisiana Ranked by Asset Size as of December 31, 2019
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
Iberiabank
Origin Bank
b1Bank
Home Bank, National Association
Investar Bank, National Association
First Guaranty Bank
Red River Bank
Gulf Coast Bank and Trust Company
Pedestal Bank
Citizens National Bank, N.A.
First Bank and Trust
Crescent Bank & Trust
Sabine State Bank and Trust Company
First American Bank and Trust
First Federal Bank of Louisiana
JD Bank
First National Banker's Bank
Fidelity Bank
Resource Bank
Liberty Bank and Trust Company
Progressive Bank
The Evangeline Bank and Trust Company
Synergy Bank
United Community Bank
Concordia Bank & Trust Company
Community Bank of Louisiana
BOM Bank
Century Next Bank
South Louisiana Bank, Houma, Louisiana
Gibsland Bank & Trust Company
Home Federal Bank
Fifth District Savings Bank
33 Merchants & Farmers Bank & Trust Company
34
Cross Keys Bank
35 Metairie Bank & Trust Company
36
37
38
39
40
41
42
43
44
45
46
47
48
Community First Bank
First National Bank of Louisiana
Rayne State Bank & Trust Company
Cottonport Bank
Gulf Coast Bank
Homeland Federal Savings Bank
Bank of Commerce & Trust Co.
Citizens Bank & Trust Company
Farmers-Merchant Bank & Trust Company
First National Bank in DeRidder
Peoples Bank and Trust Company of Pointe Coupee Parish
Jonesboro State Bank
Delta Bank
49 M C Bank & Trust Company
Southern Heritage Bank
Caldwell Bank & Trust Company
Tensas State Bank
Anthem Bank & Trust
Bank of St. Francisville
Lafayette
Choudrant
Baton Rouge
Lafayette
Baton Rouge
Hammond
Alexandria
New Orleans
Houma
Bossier City
New Orleans
New Orleans
Many
Vacherie
Lake Charles
Jennings
Baton Rouge
New Orleans
Covington
New Orleans
Monroe
Ville Platte
Houma
Gonzales
Vidalia
Mansfield
Natchitoches
Ruston
Houma
Gibsland
Shreveport
New Orleans
Leesville
Saint Joseph
Metairie
New Iberia
Crowley
Rayne
Cottonport
Abbeville
Columbia
Crowley
Plaquemine
Breaux Bridge
DeRidder
New Roads
Jonesboro
Vidalia
Morgan City
Jonesville
Columbia
Newellton
Plaquemine
58
59
60
61
62
63
64
65
66
67
68
69
70
South Lafourche Bank & Trust Company
Citizen's Bank & Trust Company of Vivian, Louisiana
Bank of Winnfield & Trust Company
Heritage Bank of St. Tammany
First National Bank USA
Vermilion Bank & Trust Company
Feliciana Bank & Trust Company
Citizens Bank & Trust Company
State Bank & Trust Company
Colfax Banking Company
Farmers State Bank & Trust Co.
Simmesport State Bank
Eureka Homestead
71 Mississippi River Bank
72
73
74
75
76
77
78
79
80
81
82
83
84
85
Bank of Erath
Peoples Bank
Jackson Parish Bank
Bank of Louisiana
Guaranty Bank & Trust Company of Delhi, Louisiana
The First National Bank of Jeanerette
St. Landry Bank and Trust Company
Patterson State Bank
City Bank & Trust Co.
First National Bank
The Bank
Bank of Coushatta
Bank of Zachary
Citizens Savings Bank
86 Winnsboro State Bank & Trust Company
87
88
89
90
St. Landry Homestead Federal Savings Bank
Guaranty Bank and Trust Company
Lakeside Bank
American Bank & Trust Company
91 Washington State Bank
92
93
94
95
Hibernia Bank
American Bank & Trust Company
CLB The Community Bank
Franklin State Bank & Trust Company
96 Marion State Bank
97
98
99
Bank of Abbeville & Trust Company
Plaquemine Bank & Trust Company
Commercial Capital Bank
100 Citizens Progressive Bank
101 Bank of Gueydan
102 Progressive National Bank of DeSoto Parish
103 Hodge Bank & Trust Company
104 Beauregard FSB
105
The Bank of Commerce
106 Sicily Island State Bank
107 Commerce Community Bank
108
First National Bank of Benton
109 Basile State Bank
110 Bank of Oak Ridge
Saint Francisville
111 Abbevile Building & Loan (A State-Chartered Savings Bank)
Bank of Sunset and Trust Company
Sunset
Exchange Bank and Trust Company, Natchitoches, Louisiana Natchitoches
Landmark Bank
Clinton
112 Rayne Building and Loan Association
113 Mutual Savings and Loan Association
114
The Mer Rouge State Bank
50
51
52
53
54
55
56
57
72
Larose
Vivian
Winnfield
Covington
Boutte
Kaplan
Clinton
Covington
Golden Meadow
Colfax
Church Point
Simmesport
Metairie
Belle Chasse
Erath
Chatham
Jonesboro
New Orleans
Delhi
Jeanerette
Opelousas
Patterson
Natchitoches
Arcadia
Jennings
Coushatta
Zachary
Bogalusa
Winnsboro
Opelousas
New Roads
Lake Charles
Opelousas
Washington
New Orleans
Covington
Jonesville
Winnsboro
Marion
Abbeville
Plaquemine
Delhi
Winnsboro
Gueydan
Mansfield
Hodge
Deridder
White Castle
Sicily Island
Oak Grove
Benton
Basile
Oak Ridge
Abbeville
Rayne
Metairie
Mer Rouge
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Financial Table of Contents
Selected Financial Data ............................................................................................ 74
Management’s Discussion and Analysis
of Financial Condition and Results of Operation ................................................. 78
Report of Independent Registered Public Accounting Firm ...............................108
Consolidated Balance Sheets...................................................................................109
Consolidated Statements of Income....................................................................... 110
Consolidated Statements of Comprehensive Income (Loss) ............................... 111
Consolidated Statements of Changes in Shareholders’ Equity ............................ 111
Consolidated Statements of Cash Flows ................................................................ 112
Notes to Consolidated Financial Statements ........................................................ 113
73
PERSISTENCE PAYS DIVIDENDS 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,
2019
2018
2017
2016
2015
(in thousands, except for % and share data)
$ 427,013
$ 405,303
$ 501,656
$ 499,336
$
914
$
549
$
823
$
271
$ 1,525,490
$ 1,225,268
$1,149,014
$ 948,921
$
10,929
$
10,776
$
9,225
$
11,114
$ 2,117,216
$ 1,817,211
$1,750,430
$1,500,946
$ 1,853,013
$ 1,629,622
$1,549,286
$1,326,181
$
86,747
$
34,538
$
52,938
$
43,230
$ 166,035
$ 147,284
$ 143,983
$ 124,349
$
$
$ 546,121
582
$ 841,583
9,415
$1,459,753
$1,295,870
42,221
$ 118,224
$
$ 166,035
$ 147,284
$ 143,983
$ 124,349
$ 118,224
0.76%
8.99%
0.78%
9.68%
3.41%
78.59%
67.48%
66.77%
431
8.42%
8.02%
7.84%
6.99%
0.82%
9.98%
0.85%
10.77%
3.41%
75.39%
69.46%
66.63%
346
8.20%
7.86%
8.10%
7.79%
0.71%
8.59%
0.73%
9.15%
3.33%
72.23%
62.64%
63.38%
338
8.31%
8.01%
8.23%
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%
8.10%
0.97%
12.98%
0.99%
13.60%
3.26%
61.31%
55.11%
57.74%
277
9.88%
9.67%
8.10%
7.89%
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 (1)
Return on average tangible common equity (1)
Net interest margin
Average loans to average deposits
Efficiency ratio (2)
Efficiency ratio (excluding amortization of intangibles and
securities transactions) (2)
Full time equivalent employees (year end)
Capital Ratios:
Average shareholders' equity to average assets
Average tangible equity to average tangible assets (3)
Common shareholders' equity to total assets
Tangible common equity to tangible assets (3)
74
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Income Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Noninterest income (excluding securities transactions)
Securities (losses) gains
Noninterest expense
Earnings before income taxes
Net income
Net income available to common shareholders
Per Common Share Data: (5)
Net earnings
Cash dividends paid
Book value
Tangible book value (4)
Dividend payout ratio
Weighted average number of shares outstanding
Number of shares outstanding
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
$
$
$
$
$
$
$
$
$
$
$
$
$
$
91,643
29,966
61,677
4,860
8,456
(157)
47,219
17,897
14,241
14,241
1.47
0.60
17.04
15.05
$
$
$
$
$
$
$
$
$
$
$
$
$
$
78,390
21,366
57,024
1,354
7,110
(1,830)
43,275
17,675
14,213
14,213
1.47
0.58
15.20
14.57
$
$
$
$
$
$
$
$
$
$
$
$
$
$
67,546
14,393
53,153
3,822
6,943
1,397
38,521
19,150
11,751
11,751
1.24
0.54
14.86
14.17
$
$
$
$
$
$
$
$
$
$
$
$
$
$
58,532
10,140
48,392
3,705
5,656
3,799
32,885
21,257
14,093
14,093
1.53
0.53
13.51
13.18
$
$
$
$
$
$
$
$
$
$
$
$
$
$
56,079
8,608
47,471
3,864
5,656
3,300
31,095
21,468
14,505
14,121
1.66
0.49
12.84
12.48
40.74%
39.65%
44.34%
34.56%
30.07%
9,695,131
9,687,123
9,468,145
9,205,635
9,741,253
9,687,123
9,687,123
9,205,635
8,485,408
9,205,635
1.04%
1.44%
1.12%
0.55%
0.82%
0.73%
0.84%
1.28%
1.17%
1.48%
2.34%
2.30%
1.51%
2.62%
2.43%
49.86%
107.48%
62.88%
50.04%
42.74%
0.36%
0.37%
0.72%
(0.02)%
0.12%
0.88%
0.54%
0.36%
0.80%
0.23%
0.42%
1.17%
0.44%
0.47%
1.12%
1.
2.
Tangible calculation eliminates goodwill and acquisition intangibles, principally core deposit intangibles, net of accumulated amortization, net of tax. See below
for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Historical
Consolidated Financial and Other Data— Non-GAAP Financial Measures."
Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income. We calculate both a GAAP and a non-
GAAP efficiency ratio. The GAAP-based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income. See below for our
reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Financial Data— Non-
GAAP Financial Measures."
3. We calculate tangible common equity as total shareholders' equity less preferred stock, goodwill and acquisition intangibles, principally core deposit intangibles,
net of accumulated amortization, and we calculate tangible assets as total assets less goodwill and core deposit intangibles. Tangible common equity to tangible
assets is a non-GAAP financial measure, and, as we calculate tangible common equity to tangible assets, the most directly comparable GAAP financial measure
is total shareholders' equity to total assets. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial
measures under the caption "Selected Historical Consolidated Financial and Other Data— Non-GAAP Financial Measures."
4. We calculate tangible book value per common share as total shareholders' equity less preferred stock, goodwill and acquisition intangibles, principally core
deposit intangibles, net of accumulated amortization at the end of the relevant period, divided by the outstanding number of shares of our common stock at
the end of the relevant period. Tangible book value per common share is a non-GAAP financial measure, and, as we calculate tangible book value per common
share, the most directly comparable GAAP financial measure is book value per common share. See below for our reconciliation of non-GAAP financial measures
to their most directly comparable GAAP financial measures under the caption "Selected Financial Data— Non-GAAP Financial Measures."
5. Historical share and per share amounts have been adjusted to reflect the ten percent stock dividend paid December 16, 2019 to shareholders of record as of
December 9, 2019.
75
PERSISTENCE PAYS DIVIDENDS
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.
which typically stem from the use of the purchase accounting method
of accounting for mergers and acquisitions. Tangible equity, tangible
assets, tangible book value per share or related measures should not be
considered in isolation or as a substitute for total shareholders' equity,
total assets, book value per share or any other measure calculated in
accordance with GAAP. Moreover, the manner in which we calculate
tangible equity, tangible assets, tangible book value per share and
any other related measures may differ from that of other companies
reporting measures with similar names.
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,
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 (1)
Book value per common share (1)
Tangible book value per common share (1)
Tangible Assets
Total Assets
Adjustments:
Goodwill
Acquisition intangibles
Tangible Assets
At December 31,
2019
2018
2017
2016
2015
(in thousands, except for share data and %)
$
166,035
$
147,284
$
143,983
$
124,349
$
118,224
-
-
-
-
12,942
3,472
3,472
1,999
6,527
2,704
3,249
978
-
1,999
1,298
$ 146,566
$ 141,108
$ 137,262
$ 121,372
$ 114,927
9,741,253
9,687,123
9,687,123
9,205,635
9,205,635
$ 17.04
$ 15.20
$ 15.05
$ 14.57
$
$
14.86
14.17
$
$
13.51
13.18
$
$
12.84
12.48
$ 2,117,216
$ 1,817,211
$ 1,750,430
$ 1,500,946
$ 1,459,753
12,942
3,472
3,472
1,999
6,527
2,704
3,249
978
1,999
1,298
$ 2,097,747
$ 1,811,035
$ 1,743,709
$ 1,497,969
$ 1,456,456
Tangible common equity to tangible assets
6.99%
7.79%
7.87%
8.10%
7.89%
1. All share amounts have been restated to reflect the ten percent stock dividend paid December 16, 2019 to shareholders of record as of December 9, 2019.
76
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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,
2019
2018
2017
2016
2015
(in thousands, except for share data and %)
67.48%
69.46%
62.64%
56.85%
55.11%
$47,219
$43,275
$38,521
$32,885
$31,095
390
545
432
320
320
46,829
61,677
8,299
42,730
57,024
5,280
38,089
32,565
53,153
48,392
8,340
9,455
30,775
47,471
8,956
(157)
(1,830)
1,397
3,739
3,125
$ 8,456
$ 7,110
$ 6,943
$ 5,716
$ 5,831
66.77%
66.63%
63.38%
60.19%
57.74%
77
PERSISTENCE PAYS DIVIDENDS
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 corporation and a financial
holding company headquartered in Hammond, Louisiana. Our
wholly-owned subsidiary, First Guaranty Bank, a Louisiana-chartered
commercial bank, provides personalized commercial banking services
primarily to Louisiana and Texas customers through 34 banking facilities
primarily located in the MSAs of Hammond, Baton Rouge, Lafayette,
Shreveport-Bossier City, Lake Charles and Alexandria, Louisiana and
Dallas-Fort Worth-Arlington and Waco, Texas. We emphasize personal
relationships and localized decision making to ensure that products
and services are matched to customer needs. We compete for business
78
principally on the basis of personal service to customers, customer
access to officers and directors and competitive interest rates and fees.
First Guaranty continued to expand in the Louisiana markets in 2019
with the acquisition of Union Bancshares, Incorporated and its wholly
owned subsidiary, The Union Bank on November 7, 2019.
Total assets were $2.1 billion at December 31, 2019 and $1.8 billion
at December 31, 2018. Total deposits were $1.9 billion at December
31, 2019 and $1.6 billion at December 31, 2018. Total loans were
$1.5 billion at December 31, 2019, an increase of $300.2 million, or
24.5%, compared with December 31, 2018. Total shareholders' equity
was $166.0 million and $147.3 million at December 31, 2019 and
December 31, 2018, respectively.
Net income was $14.2 million, $14.2 million and $11.8 million for
the years ended December 31, 2019, 2018 and 2017, 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 2019 and 2018:
• First Guaranty completed its merger with Union Bancshares,
Incorporated. ("Union") and its wholly owned subsidiary, The
Union Bank, on November 7, 2019. First Guaranty acquired a
total of $274.8 million in assets and assumed $231.5 million in
liabilities. Shareholders of Union received $1,061.20 per share in
cash, yielding an aggregate deal value of $43.4 million. The cash
consideration was partially financed by a $32.5 million term loan
from First Horizon Bank. First Guaranty acquired a total of $184.2
million in loans, securities of $38.8 million, cash and due from banks
of $20.1 million, premises of $7.2 million, other real estate owned
of $1.6 million and other assets that totaled $9.3 million. Intangibles
recorded from the transaction were a total of $13.7 million, including
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT • Total impaired loans increased $11.9 million to $20.7 million at
December 31, 2019 compared to $8.8 million at December 31,
2018.
• Nonaccrual loans increased $5.7 million to $14.4 million at
December 31, 2019 compared to $8.7 million at December 31,
2018.
• The allowance for loan losses was 0.72% of loans at December 31,
2019. Loan discounts related to acquisition accounting from the
Union transaction was approximately $2.4 million at December 31,
2019.
• Return on average assets was 0.76% and 0.82% for the years
ended December 31, 2019 and 2018, respectively. Return on
average common equity was 8.99% and 9.98% for 2019 and 2018,
respectively. Return on average assets is calculated by dividing
net income by average assets. Return on average common equity
is calculated by dividing net income to common shareholders by
average common equity.
• Book value per common share was $17.04 as of December 31,
2019 compared to $15.20 as of December 31, 2018. Tangible book
value per common share was $15.05 as of December 31, 2019
compared to $14.57 as of December 31, 2018. The increase in
book value was due primarily to an increase in accumulated other
comprehensive income ("AOCI") and retained earnings. AOCI
is comprised of unrealized gains and losses on available for sale
securities.
• First Guaranty's Board of Directors declared cash dividends of
$0.64 per common share in 2019, which was the equivalent of
$0.60 per common share after adjusting for the 10% common stock
dividend paid in December 2019. First Guaranty also declared cash
dividends of $0.64 in 2018, which was the equivalent of $0.58 per
common share after adjusting for the 10% common stock dividend
paid in December 2019. First Guaranty has paid 106 consecutive
quarterly dividends as of December 31, 2019.
• In November 2017, First Guaranty announced the launch of an
At-The-Market Equity Offering program ("ATM Offering"). First
Guaranty may sell up to $25.0 million of common stock under the
ATM Offering. First Guaranty expects to use the net proceeds of the
ATM Offering for general corporate purposes, including support for
organic growth and financing possible acquisitions of other financial
institutions. First Guaranty has not sold any shares of common stock
under the ATM Offering during the years ended December 31, 2019
and 2018.
• First Guaranty currently has one new facility under construction in
order to facilitate future expansion. This construction commitment
totals $10.1 million, with $6.8 million incurred as of December 31,
2019. First Guaranty also completed construction on a new branch
facility in Amite, Louisiana during the fourth quarter of 2019.
goodwill of $9.5 million. Total assumed liabilities included deposits
of $205.0 million, FHLB advances of $16.6 million, repurchase
agreements of $6.9 million and other liabilities of $3.0 million.
Expenses related to the merger totaled approximately $0.3 million
in 2019.
• Total assets at December 31, 2019 increased $300.0 million, or
16.5%, to $2.1 billion when compared with December 31, 2018.
Total loans at December 31, 2019 were $1.5 billion, an increase
of $300.2 million, or 24.5%, compared with December 31, 2018.
Total deposits were $1.9 billion at December 31, 2019, an increase
of $223.4 million, or 13.7% compared with December 31, 2018.
Retained earnings were $43.3 million at December 31, 2019, an
increase of $8.3 million compared to $34.9 million at December 31,
2018. Shareholders' equity was $166.0 million and $147.3 million
at December 31, 2019 and December 31, 2018, respectively.
• Net income for each of the years ended December 31, 2019 and
2018 was $14.2 million.
• Earnings per common share were $1.47 for each of the years ended
December 31, 2019 and 2018. Total weighted average shares
outstanding were 9,695,131 at December, 31, 2019 compared to
9,687,123 at December 31, 2019. The change in shares was due
to the issuance of 54,130 shares of stock in private placement in
November of 2019.
• Net interest income for 2019 was $61.7 million compared to $57.0
million for 2018.
• The provision for loan losses totaled $4.9 million for 2019 compared
to $1.4 million in 2018. First Guaranty received a $3.6 million
negotiated payment in settlement of a commercial and industrial
non-accrual loan on May 9, 2018. The payment resulted in a
recovery of $1.6 million. The recovery impacted the allowance for
loan losses and the end result was a negative provision for loan
losses in the second quarter of 2018.
• Noninterest income for 2019 was $8.3 million compared to $5.3
million for 2018. During the third quarter of 2019, First Guaranty sold
the guaranteed portion of SBA and USDA loans which generated a
gain on the sale of loans of $1.4 million.
• The net interest margin was 3.41% for 2019 and 2018. First
Guaranty attributed the stable net interest margin to a rise in interest
income associated with loans and the change in balance sheet
composition to higher yielding loans from lower yielding securities,
partially offset by a rise in interest expense associated with interest-
bearing deposits. Loans as a percentage of average interest earning
assets increased to 72.7% at December 31, 2019 compared to
69.8% at December 31, 2018.
• Investment securities totaled $427.0 million at December 31, 2019,
an increase of $21.7 million when compared to $405.3 million
at December 31, 2018. First Guaranty acquired $38.8 million in
securities from the Union acquisition and sold securities in order
to fund loan growth and reduce interest rate risk. Losses on the
sale of securities were $0.2 million for 2019 as compared to losses
of $1.8 million for 2018. At December 31, 2019, available for sale
securities, at fair value, totaled $340.4 million, an increase of $43.5
million when compared to $297.0 million at December 31, 2018. At
December 31, 2019, held to maturity securities, at amortized cost,
totaled $86.6 million, a decrease of $21.7 million when compared to
$108.3 million at December 31, 2018.
• Total loans net of unearned income were $1.5 billion at December
31, 2019 compared to $1.2 billion at December 31, 2018. Total
loans net of unearned income are reduced by the allowance for loan
losses which totaled $10.9 million at December 31, 2019 and $10.8
million at December 31, 2018.
79
PERSISTENCE PAYS DIVIDENDS 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, multifamily, and consumer
credits are strongly influenced by employment levels, consumer debt
loads and the general economy. Non-farm non-residential loans
include both owner-occupied real estate and non-owner occupied real
estate. Common risks associated with these properties is the ability to
maintain tenant leases and keep lease income at a level able to service
required debt and operating expenses. Commercial and industrial
loans generally have non-real estate secured collateral which requires
closer monitoring than real estate collateral.
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
80
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.
Valuation of Goodwill, Intangible Assets and Other Purchase Accounting
Adjustments.
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
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 loan servicing assets. 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
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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, 2019.
Further, no events or changes in circumstances between October 1,
2019 and December 31, 2019 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 and loan servicing assets related to the SBA loan portfolio.
Management periodically evaluates whether events or circumstances
have occurred that would result in impairment of value.
Financial Condition
First Guaranty completed the acquisition of Union and its wholly owned
subsidiary The Union Bank on November 7, 2019. This acquisition
added seven branches, $205.0 million in deposits, and $184.2 million
in loans to First Guaranty's balance sheet. The results of operations
since the date of acquisition reflect the impact of the transaction.
Assets.
Our total assets were $2.1 billion at December 31, 2019, an increase
of $300.0 million, or 16.5%, from total assets at December 31, 2018.
Assets increased primarily due to increases in net loans of $300.1
million and investment securities of $21.7 million, partially offset by a
decrease in cash and cash equivalents of $60.5 million.
Loans.
Net loans increased $300.1 million, or 24.7%, to $1.5 billion at
December 31, 2019 from $1.2 billion at December 31, 2018. One-
to four-family loans increased $116.9 million primarily due to the
continued growth in local loan originations and the acquisition of loans
from Union. Commercial and industrial loans increased $67.4 million
primarily due to new originations and the acquisition of loans from
Union. Consumer and other loans increased $49.4 million primarily
due to origination of lease commitments and the acquisition of loans
from Union. Construction and land development loans increased
$47.6 million principally due to the funding of unfunded commitments
on various construction projects and the acquisition of loans from
Union. Non-farm non-residential loan balances increased $30.3
million primarily due to the acquisition of loans from Union. Non-farm
non-residential loans would have declined without the acquisition of
the Union loan portfolio. Farmland loans increased $4.3 million due
to fundings on agricultural loan commitments and the acquisition of
loans from Union. Agricultural loans increased $3.6 million primarily
due to seasonal activity and the acquisition of loans from Union.
Multifamily loans decreased $18.9 million primarily due to paydowns,
primarily associated with one large credit that totaled $26.6 million.
First Guaranty had approximately 3.5% of funded and 1.1% of
unfunded commitments in our loan portfolio to businesses engaged in
support or service activities for oil and gas operations. First Guaranty
had $204.5 million in loans related to our Texas markets at December
31, 2019. Syndicated loans at December 31, 2019 were $39.9 million,
of which $22.0 million were shared national credits. Syndicated loans
decreased $27.1 million from $67.0 million at December 31, 2018
primarily due to payoffs of existing relationships.
As of December 31, 2019, 73.6% of our loan portfolio was secured
by real estate. There are no significant concentrations of credit to any
individual borrower. The largest portion of our loan portfolio, at 40.3%
as of December 31, 2019, was non-farm non-residential loans secured
by real estate. Approximately 33.3% of the loan portfolio was based
on a floating rate tied to the prime rate or LIBOR as of December 31,
2019. 72.5% of the loan portfolio is scheduled to mature within five
years from December 31, 2019.
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.
First Guaranty has continued to originate SBA and USDA loans and
sell the guaranteed portion. At December 31, 2019, First Guaranty's
balance of SBA and USDA loans was $32.3 million of which $11.1
million retained the government guarantee and $21.2 million was the
unguaranteed residual balance. At December 31, 2019, First Guaranty
also serviced 49 SBA and USDA loans that totaled $51.3 million. First
Guaranty receives servicing fee income on this portfolio
81
PERSISTENCE PAYS DIVIDENDS Loan Portfolio Composition.
The table 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,
2019
2018
2017
2016
2015
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(in thousands, except for %)
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
Less: Unearned income
Total Loans Net Of Unearned
Income
$ 172,247
11.3%
$ 124,644
10.1% $ 112,603
9.8% $ 84,239
8.9% $ 56,132
22,741
289,635
23,973
616,536
1,125,132
26,710
268,256
108,868
403,834
1.5%
18.9%
1.6%
40.3%
73.6%
1.8%
17.5%
7.1%
26.4%
18,401
172,760
42,918
586,263
944,986
23,108
200,877
59,443
283,428
1.5%
14.1%
3.5%
47.7%
76.9%
1.9%
16.4%
4.8%
23.1%
25,691
2.2%
21,138
2.2%
17,672
158,733
13.8%
135,211
14.2% 129,610
16,840
1.4%
12,450
1.3%
12,629
530,293
46.1%
417,014
43.9% 323,363
844,160
73.3% 670,052
70.5% 539,406
21,514
1.9%
23,783
2.5%
25,838
230,638
20.0%
193,969
20.4% 224,201
55,185
4.8%
63,011
6.6%
54,163
307,337
26.7% 280,763
29.5% 304,202
6.6%
2.1%
15.4%
1.5%
38.3%
63.9%
3.1%
26.6%
6.4%
36.1%
1,528,966
100.0%
1,228,414
100.0% 1,151,497
100.0% 950,815
100.0% 843,608
100.0%
(3,476)
(3,146)
(2,483)
(1,894)
(2,025)
$1,525,490
$1,225,268
$1,149,014
$948,921
$841,583
82
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Loan Portfolio Maturities.
The following tables summarize the scheduled repayments of our loan portfolio at December 31, 2019 and 2018. 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, 2019
More Than
One Year
Through
Five Years
One Year
or Less
After Five
Years
Total
(in thousands)
Real Estate:
Construction & land development
$ 35,393
$ 124,715
$ 12,139
$ 172,247
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
8,348
43,155
1,385
10,283
93,457
12,028
4,110
153,023
10,560
124,905
316,767
174,864
22,741
289,635
23,973
616,536
213,186
557,250
354,696
1,125,132
13,290
71,508
15,454
5,087
149,667
90,029
100,252
244,783
8,333
47,081
3,385
58,799
26,710
268,256
108,868
403,834
$ 1,528,966
(3,476)
$ 1,525,490
Total Loans Before Unearned Income
$313,438
$802,033
$ 413,495
Less: unearned income
Total Loans Net Of Unearned Income
December 31, 2018
More Than
One Year
Through
Five Years
One Year
or Less
After Five
Years
Total
(in thousands)
Real Estate:
Construction & land development
$ 17,799
$ 74,681
$ 32,164
$ 124,644
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
2,814
11,182
7,525
11,684
45,004
32,284
3,903
116,574
3,109
81,007
336,493
168,763
120,327
500,146
324,513
10,982
45,604
14,288
3,870
134,967
44,883
8,256
20,306
272
70,874
183,720
28,834
18,401
172,760
42,918
586,263
944,986
23,108
200,877
59,443
283,428
Total Loans Before Unearned Income
$191,201
$683,866
$353,347
$ 1,228,414
Less: unearned income
Total Loans Net Of Unearned Income
(3,146)
$ 1,225,268
83
PERSISTENCE PAYS DIVIDENDS The following table sets forth the scheduled repayments of fixed and
adjustable-rate loans at December 31, 2019 that are contractually due
after December 31, 2020.
TOTAL ASSETS
In Billions
Due After December 31, 2020
(in thousands)
Fixed
Floating
Total
$ 509,455 $ 286,131 $ 795,586
147,502
143,695
65,713
51,612
213,215
195,307
$ 800,652 $ 403,456 $ 1,204,108
14,403
$ 1,218,511
One to five years
Over five to 15 years
Over 15 years
Subtotal
Nonaccrual loans
Total
As of December 31, 2019, $153.3 million of floating rate loans were at
their interest rate floor. At December 31, 2018, $27.7 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 LOANS
In Millions
84
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT The following table shows the principal amounts and categories of our non-performing assets at December 31, 2019, 2018, 2017, 2016 and 2015.
Nonaccrual loans:
Real Estate:
Construction and 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 nonaccrual loans
Loans 90 days and greater delinquent & still accruing:
Real Estate:
Construction and 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 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
Multifamily
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
December 31,
2019
2018
2017
2016
2015
(in thousands)
$ 381
$ 311
$ 371
$ 551
$ 558
1,274
2,759
-
4,646
9,060
4,800
327
216
5,343
14,403
48
-
923
-
1,603
2,574
1,293
2,246
-
864
4,714
3,651
317
61
4,029
8,743
-
-
26
-
-
26
65
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
-
15
50
65
2,639
$17,042
-
53
66
119
145
$ 8,888
41
798
-
839
839
$13,389
-
-
-
-
179
$21,853
-
-
-
-
410
$20,449
669
-
559
-
3,651
4,879
241
-
120
-
777
1,138
304
-
23
-
954
1,281
-
-
71
-
288
359
-
-
-
-
4,879
$21,921
-
-
-
-
1,138
$10,026
-
-
-
-
1,281
$14,670
-
-
-
-
359
$22,212
25
-
880
-
672
1,577
-
-
-
-
1,577
$22,026
1.44%
1.04%
1.12%
0.82%
0.55%
0.73%
1.28%
0.84%
1.17%
2.34%
1.48%
2.30%
2.62%
1.51%
2.43%
85
PERSISTENCE PAYS DIVIDENDS For the years ended December 31, 2019 and 2018, gross interest
income which would have been recorded had the non-performing
loans been current in accordance with their original terms amounted
to $0.9 million and $0.7 million, respectively. We recognized $69,000
and $38,000 of interest income on such loans during the years ended
December 31, 2019 and 2018, respectively. For the years ended
December 31, 2019 and 2018, 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 and $0.1 million,
respectively. We recognized $0 and $0.1 million of interest income on
such loans during the years ended December 31, 2019 and 2018,
respectively.
Non-performing assets were $21.9 million, or 1.04%, of total assets
at December 31, 2019, compared to $10.0 million, or 0.55%, of total
assets at December 31, 2018, which represented an increase in non-
performing assets of $11.9 million. The increase in non-performing
assets occurred as a result of several factors.
Nonaccrual loans increased from $8.7 million at December 31, 2018
to $14.4 million at December 31, 2019. The increase in nonaccrual
loans was concentrated primarily in non-farm non-residential loans and
agricultural loans. Nonaccrual loans were concentrated in seven loan
relationships that totaled $8.8 million, or 61.3%, of nonaccrual loans at
December 31, 2019. Non-performing assets included $5.3 million in
loans with a government guarantee, or 24.3% of non-performing assets.
These are structured as net loss guarantees in which up to 90% of loss
exposure is covered.
At December 31, 2019 loans 90 days and greater delinquent and still
accruing totaled $2.6 million, an increase of $2.5 million from $0.1
million at December 31, 2018. The increase in loans 90 days and
greater delinquent and still accruing was concentrated in non-farm
non-residential loans.
Other real estate owned at December 31, 2019 totaled $4.9 million, an
increase of $3.7 million from $1.1 million at December 31, 2018. The
increase was primarily due to acquired real estate from Union.
At December 31, 2019, our largest non-performing assets were
comprised of the following nonaccrual loans and other real estate owned:
(1) a non-farm non-residential loan secured by a hotel that totaled $3.7
million; (2) a $2.2 million non-farm non-residential property included in
other real estate owned; (3) an agricultural/ farmland loan relationship
that totaled $1.1 million; (4) an agricultural loan relationship that totaled
$1.0 million; (5) an agricultural loan relationship that totaled $1.0
million; (6) an agricultural loan relationship that totaled $0.7 million;
(7) an agricultural loan relationship that totaled $0.7 million; (8) a $0.6
million non-farm non-residential property included in other real estate
owned; and (9) a one-to four-family loan that totaled $0.5 million. The
agricultural loans are partially guaranteed by the USDA Farm Service
Agency.
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
86
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, 2019, 2018 and 2017.
At December 31,
2019
2018
2017
(in thousands)
$ - $ 1,288
$ 2,138
-
-
-
-
-
-
-
-
304
334
-
-
$ -
$ 1,592
$ 2,472
TDRs:
In Compliance with Modified
Terms
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
At December 31, 2019, First Guaranty had no outstanding TDRs.
The decline in TDRs occured due to two credit relationships in the
aggregate amount of $1.6 million that had returned to market terms
and been in compliance with their modified terms for more than six
consecutive months.
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
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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, 2019, 2018 and
2017. Classified assets totaled $53.1 million at December 31, 2019,
and included $17.0 million of non-performing loans.
Classification of Loans:
Substandard
Doubtful
Total Classified Assets
Special Mention
At December 31,
2019
2018
2017
(in thousands)
$53,072
$46,792
$48,417
-
523
4,560
$53,072
$47,315
$52,977
$24,083
$26,413
$25,929
The increase in classified assets at December 31, 2019 as compared
to December 31, 2018 was due to a $6.3 million increase in
substandard loans partially offset by a $0.5 million decrease in doubtful
loans. The increase in substandard loans during 2019 was primarily
due to the addition of $8.7 million of purchase impaired loans from
Union. Substandard loans at December 31, 2019 consisted of $19.0
million in non-farm non-residential, $13.5 million in one- to four-family
residential, $7.1 million in multifamily, $5.1 million in agricultural,
$4.6 million in commercial and industrial, $2.3 million in construction
and land development, $1.3 million in farmland, and the remaining
$0.1 million comprised of consumer and other loans. The decrease in
doubtful loans was due to the upgrade of a non-farm non-residential
loan to substandard status. Special mention loans decreased by $2.3
million in 2019 primarily due to the downgrade of syndicated loans
offset by the upgrade of one-to four-family loans from substandard
status.
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.
The allowance for losses was $10.9 million at December 31, 2019 compared
to $10.8 million at December 31, 2018.
87
PERSISTENCE PAYS DIVIDENDS The allowance for losses was $10.9 million at December 31, 2019 compared to $10.8 million at December 31, 2018.
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
$
10,776
$ 9,225
$ 11,114
$
9,415
$ 9,105
At or For the Years Ended December 31,
2019
2018
2017
2016
2015
(dollars in thousands)
Charge-offs:
Real Estate:
Construction and land development
Farmland
1- 4 family
Multifamily
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
Multifamily
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:
-
-
(552)
-
(2,603)
(3,155)
(40)
(879)
(1,190)
(2,109)
(5,264)
-
-
39
-
5
44
-
267
246
513
557
(4,707)
4,860
-
-
(99)
-
(404)
(503)
(300)
(179)
(907)
(1,386)
(1,889)
-
-
(33)
-
(1,291)
(1,324)
(162)
(3,629)
(1,247)
(5,038)
(6,362)
43
-
92
40
85
260
138
30
223
391
651
3
-
90
20
89
202
26
1,642
216
1,884
2,086
197
1,354
-
-
(244)
-
(1,373)
(1,617)
(83)
(579)
(635)
(1,297)
(2,914)
4
-
45
401
16
466
113
146
183
442
908
(559)
-
(410)
(947)
(1,137)
(3,053)
(491)
(79)
(550)
(1,120)
(4,173)
5
-
94
46
5
150
3
315
151
469
619
(5,711)
3,822
(2,006)
(3,554)
3,705
3,864
$ 10,929
$ 10,776
$ 9,225
$ 11,114
$ 9,415
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
0.36%
0.31%
0.72%
43.07%
96.85%
(0.02)%
(0.02)%
0.88%
0.54%
0.50%
0.80%
(1.83)%
61.91%
(14.55)%
149.42%
0.23%
0.21%
1.17%
18.05%
54.14%
0.44%
0.42%
1.12%
37.75%
91.98%
88
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT loan pool during 2019. This pool had a remaining principal balance
of $2.6 million at December 31, 2019.
• First Guaranty charged off $0.8 million on a non-farm non-residential
loan in the second quarter of 2019. This loan had no remaining
principal balance at December 31, 2019. The collateral balance of
$2.2 million was transferred to other real estate owned during the
second quarter of 2019.
• First Guaranty charged off $0.4 million on a one-to four-family
residential loan in the second quarter of 2019. This loan had no
remaining principal balance at December 31, 2019.
• First Guaranty charged off $1.4 million on a non-farm non-residential
loan secured by a hotel in the fourth quarter of 2019. This loan had
no remaining principal balance at December 31, 2019. This loan had
been previously allocated for with a specific reserve of $1.0 million at
September 30, 2019 and December 31, 2018.
• First Guaranty charged off $0.3 million on a non-farm non-residential
loan secured by a hotel in the fourth quarter of 2019. This loan had
a remaining principal balance of $3.7 million at December 31, 2019
with a specific reserve of $1.8 million allocated against it.
• First Guaranty charged off $0.2 million on a commercial and industrial
loan in the fourth quarter of 2019. This loan had no remaining
principal balance at December 31, 2019.
• Smaller loans and overdrawn deposit accounts comprised the
remaining $1.3 million of charge-offs for 2019.
A provision for loan losses of $4.9 million was made during the year
ended December 31, 2019 as compared to $1.4 million for 2018. The
provisions made in 2019 were taken to provide for current loan losses
and to maintain the allowance proportionate to risks inherent in the loan
portfolio. First Guaranty’s loan loss calculation method incorporates risk
factors in the loan portfolio and the composition of the loan portfolio
affects the final allowance calculation. The loan portfolio composition
shifts in 2019 that primarily affected the allocation of the allowance
were the following:
• First Guaranty acquired $184.1 million in loans from the Union
acquisition on November 7, 2019. These loans were subject
to purchase accounting and are not included in the allowance
calculation but are included in the overall allowance to total loan
ratio calculation. Discounts on the acquired Union loans were
approximately $2.4 million at December 31, 2019.
• First Guaranty’s commercial lease portfolio increased by $44.2
million, which increased allocations for this portfolio.
• First Guaranty originated a $25.0 million cash secured loan in the
fourth quarter of 2019. The cash secured loan did not require a
related allowance.
• First Guaranty’s syndicated loan portfolio declined in 2019, which
lowered risk in the portfolio and required less of an allocation in the
commercial and industrial portfolio.
• First Guaranty’s non-farm non-residential loan portfolio declined by
approximately $33.8 million when acquired loans are removed from
total loans.
• First Guaranty’s multifamily loan portfolio declined by $18.9 million,
which required less of an allocation in the multifamily portfolio.
• First Guaranty charged-off $1.4 million on a previously allocated
impaired loan that had a specific reserve of $1.0 million at December
31, 2018 and September 30, 2019.
• First Guaranty continued its growth of one-to four-family loans along
with construction and land development loans. These loan categories
generally require less of a risk allocation as compared to commercial
real estate loans.
Total charge-offs were $5.3 million during the year ended December
31, 2019 as compared to $1.9 million for 2018. Recoveries totaled
$0.6 million for the year ended December 31, 2019 and $2.1 million
during 2018. Comparing the year ended December 31, 2019 to the
year ended December 31, 2018, the increase in the allowance was
primarily attributed to an increase in the provision related to impaired
loans. The primary changes were an increase in the balance associated
with non-farm non-residential loans, consumer and other loans, one-to
four-family loans and farmland loans. In the third quarter of 2019, a
$4.1 million loan secured by a hotel was determined to be impaired. An
allocation of $1.9 million was made against it during the third quarter of
2019. This increase was partially offset by a decrease in the allowance
for multifamily loans, agricultural loans and construction and land
development loans.
The charged-off loan balances for the year ended December 31, 2019
were concentrated in seven loan relationships which totaled $4.1
million, or 78.3%, of the total charged-off amount. The details of the
$5.3 million in charged-off loans were as follows:
• First Guaranty charged off $0.2 million on a commercial and industrial
loan in the first quarter of 2019. This loan had no remaining principal
balance at December 31, 2019.
• First Guaranty charged off $0.7 million on a purchased consumer
89
PERSISTENCE PAYS DIVIDENDS Allocation of Allowance for Loan Losses.
The 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,
2019
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)
2018
Percent of
Allowance to
Total Allowance
for Loan Losses
Percent of Loans in
Each Category to
Total Loans
Real Estate:
Construction and land development
$ 423
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Non-Real Estate:
Agricultural
Commercial and industrial
Consumer and other
Unallocated
50
1,027
1,038
5,277
95
1,909
1,110
3.9%
0.4%
9.4%
9.5%
48.3%
0.9%
17.5%
10.1%
11.3%
1.5%
18.9%
1.6%
40.3%
1.8%
17.5%
7.1%
$ 581
41
911
1,318
4,771
339
1,909
891
5.4%
0.4%
8.5%
12.2%
44.3%
3.1%
17.7%
8.3%
-
-%
-%
15
0.1%
10.1%
1.5%
14.1%
3.5%
47.7%
1.9%
16.4%
4.8%
-%
Total Allowance
$ 10,929
100.0%
100.0%
$10,776
100.0%
100.0%
90
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
At December 31,
2017
2016
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
$ 628
5
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%
(dollars in thousands)
9.8%
2.2%
13.8%
1.4%
46.1%
1.9%
20.0%
4.8%
$ 1,232
19
1,204
591
3,451
74
3,543
972
11.1%
0.2%
10.8%
5.3%
31.0%
0.7%
31.9%
8.7%
8.9%
2.2%
14.2%
1.3%
43.9%
2.5%
20.4%
6.6%
20
0.2%
-%
28
0.3%
-%
Real Estate:
Construction and land development
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Non-Real Estate:
Agricultural
Commercial and industrial
Consumer and other
Unallocated
Total Allowance
$ 9,225
100.0%
100.0%
$ 11,114
100.0%
100.0%
Real Estate:
Construction and land development
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Non-Real Estate:
Agricultural
Commercial and industrial
Consumer and other
Unallocated
Total Allowance
At December 31,
2015
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)
$ 962
54
1,771
557
3,298
16
2,527
230
10.2%
0.6%
18.8%
5.9%
35.0%
0.2%
26.9%
2.4%
-
-%
6.6%
2.1%
15.4%
1.5%
38.3%
3.1%
26.6%
6.4%
-%
$ 9,415
100.0%
100.0%
91
PERSISTENCE PAYS DIVIDENDS
Investment Securities.
Investment securities at December 31, 2019 totaled $427.0 million,
an increase of $21.7 million, or 5.4%, compared to $405.3 million at
December 31, 2018. 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, 2019, the U.S Government and Government agency
securities and municipal bonds qualified as securities available to
collateralize public funds. Securities pledged as collateral totaled
$212.8 million at December 31, 2019 and $289.7 million at December
31, 2018. 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.
2019
At December 31,
2018
(in thousands)
2017
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
$ -
$ -
$ -
$ -
$ 19,490
$ 19,486
16,380
94,561
497
30,297
16,400
16,393
95,369
497
32,153
16,397
146,911
141,389
200,052
195,983
76,310
72,878
91,770
91,485
483
483
32,956
33,901
918
904
500
37,210
1,191
33,680
493
39,569
1,185
33,334
179,546
179,625
48,434
47,422
337,681
340,434
306,012
296,977
383,893
381,535
18,175
5,107
63,297
18,143
5,289
63,385
28,172
5,227
74,927
27,091
5,126
72,623
28,169
5,322
86,630
27,499
5,325
85,733
$ 86,579
$ 86,817
$108,326
$104,840
$120,121
$118,557
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate debt securities
Other 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 $340.4 million at
December 31, 2019, an increase of $43.5 million, or 14.6%, compared
to $297.0 million at December 31, 2018. The increase was primarily due
to the acquired securities from Union of $14.7 million in collateralized
mortgage obligations, $12.6 million in mortgage-backed securities,
$6.9 million in municipal bonds and $2.3 million in U.S. Government
agency securities. The acquisition of securities was partially offset by
called bonds and the sale of securities. First Guaranty had $85.0 million
in U.S. Government agency securities and $1.9 million of corporate
securities called during 2019 due to the decrease in interest rates.
First Guaranty had securities sales of $46.7 million in U.S. Government
agency securities, $13.0 million in mortgage-backed securities, $23.3
million in corporate securities and $8.2 million in municipal securities for
which the proceeds were used to fund loan growth during 2019.
Our held to maturity securities portfolio had an amortized cost of $86.6
million at December 31, 2019, a decrease of $21.7 million, or 20.1%,
compared to $108.3 million at December 31, 2018. The decrease was
primarily due to the call of $10.0 million in U.S. Government agency
securities and the continued amortization of our mortgage-backed
securities.
92
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
The following tables set forth the stated maturities and weighted average yields of our investment securities at December 31, 2019 and 2018.
One Year or Less
Carrying
Value
Weighted
Average
Yield
At December 31, 2019
More than One Year
through Five Years
More than Five Years
through Ten Years
Carrying
Value
Weighted
Average
Yield
Carrying
Value
Weighted
Average
Yield
(in thousands, except for %)
More than Ten Years
Carrying
Value
Weighted
Average
Yield
$ -
-%
$ -
-%
$
-
-%
$
-
-%
Available for sale:
U.S. Treasuries
9,501
2.9%
1,740
4.7%
497
2.3%
U.S. Government Agencies
2,096
1.8%
4,647
2.2%
149
2.0%
Corporate and other debt securities
640
3.4%
24,860
3.1%
68,129
3.6%
Other securities
Municipal bonds
-
-%
-
-
-
-%
1,785
4.1%
9,221
3.8%
9,665
3.8%
11,482
3.5%
Collateralized mortgage obligations
Mortgage-backed securities
-
-
-%
-%
55
2.1%
5,567
2.2%
10,775
2.2%
416
2.0%
1,393
2.2%
177,816
2.5%
Total available for sale securities
$ 4,521
2.9%
$ 39,199
3.1%
$ 84,903
3.5%
$ 211,811 2.6%
Held to maturity:
U.S. Government Agencies
Municipal bonds
Mortgage-backed securities
$ 5,000
1.5%
$ 7,177
2.0%
$
5,998
2.1%
$
-
-%
50
1.6%
150
2.1%
1,498
2.6%
3,409
2.7%
-
-%
-
-%
11,628
2.0%
51,669
2.3%
Total held to maturity securities
$ 5,050
1.5%
$ 7,327
2.0%
$ 19,124
2.1%
$ 55,078 2.4%
At December 31, 2018
One Year or Less
More than One Year
through Five Years
More than Five Years
through Ten Years
Carrying
Value
Weighted
Average
Yield
Carrying
Value
Weighted
Average
Yield
Carrying
Value
Weighted
Average
Yield
More than Ten Years
Carrying
Value
Weighted
Average
Yield
(in thousands, except for %)
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate and other debt securities
Other 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
$ -
$ -
-
-%
-%
555
4.5%
-
-%
$
-
-%
$
-
18,428
2.1%
28,538
3.0%
-
-%
114,053
42,752
-
-%
2.5%
3.5%
-%
2,493
3.0%
7,635
4.0%
17,502
3.2%
-
-
-%
-%
-
-%
237
1.6%
-
-%
966
2.3%
46,219
$ 3,048
3.2%
$ 54,838 2.9%
$ 175,273
2.9%
$ 63,818
3.0%
$
-
8,908
1,033
483
6,271
904
-%
2.9%
5.5%
2.2%
4.7%
2.4%
2.8%
-
-
-
-%
-%
-%
-%
$ 6,998
1.6%
$ 17,174
250
1.9%
-
-%
165
14,146
2.4%
2.6%
2.0%
$
4,000
4,812
60,781
3.2%
2.7%
2.6%
$ 7,248 1.6%
$ 31,485
2.2%
$ 69,593
2.6%
93
PERSISTENCE PAYS DIVIDENDS from Union and fluctuations in existing customer balances. Interest-
bearing demand deposits increased $41.6 million, or 7.0%, to $635.9
million at December 31, 2019. The increase in interest-bearing demand
deposits was primarily concentrated in public funds interest-bearing
demand deposits that seasonally increase during the end of the year
tax collection period. Time deposits increased $75.2 million, or 11.1%,
to $756.0 million at December 31, 2019, primarily due to our local
deposit campaign. Savings deposits increased $25.2 million, or 22.9%,
to $135.2 million at December 31, 2019, primarily due to acquired
deposits from Union.
As we seek to strengthen our net interest margin and improve our
earnings, attracting noninterest-bearing or lower cost 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 and other lower cost deposits.
TOTAL DEPOSITS
In Millions
At December 31, 2019, $9.6 million, or 2.2%, of the securities portfolio
was scheduled to mature in less than one year. Securities, not including
mortgage-backed securities and collateralized mortgage obligations,
with contractual maturity dates over 10 years totaled $26.6 million, or
6.2%, of the total portfolio at December 31, 2019. 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.
At December 31, 2019, 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:
At December 31, 2019
Amortized Cost
Fair Value
(in thousands)
96,966
146,702
18,227
97,036
146,758
18,211
$ 261,895
$
262,005
Freddie Mac
Fannie Mae
Federal Farm Credit Bank
Total
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, 2018 to December
31, 2019, total deposits increased $223.4 million, or 13.7%, to $1.9
billion. Noninterest-bearing demand deposits increased $81.4 million,
or 33.3% to $325.9 million at December 31, 2019. The increase in
noninterest-bearing demand deposits was due to acquired deposits
94
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT The following table sets forth the distribution of deposit accounts, by account type, for the dates indicated.
Total Deposits
2019
2018
2017
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
$ 262,379
15.7%
-% $ 252,531
16.3%
-% $ 244,949
16.7%
Interest-bearing Demand
Savings
Time
Total Deposits
592,113
35.4%
115,682
6.9%
703,685
42.0%
1.8%
0.4%
2.4%
556,528
35.9%
111,134
7.2%
628,457
40.6%
1.5%
0.4%
1.7%
539,399
36.9%
102,779
7.0%
575,666
39.4%
$1,673,859 100.0%
1.7% $ 1,548,650 100.0%
1.3% $ 1,462,793 100.0%
0.9%
Individual and Business Deposits
2019
2018
2017
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
$ 256,099
23.7%
-% $ 246,550
26.7%
-% $ 240,337
28.0%
Interest-bearing Demand
Savings
Time
Total Individual and Business
Deposits
241,290
22.3%
86,972
8.0%
498,521
46.0%
1.4%
0.1%
2.6%
204,405
22.1%
84,844
9.2%
388,623
42.0%
1.1%
0.1%
1.7%
187,439
21.8%
82,442
9.6%
348,656
40.6%
$1,082,882 100.0%
1.5% $ 924,422 100.0%
1.0% $ 858,874 100.0%
0.7%
-%
1.0%
0.2%
1.2%
-%
0.6%
0.1%
1.3%
Public Fund Deposits
2019
2018
2017
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
$ 6,280
1.1%
-% $
5,981
1.0%
-% $
4,612
0.8%
Interest-bearing Demand
Savings
Time
350,823
59.3%
28,710
4.9%
205,164
34.7%
2.0%
1.6%
2.1%
352,123
56.4%
26,290
4.2%
239,834
38.4%
1.8%
1.4%
1.7%
351,960
58.3%
20,337
3.4%
227,010
37.5%
-%
1.2%
0.8%
1.1%
Total Public Fund Deposits
$ 590,977 100.0%
1.9% $ 624,228 100.0%
1.7% $ 603,919 100.0%
1.2%
At December 31, 2019, public funds deposits totaled $610.7 million
compared to $645.5 million at December 31, 2018. Public funds time
deposits totaled $146.4 million at December 31, 2019 compared to
$247.0 million at December 31, 2018. 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.
$463.7 million, or 76%, of these accounts at December 31, 2019,
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 33% of public funds 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. In addition to seasonal
fluctuations, there are monthly fluctuations associated with internal
payroll and short-term tax collection accounts for our public funds
deposit accounts. Public funds deposit accounts are collateralized
by FHLB letters of credit, by expanded reciprocal deposit insurance
programs, by Louisiana municipal bonds and by eligible government
and government agency securities such as those issued by the FHLB,
FFCB, Fannie Mae, and Freddie Mac.
95
PERSISTENCE PAYS DIVIDENDS The following table sets forth 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,
2019
2018
2017
(in thousands except for %)
$
9,944
$
6,930
$
4,828
424,732
29,570
146,420
364,692
26,903
247,004
389,788
20,539
225,591
$ 610,666
$ 645,529
$ 640,746
$1,853,013
$1,629,622
$1,549,286
Total Public Funds as a percent of Total Deposits
33.0%
39.6%
41.4%
At December 31, 2019, the aggregate amount of outstanding
certificates of deposit in amounts greater than or equal to $100,000 was
approximately $524.5 million. At December 31, 2019, approximately
$297.6 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, 2019.
The following table sets forth information concerning balances and
interest rates on our short-term borrowings at the dates and for the
years indicated.
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
December 31,
2019
(in thousands)
$ 226,971
120,554
177,001
$ 524,526
Balance at end of year
Maximum month-end
outstanding
Average daily outstanding
Total weighted average rate
during the year
Weighted average rate
at the end of the year
At or For the Years Ended
December 31,
2019
2018
2017
(in thousands, except for %)
$19,919
$
-
$15,500
$19,919
$ 3,320
$37,000
$ 7,119
$28,000
$ 5,833
2.00%
2.21%
1.06%
2.00%
-%
1.51%
Borrowings.
First Guaranty maintains borrowing relationships with other financial
institutions as well as the Federal Home Loan Bank on a short and
long-term basis to meet liquidity needs. First Guaranty had $19.9
million in short-term borrowings outstanding at December 31, 2019
compared to none outstanding at December 31, 2018. The short-term
borrowings at December 31, 2019 were comprised of Federal Home
Loan Bank advances of $13.1 million and repurchase agreements of
$6.8 million. First Guaranty has a line of credit for $6.5 million, with no
outstanding balance at December 31, 2019. The Federal Home Loan
Bank advances and repurchase agreements were assumed as a result
of the Union acquisition in November 2019.
At December 31, 2019, we had $355.2 million in FHLB letters of credit
outstanding obtained primarily for collateralizing public deposits.
First Guaranty Bancshares had senior long-term debt totaling $48.6
million at December 31, 2019 and $19.8 million at December 31,
2018. The increase in long-term debt was due to a new $32.5 million
term loan obtained in November 2019 to partially finance the Union
acquisition.
First Guaranty also had junior subordinated debentures totaling $14.7
million at December 31, 2019 and December 31, 2018.
Shareholders’ Equity.
Total shareholders' equity increased to $166.0 million at December
31, 2019 from $147.3 million at December 31, 2018. The increase in
shareholders' equity was principally the result of an increase of $9.3
million in accumulated other comprehensive income, an increase of
$8.3 million in retained earnings and an increase of $1.0 million in
surplus. The increase in accumulated other comprehensive income
was primarily attributed to the decrease in unrealized losses on
available for sale securities during the year ended December 31, 2019.
The $8.3 million increase in retained earnings was due to net income
of $14.2 million during the year ended December 31, 2019, partially
offset by $5.8 million in cash dividends paid on shares of our common
stock. The $1.0 million increase in surplus was due to common stock
issued in a private placement.
96
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT TOTAL COMMON SHAREHOLDERS' EQUITY
In Millions
credit quality of the loan portfolio. The increase in interest expense was
due to the rising interest rate environment and increased competition.
The decrease in noninterest income was primarily the result of an
increase in securities losses. Losses on the sale of securities were $1.8
million for the year ended December 31, 2018 compared to gains of
$1.4 million for 2017. First Guaranty also had a decrease in income
tax expense of $3.9 million resulting from the decrease in the federal
corporate tax rate as a result of the Tax Cuts and Jobs Act. Earnings
per common share for the year ended December 31, 2018 was $1.47
per common share, an increase of 21.5% or $0.26 per common share
from $1.21 per common share for the year ended December 31,
2017 (as adjusted for the 10% stock dividend in December 2019).
The increase in earnings per share was caused by the increase in net
TOTAL NET INCOME
In Millions
Results of Operations
Performance Summary
Year ended December 31, 2019 compared with year ended December
31, 2018. Net income for the year ended December 31, 2019 was
$14.2 million, an increase of $28,000, or 0.2%, as compared to the year
ended December 31, 2018. The increase in net income of $28,000 for
the year ended December 31, 2019 was the result of several factors.
First Guaranty experienced an increase in interest income associated
with loans and increased noninterest income, partially offset by an
increase in the provision for loan losses, increased interest expense and
increased noninterest expense. Loan interest income increased due to
the continued growth in First Guaranty's loan portfolio, an increase in
the average yield on loans and due to the acquired loans from the Union
acquisition. Noninterest income increased primarily as a result of gains
on the sale of the guaranteed portion of SBA and USDA loans and an
increase in securities gains. Factors that partially offset this increase in
income include increased interest expense and noninterest expense.
The increase in interest expense was due to the rising interest rate
environment, increased competition and due to the acquired deposits
from the Union acquisition. Noninterest expense increased primarily
due to expenses associated with the Union acquisition that included
approximately $0.3 million in one-time merger related expenses, as
well as expenses associated with additional compensation, occupancy
and other operating expenses for the branch offices acquired in the
Union acquisition. The provision for loan losses increased to provide
for current loan losses and to maintain the allowance proprtionate to
risks inherent in the loan portfolio. Earnings per common share for
the years ended December 31, 2019 and December 31, 2018 was
$1.47 per common share (as adjusted for the 10% stock dividend in
December 2019).
Year ended December 31, 2018 compared with year ended December
31, 2017. Net income for the year ended December 31, 2018 was
$14.2 million, an increase of $2.5 million, or 21.0%, from $11.8
million for the year ended December 31, 2017. The increase in net
income of $2.5 million for the year ended December 31, 2018 was the
result of several factors. First Guaranty experienced increased interest
income associated with loans along with a decrease in the provision for
loan losses, partially offset by increased loan interest and noninterest
expense and decreased noninterest income. The decrease in the
provision for loan losses for the year ended December 31, 2018 was
attributed to the aforementioned recovery associated with the payoff
of the nonaccrual oil and gas credit along with improvement of overall
income.
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.
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, 2019 compared with year ended December
31, 2018. Net interest income for the years ended December 31,
2019 and 2018 was $61.7 million and $57.0 million, respectively. The
increase in net interest income for the year ended December 31, 2019
as compared to the prior year 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
97
PERSISTENCE PAYS DIVIDENDS 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. For the year ended December 31, 2019, the average
balance of our total interest-earning assets increased by $136.3 million
to $1.8 billion, and the average yield of our interest-earning assets
increased by 38 basis points to 5.06% from 4.68% for the year ended
December 31, 2018. For the year ended December 31, 2019, the
average balance of our total interest-bearing liabilities increased by
$117.0 million to $1.5 billion, and the average rate of our total interest-
bearing liabilities increased by 46 basis points to 2.06% from 1.60%
for the year ended December 31, 2018. As a result, our net interest
rate spread decreased eight basis points to 3.00% for the year ended
December 31, 2019 from 3.08% for the years ended December 31,
2018. Our net interest margin remained stable at 3.41% for the year
ended December 31, 2019 and 2018
December 31, 2018 due to the rising interest rate environment for the
majority of 2019.
Interest income on loans increased $14.1 million, or 21.7%, to $78.9
million for the year ended December 31, 2019 as a result of an increase
in the average balance of loans along with an increase in the average
yield on loans. The average balance of loans (excluding loans held for
sale) increased by $148.1 million to $1.3 billion for the year ended
December 31, 2019 from $1.2 billion for the year ended December
31, 2018 as a result of new loan originations, purchased loans and
loans acquired from the Union acquisition. The average yield on loans
(excluding loans held for sale) increased by 44 basis points to 5.99%
for the year ended December 31, 2019 from 5.55% for the year ended
December 31, 2018 as a result of the rising interest rate environment
for the majority of 2019.
Year ended December 31, 2018 compared with year ended December
31, 2017. Interest income increased $10.8 million, or 16.1%, to $78.4
million for the year ended December 31, 2018 as compared to the
prior year. First Guaranty continues to transition assets from lower
yielding securities to higher yielding loans in order to increase interest
income. The increase in interest income resulted primarily from an
increase in the average balance of our total interest-earning assets
principally as a result of the Premier acquisition along with an increase
in the average yield of interest-earning assets. The average balance of
our interest-earning assets increased $79.4 million to $1.7 billion for
the year ended December 31, 2018 as compared to the prior year. The
average yield of interest-earning assets increased by 45 basis points to
4.68% for the year ended December 31, 2018 compared to 4.23% for
the year ended December 31, 2017.
Interest income on securities decreased $0.4 million to $12.9 million
for the year ended December 31, 2018 primarily as a result of a
decrease in the average balance of securities. The average balance of
securities decreased $46.3 million to $465.4 million for the year ended
December 31, 2018 from $511.7 million for the year ended December
31, 2017 due to a decrease in the average balance of our agency and
corporate securities as a result of securities sales. The average yield on
securities increased by 18 basis points to 2.78% for the year ended
December 31, 2018 from 2.60% for the year ended December 31,
2017 due to the rising interest rate environment.
Interest income on loans increased $10.8 million, or 20.0%, to $64.8
million for the year ended December 31, 2018 as a result of an
increase in the average balance of loans along with an increase in
the average yield on loans. The average balance of loans (excluding
loans held for sale) increased by $110.9 million to $1.2 billion for the
year ended December 31, 2018 from $1.1 billion for the year ended
December 31, 2017 as a result of new loan originations, purchased
loans and loans acquired 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) increased by 44
basis points to 5.55% for the year ended December 31, 2018 from
5.11% for the year ended December 31, 2017 as a result of the rising
interest rate environment.
Year ended December 31, 2018 compared with year ended December
31, 2017. Net interest income for the year ended December 31, 2018
and 2017 was $57.0 million and $53.2 million, respectively. The
increase in net interest income for the year ended December 31, 2018
as compared to the prior year 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. For the year ended December 31, 2018, the average
balance of our total interest-earning assets increased by $79.4 million
to $1.7 billion, and the average yield of our interest-earning assets
increased by 45 basis points to 4.68% from 4.23% for the year ended
December 31, 2017. For the year ended December 31, 2018, the
average balance of our total interest-bearing liabilities increased by
$76.2 million to $1.3 billion, and the average rate of our total interest-
bearing liabilities increased by 46 basis points to 1.60% from 1.14%
for the year ended December 31, 2017. As a result, our net interest
rate spread decreased one basis point to 3.08% for the year ended
December 31, 2018 from 3.09% for the year ended December 31,
2017. Our net interest margin increased eight basis points to 3.41%
for the year ended December 31, 2018 from 3.33% for the year ended
December 31, 2017.
Interest Income
Year ended December 31, 2019 compared with year ended December
31, 2018. Interest income increased $13.3 million, or 16.9%, to $91.6
million for the year ended December 31, 2019 as compared to the prior
year. First Guaranty continues to transition assets from lower yielding
securities and interest-earning bank balances to higher yielding loans
in order to increase interest income. The increase in interest income
resulted primarily from an increase in the average balance of our total
interest-earning assets principally as a result of the Union acquisition
along with an increase in the average yield of interest-earning assets.
The average balance of our interest-earning assets increased $136.3
million to $1.8 billion for the year ended December 31, 2019 as
compared to the prior year. The average yield of interest-earning assets
increased by 38 basis points to 5.06% for the year ended December
31, 2019 compared to 4.68% for the year ended December 31, 2018.
Interest income on securities decreased $3.1 million to $9.8 million
for the year ended December 31, 2019 as compared to the prior year
primarily as a result of a decrease in the average balance of securities.
The average balance of securities decreased $116.2 million to $349.2
million for the year ended December 31, 2019 from $465.4 million for
the year ended December 31, 2018 due to a decrease in the average
balance of our agency, mortgage-backed, corporate and municipal
securities as a result of securities sales, calls and maturities. The
average yield on securities increased by three basis points to 2.81%
for the year ended December 31, 2019 from 2.78% for the year ended
98
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Interest Expense
Year ended December 31, 2019 compared with year ended December
31, 2018. Interest expense increased $8.6 million, or 40.3%, to $30.0
million for the year ended December 31, 2019 from $21.4 million for
the year ended December 31, 2018 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 $115.4 million
during the year ended December 31, 2019 to $1.4 billion as a result
of a $75.2 million increase in the average balance of time deposits,
a $35.6 million increase in the average balance of interest-bearing
demand deposits and a $4.5 million increase in the average balance of
savings deposits. The average rate of interest-bearing demand deposits
increased by 23 basis points during the year ended December 31,
2019 to 1.76% as compared to the prior year. The increase in the
average rate on interest-bearing demand deposits was due to those
deposits, primarily public funds 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.
The average rate of time deposits increased 74 basis points during
the year ended December 31, 2019 to 2.44% as compared to the
prior year. The increase in the average rate and average balance of
time deposits was due to changes in market rates and the initiation
of a deposit campaign by First Guaranty in order to fund future loan
growth and diversify the deposit portfolio. First Guaranty initiated a
deposit campaign in 2018 to grow time deposits generally with terms
greater than two years. This strategy is designed to fund loan growth
and increase long term funding for the Bank.
Year ended December 31, 2018 compared with year ended December
31, 2017. Interest expense increased $7.0 million, or 48.4%, to $21.4
million for the year ended December 31, 2018 from $14.4 million for
the year ended December 31, 2017 due primarily to an increase in the
average balance of interest-bearing deposits principally as a result of
the Premier acquisition along with an increase in the average rate paid
on interest-bearing deposits. The average balance of interest-bearing
deposits increased by $78.3 million during the year ended December
31, 2018 to $1.3 billion as a result of a $52.8 million increase in the
average balance of time deposits, a $17.1 million increase in the
average balance of interest-bearing demand deposits and a $8.4 million
increase in the average balance of savings deposits. The average rate of
interest-bearing demand deposits increased by 51 basis points during
the year ended December 31, 2018 to 1.53% as compared to the
prior year. The increase in the average rate on interest-bearing demand
deposits was due to those deposits, primarily public funds 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 which have increased over the last year. The
increase in the average rate on time deposits was due to changes in
market rates and the initiation of a deposit campaign by First Guaranty
in order to fund future loan growth and diversify the deposit portfolio.
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.
99
PERSISTENCE PAYS DIVIDENDS December 31, 2019
December 31, 2018
December 31, 2017
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
Yield/
Rate
(in thousands, except for %)
$ 144,298 $ 2,956
9,800
1
24
78,862
91,643
349,247
592
324
1,315,524
1,809,985
2.05%
2.81%
0.25%
7.41%
5.99%
5.06%
$ 39,005 $
465,399
531
1,330
1,167,458
1,673,723
612
12,941
1
84
64,752
78,390
1.57%
2.78%
0.23%
6.32%
5.55%
4.68%
$
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%
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
Noninterest-earning assets:
Cash and due from banks
Premises and equipment, net
Other assets
Total assets
11,951
45,037
15,256
$1,882,229
10,013
38,502
13,805
$1,736,043
10,147
31,885
9,536
$1,645,938
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
$ 592,113
115,682
703,685
40,766
1,452,246
10,447
527
17,141
1,851
29,966
1.76%
0.46%
2.44%
4.54%
2.06%
$ 556,528
111,134
628,457
39,150
1,335,269
8,531
407
10,690
1,738
21,366
1.53%
0.37%
1.70%
4.44%
1.60%
$ 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%
262,379
9,204
1,723,829
158,400
$1,882,229
$ 357,739
252,531
5,870
1,593,670
142,373
$1,736,043
244,949
5,138
1,509,121
136,817
$1,645,938
$61,677
$57,024
$53,153
3.00%
3.41%
$ 338,454
3.08%
3.41%
$ 335,336
3.09%
3.33%
124.63%
125.35%
126.64%
(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 3.42%, 3.42% and 3.36% for the years ended December 31, 2019, 2018 and 2017. A 21% tax rate was used to
calculate the effect on securities income from tax exempt securities for the years ended December 31, 2019 and 2018. A 35% tax rate was used to calculate
the effect on securities income from tax exempt securities for year ended December 31, 2017, respectively.
10 0
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
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, 2019 vs. 2018
For the Years Ended
December 31, 2018 vs. 2017
Increase (Decrease) Due To
Increase (Decrease) Due To
Volume
Rate
Increase/
Decrease
Volume
Rate
Increase/
Decrease
(in thousands, except, for %)
Interest earned on:
Interest-earning deposits with banks
$ 2,105
$ 239
$ 2,344
$ 157
$
Securities (including FHLB stock)
Federal funds sold
Loans held for sale
Loans, net of unearned income
Total interest income
Interest paid on:
Demand deposits
Savings deposits
Time deposits
Borrowings
(3,259)
-
(72)
8,618
7,392
570
18
1,400
73
118
-
12
5,492
5,861
1,346
102
5,051
40
Total interest expense
2,061
6,539
(3,141)
(1,255)
-
(60)
(3)
6
277
871
(5)
9
$ 434
(384)
(8)
15
14,110
13,253
5,934
4,839
4,853
6,005
10,787
10,844
1,916
120
6,451
113
8,600
180
17
700
(79)
818
2,825
189
2,878
263
6,155
3,005
206
3,578
184
6,973
Change in net interest income
$ 5,331
$ (678)
$ 4,653
$ 4,021
$ (150)
$ 3,871
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 $4.9 million provision for loan losses for the year ended
December 31, 2019 compared to $1.4 million for 2018. The allowance
for loan losses at December 31, 2019 was $10.9 million or 0.72%
of total loans, compared to $10.8 million or 0.88% of total loans at
December 31, 2018. The increase in the provision was attributed to
additional provisions on loans evaluated individually for impairment.
First Guaranty also received a $3.6 million negotiated payment in
settlement of a commercial and industrial non-accrual loan on May 9,
2018. The payment resulted in a recovery of $1.6 million. The recovery
impacted the allowance for loan losses and the end result was a negative
provision for loan losses in the second quarter of 2018. The increase in
the provision was also attributable to the increase in the balance of the
loan portfolio and charge-offs not previously provided for. Substandard
loans increased $6.3 million to $53.1 million at December 31, 2019
from $46.8 million at December 31, 2018. Doubtful loans decreased
$0.5 million to $0 at December 31, 2019 from $0.5 million at December
31, 2018. 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, 2018, the provision for loan losses
was $1.4 million compared to $3.8 million for 2017. The allowance for
loan losses at December 31, 2018 was $10.8 million or 0.88% of total
loans, compared to $9.2 million or 0.80% of total loans at December
31, 2017. The decrease in the provision was attributed to improvement
in credit quality of the loan portfolio. First Guaranty also received a
$3.6 million negotiated payment in settlement of a commercial and
industrial non-accrual loan on May 9, 2018. The payment resulted in a
recovery of $1.6 million. The recovery impacted the allowance for loan
losses and the end result was a negative provision for loan losses in the
second quarter of 2018. Substandard loans decreased $1.6 million to
$46.8 million at December 31, 2018 from $48.4 million at December
31, 2017. Doubtful loans decreased $4.0 million to $0.5 million at
December 31, 2018 from $4.6 million at December 31, 2017. The
allowance for loan losses as a percentage of total loans was 0.95%
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.
101
PERSISTENCE PAYS DIVIDENDS
Noninterest Income
Our primary sources of recurring noninterest income are customer
service fees, ATM and debit card 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.
Noninterest income totaled $8.3 million for the year ended December
31, 2019, an increase of $3.0 million from $5.3 million for the year ended
December 31, 2018. The increase was primarily due to increased
gains on the sale of the guaranteed portion of SBA and USDA loans
along with lower losses on the sale of securities. Net securities losses
were $0.2 million for the year ended December 31, 2019 as compared
to net securities losses of $1.8 million for 2018. The losses on securities
sales occurred as First Guaranty sold investment securities in order to
fund loan growth. Service charges, commissions and fees totaled $2.8
million for the year ended December 31, 2019 as compared to $3.0
million for 2018. ATM and debit card fees totaled $2.3 million for the
year ended December 31, 2019 and $2.1 million for 2018. Net gains
on the sale of loans were $1.4 million for the year ended December
31, 2019 and $0.3 million for 2018. Other noninterest income totaled
$2.0 million and $1.7 million for the years ended December 31, 2019
and 2018, respectively.
Noninterest income totaled $5.3 million for the year ended December
31, 2018, a decrease of $3.1 million from $8.3 million for the year
ended December 31, 2017. The decrease was primarily due to lower
gains on securities sales. Net securities losses were $1.8 million for
the year ended December 31, 2018 as compared to net securities
gains of $1.4 million for 2017. The gains and losses on securities
sales occurred as First Guaranty sold investment securities in order to
fund loan growth. Service charges, commissions and fees totaled $3.0
million for the year ended December 31, 2018 as compared to $2.6
million for 2017. ATM and debit card fees totaled $2.1 million for the
year ended December 31, 2018 and $2.0 million for 2017. Net gains
on the sale of loans were $0.3 million for the year ended December
31, 2018 and $0.3 million for 2017. Other noninterest income totaled
$1.7 million and $2.1 million for the years ended December 31, 2018
and 2017, respectively.
Noninterest Expense
Noninterest expense
includes salaries and employee benefits,
occupancy and equipment expense and other types of expenses.
Noninterest expense totaled $47.2 million for the year ended December
31, 2019 and $43.3 million for the year ended December 31, 2018.
Salaries and benefits expense totaled $25.0 million for the year ended
December 31, 2019 and $22.9 million for the year ended December
31, 2018. The increase in salaries and benefits expense was primarily
due to the increase in personnel expense from the Union acquisition
and new hires. Occupancy and equipment expense increased to $6.1
million for the year ended December 31, 2019 from $5.6 million for
the year ended December 31, 2018 due to the new offices acquired in
the Union acquistion. Other noninterest expense totaled $16.1 million
for the year ended December 31, 2019 and $14.8 million for 2018.
Noninterest expense totaled $43.3 million for the year ended December
31, 2018 and $38.5 million for the year ended December 31, 2017.
Salaries and benefits expense totaled $22.9 million for the year ended
December 31, 2018 and $20.1 million for the year ended December
31, 2017. The increase in salaries and benefits was primarily due to
the increase in personnel expense from the Premier acquisition and
new hires. Occupancy and equipment expense totaled $5.6 million
for the year ended December 31, 2018 and $4.5 million for the year
ended December 31, 2017. Other noninterest expense totaled $14.8
million for the year ended December 31, 2018 and $13.9 million for
2017. Legal and professional fees totaled $2.4 million for the year
ended December 31, 2018, a decrease of $0.7 million from $3.0
million for the year ended December 31, 2017. The reduction was due
to the non-recurring expenses included in the year ended December
31, 2017 related to the acquisition of Premier.
The following table presents, for the years indicated, the major categories 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
Total other expense
102
December 31, 2019
December 31, 2018
December 31, 2017
(in thousands)
$ 2,648
$ 2,362
1,972
1,217
1,456
1,094
674
1,308
908
193
390
603
422
683
1,692
1,214
1,329
1,066
562
1,119
978
208
545
380
186
941
$ 3,049
1,608
1,161
1,205
970
496
923
910
167
432
322
306
726
2,536
$16,104
2,204
$14,786
1,628
$13,903
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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, 2019, 2018 and 2017 was $3.7 million,
$3.5 million and $7.4 million, respectively. The provision for income
taxes in 2019 increased as compared to 2018 due to the increase
in income before income taxes. 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 required that the impact of the Tax Act must be accounted for
in the period of enactment of the new law. First Guaranty's statutory
tax rate was 21.0% for the years ended December 31, 2019 and
2018, which was a decrease of 14 basis points from the year ended
December 31, 2017 rate of 35.0%.
Impact of Inflation
Our consolidated financial statements and related notes included
elsewhere in this Annual Report 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, 2019 totaled
$310.5 million. At December 31, 2019, time deposits maturing
within one year or less totaled $300.6 million. First Guaranty's held to
maturity ("HTM") investment securities portfolio at December 31, 2019
was $86.6 million or 20.3% of the investment portfolio compared to
$108.3 million or 26.7% at December 31, 2018. 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, 2019.
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 4.2 years based on current interest rates at December
31, 2019. 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 $340.4 million, or 79.7% of
the investment portfolio at December 31, 2019 compared to $297.0
million, or 73.3% at December 31, 2018. 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.
We maintained a net borrowing capacity at the FHLB totaling $170.3
million and $108.6 million at December 31, 2019 and December
31, 2018, respectively with $15.8 million and $0 in FHLB advances
outstanding at December 31, 2019 and December 31, 2018,
respectively. At December 31, 2019, we had outstanding letters
of credit from the FHLB in the amount of $355.2 million that were
primarily used to collateralize public funds deposits. We also have a
discount window line with the Federal Reserve Bank. We also maintain
federal funds lines of credit at various correspondent banks with
borrowing capacity of $100.5 million at December 31, 2019. We have
a revolving line of credit for $6.5 million, with no outstanding balance
at December 31, 2019 secured by a pledge of the Bank's common
stock. Management believes there is sufficient liquidity to satisfy
current operating needs
Capital Resources
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 $166.0 million at December
31, 2019 from $147.3 million at December 31, 2018. The increase in
shareholders' equity was principally the result of an increase of $9.3
million in accumulated other comprehensive income, an increase of
$8.3 million in retained earnings and an increase of $1.0 million in
surplus. The increase in accumulated other comprehensive income
was primarily attributed to the decrease in unrealized losses on
available for sale securities during the year ended December 31,
2019. The $8.3 million increase in retained earnings was due to net
income of $14.2 million during the year ended December 31, 2019,
partially offset by $5.8 million in cash dividends paid on our common
stock. The $1.0 million increase in surplus was due to the issuance of
common stock in a private placement.
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, 2019, First Guaranty Bank was classified as well-
capitalized. First Guaranty Bank's capital conservation buffer was
4.58% at December 31, 2019.
103
PERSISTENCE PAYS DIVIDENDS The following table presents First Guaranty Bank's capital ratios as of the indicated dates.
"Well Capitalized
Minimums"
At December 31, 2019
"Well Capitalized
Minimums"
At December 31, 2018
Tier 1 Leverage Ratio
5.00%
Tier 1 Risk-based Capital Ratio
Total Risk-based Capital Ratio
Common Equity Tier One Capital
8.00%
10.00%
6.50%
10.44%
11.96%
12.61%
11.96%
5.00%
8.00%
10.00%
6.50%
9.79%
12.20%
12.97%
12.20%
Off-balance sheet commitments
We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers
and to reduce our own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby
and commercial letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount
recognized in our consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of the involvement in
particular classes of financial instruments.
The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and
standby and commercial letters of credit is represented by the contractual notional amount of those instruments. The same credit policies are used
in making commitments and conditional obligations as we do for on-balance sheet instruments. Unless otherwise noted, collateral or other security
is not required to support financial instruments with credit risk.
The notional amounts of the financial instruments with off-balance sheet risk at December 31, 2019, 2018 and 2017 are as follows:
Contract Amount
December 31, 2019
December 31, 2018
December 31, 2017
Commitments to Extend Credit
Unfunded Commitments under lines of credit
Commercial and Standby letters of credit
$ 117,826
$ 148,127
$ 11,258
(in thousands)
$ 108,348
$ 122,212
$ 6,912
$ 78,125
$ 101,344
$ 7,886
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
(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, 2019, 2018 and 2017.
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, 2019, the largest concentrations of unfunded
commitments were lines of credit associated with construction and
land development loans and commercial and industrial loans.
104
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Contractual Obligations
The following table summarizes our fixed and determinable contractual obligations and other funding needs by payment date at December 31,
2019. 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, 2019
Operating leases
Software contracts
Time deposits
Short-term advances from
Federal Home Loan Bank
Repurchase agreements
Long-term advances from
Federal Home Loan Bank
Senior long-term debt
Junior subordinated debentures
Total contractual obligations
Less Than One Year
One to Three Years
Over Three Years
Total
(in thousands)
$ 147
$ 241
$ 46
$ 434
1,484
344,758
13,079
-
-
19,349
-
2,276
167,902
-
6,840
-
6,500
-
1,678
243,367
-
-
3,533
22,750
15,000
5,438
756,027
13,079
6,840
3,533
48,599
15,000
$ 378,817
$ 183,759
$ 286,374
$ 848,950
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, 2019 illustrated below reflects a liability-sensitive
position with a negative cumulative gap on a one-year basis.
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.
105
PERSISTENCE PAYS DIVIDENDS December 31, 2019
Interest Sensitivity Within
Over 3
Months
thru 12
Months
3 Months
Or Less
Total One
Year
Over One
Year
Total
(in thousands)
$ 443,900
$ 172,007
$ 615,907
$ 909,583
$ 1,525,490
4,027
914
47,820
8,851
-
-
12,878
914
47,820
417,443
-
-
430,321
914
47,820
$ 496,661
$ 180,858
$ 677,519
$ 1,327,026
$ 2,004,545
$ 635,942
$ -
$ 635,942
$ -
$ 635,942
135,156
73,427
13,079
48,558
-
-
-
227,170
-
-
-
-
135,156
300,597
13,079
48,558
-
-
-
455,430
6,085
3,533
14,737
391,428
135,156
756,027
19,164
52,091
14,737
391,428
$ 906,162
$ 227,170
$ 1,133,332
$ 871,213
$ 2,004,545
$ (409,501)
$ (46,312)
$ (455,813)
$ 455,813
$ (409,501)
$ (455,813)
$ (455,813)
$ -
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
(20.4)%
(22.7)%
(22.7)%
106
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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 27.8% in 2018 to 19.3% in 2019. 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.
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, 2019. 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, 2019
Instantaneous Changes in Interest
Rates (basis points)
Percent Change in Net Interest
Income
+400
+300
+200
+100
Base
-100
(0.71)%
(0.41)%
(0.13)%
(0.21)%
-%
2.87%
Gradual Changes in Interest Rates
(basis points)
Percent Change in Net Interest
Income
+400
+300
+200
+100
Base
-100
(2.45)%
(1.77)%
(1.15)%
(0.4)%
-%
1.14%
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
107
PERSISTENCE PAYS DIVIDENDS Report of Independent Registered Public 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 (First Guaranty)
as of December 31, 2019 and 2018, 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, 2019, and the related notes (collectively referred to as
the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated
financial position of First Guaranty as of December 31, 2019 and 2018, and the consolidated results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 2019, in conformity with accounting principles generally accepted in
the United States of America.
Basis for Opinion
These financial statements are the responsibility of First Guaranty's management. Our responsibility is to express an opinion on First
Guaranty's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board ("PCAOB") and are required to be independent with respect to First Guaranty 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.
First Guaranty is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of
our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing
an opinion on the effectiveness of First Guaranty's internal control over financial reporting. Accordingly, we express no such opinion.
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, 2020
108
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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 $86,817 and $104,840, 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 advances from Federal Home Loan Bank
Repurchase agreements
Accrued interest payable
Long-term advances from Federal Home Loan Bank
Senior long-term debt
Junior subordinated debentures
Other liabilities
Total Liabilities
Shareholders' Equity
Common stock:1
$1 par value - authorized 100,600,000 shares; issued 9,741,253 and 9,687,123 shares
Surplus
Retained earnings
Accumulated other comprehensive income (loss)
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity
See Notes to the Consolidated Financial Statements.
December 31, 2019
December 31, 2018
(in thousands, except share data)
$ 66,511
914
67,425
$ 127,416
549
127,965
340,434
86,579
427,013
3,308
-
1,525,490
10,929
1,514,561
296,977
108,326
405,303
2,393
344
1,225,268
10,776
1,214,492
56,464
12,942
7,166
4,879
8,412
15,046
$ 2,117,216
39,695
3,472
3,528
1,138
6,716
12,165
$ 1,817,211
$ 325,888
635,942
135,156
756,027
1,853,013
$ 244,516
594,359
109,958
680,789
1,629,622
13,079
6,840
6,047
3,533
48,558
14,737
5,374
1,951,181
-
-
3,952
-
19,838
14,700
1,815
1,669,927
9,741
110,836
43,283
2,175
166,035
$ 2,117,216
9,687
109,788
34,947
(7,138)
147,284
$ 1,817,211
1All share and per share amounts have been restated to reflect the ten percent stock dividend paid December 16, 2019 to shareholders of
record as of December 9, 2019.
109
PERSISTENCE PAYS DIVIDENDS FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
2018
2019
2017
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 (losses) 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
Per Common Share1:
Earnings
Cash dividends paid
(in thousands, except share data)
$ 78,886
2,956
9,800
1
91,643
10,447
527
17,141
1,851
29,966
61,677
4,860
56,817
2,808
2,254
(157)
1,376
2,018
8,299
25,019
6,096
16,104
47,219
17,897
3,656
$ 14,241
$ 64,836
612
12,941
1
78,390
$ 54,034
178
13,325
9
67,546
8,531
407
10,690
1,738
21,366
57,024
1,354
55,670
2,988
2,122
(1,830)
278
1,722
5,280
22,888
5,601
14,786
43,275
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
17,675
3,462
$ 14,213
19,150
7,399
$ 11,751
$ 1.47
$ 0.60
$
$
1.47
0.58
$
$
1.21
0.54
Weighted Average Common Shares Outstanding
9,695,131
9,687,123
9,687,123
See Notes to Consolidated Financial Statements
1All share and per share amounts have been restated to reflect the ten percent stock dividend paid December 16, 2019
to shareholders of record as of December 9, 2019.
110
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years Ended December 31,
2018
2017
2019
Net Income
Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period
Reclassification adjustments for gains (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)
$ 14,241
$ 14,213
$ 11,751
11,435
353
11,788
(2,475)
9,313
(8,508)
1,830
(6,678)
1,402
(5,276)
5,098
(1,397)
3,701
(1,258)
2,443
$ 23,554
$ 8,937
$ 14,194
FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
December 31, 2016(1)
Net income
Common
Stock
$1 Par
Surplus
Retained
Earnings
Accumulated
Other
Comprehensive
Income/(Loss)
Total
(in thousands, except share data)
$ 9,205
-
$ 97,649
-
$21,494
11,751
$ (3,999) $ 124,349
11,751
-
Common stock issued in acquisition, 481,488 shares(1)
482
12,139
(1,971)
Other comprehensive income
Cash dividends on common stock ($0.54 per share)(1)
Balance December 31, 2017
Reclassification of stranded tax effects in accumulated
other comprehensive income(2)
Net income
Other comprehensive income (loss)
Cash dividends on common stock ($0.58 per share)(1)
Balance December 31, 2018
Net income
-
-
$ 9,687
-
-
-
-
$ 9,687
-
-
-
$109,788
-
-
-
-
$109,788
-
-
(5,210)
$26,064
306
14,213
-
(5,636)
$34,947
14,241
-
2,443
-
10,650
2,443
(5,210)
$ (1,556) $ 143,983
(306 )
-
(5,276 )
-
-
14,213
(5,276)
(5,636)
$ (7,138) $ 147,284
14,241
-
Common stock issued in private placement, 54,130 shares
54
1,048
(102)
Other comprehensive income
Cash dividends on common stock ($0.60 per share)
Balance December 31, 2019
-
-
$ 9,741
-
-
$ 110,836
-
(5,803)
$ 43,283
-
9,313
-
$ 2,175
1,000
9,313
(5,803)
$ 166,035
See Notes to Consolidated Financial Statements
(1) All share and per share amounts reflect the ten percent stock dividend paid December 16, 2019 to shareholders of record as of
December 9, 2019.
(2) See Note 2 - Recent Accounting Pronouncements
111
PERSISTENCE PAYS DIVIDENDS
FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
2019
Years Ended December 31,
2018
(in thousands)
2017
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
Loss (gain) on sale/call of securities
Gain on sale of assets
Repossessed asset writedowns, gains and losses on dispositions
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 HTM securities
Proceeds from maturities, calls and sales of AFS securities
Funds invested in HTM securities
Funds Invested in AFS securities
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 in deposits
Net decrease in federal funds purchased and short-term borrowings
Proceeds from long-term borrowings, net of costs
Repayment of long-term borrowings
Common stock issued in private placement
Dividends paid
Net Cash 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
Noncash Activities:
Acquisition of real estate in settlement of loans
Common stock issued in acquisition
Cash Paid During the Period:
Interest on deposits and borrowed funds
Federal income taxes
State income taxes
See Notes to the Consolidated Financial Statements.
112
$ 14,241
$ 14,213
$ 11,751
4,860
3,057
1,347
157
(1,304)
90
(63)
344
6,349
29,078
21,190
279,590
-
(274,437)
(123,553)
(11,933)
12
550
(23,325)
(131,906)
18,408
(28)
32,465
(3,754)
1,000
(5,803)
42,288
1,354
3,289
1,445
1,830
(301)
(47)
(42)
964
4,184
26,889
11,197
384,549
-
(309,346)
(76,354)
(3,787)
46
484
-
6,789
80,336
(15,500)
-
(2,941)
-
(5,636)
56,259
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
(60,540)
127,965
$ 67,425
89,937
38,028
$ 127,965
19,917
18,111
$ 38,028
$ 2,789
$ -
$ 297
$ -
$ 1,374
$ 10,650
$ 27,871
$ 19,902
$ 13,836
$ 3,250
$ 23
$ 2,400
$ -
$ 10,700
$ -
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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 thirty-four banking offices, including one drive-up
banking facility, and forty-eight automated teller machines (ATMs) in
Southeast Louisiana, Southwest Louisiana, Central 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.
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.
113
PERSISTENCE PAYS DIVIDENDS 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.
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 6 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 6 months of
performance. The evaluation includes a review of the loan file and
analysis of the credit to assess the loan terms, including interest
rate to insure such terms are consistent with market terms. The loan
terms are compared to a sampling of loans with similar terms and risk
characteristics, including loans originated by First Guaranty and loans
lost to a competitor. The sample provides a guide to determine market
terms pursuant to ASC 310-40-50-2. The loan is also evaluated at that
time for impairment. A loan determined to be restructured to market
terms and not considered impaired will no longer be disclosed as a
TDR in the years following the restructuring. These loans will continue
to be individually evaluated for impairment. A loan determined to either
be restructured to below market terms or to be impaired will remain
a TDR.
Credit Quality
First Guaranty's credit quality indicators are pass, special mention,
substandard, and doubtful.
114
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
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
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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.
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.
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.
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.
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.
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 and loan servicing assets related to the SBA
portfolio. 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.
115
PERSISTENCE PAYS DIVIDENDS 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.
Other real estate
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.
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.
Transfers of Financial Assets
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
Earnings per share represents
to common
shareholders divided by the weighted average number of common
shares outstanding during the period. In December of 2019, 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.
Income taxes
Operating Segments
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 2016. 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.
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 2019.
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. During 2018 and early 2019, the FASB
issued ASU No. 2018-11, "Targeted Improvements", ASU No. 2018-
20, "Narrow-Scope Improvements for Lessors", and ASU No. 2019-01,
"Codification Improvements", which clarified certain implementation
issues, provided an additional optional transition method and clarified
the disclosure requirements during the period of adopting ASU 2016-
02, among others. The ASU is effective for annual and interim periods
116
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT beginning after December 15, 2018. First Guaranty adopted this
ASU in the first quarter of 2019. As a result of adopting this ASU,
First Guaranty established a right-to-use asset and a lease liability as
of January 1, 2019 of $0.9 million. The right-to-use asset represents
First Guaranty's right to use an underlying asset for the lease term and
is included in other assets on First Guaranty's consolidated balance
sheets. The lease liability represents First Guaranty's obligation to make
lease payments and is included in other liabilities on First Guaranty's
consolidated balance sheets. First Guaranty does not expect material
changes to the recognition of lease expense in future periods as a
result of the adopting this ASU.
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
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.
On October 16, 2019, the FASB approved an effective date delay
applicable to smaller reporting companies until fiscal years beginning
after December 15, 2022, including interim periods within those
fiscal years. First Guaranty is currently evaluating the impact of this
accounting standard and is implementing a new software application
to assist in determining the impact 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. First Guaranty is
currently evaluating the impact of the adoption of this guidance on the
Consolidated Financial Statements.
In August 2018, the FASB issued ASU No. 2018-13, "Disclosure
Framework - Changes to the Disclosure Requirements for Fair Value
Measurement." This ASU removes, modifies, and adds certain
disclosure requirements for fair value measurements. For example,
public entities will no longer be required to disclose the valuation
processes for Level 3 fair value measurements, but will be required to
disclose the range and weighted average used to develop significant
unobservable inputs for Level 3 fair value measurements. This
ASU is effective for interim and annual reporting periods beginning
after December 15, 2019. In addition, entities may early adopt the
modified or eliminated disclosure requirements and delay adoption of
the additional disclosure requirements until their effective date. First
Guaranty does not believe the adoption of this ASU will have a material
impact on the Consolidated Financial Statements, as the update only
revises disclosure requirements.
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes:
Simplifying the Accounting for Income Taxes". This ASU removes
specific exceptions to the general principles in Topic 740, Income
Taxes. The amendments also improve consistent application of and
simplify GAAP for other areas of Topic 740 by clarifying and amending
existing guidance. This ASU is effective for annual and interim periods
beginning after December 15, 2020, with early adoption in any interim
period permitted. First Guaranty is currently evaluating the impact of
this accounting standard on the Consolidated Financial Statements.
Note 3. Merger Transaction
Effective at the close of business on November 7, 2019, First Guaranty
completed its acquisition of 100% of the outstanding shares of Union
Bancshares, Incorporated, a Louisiana corporation ("Union"), a single
bank holding company headquartered in Marksville, Louisiana and
its wholly owned subsidiary, Union Bank for $43.4 million in cash.
This acquisition allowed First Guaranty to expand its presence into
the Central Louisiana market area. The purchase price resulted in
approximately $9.5 million in goodwill and $4.2 million in core deposit
intangible, none of which is deductible for tax purposes.
First Guaranty accounts for business combinations under the
acquisition method in accordance with ASC Topic 805, Business
Combinations. Accordingly, for each transaction, the purchase price is
allocated to the fair value of the assets acquired and liabilities assumed
as of the date of the acquisition. In conjunction with the adoption of
ASU 2015-16, upon receipt of final fair value estimates during the
measurement period, which must be within one year of the acquisition
dates, First Guaranty records any adjustments to the preliminary fair
value estimates in the reporting period in which the adjustments are
determined. First Guaranty is continuing to finalize the purchase price
allocations related to the Union acquisition. Based on management's
preliminary valuation of tangible and intangible assets acquired and
liabilities assumed, the purchase price for the Union acquisition is
allocated in the table below. These allocations are subject to change.
Cash and due from banks
Securities available for sale
Loans
Premises and equipment
Goodwill
Intangible assets
Other real estate
Other assets
Union Bancshares,
Incorporated
(in thousands)
$ 20,058
38,813
184,165
7,223
9,469
4,213
1,595
9,303
Total assets acquired
$ 274,839
Deposits
FHLB borrowings
Repurchase agreements
Other liabilities
Total liabilities assumed
Net assets acquired
204,983
16,617
6,863
2,993
$ 231,456
$ 43,383
117
PERSISTENCE PAYS DIVIDENDS
The following pro forma information for the twelve months ended
December 31, 2019 and December 31, 2018 reflects First Guaranty's
estimated consolidated results of operations as if the acquisition of
Union occurred at January 1, 2018, unadjusted for potential cost
savings.
Net Interest Income
Noninterest Income
Noninterest Expense
Net Income
2019
2018
(in thousands, except
share data)
$ 70,105
$ 67,194
9,877
54,482
16,459
7,075
51,261
17,259
Earnings per common share
$ 1.70
$ 1.78
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 $176.9 million and had gross contractual amounts receivable of $174.2 million on the date of acquisition. Contractual cash flows not
expected to be collected are estimated at $1.2 million.
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, 2019 and
2018. At December 31, 2019 First Guaranty had two accounts at correspondent banks, excluding the Federal Reserve Bank, that exceeded the
FDIC insurable limit of $250,000. The amount of these accounts that were over the insurable limit totaled $5.7 million. At December 31, 2018 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 $127,000.
Note 5. Securities
A summary comparison of securities by type at December 31, 2019 and 2018 is shown below.
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate debt securities
Other securities
Municipal bonds
Collateralized mortgage obligations
December 31, 2019
December 31, 2018
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Fair Value
(in thousands)
$ -
$ -
$ -
$ -
$
-
$ -
$ -
$
-
16,380
94,561
497
30,297
16,400
15
1,110
-
1,870
40
317
(2)
16,393
146,911
(302)
95,369
76,310
-
(14)
(43)
497
483
32,153
16,397
32,956
918
(238)
179,625
48,434
-
72
-
1,120
-
-
(5,522)
141,389
(3,504)
72,878
-
(175)
(14)
483
33,901
904
(1,012)
47,422
Mortgage-backed securities
179,546
Total available for sale securities
$ 337,681
$ 3,352
$ (599) $ 340,434
$306,012
$ 1,192
$ (10,227) $296,977
Held to maturity:
U.S. Government Agencies
Municipal bonds
Mortgage-backed securities
$ 18,175
$ -
$ (32) $ 18,143
$ 28,172
$ -
$ (1,081) $ 27,091
5,107
63,297
182
200
-
5,289
5,227
(112)
63,385
74,927
-
-
(101)
5,126
(2,304)
72,623
Total held to maturity securities
$ 86,579
$ 382
$ (144) $ 86,817
$108,326
$ -
$ (3,486) $104,840
118
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT The scheduled maturities of securities at December 31, 2019, 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, 2019
Amortized
Cost
Fair Value
(in thousands )
$ 4,499
$ 4,520
38,029
76,584
22,623
141,735
16,400
179,546
38,729
77,943
23,220
144,412
16,397
179,625
$ 337,681
$ 340,434
$ 5,050
$ 5,047
7,327
7,496
3,409
23,282
63,297
7,318
7,543
3,524
23,432
63,385
$ 86,579
$ 86,817
The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at December
31, 2019.
Less Than 12 Months
12 Months or More
At December 31, 2019
Number
of
Securities
Fair
Value
Gross
Unrealized
Losses
Number
of
Securities
Fair
Value
Gross
Unrealized
Losses
Number
of
Securities
Total
Fair
Value
Gross
Unrealized
Losses
(in thousands)
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate debt securities
Other securities
Municipal bonds
Collateralized mortgage obligations
Mortgage-backed securities
-
$ -
$ -
1
42
-
9
12
57
4,398
21,269
-
4,285
10,022
91,753
(1)
(174)
-
(14 )
(43)
(186 )
-
1
12
-
-
-
9
$ -
$ -
149
3,184
(1)
(128)
-
-
-
-
-
-
12,121
(52)
-
2
54
-
9
12
66
$ -
$ -
4,547
24,453
-
4,285
10,022
(2)
(302)
-
(14)
(43)
103,874
(238)
Total available for sale securities
121
$131,727
$ (418)
22
$15,454
$ (181)
143
$147,181
$ (599)
Held to maturity:
U.S. Government Agencies
Municipal bonds
Mortgage-backed securities
Total held to maturity securities
2
-
7
9
$ 2,177
$ (2)
-
8,880
-
(58 )
$ 11,057
$ (60)
8
1
10
19
$ 15,965
$ (30)
50
11,343
-
(54)
$ 27,358
$ (84)
10
1
17
28
$ 18,142
$ (32)
50
20,223
-
(112)
$ 38,415
$ (144)
119
PERSISTENCE PAYS DIVIDENDS The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at December
31, 2018.
Less Than 12 Months
12 Months or More
At December 31, 2018
Number
of
Securities
Fair
Value
Gross
Unrealized
Losses
Number
of
Securities
Fair
Value
Gross
Unrealized
Losses
Number
of
Securities
Total
Fair
Value
Gross
Unrealized
Losses
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate debt securities
Other 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
-
1
37
-
1
-
16
55
-
-
-
-
$ -
$ -
4,227
9,560
-
115
-
(273)
(252)
183
-
-
-
-
50
-
19
5
38
19,453
(73)
(in thousands)
$ -
$ -
137,162
58,877
-
8,436
904
27,969
-
51
(5,249)
(3,252)
220
-
(175)
(14)
(939)
-
20
5
54
$ -
$ -
141,389
68,437
-
8,551
904
(5,522)
(3,504)
-
(175)
(14)
47,422
(1,012)
$ 33,355
$ (598)
295
$ 233,348
$(9,629)
350
$266,703
$(10,227)
$ -
$ -
-
-
-
-
$ -
$ -
14
9
56
79
$ 27,091
$ (1,081)
5,126
72,623
(101)
(2,304)
$ 104,840
$(3,486)
14
9
56
79
$ 27,091
$ (1,081)
5,126
72,623
(101)
(2,304)
$104,840
$ (3,486)
As of December 31, 2019, 171 of First Guaranty's debt securities had
unrealized losses totaling 0.4% of the individual securities' amortized
cost basis and 0.2% of First Guaranty's total amortized cost basis of
the investment securities portfolio. 41 of the 171 securities had been
in a continuous loss position for over 12 months at such date. The 41
securities had an aggregate amortized cost basis of $43.1 million and
an unrealized loss of $0.3 million at December 31, 2019. Management
has the intent and ability to hold these debt securities until maturity or
until anticipated recovery.
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. No securities with an other-than-temporary impairment
loss were held at December 31, 2019. 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.
There were no other-than-temporary impairment losses recognized
on securities during the years ended December 31, 2019, 2018, and
2017.
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.
120
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Net unrealized gains on available for sale securities included in
accumulated other comprehensive income (loss) ("AOCI"), net of
applicable income taxes, totaled $2.2 million at December 31, 2019.
At December 31, 2018 net unrealized losses included in AOCI, net of
applicable income taxes, totaled $7.1 million. During 2019 and 2018
net losses, net of tax, reclassified out of AOCI into earnings totaled $0.3
million and $1.4 million, respectively.
At December 31, 2019, First Guaranty's exposure to investment
securities issuers that exceeded 10% of shareholders' equity was as
follows:
December 31, 2019
Amortized
Cost
Fair Value
(in thousands)
96,966
97,036
146,702
18,227
146,758
18,211
$ 261,895
$ 262,005
Federal Home Loan Mortgage
Corporation (Freddie Mac-FHLMC)
Federal National Mortgage
Association (Fannie Mae-FNMA)
Federal Farm Credit Bank (FFCB)
Total
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, 2019, 2018, and 2017:
Year Ended
December 31,
2019
Year Ended
December 31,
2018
Year Ended
December 31,
2017
(in thousands)
$ 60
$ 60
$ 60
-
-
-
(60)
-
-
-
-
-
-
-
-
$
-
$ 60
$ 60
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 2019, 2018 and 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.
At December 31, 2019 and 2018 the carrying value of pledged
securities totaled $212.8 million and $289.7 million, respectively.
Gross realized gains on sales of securities were $0.8 million, $0.1
million and $1.4 million for the years ended December 31, 2019,
2018 and 2017, respectively. Gross realized losses were $1.1 million,
$1.9 million and $100,000 for the years ended December 31, 2019,
2018 and 2017. The tax applicable to these transactions amounted to
$(79,000), $(0.4) million, and $0.5 million for 2019, 2018 and 2017,
respectively. Proceeds from sales of securities classified as available
for sale amounted to $90.5 million, $114.5 million and $148.0 million
for the years ended December 31, 2019, 2018 and 2017, respectively.
121
PERSISTENCE PAYS DIVIDENDS Note 6. Loans
The following table summarizes the components of First Guaranty's loan portfolio as of December 31, 2019 and December 31, 2018:
December 31,
2019
2018
Balance
As % of
Category
Balance
As % of
Category
(in thousands, except for %)
Real Estate:
Construction & land development
$ 172,247
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
22,741
289,635
23,973
616,536
1,125,132
26,710
268,256
108,868
403,834
11.3%
1.5%
18.9%
1.6%
40.3%
73.6%
1.8%
17.5%
7.1%
26.4%
$ 124,644
18,401
172,760
42,918
586,263
944,986
23,108
200,877
59,443
283,428
10.1%
1.5%
14.1%
3.5%
47.7%
76.9%
1.9%
16.4%
4.8%
23.1%
Total Loans Before Unearned Income
1,528,966
100.0%
1,228,414
100.0%
Unearned income
Total Loans Net of Unearned Income
(3,476)
$ 1,525,490
(3,146)
$ 1,225,268
The following table summarizes fixed and floating rate loans by contractual maturity, excluding nonaccrual loans, as of December 31, 2019 and
December 31, 2018 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.
2019
December 31,
(in thousands)
2018
Fixed
Floating
Total
Fixed
Floating
Total
$ 205,596
$ 104,859
$ 310,455
$ 108,160
$
80,895
$
189,055
509,455
147,502
143,695
286,131
65,713
51,612
795,586
213,215
195,307
393,344
118,715
85,611
287,737
86,779
58,430
681,081
205,494
144,041
$ 1,006,248
$ 508,315
1,514,563
$ 705,830
$ 513,841
1,219,671
14,403
1,528,966
(3,476)
$ 1,525,490
8,743
1,228,414
(3,146)
$
1,225,268
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
As of December 31, 2019, $153.3 million of floating rate loans were at their interest rate floor. At December 31, 2018, $27.7 million of floating
rate loans were at their interest rate floor. Nonaccrual loans have been excluded from these totals.
122
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT The following tables present the age analysis of past due loans at December 31, 2019 and December 31, 2018:
As of December 31, 2019
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
$ 760
$ 429
$ 1,189
$ 171,058
$ 172,247
$ 48
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
6
8,521
-
11,279
20,566
310
2,801
794
3,905
1,274
3,682
-
1,280
12,203
—
6,249
17,528
21,461
277,432
23,973
599,008
22,741
289,635
23,973
616,536
11,634
32,200
1,092,932
1,125,132
4,800
342
266
5,408
5,110
3,143
1,060
9,313
21,600
265,113
107,808
394,521
26,710
268,256
108,868
403,834
-
923
-
1,603
2,574
-
15
50
65
Total Loans Before Unearned Income
$24,471
$17,042
$41,513
$1,487,453
1,528,966
$ 2,639
Unearned income
Total Loans Net of Unearned Income
(3,476)
$1,525,490
As of December 31, 2018
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
$
936
$
311
$ 1,247
$ 123,397
$
124,644
$
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
Unearned income
Total Loans Net of Unearned Income
-
4,333
648
4,897
1,293
2,272
-
864
1,293
6,605
648
5,761
10,814
4,740
15,554
528
742
537
1,807
$ 12,621
3,651
370
127
4,148
4,179
1,112
664
5,955
17,108
166,155
42,270
580,502
929,432
18,929
199,765
58,779
277,473
18,401
172,760
42,918
586,263
944,986
23,108
200,877
59,443
283,428
$ 8,888
$21,509
$ 1,206,905
1,228,414
$ 145
(3,146)
$ 1,225,268
-
-
26
-
-
26
-
53
66
119
The tables above include $14.4 million and $8.7 million of nonaccrual loans for December 31, 2019 and 2018, respectively. See the tables below
for more detail on nonaccrual loans.
123
PERSISTENCE PAYS DIVIDENDS
The following is a summary of nonaccrual loans by class at the dates indicated:
As of December 31,
2019
2018
(in thousands)
Real Estate:
Construction & land development
$ 381
$
311
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 Nonaccrual Loans
1,274
2,759
-
4,646
9,060
4,800
327
216
1,293
2,246
-
864
4,714
3,651
317
61
5,343
4,029
$14,403
$ 8,743
The following table identifies the credit exposure of the loan portfolio, including loans acquired with deteriorated credit quality, by specific credit
ratings as of the dates indicated:
As of December 31, 2019
As of December 31, 2018
Pass
Special
Mention
Sub-
standard Doubtful
Total
Pass
Special
Mention
Sub-
standard Doubtful
Total
(in thousands)
Non-farm non-residential
589,800
7,743
18,993
$ 163,808 $ 6,180 $ 2,259
$ - $ 172,247 $ 116,062
$ 5,698 $ 2,884
$
18,223
271,392
3,177
4,751
1,341
13,492
16,025
805
7,143
1,059,248
22,656
43,228
21,529
48
262,416
1,199
108,618
180
5,133
4,641
70
392,563
1,427
9,844
-
-
-
-
-
-
-
-
-
22,741
13,151
289,635
160,581
3,888
2,815
1,362
9,364
23,973
35,554
-
7,364
616,536
564,993
2,888
17,859
1,125,132
890,341
15,289
38,833
26,710
268,256
108,868
19,050
43
186,176
10,930
59,119
151
4,015
3,771
173
403,834
264,345
11,124
7,959
-
-
-
-
523
523
-
-
-
-
$124,644
18,401
172,760
42,918
586,263
944,986
23,108
200,877
59,443
283,428
$1,451,811 $ 24,083 $ 53,072
$ -
1,528,966 $ 1,154,686
$ 26,413 $46,792 $ 523
1,228,414
(3,476)
$ 1,525,490
(3,146)
$1,225,268
Real Estate:
Construction & land
development
Farmland
1- 4 family
Multifamily
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
124
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Purchased Impaired Loans
As part of the acquisition of Union Bancshares, Inc. on November 7, 2019 and Premier Bancshares, Inc. on June 16, 2017, First Guaranty
purchased credit impaired loans for which there was, at acquisition, evidence of deterioration of credit quality since their origination and it was
probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows at
December 31, 2019 and 2018.
As of December 31,
2019
As of December 31,
2018
(in thousands)
Real Estate:
Construction & land development
$ 526
$
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
-
6,402
-
2,294
9,222
-
1,198
-
1,198
-
1
48
-
2,301
2,350
-
909
-
909
$ 10,420
$ 3,259
For those purchased loans disclosed above, there was no allowance for
loan losses at December 31, 2019 or December 31, 2018.
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.
The accretable yield, or income expected to be collected, on the purchased loans above is as follows for the years ended December 31, 2019 and
2018.
Balance, beginning of period
Acquisition accretable yield
Accretion
Net transfers from nonaccretable difference to accretable yield
Balance, end of period
Year Ended
December 31,
2019
Year Ended
December
31, 2018
(in thousands)
$
613
$ 1,031
3,367
(831)
498
-
(418)
-
$ 3,647
$
613
The contractually required payments of purchased impaired loans related to the Union acquisition totaled $13.7 million, while the cash flow
expected to be collected at acquisition total $10.6 million, and the fair value of the acquired loans totaled $7.3 million.
125
PERSISTENCE PAYS DIVIDENDS
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, 2019, 2018 and 2017 are as follows:
As of December 31,
2019
2018
Beginning
Allowance
(12/31/18)
Charge-
Offs
Recoveries Provision
Ending
Allowance
(12/31/19)
Beginning
Allowance
(12/31/17)
Charge-
Offs
(in thousands)
Recoveries
Provision
Ending
Allowance
(12/31/18)
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
Unallocated
Total Non-Real
Estate
Total
$ 581 $ -
$ -
$ (158)
$ 423
$ 628 $
41
911
1,318
4,771
7,622
-
(552)
-
(2,603)
(3,155)
-
39
-
5
44
9
629
(280)
3,104
3,304
50
1,027
1,038
5,277
7,815
5
1,078
994
2,811
5,516
-
-
(99)
-
(404)
(503)
$ 3
$ (50)
$
581
-
90
20
89
202
36
(158)
304
2,275
2,407
41
911
1,318
4,771
7,622
339
(40)
-
(204)
95
187
(300)
26
426
339
1,909
(879)
891
15
(1,190)
-
267
246
-
612
1,909
2,377
(179)
1,642
(1,931
)
1,909
1,163
(15)
1,110
-
1,125
(907)
20
-
216
-
457
(5)
891
15
3,154
(2,109)
513
1,556
3,114
3,709
(1,386)
1,884
(1,053)
3,154
$10,776
$ (5,264)
$ 557
$ 4,860
$10,929
$ 9,225
$ (1,889)
$2,086
$1,354
$ 10,776
As of December 31,
2017
Beginning Allowance
(12/31/16)
Charge-
Offs
Recoveries
Provision
(in thousands)
Ending Allowance
(12/31/17)
Real Estate:
Construction & land development
$
1,232
$
19
1,204
591
-
-
(33 )
-
3,451
(1,291 )
6,497
(1,324 )
74
3,543
972
28
(162 )
(3,629 )
(1,247 )
-
4,617
(5,038 )
$ 43
$ (647)
$
-
92
40
85
260
138
30
223
-
391
(14)
(185)
363
566
83
137
2,433
1,177
(8)
3,739
628
5
1,078
994
2,811
5,516
187
2,377
1,125
20
3,709
$ 11,114
$ (6,362 )
$ 651
$ 3,822
$ 9,225
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Consumer and other
Unallocated
Total Non-Real Estate
Total
126
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
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, including loans acquired with deteriorated credit quality, individually and collectively evaluated for
impairment are as follows:
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
Unallocated
Total Non-Real Estate
Total
Unearned Income
Total Loans Net of
Unearned Income
As of December 31, 2019
Allowance
Individually
Evaluated
for
Purchased
Credit-
Impairment
Allowance
Individually
Evaluated
for
Impairment
Allowance
Collectively
Evaluated
for Impairment
Total
Allowance
for Credit
Losses
Loans
Individually
Evaluated
for
Purchased
Credit-
Impairment
Loans
Individually
Evaluated
for
Impairment
Loans
Collectively
Evaluated
for
Impairment
Total
Loans
before
Unearned
Income
(in thousands)
$ -
$ -
$ 423 $ 423
$ - $ 526
$ 171,721
$ 172,247
-
34
-
1,879
1,913
-
111
-
-
111
-
-
-
-
-
-
-
-
-
-
50
993
1,038
3,398
5,902
50
1,027
1,038
5,277
7,815
543
1,058
-
12,120
13,721
-
6,402
-
2,294
9,222
22,198
282,175
23,973
22,741
289,635
23,973
602,122
616,536
1,102,189
1,125,132
95
95
4,030
-
22,680
26,710
1,798
1,110
-
3,003
1,909
1,110
-
3,114
2,981
1,198
-
-
-
-
264,077
108,868
-
268,256
108,868
-
7,011
1,198
395,625
403,834
$ 2,024
$ -
$ 8,905
$ 10,929
$ 20,732 $ 10,420
$ 1,497,814
$ 1,528,966
(3,476)
$ 1,525,490
127
PERSISTENCE PAYS DIVIDENDS
As of December 31, 2018
Allowance
Individually
Evaluated
for
Purchased
Credit-
Impairment
Allowance
Individually
Evaluated
for
Impairment
Allowance
Collectively
Evaluated
for Impairment
Total
Allowance
for Credit
Losses
Loans
Individually
Evaluated
for
Purchased
Credit-
Impairment
Loans
Individually
Evaluated
for
Impairment
Loans
Collectively
Evaluated
for
Impairment
Total
Loans
before
Unearned
Income
(in thousands)
$ 38
$ -
$ 543 $ 581
$ 304 $ -
$ 124,340
$ 124,644
-
-
-
1,152
1,190
-
110
-
-
110
-
-
-
-
-
-
-
-
-
-
41
911
1,318
3,619
6,432
41
911
1,318
4,771
7,622
339
339
1,799
891
15
3,044
1,909
891
15
3,154
552
631
-
4,881
6,368
2,983
1,088
-
-
1
48
-
2,301
2,350
17,848
172,081
42,918
579,081
936,268
18,401
172,760
42,918
586,263
944,986
-
20,125
23,108
909
-
-
198,880
59,443
-
200,877
59,443
-
4,071
909
278,448
283,428
$ 1,300
$ -
$ 9,476
$ 10,776
$ 10,439 $ 3,259
$ 1,214,716
1,228,414
(3,146)
$ 1,225,268
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
Unallocated
Total Non-Real Estate
Total
Unearned Income
Total Loans Net of
Unearned Income
As of December 31, 2019, 2018 and 2017, First Guaranty had loans totaling $14.4 million, $8.7 million and $12.6 million, respectively, not
accruing interest. As of December 31, 2019, 2018 and 2017, First Guaranty had loans past due 90 days or more and still accruing interest
totaling $2.6 million, $0.1 million and $0.8 million, respectively. The average outstanding balance of nonaccrual loans in 2019 was $12.0 million
compared to $8.9 million in 2018 and $17.3 million in 2017.
As of December 31, 2019, First Guaranty has no outstanding commitments to advance additional funds in connection with impaired loans.
128
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
The following is a summary of impaired loans, excluding loans acquired with deteriorated credit quality, by class at December 31, 2019:
As of December 31, 2019
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
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
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 an allowance recorded
543
541
-
8,307
9,391
4,030
1,962
552
541
-
8,307
9,400
4,186
1,962
5,992
6,148
15,383
15,548
-
-
-
-
-
-
-
-
-
-
-
-
517
-
3,813
4,330
-
-
517
-
4,162
4,679
-
-
1,019
1,019
-
1,019
5,349
-
1,019
5,698
-
-
34
-
1,879
1,913
-
111
-
111
2,024
550
544
-
9,940
11,034
4,031
1,788
5,819
16,853
-
-
522
-
4,134
4,656
-
1,039
-
1,039
5,695
-
27
-
673
700
12
81
93
793
-
-
-
-
194
194
-
81
-
81
-
22
-
688
710
-
67
67
777
-
-
-
-
212
212
-
77
-
77
275
289
Total Impaired Loans
$20,732
$21,246
$ 2,024
$ 22,548
$ 1,068
$1,066
129
PERSISTENCE PAYS DIVIDENDS
The following is a summary of impaired loans, excluding loans acquired with deteriorated credit quality, by class at December 31, 2018:
As of December 31, 2018
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
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
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 an allowance recorded
$
-
-
631
-
523
$
-
-
631
-
523
1,154
1,154
3,535
3,613
-
-
-
-
3,535
4,689
3,613
4,767
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,070
3,070
3,070
3,070
1,150
1,150
-
-
1,088
1,088
-
1,088
4,158
-
1,088
4,158
-
110
-
110
1,260
$
-
-
626
-
536
1,162
$
-
-
13
-
33
46
$
-
-
-
-
34
34
3,583
173
272
-
-
3,583
4,745
-
-
-
-
3,104
3,104
-
1,115
-
1,115
4,219
-
-
173
219
-
-
-
-
139
139
-
55
-
55
-
-
272
306
-
-
-
-
139
139
-
64
-
64
194
203
Total Impaired Loans
$ 8,847
$ 8,925
$ 1,260
$ 8,964
$ 413
$ 509
130
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT
Troubled Debt Restructurings
A Troubled Debt Restructuring ("TDR") is considered such if the lender 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 either the
interest rate charged or the amortization. The effect of the modifications to First Guaranty was a reduction in interest income. These loans have an
allocated reserve in First Guaranty's allowance for loan losses. First Guaranty has not restructured any loans that are considered TDRs in the years
ended December 31, 2019 and 2018. At December 31, 2019, First Guaranty had no outstanding TDRs.
The following table is an age analysis of TDRs as of December 31, 2019 and December 31, 2018:
December 31, 2019
December 31, 2018
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
Multifamily
Non-farm non residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Consumer and other
Total Non-Real Estate
Total
(in thousands)
$
$
-
-
-
-
-
-
-
-
-
-
-
$
$
-
-
-
-
-
-
-
-
-
-
-
$
$
-
-
-
-
1,288
1,288
-
-
-
-
$1,288
$
-
-
-
-
-
-
-
-
-
-
-
$ 304
$ 304
-
-
-
-
304
-
-
-
-
-
-
-
1,288
1,592
-
-
-
-
$ 304
$ 1,592
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
$ -
$
The following table discloses TDR activity for the twelve months ended December 31, 2019.
Trouble Debt Restructured Loans Activity
Twelve Months Ended December 31, 2019
Beginning
balance
(December
31, 2018)
Charge-Offs
post-
modification
New
TDRs
Transferred
to ORE
Paydowns
Construction
to
permanent
financing
Restructured
to market
terms
Other
adjustments
Ending
balance
(December
31, 2019)
(in thousands)
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 Impaired Loans with no
related allowance
$ 304 $ -
$ -
$ -
$ -
$ -
$ (304)
$ -
$ -
-
-
-
1,288
1,592
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,288)
(1,592)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$1,592 $ -
$ -
$ -
$ -
$ -
$(1,592)
$ -
$ -
There were no commitments to lend additional funds to debtors whose terms have been modified in a troubled debt restructuring at December
31, 2019.
131
PERSISTENCE PAYS DIVIDENDS
Note 8. Premises and Equipment
The components of premises and equipment at December 31, 2019 and 2018 are as follows:
Land
Bank premises
Furniture and equipment
Construction in progress
Acquired value
Less: accumulated depreciation
December 31,
2019
2018
(in thousands)
$ 15,180
$ 12,875
40,536
27,255
9,534
92,505
36,041
33,457
25,453
2,046
73,831
34,136
Net book value
$ 56,464
$39,695
Depreciation expense amounted to $2.3 million, $2.1 million and $1.8 million for 2019, 2018 and 2017, respectively. Interest cost capitalized as
a construction cost was $91,000, $54,000 and $0 for 2019, 2018 and 2017.
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, Premier Bancshares, Inc. in 2017 and Union Bancshares, Incorporated in 2019. No impairment charges have been
recognized since acquisition. Goodwill totaled $12.9 million and $3.5 million at December 31, 2019 and 2018, respectively.
The following table summarizes intangible assets subject to amortization.
December 31,
2019
2018
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
(in thousands)
Core deposit intangibles
$ 16,266
$ 9,739
Loan servicing assets
Total
1,558
$ 17,824
918
$ 10,657
$ 6,527
640
$ 7,167
$ 12,053
$ 9,349
1,441
617
$ 13,494
$ 9,966
$ 2,704
824
$ 3,528
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 10.8 years.
Amortization expense relating to purchase accounting intangibles
totaled $0.4 million, $0.5 million, and $0.4 million for the years ended
December 31, 2019, 2018, and 2017, 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, 2020
December 31, 2021
December 31, 2022
December 31, 2023
December 31, 2024
132
(in thousands)
$712
$644
$576
$576
$576
Note 10. Other Real Estate
Other real estate owned consists of the following at the dates 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,
2019
2018
(in thousands)
$ 559
$ 120
669
3,651
241
777
$ 4,879
$ 1,138
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Long-term debt is summarized as follows:
Long-term Federal Home Loan Bank advance, fixed at 2.12%, totaled
$3.5 million at December 31, 2019 and $0 at December 31, 2018. This
advance was acquired in the Union acquisition and has a contractual
maturity date of September 1, 2037.
Senior long-term debt with a commercial bank, priced at floating
3-month LIBOR plus 250 basis points (4.61%), totaled $16.9 million
at December 31, 2019 and $19.8 million at December 31, 2018. 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).
Senior long-term debt with a commercial bank, priced at floating
Wall Street Journal Prime less 70 basis points (4.05%), totaled $31.7
million at December 31, 2019 and $0 at December 31, 2018. First
Guaranty pays $812,500 principal plus interest quarterly. This loan
was originated in November 2019 and has a contractual maturity date
of November 7, 2024. 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).
Junior subordinated debt, priced at Wall Street Journal Prime plus 75
basis points (4.00%), totaled $14.7 million at December 31, 2019 and
December 31, 2018. 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, 2019. This line of credit
is secured by a pledge of 13.2% (735,745 shares) of First Guaranty's
interest in First Guaranty Bank (a wholly owned subsidiary) and is
priced at 5.00%.
At December 31, 2019, letters of credit issued by the FHLB totaling
$355.2 million were outstanding and carried as off-balance sheet
items, all of which expire by 2024. At December 31, 2018, letters of
credit issued by the FHLB totaling $344.3 million were outstanding
and carried as off-balance sheet items, all of which expired in 2019.
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.
Note 11. Deposits
A schedule of maturities of all time deposits are as follows:
2020
2021
2022
2023
December 31, 2019
(in thousands)
$ 344,758
90,279
77,623
101,672
2024 and thereafter
141,695
Total
$ 756,027
The table above includes $3.4 million in brokered deposits for
December 31, 2019. The aggregate amount of jumbo time deposits,
each with a minimum denomination of $250,000 totaled $290.3 million
and $301.8 million at December 31, 2019 and 2018, respectively.
Note 12. Borrowings
Short-term borrowings are summarized as follows:
December 31,
2019
December 31,
2018
(in thousands)
Federal Home Loan Bank
advances
Repurchase agreements
Line of credit
$ 13,079
$ -
6,840
-
-
Total short-term borrowings
$ 19,919
$ -
First Guaranty maintains borrowing relationships with other financial
institutions as well as the Federal Home Loan Bank on a short and
long-term basis to meet liquidity needs. First Guaranty had $19.9
million in short-term borrowings outstanding at December 31, 2019
compared to none outstanding at December 31, 2018. First Guaranty
has an available line of credit of $6.5 million, with no outstanding
balance at December 31, 2019.
Available lines of credit totaled $278.8 million at December 31, 2019
and $216.4 million at December 31, 2018.
The following schedule provides certain information about First
Guaranty's short-term borrowings for the periods indicated:
December 31,
2019
2018
2017
(in thousands, except for %)
Outstanding at year end
$ 19,919
$
-
$ 15,500
Maximum month-end
outstanding
Average daily outstanding
Weighted average rate
during the year
Weighted average rate at
year end
$19,919
$ 3,320
$37,000
$ 7,119
$28,000
$ 5,833
2.00%
2.21%
1.06%
2.00%
-%
1.51%
133
PERSISTENCE PAYS DIVIDENDS and certain off-balance sheet items as calculated under regulatory
accounting practices. The capital amounts and classification are also
subject to qualitative judgments by the regulators about components,
risk weightings and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios
of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to
average assets. Management believes, as of December 31, 2019 and
2018, that 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 2019, the capital
conservation buffer will be 2.500% of risk-weighted assets. First
Guaranty Bank's capital conservation buffer was 4.58% at December
31, 2019.
As of December 31, 2019, 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.
As of December 31, 2018 obligations on senior long-term debt and
junior subordinated debentures totaled $63.3 million. The scheduled
maturities are as follows:
Senior
Long-term
Debt
Junior
Subordinated
Debentures
(in thousands)
$ 19,349
$
2020
2021
2022
2023
2024
2024 and thereafter
Subtotal
Debt issuance costs
Total
3,250
3,250
3,250
19,500
-
$48,599
(41)
$48,558
-
-
-
-
15,000
$15,000
(263)
$14,737
Note 13. Capital Requirements
First Guaranty Bank is subject to various regulatory capital requirements
administered by federal and state banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions that, if undertaken, could
have a direct material effect on First Guaranty's financial statements.
Under capital adequacy guidelines and the regulatory framework
for prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of their assets, liabilities
134
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT First Guaranty Bank's actual capital amounts and ratios as of December 31, 2019 and 2018 are presented in the following table.
Actual
Minimum Capital
Requirements
Minimum to be Well
Capitalized Under
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(in thousands, except for %)
December 31, 2019
Total Risk-Based Capital:
Tier 1 Capital:
Tier 1 Leverage Capital:
$ 213,962
12.61% $ 135,697
$ 203,034
11.96% $ 101,773
$ 203,033
10.44% $ 77,771
Common Equity Tier One Capital:
$ 203,034
11.96% $ 76,329
December 31, 2018
Total Risk-Based Capital:
Tier 1 Capital:
Tier 1 Leverage Capital:
$ 181,618
12.97% $ 112,055
$ 170,842
12.20% $ 84,041
$ 170,842
9.79% $ 69,822
Common Equity Tier One Capital:
$ 170,842
12.20% $ 63,031
8.00%
6.00%
4.00%
4.50%
8.00%
6.00%
4.00%
4.50%
$ 169,621
10.00%
$ 135,697
$ 97,214
$ 110,254
8.00%
5.00%
6.50%
$ 140,069
10.00%
$ 112,055
$ 87,277
$ 91,045
8.00%
5.00%
6.50%
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 2020 without permission
will be limited to 2020 earnings plus the undistributed earnings of $2.1
million from 2019.
Accordingly, at January 1, 2020, $222.6 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, affiliates 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, 2019 and 2018
follows:
December 31,
2019
2018
(in thousands)
Balance, beginning of year
$ 63,907
$82,918
Net (Decrease) Increase
Balance, end of year
(2,087)
(19,011)
$61,820
$63,907
Unfunded commitments to First Guaranty and Bank directors and
executive officers totaled $21.6 million and $8.6 million at December
31, 2019 and 2018, respectively. At December 31, 2019 First
Guaranty and the Bank had deposits from directors and executives
totaling $41.5 million. There were no participations in loans purchased
from affiliated financial institutions included in First Guaranty's loan
portfolio in 2019 or 2018.
During the years ended 2019, 2018 and 2017, First Guaranty paid
approximately $0.5 million, $0.3 million and $0.4 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 2019 and 2018 for this
note.
135
PERSISTENCE PAYS DIVIDENDS During the years ended 2019, 2018 and 2017, First Guaranty paid
approximately $0.1 million, $0.2 million and $6,000, respectively,
for the purchase and maintenance of First Guaranty's automobiles to
subsidiaries of Hood Automotive Group, of which William K. Hood, a
director of First Guaranty, is President.
During the years ended 2019, 2018 and 2017, First Guaranty paid
approximately $69,000, $0.7 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.
During the years ended 2019 and 2018, First Guaranty paid
approximately $0.3 million and $0.2 million to Centurion Insurance,
an insurance brokerage agency, to bind coverage at market terms for
property casualty insurance and health insurance. First Guaranty owns
a 40% interest in Centurion and accounts for this investment under the
equity method.
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 $149,000, $292,000
and $240,000 in 2019, 2018 and 2017, 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 2019,
2018 or 2017. As of December 31, 2019, the ESOP held 5,644 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:
December 31,
2019
2018
2017
(in thousands)
Other noninterest expense:
Legal and professional fees
$ 2,648
$ 2,362
$ 3,049
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
1,972
1,217
1,456
1,094
674
1,692
1,214
1,329
1,066
562
1,308
1,119
908
193
390
603
422
683
978
208
545
380
186
941
1,608
1,161
1,205
970
496
923
910
167
432
322
306
726
Other
2,536
2,204
1,628
Total other noninterest expense
$16,104
$14,786
$13,903
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 $0.8
million, $0.9 million and $0.7 million for 2019, 2018 and 2017,
respectively.
136
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT Note 18. Income Taxes
The Tax Cuts and Jobs Act ("TCJA") signed into law on December 22,
2017, makes broad and complex changes to the U.S. tax code that
affected income tax expense in 2017. The TCJA reduced the U.S.
federal corporate income tax rate from 35% to 21% beginning January
1, 2018 and also established new tax laws that affect 2018.
The following is a summary of the provision for income taxes included
in the Consolidated Statements of Income:
December 31,
2019
2018
2017
(in thousands, except for %)
$ 3,770
$ 3,929
$ 4,638
(114)
(467)
2,761
$ 3,656
$ 3,462
$ 7,399
Current
Deferred
Total
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:
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
Deferred tax liabilities:
Depreciation and amortization
Core deposit intangibles
Unrealized gains on available for sale
securities
Discount on purchased loans
December 31,
Other
December 31,
2019
2018
(in thousands)
$ 1,720
$ 2,159
257
28
-
1,282
508
1,897
1,374
456
3,767
5,914
(2,010)
(1,537)
(1,359)
(552)
(578)
(267)
(670)
-
-
(589)
2019
2018
2017
Gross deferred tax liabilities
(4,884)
(2,678)
(in thousands, except for %)
Statutory tax rate
21.0%
21.0%
35.0%
Net deferred tax (liabilities) assets
$(1,117)
$ 3,236
Federal income taxes at statutory
rate
Tax exempt municipal income
Other (1)
Total
$3,758
$3,712
$6,703
(140)
38
(166)
(84)
(254)
950
$3,656
$3,462
$7,399
(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, 2019 and
2018 are as follows:
At December 31, 2019, First Guaranty had recorded a net deferred tax
liability position. First Guaranty determined that the net deferred tax
asset at December 31, 2018 was more likely than not to be realized
based on an assessment of all available positive and negative evidence,
and therefore no valuation allowance was recorded.
Net operating loss carryforwards for income tax purposes were $6.1
million as of December 31, 2019 and $6.5 million in 2018. 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
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, 2019,
2018 and 2017, 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.
137
PERSISTENCE PAYS DIVIDENDS Note 19. Commitments and Contingencies
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, 2019 and
December 31, 2018.
December 31,
2019
2018
(in thousands)
Contract Amount
Commitments to Extend Credit
$ 117,826
$108,348
Unfunded Commitments under lines of
credit
$ 148,127
$122,212
Commercial and Standby letters of credit
$ 11,258
$ 6,912
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.
There were no losses incurred on off-balance sheet commitments in
2019, 2018 or 2017.
First Guaranty currently has one new facility under construction with
total construction commitment of $10.1 million of which $6.8 million
has been incurred as of December 31, 2019.
138
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, 2019 includes corporate debt and
municipal securities.
Impaired loans
Loans are measured for impairment using the methods permitted by
ASC Topic 310. Fair value of impaired loans is measured by either the
fair value of the collateral if the loan is collateral dependent (Level 2 or
Level 3), or the present value of expected future cash flows, discounted
at the loan's effective interest rate (Level 3). 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, 2019 and 2018 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.
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT 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, 2019 and 2018, segregated
by the level of the valuation inputs within the fair value hierarchy
utilized to measure fair value:
December 31,
The following table measures financial assets and financial liabilities
measured at fair value on a non-recurring basis as of December 31,
2019, segregated by the level of valuation inputs within the fair value
hierarchy utilized to measure fair value:
December 31,
2019
2018
(in thousands)
Fair Value Measurements Using: Impaired
Loans
Available for Sale Securities Fair Value
Measurements Using:
Level 1: Quoted Prices in Active Markets
2019
2018
Level 1: Quoted Prices in Active Markets
(in thousands)
For Identical Assets
$
Level 2: Significant Other Observable
Inputs
$
-
-
-
-
Level 3: Significant Unobservable Inputs
4,046
3,620
For Identical Assets
$ 497
$ 483
Impaired loans measured at fair value
$ 4,046
$ 3,620
Level 2: Significant Other Observable
Inputs
330,539
291,733
Level 3: Significant Unobservable Inputs
9,398
4,761
Securities available for sale measured at
fair value
$ 340,434
$ 296,977
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, 2018 was due principally to changes in market values on Level
1 securities. The change in Level 2 securities available for sale from
December 31, 2018 was due principally to a reduction in agency,
municipal and corporate bonds related to sales and maturities. There
were no transfers between Level 1 and 2 securities available for sale
from December 31, 2018 to December 31, 2019.
The following table reconciles assets measured at fair value on a
recurring basis using unobservable inputs (Level 3):
Level 3 Changes
December 31,
2019
2018
(in thousands)
Balance, beginning of year
$ 4,761
$ 6,533
Total gains or losses (realized/unrealized):
Included in earnings
Included in other comprehensive income
-
146
(15)
(79)
Purchases, sales, issuances and
settlements, net
Transfers in and/or out of Level 3
Balance as of end of year
4,491
(1,886 )
-
208
$ 9,398
$ 4,761
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, 2019.
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
$
-
$
-
4,158
721
1,012
126
$
4,879
$ 1,138
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.
139
PERSISTENCE PAYS DIVIDENDS Impaired loans
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.
Borrowings
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, 2019
and 2018 the fair value of guarantees under commercial and standby
letters of credit was not material.
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,
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.
140
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT The estimated fair values and carrying values of the financial instruments at December 31, 2019 and 2018 are presented in the following table:
December 31,
2019
2018
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
(in thousands)
$
67,425
$
67,425
$ 127,965
$ 127,965
$ 340,434
$ 340,434
$ 296,977
$ 296,977
$
$
$
86,579
3,308
-
$
$
$
86,817
$ 108,326
$ 104,840
3,308
-
$
$
2,393
344
$
$
2,393
379
$ 1,514,561
$ 1,515,277
$1,214,492
$1,193,886
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
$
8,412
$
8,412
$
6,716
$
6,716
Liabilities
Deposits
Borrowings
Junior subordinated debentures
Accrued interest payable
$ 1,853,013
$ 1,863,179
$1,629,622
$1,625,827
$
$
$
72,010
14,737
6,047
$
$
$
71,969
14,762
6,047
$
$
$
19,838
14,700
3,952
$
$
$
19,853
14,537
3,952
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.
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, 2019. 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.
Approximately 33.0% of First Guaranty's deposits are derived from local
governmental agencies at December 31, 2019. 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 $610.7 million at December 31, 2019.
Note 23. Litigation
First Guaranty is subject to various legal proceedings in the normal
course of its business. First Guaranty assesses its liabilities and
contingencies in connection with outstanding legal proceedings.
Where it is probable that First Guaranty will incur a loss and the
amount of the loss can be reasonably estimated, First Guaranty
records a liability in its consolidated financial statements. First
Guaranty does not record a loss if the loss is not probable or the
amount of the loss is not estimable. First Guaranty is a defendant
in a lawsuit alleging overpayment of interest on a loan with a
possible loss range of $0.0 million to $0.5 million. Judgment has
been rendered against First Guaranty for the full amount, but First
Guaranty is exercising its appeal rights. First Guaranty had an
accrued liability of $0.1 million at December 31, 2019 related to this
lawsuit. First Guaranty is also a defendant in a lawsuit alleging fault
for a loss of funds by a customer with a possible loss range of $0.0
million to $1.5 million. No accrued liability has been recorded related
to this lawsuit.
141
PERSISTENCE PAYS DIVIDENDS 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
Other assets
Total Assets
Liabilities and Shareholders' Equity
Senior long-term debt
Junior subordinated debentures
Other liabilities
Total Liabilities
Shareholders' Equity
December 31,
2019
2018
(in thousands)
$ 633
$ 8,069
224,677
4,427
169,880
4,724
$229,737
$182,673
48,558
14,738
406
63,702
166,035
19,838
14,700
851
35,389
147,284
Total Liabilities and Shareholders' Equity
$229,737
$182,673
First Guaranty Bancshares, Inc.
Condensed Statements of Income
Operating Income
Dividends received from bank subsidiary
Net gains on sale of equity 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
Income before increase in equity in undistributed earnings of subsidiary
Increase in equity in undistributed earnings of subsidiary
Net Income
142
December 31,
2019
2018
2017
(in thousands)
$ 13,982
$11,788
$10,622
196
424
-
289
54
171
14,602
12,077
10,847
1,795
208
953
2,956
11,646
494
12,140
2,101
1,675
133
916
2,724
9,353
540
9,893
4,320
1,518
495
1,147
3,160
7,687
834
8,521
3,230
$ 14,241
$14,213
$11,751
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT First Guaranty Bancshares, Inc.
Condensed Statements of Cash Flows
Cash flows from operating activities:
Net income
December 31,
2019
2018
2017
(in thousands)
$ 14,241
$14,213
$11,751
Adjustments to reconcile net income to net cash provided by operating activities:
Increase in equity in undistributed earnings of subsidiary
(2,101)
(4,320)
(3,230)
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
Proceeds from sales of equity securities
Funds invested in bank subsidiary
Purchases of premises and equipment
Cash paid in acquisition
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from long-term debt, net of costs
Repayment of long-term debt
Proceeds from junior subordinated debentures, net of costs
Common stock issued in private placement
Dividends paid
Net cash provided by (used in) 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
80
(196)
(444)
(601)
43
-
136
1,360
10,979
11,432
-
1,196
-
(136)
(43,383)
(42,323)
32,465
-
-
-
-
-
-
-
43
(54)
187
(1,306)
7,391
134
-
(3,750)
-
(10,108)
(13,724)
3,750
(3,754)
(2,941)
(3,081)
-
1,000
(5,803)
23,908
-
-
-
-
(5,636)
(8,577)
(5,210)
(4,541)
(7,436)
8,069
2,855
5,214
(10,874)
16,088
$ 633
$ 8,069
$ 5,214
143
PERSISTENCE PAYS DIVIDENDS
This annual report does not include an attestation report of First
Guaranty's independent registered public accounting firm regarding
internal control over financial reporting. Management's report was not
subject to attestation by First Guaranty's independent registered public
accounting firm pursuant to the rules of the Securities and Exchange
Commission that permit First Guaranty to provide only management's
report in this annual report.
Item 9B - Other Information
None
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, 2019, there
were approximately 1,500 holders of record of our common stock.
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 106 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 our 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.
First Guaranty Bancshares, Inc. did not repurchase any of its shares of
common stock during the fourth quarter of 2019.
Item 9 - Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
There were no changes in or disagreements with accountants on
accounting and financial disclosures for the year ended December 31,
2019.
Item 9A - Contracts and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, an evaluation was
carried out under the supervision and with the participation of First
Guaranty's management, including its Chief Executive Officer (Principal
Executive Officer) and its Chief Financial Officer (Principal Financial
Officer), of the effectiveness of its disclosure controls and procedures
(as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934). Based on that evaluation, the Chief Executive Officer and the
Chief Financial Officer concluded that these disclosure controls and
procedures were effective.
For further information, see "Management's annual report on internal
control over financial reporting" below. There was no change in First
Guaranty's internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934) that occurred
during the quarter ended December 31, 2019, that has materially
affected, or is reasonably likely to materially affect, First Guaranty's
internal control over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting
The Management of First Guaranty Bancshares, Inc. has prepared the
consolidated financial statements and other information in our Annual
Report in accordance with accounting principles generally accepted
in the United States of America and is responsible for its accuracy.
The financial statements necessarily include amounts that are based
on Management's best estimates and judgments. In meeting its
responsibility, Management relies on internal accounting and related
control systems. The internal control systems are designed to ensure
that transactions are properly authorized and recorded in our financial
records and to safeguard our assets from material loss or misuse. Such
assurance cannot be absolute because of inherent limitations in any
internal control system.
Management is responsible for establishing and maintaining the
adequate internal control over financial reporting, as such term is
defined in the Exchange Act Rules 13 – 15(f). Management did not
assess the effectiveness of internal controls of the acquired business
from Union Bancshares, Incorporated (“Union”). First Guaranty
acquired Union effective close of business on November 7th, 2019.
The acquisition of Union represented approximately fifteen percent of
consolidated assets of First Guaranty. Under the supervision and with
the participation of Management, including our principal executive
officer and principal financial officer, we conducted an evaluation
of the effectiveness of internal control over financial reporting based
on the framework in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway
Commission. This section relates to Management's evaluation of
internal control over financial reporting including controls over
the preparation of the schedules equivalent to the basic financial
statements and compliance with laws and regulations. Our evaluation
included a review of the documentation of controls, evaluations of the
design of the internal control system and tests of the effectiveness of
internal controls.
Based on our evaluation under the framework in Internal Control –
Integrated Framework, Management concluded that internal control
over financial reporting was effective as of December 31, 2019.
144
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT First Guaranty Bank
CORPORATE INFORMATION
ANNUAL MEETING
The Annual Meeting of Shareholders will convene at
2:00 PM Central Daylight Saving Time (CDT) on
Thursday, May 21, 2020 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: (888) 375-3093
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..
145
PERSISTENCE PAYS DIVIDENDS Visit www.fgb.net for additional information.
146
FIRST GUARANTY BANCSHARES, INC. 2019 ANNUAL REPORT