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ANNUAL REPORT 2021
www.fgb.net
First Guaranty Bancshares, Inc.
Financial Snapshot
STRONG
First Guaranty Bancshares, Inc.
At December 31, 2021, total assets were $2.9 billion,
net income was $27.3 million and earnings per common
share were $2.42. Return on average assets was 1.01%
and return on average common equity was 14.06%. First
Guaranty Bancshares, Inc. shares trade on the NASDAQ
Global Market Exchange and has paid quarterly
dividends for 114 consecutive quarters at December
31, 2021. A 10% common stock dividend was awarded
to all First Guaranty Bancshares, Inc.’s shareholders on
December 17, 2021. First Guaranty Bancshares, Inc. is
committed to customer service and shareholder value.
We continue to learn, grow, listen and serve. For the
second consecutive year, First Guaranty was named the
#1 Best Small Bank in the U.S.!
Profile
First Guaranty Bancshares, Inc. is the holding company
of First Guaranty Bank, which it wholly owns. The
Bank is a full-service financial institution with a major
presence throughout Louisiana and in northeast Texas,
serving customers from 36 locations. Headquartered in
Hammond, Louisiana, the Company had 463 employees
as of December 31, 2021.
PERFORMANCE
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 $57.35 since 1993.
[1] Book value has been adjusted for cumulative stock splits and dividends of 3.22 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.
PROFITABILITY
Cash
Dividends
on Common
Stock
(In thousands)
First Guaranty
has paid
$90,962,000
in Cash
Dividends
to common
shareholders
since 1993.
1
Table of Contents
Financial Snapshot ....................................................................................... Page 1
Table of Contents ......................................................................................... Page 2
Learn, Grow, Listen, and Serve ...................................................................... Page 3
Letter from the Chairman, Marshall T. Reynolds .............................................. Page 7
Letter from the Chief Executive Officer & President, Alton B. Lewis ................... Page 8
Report from the Chief Financial Officer, Eric J. Dosch ....................................... Page 9
Report from the Chief Lending Officer, Randy S. Vicknair ................................. Page 10
Report from the Texas Area President, Jordan M. Lewis ................................... Page 11
Report from the Mideast Area President, Michael R. Mineer ............................ Page 12
Report from the Senior Vice President, Glenn A. Duhon, Sr. ............................. Page 13
First Guaranty Bank Board of Directors ......................................................... Page 14
First Guaranty Bank Advisory Board ............................................................... Page 15
First Guaranty Bank Officers .......................................................................... Page 16
Performance Graphs ..................................................................................... Page 17
Accomplishments & Highlights ...................................................................... Page 20
Earnings & Dividends ................................................................................... Page 21
Locations (map) ........................................................................................... Page 22
First Guaranty Bank ATM/ITM and Bank Locations .......................................... Page 23
First Guaranty Bank Departments & Branches ................................................ Page 24
Mission Statement ....................................................................................... Page 54
FGB Gives Back ............................................................................................ Page 55
Banks Headquartered in Louisiana ................................................................ page 71
Corporate Information ................................................................................... Page 72
Financial Table of Contents ........................................................................... Page 73
Visit www.fgb.net for additional
information.
NASDAQ Stock Ticker Symbol:
FGBI and FGBIP
2
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Learn,
Grow,
Listen,
and Serve
Since our founding, First Guaranty
has been committed to superior
customer service. With nearly a century
of dedication and focus on our customers,
a culture of service has been forged at
First Guaranty whereby all employees
and directors search for new and
inspiring opportunities to better serve our
customers. We know that this commitment
earns trust and allows us to strengthen
our banking relationships, as well as
enhance shareholder value.
This sincere commitment to service, combined with our relentless attention
on a fortress balance sheet, has established a firm foundation built with
meticulous care and expertise. As a community bank holding company, First
Guaranty Bancshares, Inc. serves a wide variety of personal and commercial
customers. We invest in our employees with continuing education, training and
opportunities by promoting from within. Likewise, we invest in communities
served by providing useful financial information, education and contributions to
enhance these communities. Residing throughout communities we serve also
strengthens our hometown banking relationships.
Addressing challenges presented by Coronavirus and Hurricane Ida, First
Guaranty moved quickly and decisively to assist our customers and employees
with loans to minimize the financial hardship. Led by an active and involved
Board of Directors, First Guaranty Bancshares, Inc. responded with bold,
decisive actions and intelligent solutions.
3
Learn, Grow, Listen, and Serve
At First Guaranty Bancshares, Inc., we learn, grow, listen, and serve. We accomplish
these concepts as a company and professionally as individual employees, while inspiring
and motivating customers to take full advantage of the First Guaranty experience.
Not only do we utilize
new bank technologies,
explore new markets,
and navigate hurdles,
but also First Guaranty
teaches Financial
Literacy and Fraud
Training in our
communities.
LEARN
GROW
Learning is a part of growth. First Guaranty Bancshares, Inc.
measures and records assets, loans, number of employees,
number of locations, sizes of accounts, and its investments.
First Guaranty grows the number of convenient locations to serve
customers, and we grow in our banking relationships. We invest
time, interest, and energy into each employee, location, personal
account, business account, and in all the communities we serve.
First Guaranty Bancshares, Inc. recently added Kentucky and
West Virginia locations. Further, we serve the community by
loan growth, assisting businesses and individuals accomplish
their goals and dreams with necessary financing in today’s ever-
changing environment.
Vital to quality of life is the ability
to work together, learn from each
other, and help each other grow.
— Stephen Covey
4
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Learn, Grow, Listen, and Serve
One of the truest signs of caring for someone and about another is
to stop and listen attentively. To listen requires consideration of what
is being said, not simply hearing the words. We know it is important
that you are heard. At First Guaranty, we are attentive and listen to
our customers. As your Best Small Bank, we care about you –
we want to hear about your wants, needs and challenges. We
understand the importance of connection and are committed to
your success.
LISTEN
Superior customer service is a key factor in managing a
successful business. The First Guaranty team shares our helpful,
friendly attitude with customers. Commitment to customer service
remains the essence of our financial institution. At First Guaranty,
our employees are active in the communities we serve and volunteer
time, effort and financial aid to professional, charitable and community
organizations. We are involved in activities which support community
interests, culture and needs. From Back to School drives and sports
championship celebrations, to immediate needs in times of hurricane
or flood, First Guaranty Bancshares, Inc. serves and strives to be a
good neighbor.
SERVE
5
Learn, Grow, Listen, and Serve
First Guaranty rewarded shareholders
with a 10% common stock dividend
and the 114th consecutive quarterly
dividend paid.
Our mission is to increase shareholder
value while providing services for and
contributing to the growth and welfare of
the communities that we serve. As home to
"Fanatical Banking" our mission is to become
the bank of choice for small business and
consumer customers who are located in both
metropolitan and rural markets.
We continue to forge our vision of expanding
our geographical footprint, evolving as
an institution and staying competitive
while offering new banking products and
technologies. First Guaranty Bancshares,
Inc. is strong, stable, and secure with a
concentration on profitability.
Our First Guaranty team is friendly,
understanding and knowledgeable, you
might even say fanatical! We are resilient
and continue to achieve consistent, strong
progress and growth as we serve our
customers, community, and shareholders.
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FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
S T OME
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Letter from the
Chairman
Marshall T. Reynolds
Chairman of the Board
FIRST GUARANTY BANCSHARES, INC.
Dear Shareholders,
Last year I wrote about the positioning of our bank for the coming years. 2021 was truly a great
year for our bank, our ROA went from .87% to 1.01% and the all-important ROE went from 11.36%
to 14.06%. There is an old saying in the Banking industry if we can get to 15% ROE nothing else
matters.
I am truly excited about our adding loan production offices and deposit production offices in West
Virginia and Kentucky. A young man whom I have a lot of confidence in is heading up this team. His
name is Mike Mineer and I have worked with Mike for eighteen years. He has committed to having
$150 million in loans by June 30, 2022 and $300 million by December 31, 2022. I have never had
Mike lie to me, so I am putting these projections down in stone. Also on this team is Dan Pack and
Sam Gallo, two formidable bankers.
If you look at the loan growth from FGB and the outstanding job that Randy Vicknair is doing and
add $300 million to it as out of market loans, then we should have a phenomenal year in loans
outstanding. When you combine that with loan quality which we have attested to by the Texas ratio
falling to 6.56% at December 31, 2021.
Well so much for loans and my excitement for the core FGB loans as well as the Kentucky-West
Virginia addition. I want to turn to the operations as a whole. Evan Singer was put in charge of
OREO the first of the year and the aforementioned Texas ratio coming down to 6.56%. This is
certainly a positive reflection on Evan as well as Randy Vicknair as they were the two-driving forces
in obtaining this number. Remember that the goal was and still is 5%. However, this is really
excellent progress from the 11.65% at December 31, 2020.
Tangipahoa Parish has only one locally owned bank. That bank is First Guaranty Bank, and we have
37% of the deposits in our home parish. Although there are a lot of competitors, we still plan to
improve on this number. I could not write this letter without mentioning Jordan Lewis, our Texas
area President. Loans in Texas have about doubled in size since the acquisition date in 2017 while
deposits have nearly tripled.
In closing I would like to add my sincere heart felt thanks to all the members of the Board,
Management and all the Employees.
MARSHALL T. REYNOLDS
Chairman of the Board
FIRST GUARANTY BANCSHARES, INC.
Chairman of the Board
FIRST GUARANTY BANK
STRONG
PERFORMANCE
PROFITABILITY
7
Letter from the
Chief Executive Officer & President
Dear Shareholders,
2021 was not only a year of strong earnings for First Guaranty Bancshares, Inc.; it was a
year in which we took big steps forward to improve First Guaranty Bancshares, Inc. and your
investment in First Guaranty Bancshares, Inc.
While wearing the crown of Best Small Bank in the United States for the year 2021, we
also received notification that we have been named the Best Small Bank in the United
States for the year 2022. That shows the consistency in excellence which we wish to be
the hallmark of First Guaranty Bancshares, Inc.
Alton B. Lewis
Chief Executive Officer &
President
We made a bold step in our growth as we added Loan Production Offices and Deposit
Production Offices in both Kentucky and West Virginia. We were presented with an
opportunity to expand our presence and expand our loan portfolio strongly while, at the
same time, improving the utilization and the yield on excess liquidity. All of this was done,
while at the same time, enhancing our profitability.
2021 brought better asset quality as our Texas ratio decreased from 11.65% to 6.56%. The lower Texas
ratio the better. Our bank diluted cost of funds have continued to decline as it was reduced from 1.53% as of
December 2019 to 0.79% as of December 2021. Our loan portfolio grew by 17% during 2021 as we broke
through the $2 billion mark to a total of $2,159,359,000 in loans. We closed approximately $1.4 billion in loans
for the year 2021. Our total interest income increased by 11.2% year over year while our total interest expense
declined by 14.3%. Net interest income after provision for loan losses grew from $59.8 million in 2020 to $87.6
million in 2021, an improvement of 46.5% year over year.
2021 was a strong year for First Guaranty Bancshares, Inc. It is now our mission to build upon the results of
2021 and continue to make First Guaranty Bancshares, Inc. not only bigger, but, stronger. We will continue to
improve First Guaranty Bancshares, Inc. in all aspects, including a fortress balance sheet. We will continue to
enhance shareholder value.
In 2020, our earnings were $1.90 per share, in 2021, our earnings were $2.42 per share, this is a 27.4%
increase. It would be easy to say that we are successful. That is not our mindset. Our mindset is, that is good,
but what can it be? Let’s do better.
Thank you for your support.
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
STRONG
PERFORMANCE
PROFITABILITY
8
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Report from the
Chief Financial Officer
Learn, Grow, Listen, and Serve
First Guaranty Bancshares, Inc. continued its consistent track record of loan growth, dividend
payments, capital growth and outstanding customer service in 2021. Newsweek and Lending
Tree ranked First Guaranty Bank as the number one small bank in the United States for the
second year in a row. We are honored by this tribute and will continue to make our bank
better every day.
First Guaranty continued to execute its plan to grow loans as a percentage of our balance
sheet and reduce funding costs. Loans and leases grew 17.1% or $315.2 million from
$1.84 billion in 2020 to $2.16 billion in 2021. First Guaranty increased loan interest income
by $12.5 million in 2021. The loan to deposit ratio was 83.2% at December 31, 2021
which still leaves room for additional growth. Loan yields averaged 5.13% for 2021. Interest
expense declined $3.7 million in 2021. The weighted average rate on deposits fell from
1.14% for 2020 to 0.84% for 2021.
Eric J. Dosch
Chief Financial Officer
First Guaranty total earnings improved to $27.3 million for 2021, a 34% improvement over the 2020 earnings of
$20.3 million. Earnings per common share were $2.42 in 2021 compared to $1.90 in 2020.
First Guaranty issued $34.5 million in preferred stock in April 2021 in order to provide capital for our continued
growth. Proceeds from the issuance were also used to reduce debt as First Guaranty paid off $13.3 million in
long term debt. First Guaranty reduced its long term debt to equity ratio from 32% in 2020 to 18% in 2021. First
Guaranty paid $1.4 million in preferred stock dividends in 2021.
FPO
The Texas loan portfolio grew to $257.8 million at December 31, 2021. which is a $12.6 million increase from
$245.2 million at December 31, 2020. Texas loans have grown a total of $129.8 million from $128.0 million at the
acquisition date in June 2017. Texas deposits grew to $339.5 million at December 31, 2021 from $275.2 million
at December 31, 2020. Texas deposits have grown a total of $212.3 million from $127.2 million at June 2017.
First Guaranty entered the new Mid-East market with offices in Kentucky and West Virginia in late 2021. A total of
$64.5 million in loans were in this loan portfolio at December 31st, 2021.
Total common shareholder’s equity increased $12.2 million from $178.6 million in 2020 to $190.8 million in 2021.
Retained earnings increased $19.6 million from $37.1 million in 2020 to $56.7 million in 2021.
Tangible book value per share increased from $14.92 at December 31, 2020 to $16.13 at December 31, 2021.
The net interest margin improved from 3.35% for 2020 to 3.44% for 2021.
Return on average assets was 0.87% for 2020 and improved to 1.01% for 2021. Return on average common equity
was 11.36% for 2020 and increased to 14.06% for 2021.
First Guaranty Bancshares, Inc. paid a total of $6,393,000 in cash dividends to common shareholders in 2021.
The Company has paid 114 consecutive quarters of dividends as of December 31, 2021. First Guaranty declared
and paid its fifth common stock dividend in December 2021 and maintained the same $0.16 per share dividend
rate. This resulted in an increase in cash dividends paid to shareholders.
First Guaranty continues to build strength for the future. We increased loans and capital in 2021. First Guaranty
continues to maintain a leading deposit market share in the communities that we serve in Louisiana. We continue
to grow our business in Texas and look forward to serving our new mideast markets in Kentucky and West Virginia.
Our continuing investment in our products and systems will help our employees be more productive and better
serve our customers. 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
STRONG
PERFORMANCE
PROFITABILITY
9
Report from the
Chief Lending Officer
2021 was a solid performance for the First Guaranty Bank team!
Our strong growth continued in 2021 with 17% net loan growth, which contributed to a
14% increase in loan interest income. We faced a familiar challenge throughout the year
with COVID still prevalent, combined with a few new challenges such as the Ice Storm
and Hurricane Ida. These events provided the opportunity for us to do what we do best:
serving our communities via our outreach and relief programs. As we learned new and
innovative ways to serve our customers, we fostered new relationships that contributed
to our success in 2021.
Randy S. Vicknair
Senior Vice President/
Chief Lending Officer
First Guaranty Bank’s total loan portfolio grew to $2.159 billion at December 31, 2021,
which was a $315 million increase over the previous year end of $1.844 billion. Our
strong loan growth is due to the contributions of multiple lines of business including
commercial real estate loans, commercial and industrial loans, mortgage loans, and
commercial leases. One key factor to consider is the First Guaranty Bank team closed
over $1 billion in new money loans with over $700 million in new loan fundings, which was partially offset by
early loan payoffs exceeding $350 million, including Paycheck Protection Program loan payoffs and normal
portfolio amortization. In addition to strong loan growth, we successfully added new loans to the portfolio at
an average yield of 5.28% while payoffs had an average yield of 3.90%. This is a 1.38% improvement in the
yield related to those loans which provides about $5 million in additional interest income each year. Overall
loan interest income, excluding fees, was $96.1 million as of December 31, 2021 compared to $84.5 million
at December 31, 2020, an increase of $11.6 million or 14%. This significant increase was achieved by a
combination of yield improvement and loan growth.
It is important to note that the loan growth and yield improvement success were not achieved by sacrificing
credit quality. First Guaranty Bank remains diligent in our underwriting and review of each loan with our Chief
Credit Officer, Matt Wise, and his team ensuring that we adhere to strict credit standards. Steadfast standards
combined with contributions from all the teams at First Guaranty Bank, enabled us to be successful in not just
maintaining credit quality, but also improving it. This is reflected in our Texas ratio reducing 5.09% for the year,
from 11.65% at December 31, 2020 to 6.56% at December 31, 2021.
First Guaranty Bank expanded our markets in 2021 with the addition of Loan Production Offices in Kentucky
and West Virginia. Mike Mineer joins our team as the Mideast Area President for these offices and brings with
him 12 individuals with significant successful banking experience and growth potential via their existing local
customer relationships. Kentucky and West Virginia fit perfectly into the First Guaranty family and are already
complementing our team’s loan growth efforts. We anticipate the region to be cash-flow positive in early 1st
quarter 2022. First Guaranty Bank’s existing markets remained strong in 2021, with significant contributions
from our Central Louisiana, Southwest Louisiana, North Louisiana, Southeast Louisiana, and Texas regions.
The best part about their contributions is that each region contributed at different times throughout the year to
create a successful and profitable 2021.
First Guaranty Bank is honored and humbled to repeat as the #1 Small Bank in the country. This award is truly
a testament to the leadership of our board combined with the dedication and commitment of our management
and team members. We had a solid year in 2021 and remain focused on continuing our success into 2022!
Sincerely,
Randy S. Vicknair
Senior Vice President/Chief Lending Officer
FIRST GUARANTY BANK
STRONG
PERFORMANCE
PROFITABILITY
10
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Report from the
Texas Area President
The Humility of the Bold
To be strong does not mean to be proud. Strength is earned through thoughtful
investment of one’s best effort exerted over and again, day in and day out, despite
excuses. Strength is the potential of the bold.
For First Guaranty Bank in Texas, 2021 was a year of strength training. The year began
with an unprecedented statewide ice storm, shutting down power and water for millions
for over a week. Recognizing the needs of those around them, First Guaranty Bank
rallied to respond to its neighbors, providing funding and volunteers to support those
in need of care and shelter as well as emergency loans to individuals whose homes or
businesses were affected by the freeze. The year continued with another round of PPP
loans and a tremendous amount of market uncertainty related to COVID issues. Several
other catastrophes hit our communities hard. In the midst of so many unexpected
JORDAN M. LEWIS
Texas Area President
developments, it was incumbent upon the leaders of First Guaranty Bank in Texas to keep everyone focused on
improving their processes and their understanding of how to serve our clients better each and every day.
Despite the distractions, the Texas region of First Guaranty Bank showed strength. Across the five branches
in Texas, deposits rose 23.37% over the year. The region saw over $60 million in paydowns due to shifting
economic pressures, yet the loan portfolio still grew by almost $13 million (+5.27%) on $120 million in new
production. Despite tremendous growth in deposits, Texas saw its cost of funds drop by 16.76%, resulting in
an increase of its contribution to First Guaranty Bank’s gross revenue of over 16.61% compared to 2020.
Growth in the midst of adversity is the result of daily work. First Guaranty Bank earned Texas customers’
business and trust by listening carefully, improving internal processes, and learning from both internal and
external experts how to better perform. As the people of First Guaranty Bank in Texas step forward into 2022,
they are now better equipped, better prepared, more on mission, and ready to serve. No matter what the
future has in store, our communities can rely upon our strength and our confidence.
Ever onward,
Jordan M. Lewis
Texas Area President
FIRST GUARANTY BANK
STRONG
PERFORMANCE
PROFITABILITY
11
Report from the
Mideast Area President
Geographical asset diversification with technological and integration solutions
The Kentucky/West Virginia market is a new market for First Guaranty Bank. While new
to the bank, this market is well known by our Chairman, Marshall Reynolds. Our journey
to bring this market to the bank began after the sale of Premier Financial, “PFBI” a two-
bank holding company, also chaired by Mr. Reynolds.
Our team is comprised of a highly cohesive group of tenured commercial real estate
relationship managers and support staff that stretches from the Cincinnati/Northern
Kentucky market to the Bridgeport/Morgantown area of West Virginia. The group joined
FGB in mid-November and by the end of the year already recorded over $60 million in
loans on the books of First Guaranty Bank. This balance sufficiently covers the carrying
cost of the new team. At year end, an additional $40 million in loans was approved and
the team pumped an additional $40 million into the pipeline. Our team is marching
toward the first self-imposed milestone of $150 million in loans by mid-2022.
Michael R. Mineer
Kentucky/West Virginia
Area President
As our Kentucky-West Virginia team assimilates into the processes of closing loans under the First Guaranty
process, we intend to increase our efficient delivery of closed loan packages to our customers. Additionally, as
we learn these processes, we will incorporate our experience with technological and integration solutions to
further enhance our customer experience. This will also create new efficiencies as we combine best practices
on closing and booking of loans in the most proficient manner.
With great excitement we bring geographical asset diversification and a tenured, proven team to First Guaranty
Bank! We are a team of relationship bankers with a customer base that follows their banker’s best advice. We
focus on high quality borrowers and strive to provide the highest level of customer service. Our team is excited
to join the FGB team where we can continue to take care of our customers as we have in the past. The end
result is our customers, shareholders and employees of First Guaranty Bank will all be winners.
Sincerely,
Michael R. Mineer
Kentucky/West Virginia Area President
FIRST GUARANTY BANK
STRONG
PERFORMANCE
PROFITABILITY
12
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Report from the
Senior Vice President
Strong growth!
First Guaranty Bank had an excellent year in 2021 and the Southwestern Region of
First Guaranty Bank showed strong growth in deposits and loan production during this
12-month period.
The hospitality industry is slowly strengthening as occupancy begins to normalize
and people return to their travels. Travel strengthening has resulted in many of our
customers in this industry meeting all of their obligations in 2021 and we are excited
about the growth that will occur as these trends continue.
Glenn A. Duhon, Sr.
Senior Vice President/
Regional Manager
Our agricultural businesses had a strong year in 2021 in sugarcane and rice. The
crawfishing industry is facing issues that have affected sales and lowered production;
however, most were able to meet their financial obligations using other crop proceeds.
The Abbeville Branch ended 2021 with $184.7 million in deposit accounts showing extreme growth with an
increase of $42.5 million over 2020. Abbeville’s loan volume followed that trend with a total of $92.3 million in
loans at year end. This represents an increase of $16.7 million over 2020.
Jennings deposit accounts ended 2021 with $41 million, an increase of $2.5 million over 2020. Jennings loan
production also showed an increase of $6.2 million over 2020 for a total of $17.6 million in loan volume at
year’s end.
Our Lake Charles Loan Production Office also proved to have a very successful year in 2021 with a massive
increase of $33.8 million in loan production over the prior year with a total of $52.7 million in loan volume.
The Southwest Region as a whole ended the 2021 year with an increase of $44.9 million in deposits and an
increase in loan volume of $56.6 million over the prior year.
As consistently done in the past, we will continue to treat and service our customers as we expect to be
treated. With the support of our employees, management, and board of directors, and customer loyalty we
should continue to see strong growth throughout First Guaranty Bank’s Southwestern Region!
Sincerely,
Glenn A. Duhon, Sr.
Senior Vice President/Regional Manager
FIRST GUARANTY BANK
STRONG
PERFORMANCE
PROFITABILITY
13
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
ANTHONY J. BERNER, JR.
Consultant, Gold Star Food Group.
Former President of Pon Food Corporation
of Ponchatoula.
GLORIA M. DYKES
Owner of Dykes Beef Farm and
Part Owner of Dykes Feed & Fertilizer Inc.
and Bluff Creeks Properties.
DR. PHILLIP E. FINCHER
North Louisiana Advisory Board.
Retired Economics/Finance Professor of
Louisiana Tech University.
Board member of Claiborne Electric
Cooperative.
Owner of C & B Ranch since 1969.
ROBERT H. GABRIEL
President of Gabriel Building Supply
Company of Ponchatoula and Amite.
ANDREW GASAWAY, JR.
Secretary, Board of Directors of First
Guaranty Bank.
President of Gasaway-Gasaway-Bankston
Architects.
WILLIAM K. HOOD
Chairman of the Audit Committee,
Directors’ Loan Committee.
President, Hood Automotive Group.
EDWIN L. HOOVER, JR.
President of Encore Development Corporation.
ALTON LEWIS
Vice Chairman of the Board,
Chief Executive Officer/President of First
Guaranty Bank and Vice Chairman of the
Board, Chief Executive Officer/President of
First Guaranty Bancshares, Inc.
BRUCE MCANALLY
Registered pharmacist, Director of Paragon
HealthCare in Dallas, RxPreferred Benefits in
Nashville, and Best Value Pharmacies in Ft.
Worth.
MORGAN S. NALTY
Investment Banking Executive and Partner in
the firm of Johnson Rice & Company, LLC.
JACK M. REYNOLDS
Vice President of Trifecta Productions, Vice
President of Pritchard Electric and Secretary,
ADJ Corporation. Board member of Energy
Services of America, The Harrah and Reynolds
Corporation, and Citizens Deposit Bank.
MARSHALL T. REYNOLDS
Chairman of the Board of First Guaranty
Bancshares, Inc. and Chairman of the Board of
First Guaranty Bank.
Chairman of Champion Industries, Inc.
NANCY C. RIBAS
Owner of Ribas Holdings LLC.
(Photo taken pre-Covid 19)
JACK ROSSI
Chairman of First Guaranty Bancshares, Inc. Audit
Committee.
Certified Public Accountant in West Virginia and
Vice President Business Development at Summit
Community Bank in West Virginia and Virginia,
on the Board of Trustees of the West Virginia
Investment Management Board, a member of the
Charleston Area Alliance Board, and the Treasurer
and Past Chairman of the Charleston Regional
Chamber Of Commerce Board, and West Virginia
University Business Economics Visiting Committee.
RICHARD W. “DICKIE” SITMAN
Director of Dixie Electric Membership Corporation.
Board President of Dixie Business Center.
Board member of the Association of Louisiana
Electric Co-ops.
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. Committee member of the Ray Smith
Memorial Fund.
EDGAR R. SMITH, III
Chairman and CEO of Smitty’s Supply, Inc. and its
affiliates, Cam 2 International, Big 4 Trucking, Big 4
Investments, Jaxon Energy, and Xeray Systems.
14
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
First Guaranty Bank
Advisory Board
Left to Right: Britt L. Synco, Thomas “Tommy” D. Crump, Gil Dowies, III, Dr. Philip E. Fincher
Not pictured: John D. Gladney, M.D.
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.
The five men who make up the North Louisiana
Advisory Board were all born and reared in Claiborne
Parish and have deep roots in the communities and
business affairs of this area. In the period where big
banks began to buy up small and medium size banks
across the country, it became apparent to us that the
banking needs of individuals and small businesses
were not being met by these megabanks in our area of
Northwest Louisiana. These concerns led the Advisory
Group to join with others to form a new community
bank for Claiborne Parish. Shortly after the formation
of this bank, the group had the opportunity to join with
FIRST GUARANTY BANK to create a stronger and better
institution to meet the banking needs of a much larger
community of individuals and businesses across the
whole area of Northwest Louisiana. As First Guaranty
has grown in size and strength, it has never failed to
fulfill its mission to function as a true, community-
oriented bank–like all those which had preceded it in
our rural communities.
The ranking of First Guaranty for the second
consecutive year as the best small bank in the U.S.
by a national publication only confirms what the
Advisory Group has known for a long time—our
bank is one of the best things that has happened
in our area in the last 20 years!
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.
15
First Guaranty Bank
Officers
Chairman
MARSHALL T. REYNOLDS*
Chairman of the Board
Executive Officers
ALTON B. LEWIS*
President and CEO
ERIC J. DOSCH*
Chief Financial Officer
Senior Vice Presidents
JORDAN M. LEWIS
Texas Area President
MICHAEL MINEER
Mideast Area President
THOMAS F. BROTHERS
Director of Internal Audit
TIMOTHY L. CHESNEY, JR.
Chief Information Officer
MARK J. DUCOING
Chief Deposit Officer
GLENN A. DUHON, SR.
Regional Manager
Abbeville
RONALD R. FOSHEE
Director of Lending Development
KEVIN J. FOSTER
Regional Manager
Denham Springs
ADAM J. JOHNSTON
Regional Manager
North Louisiana
MIKKI M. KELLEY
Human Resources Department
Manager
GREGORY P. PRUDHOMME
Regional Manager
Central Louisiana
CRAIG E. SCELFO
Regional Manager
Ponchatoula & St. Tammany
DESIREE B. SIMMONS
Chief Administrative Officer
EVAN M. SINGER
Director of Mergers & Acquisitions
Regional Manager
Greensburg
LISA K. STOKER
JOHN A. SYNCO
LAURYN H. WAITS
MELINA V. WEST
J. RICHARD STARK
Operations
RANDY S. VICKNAIR
Chief Lending Officer
CHRISTY L. WELLS
Regional Manager
Hammond
MATTHEW B. WISE
Chief Credit Officer
Vice Presidents
ASHLEY N. BELL
BRENDA A. BRISCOE
Assistant Vice Presidents
CONRAD H. ARRAMBIDE III
DARRYL P. BOUDREAUX
MIRANDA M. DERVELOY
SUSAN M. DESOTO
MICHELLE M. DIONNE
LANDA G. DOMANGUE
VANESSA R. DREW
HARRISON R. GILL
LUDRICK P. HIDALGO
LESLIE A. HINZMAN
DONNA S. HODGES
CHERYL Q. BRUMFIELD
MATTHEW P. HUDNALL
KATHERINE K. CAMPBELL
Controller
CHRISTINA M. CARTER
LOUIS J. CUSIMANO, JR.
VIKKI W. DUPAQUIER
RONALD W. EDMONDS
CLIFTON A. FINCHER, JR.
DENISE D. FLETCHER
ANTHONY S. HUGHES
SHIRLEY P. JONES
JOELLEN K. JUHASZ
BSA Officer
MICHAEL D. KNIGHTEN
TERRIE E. MCCARTNEY
COLTON C. MCDANIEL
MARY T. MAYO
JASON D. NORMAND
STEVEN F. OSMAN
SCOTT B. SCHILLING
AMBER L. SMITH
MARSHA V. SPRING
KEITH T. KLEIN
DANIEL L. LOE
CATHERINE E. MATHES
PAMELA R. NORMAND
DOLLIE D. OGLETREE
DEV M. PATEL
RAHUL R. PATEL
KRISTY PUCKETT
AREEB RASHIB
NIEKITSHA S. RIDLEY
CHANYON O. ROBINSON
STACY J. THOMPSON
COURTNEY M. TRAMIEL
Officers
MANDI B. AGUILLARD
CALVIN P. DUCOTE
JEANNETTE N. ERNST
KRISTIN M. WILLIAMS
*Officers of both First Guaranty Bank and First Guaranty Bancshares, Inc.
16
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
First Guaranty Bank
Performance Graphs
Tangible Common Equity [3]
(in thousands)
Tangible Common Equity
(in thousands)
1993
1998
2003
2008
2013
2018
2019
2020
2021
$ 9,005
$ 17,376
$ 43,557
$ 61,429
$ 80,033
$141,108
$146,566
$159,876
$172,880
Tangible Common Equity
has increased
$163.9 million since 1993.
Total Assets
(in millions)
1993
1998
2003
2008
2013
2018
2019
2020
2021
$ 159
$ 245
$ 485
$ 871
$1,436
$1,817
$2,117
$2,473
$2,878
First Guaranty Assets
have increased
1,710% since 1993.
Total Assets
(in millions)
[3]Total equity less preferred equity, goodwill and acquisition intangibles, principally core deposit
intangibles, net of accumulated amortization.
17
First Guaranty Bank
Performance Graphs
Net Income
(in millions)
Total Deposits
(in millions)
Net Income
(in millions)
1993
1998
2003
2008
2013
2018
2019
2020
2021
$2.1
$3.7
$7.0
$5.5
$9.1
$14.2
$14.2
$20.3
$27.3
Total Deposits
(in millions)
1993
1998
2003
2008
2013
2018
2019
2020
2021
$ 149
$ 257
$ 376
$ 780
$1,303
$1,630
$1,853
$2,166
$2,596
18
FIRST GUARANTY BANCSHARES, INC. 2021 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
2018
2019
2020
2021
$ 105
$ 177
$ 381
$ 606
$ 703
$1,225
$1,525
$1,844
$2,159
Investments
(in millions)
1993
1998
2003
2008
2013
2018
2019
2020
$ 30
$ 73
$ 59
$139
$635
$405
$427
$239
2021 $364
Investments [4]
(in millions)
[4] Available for sale securities at fair value, held to maturity at amortized cost
19
First Guaranty Bank
2021 Accomplishments & Highlights
114th consecutive quarterly
dividend and year-end
10% stock dividend
For the SECOND CONSECUTIVE
Year, Named the No. 1 BEST
SMALL BANK IN THE U.S.!
Asset quality increased as Texas
Capital Ratio decreased from
11.65% to 6.56%.
Expansion into Mideast Markets:
Bridgeport, West Virginia and
Vanceburg, Kentucky
Strong Earnings
Loan Portfolio increase of 17%,
year over year.
Fortress Balance Sheet
Celebrated 87 years in banking
and we thank our customers,
employees and shareholders.
20
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Earnings &
Dividends
Earnings
Total Common
Dividends Paid
Cumulative Retained
Earnings (Deficit)*
Notable Events
$2.1 million
$ 200,000
$(4,984,000)
■ Investors purchased $3.6 million of common stock
$1.7 million
$ 601,000
$(3,879,070)
$2.1 million
$ 815,000
$(2,796,000)
■ Investors purchased $337,000 of common stock
$3.3 million
$1,020,000
$ (774,000)
■ Three-for-two stock split
$3.4 million
$1,223,000
$ 1,205,000
$3.4 million
$1,223,000
$ 3,482,000
$3.4 million
$1,316,000
$ 4,473,000
■ Investors purchased $9.6 million of common stock
■ Acquired 13 branches from Bank One of Louisiana
■ Acquired First Southwest Bank
$5.0 million
$1,530,000
$ 5,027,000
■ Gains from sale of acquired branches net of tax totaling $2.8 million
$6.0 million
$1,668,000
$ 8,638,000
■ Acquired Woodlands Bancorp
■ Gains from sale of acquired branches net of tax totaling $1.3 million
$3.5 million
$1,751,000
$10,426,000
$7.0 million
$2,086,000
$13,967,000
$8.6 million
$2,752,000
$19,771,000
$6.0 million
$3,173,000
$23,351,000
■ Four-for-three stock split
$8.4 million
$3,335,000
$28,402,000
$9.8 million
$3,503,000
$34,671,000
■ Acquired Homestead Bancorp
$5.5 million
$3,558,000
$36,626,000
$7.6 million
$3,558,000
$40,069,000
$10.0 million
$3,558,000
$45,203,000
$8.0 million
$3,610,000
$47,650,000
■ Acquired Greensburg Bancshares
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$12.1 million
$4,035,000
$53,702,000
■ 10% common stock dividend
■ Dividend rate per share remains $0.16 per quarter
2013
$9.1 million
$4,027,000
$58,102,000
■ Total loans exceeded $700 million
2014
$11.2 million
$4,027,000
$64,905,000
2015
$14.5 million
$4,247,000
$73,445,000
■ Retained earnings grew by $6.8 million
■ Total loans reached $790 million
■ 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
2018
$14.2 million
$5,636,000
$97,786,00
2019
$14.2 million
$5,803,000 $106,244,000
2020
$20.3 million
$6,234,000
$120,328,000
■ Grand openings of Bossier City, LA Banking Center
■ Acquisition of Synergy Bank and addition of five new Texas locations
■ 50% ownership in Centurion Insurance Services allowing First
Guaranty to sell insurance products
■ Grand opening of Lake Charles, LA Loan Production Office
■ Total loans surpassed $1.2 billion
■ Acquisition of Union Bank and addition of seven new Louisiana
locations
■ Retained earnings of $57.4 million
■ Strengthened loan loss reserve and strong loan growth
■ 114th consecutive quarterly dividend and year-end 10%
common stock dividend
■ For the SECOND CONSECUTIVE Year, Named the No. 1 BEST
2021 $25.9 million
$6,393,000
$139,849,000
SMALL BANK IN THE U.S.!
■ Asset quality increased as Texas Capital Ratio decreased from
11.65% to 6.56%.
■ Expansion into Mideast Markets
$252.2 million $90,962,000
* 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.
21
First Guaranty Bank
Banking Locations
127
24
6
7
12
14
10
COMING SOON:
35
Bridgeport, West Virginia
Loan & Deposit Production Office
Vanceburg, Kentucky
36
Loan & Deposit Production Office
25
4
21
20
13
23
8
16
19
3
Louisiana
17
18
5
15
11
22
28
9 29
12
26
Texas
30
33
31
32
22
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
34
30333231341104920551227247121410163929181512261122286191754252081321231049205512 First Guaranty Bank
Branches & ATM/ITM Locations
BRANCHES
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
Independence, LA
15
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
35 Bridgeport, WV (coming soon)
36 Vanceburg, KY (coming soon)
ATM LOCATIONS
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
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
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
BOSSIER CITY, LA
4221 Airline Drive
PINEVILLE, LA
40 Pinecrest Drive
TEXAS
FORT WORTH, TX
2001 North Handley
Ederville Road
WACO, TX
7600 Woodway Drive
DUBACH, LA
117 East Hico Street
HAYNESVILLE, LA
10065 Highway 79
HOMER, LA
401 North 2nd Street
OIL CITY, LA
126 South Highway 1
VIVIAN, LA
102 East Louisiana
Avenue
ITM LOCATIONS
AMITE, LA
632 West Oak Street
BOSSIER CITY, LA
4221 Airline Drive
DENHAM SPRINGS, LA
2231 South Range Avenue
GUARANTY WEST
2111 West Thomas Street
HAMMOND MAIN OFFICE
400 East Thomas Street
KENTWOOD
723 Avenue G
PONCHATOULA, LA
500 West Pine Street
23
First Guaranty Bank
Departments & Locations
Guaranty Square
(985) 345-7685
(888) 375-3093
400 East Thomas Street
Hammond, LA 70401
LEARN
GROW
LISTEN
SERVE
APPRAISAL REVIEW:
(Left to Right)
Starr Bernier, Emma Willman, Sarah DiMarco, Luke Orlando
24
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
BSA MARKSVILLE:
Front: Cathy Butter
Back: Lucinda Jacobs
BSA MAIN:
(Left to Right)
Front: JoEllen Juhasz, Christe Feimster, Jonathan Fandal
Back: Kendra Fairburn, Taylor Barnard, Linda Miller
Not Pictured: Sharmaine Robertson
COLLATERAL:
(Left to Right)
Front: Emily McIntyre, Heather Coslan, Lauryn Waits
Middle: Sharon Rogers, Tylishia Randell, Cate Mathes, Sarah Sheridan, Brandi Addison
Back: Sarah Jenkins, Krystal Gregory
Not Pictured: Amy King
25
COMPLIANCE & LOAN REVIEW:
(Left to Right)
Front: Crystal Ward, Hannah Primes
Middle: Ann Morgan, Christina Carter, Lisa Armstrong
Back: Brianda Robinson, Allison Duke
CREDIT MAIN:
(Left to Right)
Row 1 : Lana Quinn, Brittanie Wallace, Madison Amos, Jane Wear
Row 2: Rene Puissegur, Ben Lopez, Claire Roberts, Heidi Romelfanger,
Corey Hayden, Matt Wise
Row 3: Colton McDaniel, Jakayla Brown, Louis Cusimano, Joshua Madere
Row 4: Patrick Meyers, Davon Mitchell
Not Pictured: Jamie Davis
CREDIT TEXAS:
(Left to Right)
Front: Stacy Dutcher, Ben Golan
Back: Keith Klein
Not Pictured: Adam Smith
26
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
CREDIT CARD DEPARTMENT:
(Left to Right)
Front: Jason Wilson, Derhonda Gaines
Back: Debbie Dubuisson
CUSTOMER SUPPORT CENTER:
(Left to Right)
Front: Laura Ard, Danyelle Green
Back: Devenair Fultz, Jasmine Henry, Norma Volkers
Not Pictured: Matthew Sullivan, Madison Gatlin, Destiny Brumfield, Stevie Vazquez
DEPOSIT OPERATIONS MAIN:
(Left to Right)
Front: Stefanie Addison, Christopher Williard, Shirley Jones, Sandra Edwards
Middle Sitting: Lori Lloyd, Tracey Robertson, Kim Fletcher
Standing: Craishan Bridges, Tammy Graves, Laura Huszar, Glenda Saucier, Amanda Johnson, Christina Lacara
27
DEPOSIT MANAGEMENT & PUBLIC
FUNDS MAIN:
(Left to Right)
Front: Steve Osman
Middle: Holly Tamburello, Brandi Steffek
Back: Mark Ducoing
DEPOSIT MANAGEMENT
SOUTHEAST LA:
Mary Mayo
DEPOSIT MANAGEMENT
TEXAS:
Areeb Rashid
DEPOSIT MANAGEMENT
CENTRAL:
Chanyon Robinson
DEPOSIT MANAGEMENT
NORTH LA:
Daniel Loe
EFT SERVICES:
(Left to Right)
Front: Michelle Verneuil, Alyssa Guillory
Middle: Alexa Salpietra, Susan Kimmerling,
Chandler Guess
Back: Elisa Costanza, Nicole Jackson
Not Pictured: Makaila White
28
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
EXECUTIVE:
(Left to Right)
Vanessa Drew, Kristin Williams, Alton Lewis
FINANCE DEPARTMENT MAIN:
(Left to Right)
Front: Rhesha Lamonte, LaQuita Johnson, Emilie McCutcheon, Chuck Lyles
Middle: Wendy Caillouet, Diane Lanier, Karli Montero, Chandra McKinney, Katherine Campbell, Donna Scamardo
Back: Brody McDaniel, Jessica West, Eric Dosch, Jannifer Knighten, Michael Moye, Avery Ferrara
FINANCE MARKSVILLE:
(Photo at Left)
Calvin Ducote
29
FRONTLINE MAIN:
(Left to Right)
Front: Sarah Matthews, Jeannette Ernst, Briana Lowe
Back: Jozey Pfister, Latonia Cotton, Richard Hamilton
Not Pictured: Vickie Vanlandingham, Edrea Jackson
HUMAN RESOURCES MAIN:
(Left to Right)
Front: Christin Bacile, Landa Domangue
Back: Danielle Willie, Mikki Kelley, Ike Long, Mandi Aguillard
30
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
HUMAN RESOURCES
MARKSVILLE:
Jason Normand
INFORMATION TECHNOLOGY MAIN:
(Left to Right)
Row 1: Averi Dickerson, Joshua Elliott, Merill Magday,
Wendy Kinchen, Star Lala
Row 2: Keith Mills, Mia Edwards, Ramya Tummala
Row 3: Scott Klausing, Samantha Petracek
Row 4: Michelle Saucier, Austin Grant
Row 5: Mark Montalbano, Joshua Valladares
Not Pictured: Timothy Chesney, David Couvillon,
Brian Lejeune
INFORMATION TECHNOLOGY
FORT WORTH:
Moises Rodriguez
INFORMATION TECHNOLOGY
MARKSVILLE:
Front: Tyler Roy
Back: Juan Bautista
INFORMATION TECHNOLOGY
WACO:
Fed Guerrero
INFORMATION
SECURITY WACO:
Kenny Wilson
INTERNAL AUDIT MAIN:
(Left to Right)
Front: Nicole Ferrante, Michelle Dionne
Middle: Travis Hester, Tom Brothers
Back: Tae Anderson
INTERNAL AUDIT
FORT WORTH:
Nancy Rodriguez
31
LEARNING & DEVELOPMENT MAIN:
(Left to Right)
Front: Summer Brignac, Casie Qualls
Back: Vikki Dupaquier, Wil Brown, Miranda Derveloy
LEARNING & DEVELOPMENT NORTH LA:
Kendra Phipps, Amber Smith
LENDING MAIN:
(Left to Right)
Randy Vicknair, Melanie Gottschalck
Ronnie Foshee
LENDING MAIN 2:
(Left to Right)
Front: Vickie Jenkins, Catherine Egnew
Back: Dev Patel, Christy Wells, Mike Knighten
32
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
LOAN OPERATIONS MAIN:
(Left to Right)
Row 1: Elizabeth Roy, Virginia Lambert,
Kellie DeMarco
Row 2: April Coker, Breanna Bankston
Row 3: Angela Fields, Leah Hunter,
Melissa Nevels
Row 4: Audrey Carter, Laura Lacoste,
Row 5: Juliette Carmo, Darlene Albert,
Donna Hodges, Kaley Millet,
Kimberly Drury
Row 6: Luke Lavergne, Cliff Fincher
LOAN OPERATIONS MARKSVILLE:
Front: Stephanie Moses
Back: Melissa Small, Brittany Dauzat
LOAN OPERATIONS MCKINNEY:
Front: Jenny Bae, Lisa Stoker
Back: Janet Culberson, Jan Brownd
33
MARKETING:
(Left to Right)
Front: Carl Duplessis, Desiree Simmons
Middle: Elliot Koss, April Alford
Back: Allison Ryan, Lauren Lee
MERGERS & ACQUISITIONS:
(Left to Right)
Front: Heath Arnold
Back: Evan Singer
34
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
MORTGAGE MAIN:
(Left to Right)
Front: Kimberly Lecumberri, Melina West
Middle: Christine Zeringue,
Megan Nelson, Megan Braden
Back: Kyleen Tulion, Brandon Wear,
Anna Borgstede, Melissa Duchmann
MORTGAGE MARKSVILLE:
Becky Sellers
MORTGAGE TEXAS:
Linda Kolosey
OPERATIONS MAIN:
(Left to Right)
Melinda Lenz, Richard Stark
Not Pictured: Julie Nevels, Denise
Rehage, Tasha Jackson
OPERATIONS TEXAS:
Ashley Bell
OPERATIONS
SOUTHEAST LA:
Marsha Spring
OPERATIONS NORTH LA
AND CENTRAL LA:
Shane Hughes
35
PURCHASING MAIN:
(Left to Right)
Darryl Boudreaux, Chip Campbell, Donna Turnage, Joseph Ernest
PURCHASING
MARKSVILLE:
Armenio Magday
SPECIAL ASSETS MAIN:
(Left to Right)
Luke Hammonds, Christian Baer, Lee Ann Sibley
Not Pictured: Kriss Patterson
SPECIAL ASSETS
MARKSVILLE:
Joann Moreau
36
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Abbeville
(337) 893-1777
799 West Summers Drive
Abbeville, LA 70510
Alexandria
(318) 443-8994
1701 Metro Drive
Alexandria, LA 70301
(Left to Right)
Front: Ruth Huron, Diane Frederick
Middle: Gretchen Meaux, Rhesa Decuir, Lisa Guidry
Back: Kathryn Desormeaux, Cody Gil, Glenn Duhon, Saxon Fuqua
Not Pictured: Amy Broussard, Roxanne Trahan
(Left to Right)
Front: Jeanette Brown, Lisa Hernandez
Back: Pam Normand, Rachel Hazelton, Jajuanna Pardue
Not Pictured: Brooke Moore
37
(Left to Right)
Front: Saleatha Gordon, Nicole Brown, Shana Wells
Middle: Roxane Williams, Sharon Smith
Back: Scott Schilling
Not Pictured: Stephanie Campo, Jenny Weedman, Elizabeth Zito, Ebony Solomon
Amite
(985) 748-5111
632 West Oak Street
Amite, LA 70422
Benton
(318) 965-2221
189 Burt Boulevard
Benton, LA 71006
(Left to Right)
Front: Kendria Smith, Monique Rochelle
Back: Donna Cummings, Evelyn Saul, Jennifer Purcell, Karen Varilek
Not Pictured: Stephanie Brackens
38
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Bossier City
(318) 383-5234
4221 Airline Drive
Bossier City, LA 71111
Bunkie
(318) 346-4981
1110 Shirley Road
Bunkie, LA 71322
(Left to Right)
Front: Erika Taylor, Stephanie Dempsey, Matt Hudnall, Janet
Parmer
Back: Nancy Garsee, Benita Douglas, Linda Blankenship, Lynn
Henry
Not Pictured: Courtney Tramiel
Adam Johnston
(Left to Right)
Front: Jadelyn Hall
Middle: Kim Ferguson, Rebekah Turner,
Back: Dominique Wilson
Not Pictured: Cheri Moses, Casey Brouillette
39
(Left to Right)
Front: Kathie Alimia, Michelle O’Quin
Middle: Ludrick Hidalgo, Courtney Lachney, Reynold Lagarrigue
Back: Clint Trant, Angela Wales, Kevin Foster
Not Pictured: Sharon Moore, Jennifer Rizzi
Denham Springs
(225) 791-7964
2231 South Range Avenue
Denham Springs, LA 70726
Denton
(940) 383-0700
2209 West University Drive
Denton, TX 76201
(Left to Right)
Front: Leslie Hinzman, Sandra Whittington
Back: Matthew Jefferson
Not Pictured: Jerad Boardman, Karen Stevenson
40
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Dubach
(318) 777-3461
117 East Hico Street
Dubach, LA 71235
(Left to Right)
Front: Angela Thomas
Middle: Diane Shoemaker, Angela Brown
Back: Kristy Puckett
Not Pictured: Kemberlin Levingston, Iesha Johnson
Fort Worth
(817) 502-6611
2001 North Handley Ederville Road
Fort Worth, TX 76118
(Left to Right)
Front: Montavious Morehouse
Back: Teresa Ortiz, Indra Pant
Not Pictured: Dot Frazier, Ifeanyi Ezugwu, Alyssa Al Sabi
41
Garland
(214) 227-4550
603 Main Street #101
Garland, TX 75040
Greensburg
(225) 222-6101
6151 Highway 10
Greensburg, LA 70441
(Left to Right)
Front: Amy Turner, Jennifer Petty
Back: Brenda Briscoe, Callistus Amajoyi, Sara Wayne
Not Pictured: Perla Alvizo
(Left to Right)
Front: Melissa Smith, Emma McDonald, Harrison Gill
Back: Paige Rushing, Trella Page, Beau Brumley
Not Pictured: Cortne Coleman, Deionna Frank
42
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Hammond – Guaranty West
(985) 375-0371
2111 West Thomas Street
Hammond, LA 70401
(Left to Right)
Front: Epris Mcknight
Middle: Brittany Morgan, Callie Guillot
Back: Laura Day, Christopher Martin, Harley Ribando
Haynesville
(318) 624-1171
10065 Highway 79
Haynesville, LA 70138
(Left to Right)
Julia Tabor, Jane Cleveland, Tammy Burley
43
Hessmer
(318) 563-4583
2705 Main Street
Hessmer, LA 71341
Homer
(318) 927-3000
401 North 2nd Street
Homer, LA 71040
(Left to Right)
Front: Lakrishia Brossette
Middle: Rikki Deaville
Back: Jacquelyn Tullos
Not Pictured: Katherine Ponthieux, Becki Normand
(Left to Right)
Front: Tristan Lowe, Ron Edmonds, Candie White
Middle: Caree Bailey, Niekitsha Ridley, Aleshia Lee, John Synco
Back: Shanya Cowser, Debbie Spigener, Ashley Bailey, Laura Pair, C’nya Anderson
Not Pictured: Jamie Wiliams
44
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Independence
(985) 878-6777
455 West Railroad Avenue
Independence, LA 70443
(Left to Right)
Front: Peggy Garon, Karen Paille, Caitlin Doty
Back: Cheryl Brumfield, Susann Schliegelmeyer
Not Pictured: Chelsey Weedman
Jennings
(337) 824-1712
500 North Cary Avenue
Jennings, LA 70546
(Left to Right)
Front: Keisha Miller
Back: Brenda Mallett, Amanda Crochet
Not Pictured: Georgette Miller, Erica O'Neal, Gwendolyn Pete
45
(Left to Right)
Front: Pamela Newman, Lindsey George, Kelsey Travis
Back: Christopher Geraci, Connie Butler, Lisa Rushing
Kentwood
(888) 375-3093
301 Avenue F
Kentwood, LA 70444
Kentwood West
(985) 229-6101
723 Avenue G
Kentwood, LA 70444
(Left to Right)
Front: Allison Keating
Back: Cara Garner
Not Pictured: Ruby Carter
46
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Lake Charles:
LOAN PRODUCTION OFFICE
(337) 824-1712
4740 Nelson Road, #320
Lake Charles, LA 70605
Rahul Patel
Marksville
(318) 253-4531
305 North Main Street
Marksville, LA 71351
MARKSVILLE FRONT LINE:
(Left to Right)
Front: Liz Lemoine, Ronald Chatelain, Sheila Smith
Back: Ann Tassin, Ronny Green, Cynthia Wyatt,
Colleen McGehee
MARKSVILLE LEGAL:
(Left to Right)
Amanda Theriot, Samantha Lachney
MARKSVILLE MAIN
LENDING:
(Left to Right)
Front: Jana Joshua
Middle: Kristen Nelson
Back: Gregory Prudhomme
47
(Left to Right)
Front: Christen Cooper, Nickie Dauzat, Katherine Scallan
Back: Ariel Deming, Colton Campbell, Josiah Blood, Carolyn Bordelon
Not Pictured: Angel Williams, Dusti Marcotte
Marksville - Tunica
(318) 253-9835
211 East Tunica Drive
Marksville, LA 71351
TUNICA - TAG AND TITLE/
INSURANCE:
(Left to Right)
Minnie Deshotel, Pamela Landry
McKinney
(972) 562-1400
8951 Synergy Drive, #100
McKinney, TX 75070
(Left to Right)
Front: Jie Rong, Deborah King
Back: Gustavo Melendez, Daniel Prince
Not Pictured: Conrad Arrambide, Corinne Forbes
Jordan Lewis
48
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Montpelier
(225) 777-4304
35651 Highway 16
Montpelier, LA 70422
(Left to Right)
Front: Betsy Ehret
Back: Brianna Chaney, Heather Burrell
Moreauville
(318) 985-2299
10710 Highway 1
Moreauville, LA 71355
(Left to Right)
Front: Melinda Fontenot
Middle: Courtney Lacombe, Susan Desoto
Back: Laura Dufour
Not Pictured: Elizabeth Bordelon, Lakin Lemoine
49
(Left to Right)
Front: Dollie Ogletree, Glenda Graham
Back: Emma Rolling, Shawn Hall, Tina Gay
Not Pictured: Mika Rodgers
Oil City
(318) 995-6682
126 South Highway 1
Oil City, LA 71061
Pineville
(318) 641-7564
40 Pinecrest Drive
Pineville, LA 71360
(Left to Right)
Front: Evelyn Pickney, Taylor Peavy
Back: Robyn Patterson, Chaston Price, Lynn James, Monchondria Allen
50
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Ponchatoula
(888) 375-3093
500 West Pine Street
Ponchatoula, LA 70454
Vivian
(318) 375-3202
102 East Louisiana Avenue
Vivian, LA 71082
(Left to Right)
Front: Laura Serpas, Renee Stewart
Middle: Craig Scelfo, Joan Thibodeaux, Amiee Gervais, Elliot Goorley
Back: Phillip Jeanfreau, Misty Chauvin
Not Pictured: Lori Robertson, Denise Fletcher
(Left to Right)
Front: Elizabeth Cash, Caroline Caldwell
Middle: Taylor Wilson, Brandy Moon
Standing: Sherile Hartline, Tammy Boatman, Stacy Thompson
Not pictured: Glenda Sepulveda
51
(Left to Right)
Front: Terrie McCartney, Amy Dennis, Jessica Garcia
Middle: Angelia Simmers, Veronica Davis, Pam Lambert, Candice Mitchell
Back: Joshua Collier
Waco
(254) 399-0700
7600 Woodway Drive
Waco, TX 76712
Walker
(225) 664-5549
29815 Walker Road South
Walker, LA 70785
(Left to Right)
Front: Sheila Lofton, Sylvia Moore
Back: Nicole Mouton, Joey Amadeo, Adriana Johnson
52
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
(Left to Right)
Front: Tammy Chavers
Back: Judy Hughes, Bill Smith
Not Pictured: Emily Glaviano
Watson
(225) 665-0400
33818 Highway 16
Denham Springs, LA 70706
Bridgeport, West Virginia
Loan & Deposit Production Office
COMING SOON!
(Left to Right)
Front: Lisa Blackwell, Lisa Musgrave,
Diana Kinder
Back: Jason Turner, Sam Gallo,
Christopher Parr, Craig Hriblan
Vanceburg, Kentucky
Loan & Deposit Production Office
COMING SOON!
(Left to Right)
Mike Mineer, Jane Muehlbauer,
Marty Cole, Adam Christy
Not pictured: Ammon Cooper,
Daniel Pack
53
Our Mission
The mission of First Guaranty Bank and First Guaranty Bancshares, Inc. 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.
54
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
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 2021.
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
$431,500+
exceeded
in 2021.
Casie Qualls and Miranda Derveloy presented a contribution to Mayor Pete
Panepinto and Desiree Dotey, Camp Director for Hammond Area Recreation
Department Summer Camp.
Keisha Miller presented two seniors from Welsh High School a contribution for the
Graduation Safe and Sober Party.
Conrad Arrambide presented a contribution to Jessica Bartnick, Co-Founder &
CEO of Foundation For C.H.O.I.C.E.
Steven Osman presented a contribution to Scott Laborde, Director of Bands &
Choral Activities for Avoyelles Public Charter School to purchase band equipment.
Donna Hodges presented a contribution to Katie Landry for the Albany High
School Softball Team.
55
Caroline Caldwell, Stacy Thompson, and Shane Hughes presented a contribution to
Tim and Lou Ann Dodge, owners of the Vivian Fire House.
Becky Sellers presented a contribution to Angela Walters, Member Services
Coordinator for the Baton Rouge Board of Realtors.
Mikki Kelley presented a contribution to Cammie
Proctor, Director, Resource Department of United Way of
Southeast Louisiana for the United Way Campaign.
Matt Hudnall and Adam Johnston attended the "Floor
Signing" at the St. Jude Dream Home. This contribution
allowed us the opportunity for the sponsors to leave a
message for the kids of St. Jude and sign their names on
the floor – that'll stay with the home forever.
Matt Hudnall and Adam Johnston presented a contribution to Philip and Jenny Rodgers of Rodgers
Homes and Construction for the St. Jude Dream Home in Bossier.
56
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Glenda Graham and Dollie Ogletree presented a contribution to Pinnacle Search & Rescue. The
donation allows them to serve low income youth and further their mission to provide college and career
access opportunities for the underprivileged.
Courtney Tramiel presented a contribution to Coach J.A.
Anglin of the Cavalier Athletic Association (Bossier Parish
Community College Basketball).
Amy Dennis presented a contribution to Fuzzy Friends Rescue in Waco.
Cheryl Brumfield presented a contribution to Molli Rae Kinchen
representing the Tangi High School Rodeo.
Daryl Ferrara presented a contribution to Patti Roubique, Executive Director of
Louisiana Children’s Discovery Center for their Mad Hatter Brunch.
57
Elliot Goorley presented a contribution to Danny Elstrott of the
Ponchatoula Rotary for the “Golfin’ Dollars for Scholars” golf
tournament.
First Guaranty Bank presented a contribution to Sacred Heart
Catholic Church for Vacation Bible School. Left to right: Charissa
Lemoine, Kim Adams, Father Brian Seiler, Steven Osman, Carolyn
Bordelon, Davied Boe, Esher Boe, Andre Spruill, Margaret Borrel,
and Liz Lemoine.
Courtney Tramiel presented a contribution to Dianne Clark with Sci-Port. First Guaranty Bank
sponsored the Sno-Port Exhibit.
Kristin Williams presented a contribution to Vanessa Prentice,
Director of Development for Southeastern Louisiana University
Foundation.
Alton Lewis presented a contribution to Ryan Barker, Director of Chappapeela Sports park for
an annual sponsorship.
58
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
First Guaranty Bank presented a contribution to North Oaks Foundation for the Covid-100 initiative. Left to right: Alton Lewis, Randy Vicknair, Amber Smith, Latonia
Cotton, and Eric Dosch.
FGB presented a contribution to the Town of Cheneyville. Left to right: Ronald
Chatelain, Colleen McGehee, Cynthia Wyatt, Derrick Johnson, Ronny Green,
Elizabeth Lemoine, and Sheila Smith.
First Guaranty Bank presented a contribution to Brother Bill’s Helping Hand. Left
to right: Areeb Rashid, Laurel Green of Brother Bill’s Helping Hand, and Ashley
Bell.
First Guaranty Bank contributed to the Independence Sicilian Heritage Festival.
Left to right: Cheryl Brumfield; Ryan Oliphant, Sponsorship; Robin Abrams,
Public Relations; and Lisa Paine, Treasurer.
First Guaranty Bank presented a contribution to Junior Achievement of the
Chisolm Trail Inc. In the photo left to right is Kathleen Barbee, Director of
Strategic Partnerships, Junior Achievement of the Chisholm Trail, Alyssa Al Sabi,
and Indra Pant.
59
Courtney Lacombe presented a contribution to the
Hessmer Sports Club.
Matt Wise presented a contribution to Vanessa Pentice,
Director of Development and Wendy Lauderdale,
Executive Director Southeastern Foundation for the
Chefs Under the Stars Event.
First Guaranty Bank presented a contribution (and king cakes) to the Adopt-A-School program for
Dubach Elementary School. Left to right: Kemberlin Locks, Marilyn Rushing, Dubach Elementary
School secretary/clerk, and Kristy Puckett.
Jane Wear presented a contribution to Jivka Duke for the SLU Community Music
School.
Pam Normand and William Voelker presented a contribution to Michelle
Purl, CEO, for United Way.
60
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Crystal Ward and Casie Navarre presented a contribution to Genevieve
Silverman, President & CEO and Kristi Richardson, Program & Event
Coordinator for the BizTech Challenge.
Cheryl Brumfield presented a contribution to the Independence Volunteer Fire
Department. Left to right: Otis Ellison, Cheryl Brumfield, Fire Chief John Polito,
and Tommie Spencer, Jr.
Alton Lewis and Kristin Williams presented a contribution to
Michelle Gallo, CEO/Executive Director of Crime Stoppers of
Tangipahoa, Inc. and Rayne Beal, Crime Stoppers Outreach
Coordinator for the Duck Derby event.
First Guaranty Bank contributed to the Loranger Middle School Robotics Team, the Wolf-Bytes.
Chaston Price presented a contribution to the Family Justice Center of Central LA.
61
First Guaranty Bank
presented a contribution to
the Abbeville Fire Department
for the fire safety program
called “Fire Pup.” Left to
right: Diane Frederick,
Gretchen Meaux, Captain
Cory Bourque, Fireman Eric
Meaux, Ruth Huron, and Lisa
Guidry.
Miranda Derveloy and Casie Qualls presented a contribution to Patrick Coudrain,
Kiwanis President, for Trivia Night.
Matt Hudnall and Adam Johnston presented a contribution to Logan Lewis, Director
of Marketing & Membership for the Independence Bowl.
Kendra Phipps presented a contribution to the Haughton Football team.
62
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Casie Qualls presented
a contribution to Charley
Vance, Talented Theatre
Teacher and the Amite
and Jewel Sumner High
School’s students for the
Tangipahoa Parish School
Board’s Talented Theatre
Program.
Becky Sellers presented a contribution to Dax Roy, President of Greater Central Louisiana Realtor
Association and Angela Lavais, Account Executive of Greater Central Louisiana Realtor Association, for
the 2021 Greater Central Louisiana Realtor Association Installation and Awards Banquet.
Trella Page presented a contribution to Marquetta L.
Anderson, MS, MPA for the St. Helena Farmer’s Market.
63
Cody Gil and Gretchen Meaux presented a contribution
to the Chief of Police, William Spearman for the
Abbeville Police Department.
Adam Johnston presented a contribution to Lion Frank
Russell for the Lions International Bossier City.
First Guaranty Bank presented a contribution to Christmas on Caddo Festival. Left to right: Mika
Rodgers, Shawn Hall, Emma Rolling, Casey Hartley (President, Christmas on Caddo), Glenda Graham,
and Tina Gay.
Catherine Egnew presented a contribution to Coach
Christopher Blanchard, Baseball Coach, for Springfield
High School.
First Guaranty Bank presented a contribution to Kentwood Middle School football team for the
purchase of new uniforms. Left to right: Rochell Bates, Kentwood High Magnet School Principal, Chris
Geraci, and Teddy Hookfin, Kentwood Middle Football Coach.
64
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Courtney Tramiel presented a contribution to Coach
Eddie Hamilton for the Airline High School Boys
Basketball.
Leslie Hinzman presented a contribution to Andie Jackson, UNT Student Activity Coordinator for the
UNT Mean Green Fling.
First Guaranty Bank presented
a contribution to Gingerbread
House Children's Advocacy
House. Left to right, Aelania
Auzenne, Sophia M. Herron,
Jordan Hughes, Jessica Milan
Miller, from the Gingerbread
House, Courtney Tramiel, and
Stephanie Dempsey.
65
Casie Qualls presented a contribution to Dana Monistere for
the Project Graduation event for Loranger High School.
Daryl Ferrara presented a contribution to Melissa Griffin,
Executive Director of the Hammond Regional Arts Center.
Keisha Miller presented a contribution to Mr. Jimmy Segura for the JHS Alumni Tournament.
Dollie Ogletree presented a contribution to Jill Lucero,
Regional Director of American Heart Association Northwest
Louisiana Area for the Northwest Louisiana Go Red for
Women Celebration.
Alton Lewis and Kristin Williams presented a contribution to Mayor Pete Panepinto and Guy Recotta
for the Back to School Bash.
66
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Philip Jeanfreau presented a contribution to Owen Bateman
of the Ponchatoula High School Band.
Melinda Kidder presented a contribution to Chief James Gaspard
of the Bordelonville Fire Department.
Vanessa Drew presented a contribution to Patti Roubique,
Executive Director of Louisiana Children’s Discovery Center.
Brandi Steffek presented a contribution to Carolyn Strahan with Greenville Park Leadership
Academy for the upcoming teachers appreciation event.
Cheryl Brumfield presented a contribution to Jeanette
Patanella for the Mater Dolorosa Catholic School Steak
Dinner.
67
Adam Johnston presented a contribution to Angela "Angie"
White, Executive Vice President of the North Louisiana
Economic Partnership.
Greg Prudhomme presented a contribution to Coach Nick Pujol of Bunkie High School.
Randy Vicknair presented a contribution to Dr. Tará Burnthorne Lopez, Interim Dean
and Professor of Marketing at Southeastern Louisiana University for Business Week.
Desiree Simmons presented a contribution to Randy Settoon, Director, for
the Southeastern Channel.
68
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Angela Wales presented a contribution for the Kiwanis Club of Denham Springs. In the photo with Angela Wales are Live Oak High Key Club and Denham
Springs High Key Club.
Melina West presented a contribution to Jodee Hoover, Executive
Director and Donna Olivia, House Administrator, for the Richard Murphy
Hospice Foundation.
First Guaranty Bank contributed to the Salute the Lions event hosted by FeLions. Front
row, left to right: Christina Carter, Jan Labbe, and Joann Giannobile. Back row, left to
right: Peggy Hoover, Libby Covington, and Peggy Matheu.
69
A
City of Abbeville – Fire Safety
Education
Abbeville Police Department
Albany High School – Softball Team
Sign
ALSAC/St. Jude’s Hospital
American Heart Association Inc.
Avoyelles Council on Aging, Inc.
Avoyelles High School – Baseball
Team Sponsor
Avoyelles Parish School Board – High
School Spirit Squad
Avoyelles Parish Charter School –
Band Equipment
B
Bordelonville Fire Department
Bossier Chamber of Commerce
Bossier City Lions Club – High School
Football Jamboree
Bossier Parish School Board – Airline
High Basketball
Boy Scouts of America
Boys and Girls Club of Acadiana
Brother Bill’s Helping Hand
Bunkie High School – Football
Stadium Scoreboard
C
Caddo Parish School Board – Positive
Behavior Program
Cajun Navy – Rescue Supplies
CASA Services, Inc.
Cavalier Athletic Association
Town of Cheneyville – Founders Day
Festival
Chisholm Trail RSVP, Inc. – Golf
Tournament Sponsor
Christmas on Caddo
Claiborne Academy – Billboard
Claiborne Charity Inc. – Silver
Sponsor
Claiborne Parish School Board –
Haynesville Elementary
CLHG Avoyelles LLC – Nursing Staff
Crawfish Boil
Commission for Women of Bossier
City Inc. – Inspiring Women
Luncheon Sponsor
D
Delta Waterfowl Foundation –
Banquet Sponsor
Dubach Restoration and
Beautification Organization –
Chicken Festival
Dubach School – Adopt-A-School and
Teacher Appreciation Week
Town of Dubach – Santa Run
Sponsor, Trunk or Treat and
Veterans’ Lunch
F
Faith House, Inc.
Family Justice Center of Central
Louisiana Inc.
Foundation for CHOICE – Mentoring
Program for At-Risk High School
Students
Fuzzy Friends Rescue – Barkin’ Ball
G
Gingerbread House Bossier/Caddo
Good Samaritans of Garland Inc.
Greater Bossier Development
Foundation
Greater Central Louisiana Realtor
Association
Greenville Park Leadership Academy
– Teachers Appreciation
Gujarati Samaj of Mississippi –
Annual Banquet Sponsor
H
Hammond Area Recreation District –
Movie in the Park and Chappapella
Sports Park Sponsor
Hammond – Downtown Development
District – Railroad Bench,
Community Garden, and Picnic in
the Park
Hammond Chamber of Commerce
– Chillin’ with the Chamber
Title Sponsor, LHSAA Soccer &
Basketball Tournaments
City of Hammond – Back to School
Bash
City of Hammond Recreation
Department – Summer Camp
Hammond Eastside Magnet School –
Fall Festival
Hammond Regional Arts Center
Haughton High School – Football
program and Baseball Tournament
Sponsor
Haynesville Beautification Committee
Hessmer Sports Club – Sign
Holy Ghost Catholic Church –
Sparklers Sponsorship
Homer Golf Club – Tee Box Sponsor
Homer Main Street La Legends
Festival and Golf Sponsorship
I
Independence Bowl Foundation, Inc.
Independence Sicilian Heritage
Festival
Independence Summer Baseball
Independence Volunteer Fire
Department – Smokin’ on the Track
BBQ
J
Jeff Davis Chamber of Commerce –
Gold Tournament Sponsor
Jennings High School – JHS Alumni
Softball Tournament Sponsor
Jennings Police Association – Shop
with a Cop
Junior Achievement of Chisholm Trail
Inc.
Junior Achievement of Greater Baton
Rouge & Acadia
K
Kentwood Baseball/Softball
Association
Kentwood High Magnet School –
Baseball Program
Kentwood Rotary Club – Golf
Tournament
Town of Kentwood – School Supply
Giveaway
Kim’s Stitches & Inks, LLC – Football
T-Shirts
St. Genevieve – Sunday Missal Ad
St. Helena Cattle Company – Farmers
Kiwanis Club of Denham Springs –
Market Sponsorship
Christmas Parade, Clay Shoot
Kiwanis Club of Hammond
Knights of Columbus Marksville
Council 1217
L
LA Children’s Discovery Center – Mad
Hatter Brunch and Bubble Zone
Exhibit Sponsor
Launch
Livestock Committee of Garland
Loranger High School – Project
Graduation
Loranger Middle School – Wolf-Bytes
Robotics Team Diamond Sponsor
Loranger Youth Basketball
Louisiana 4-H Foundation – Jr.
Livestock Show – 5 Belt Buckles
Louisiana Cattlemen’s Association –
Banquet Sponsor
Louisiana Realtors – Spring Into
Action
Louisiana Technology Park – Biz Tech
Challenge Sponsor
M
City of Marksville – Doll and Toy Fund
Marksville High/Avoyelles Parish
School Board
Marksville Little League – T-Ball All
Stars
Mater Dolorosa Catholic Church –
Steak Dinner Eagle Sponsorship
Monterey County Club
Moreauville Volunteer Fire
Department
Mothers Against Drunk Driving
Richard Murphy Hospice Foundation
N
North Louisiana Economic
Partnership
North Oaks Foundation – COVID
Vaccination Incentive
O
Oak Forest Academy – Golf
Tournament
Oak Grove Church of Christ
Open Hands Sharing God’s Love
Options, Inc.
P
Ponchatoula Chamber of Commerce
Ponchatoula High School – Lady
Wave Basketball, Band Sponsor and
Senior Breakfast
R
Rotary Club of Denton, Texas – Flag
Program
Rotary Club of Ponchatoula – Golfin’
Dollars for Scholars
S
Sacred Heart Church – Fall Fair
Fundraiser and Vacation Bible
School
St. Helena Parish Police Jury
St. Mary’s Assumption School –
Athletics Silver Sponsor
St. Thomas Aquinas High School
Basketball Team and National
Championship Rings
SCI-PORT Discovery Center
Shriners Hospitals for Children
Jordan Smith Benefit
Southeastern Louisiana University –
Golf Tournament
Southeastern Louisiana University –
Columbia Theatre for the Arts
SLU Athletic Association – Sports
Package and Salute the Lions
SLU Foundation – Business
Perspectives Week Sponsor,
Southeastern Alumni Association,
Southeastern Giving Day,
Community Music School, Channel
Sponsorship, Chefs Evening
Southeast Community Health System
Southeast regional Officials
Association
Southern University System
Foundation Inc.
Special Olympics Louisiana
Springfield High School – Baseball
Team
Stirling Properties – Golf Tournament
Sumner High School
T
Tangi High School Rodeo – Barrel
Racing Sponsor
Tangipahoa Parish School System –
Talented Theatre and PHS Cheer
Terzia’s Inc. – Chicken Festival
Texas Bankers Association
Tunica-Biloxi Indians PAC – Golf
Tournament
Twin Steeples, Inc.
U
United by BBQ
United Way of Central Louisiana Inc.
United Way of Southeast Louisiana
University of North Texas – Mean
Green Fling Sponsor and University
Day Sponsor
V
Varsity Brands Holding Co., Inc. –
Kentwood Junior High Football Team
Vivian Fire House LLC – Museum
W
Westminster Place – Holiday
Meals/Gifts for Thanksgiving and
Christmas
WHS Class of 2021 – Safe and Sober
After Graduation Party
Woodland Park Magnet School –
Teacher Appreciation Week
70
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Banks Headquartered in Louisiana Ranked by Asset Size as of December 31, 2021
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
Origin Bank
b1Bank
Red River Bank
First Guaranty Bank
Home Bank, National Association
Investar Bank, National Association
Gulf Coast Bank and Trust Company
Citizens National Bank, N.A.
JD Bank
First Federal Bank of Louisiana
Sabine State Bank and Trust Company
First Bank and Trust
First American Bank and Trust
First National Banker's Bank
Fidelity Bank
Resource Bank
Crescent Bank & Trust
Liberty Bank and Trust Company
The Evangeline Bank and Trust Company
Progressive Bank
Synergy Bank
BOM Bank
Community Bank of Louisiana
United Community Bank
South Louisiana Bank, Houma, Louisiana
Concordia Bank & Trust Company
Home Federal Bank
28 Metairie Bank & Trust Company
29
30
31
32
33
34
First National Bank of Louisiana
Century Next Bank
Community First Bank
Gulf Coast Bank
Jonesboro State Bank
Rayne State Bank & Trust Company
35 Merchants & Farmers Bank & Trust Company
Cottonport Bank
Cross Keys Bank
Fifth District Savings Bank
Gibsland Bank & Trust Company
Delta Bank
Citizens Bank & Trust Company
First National Bank in DeRidder
The First National Bank of Jeanerette
36
37
38
39
40
41
42
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44
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46
47
48 M C Bank & Trust Company
49
50
51
52
53
54
55
56
The Bank
Lakeside Bank
Southern Heritage Bank
St. Landry Bank and Trust Company
Guaranty Bank & Trust Company of Delhi, Louisiana
Bank of Zachary
Louisiana National Bank
City Bank & Trust Co.
Choudrant
Baton Rouge
Alexandria
Hammond
Lafayette
Baton Rouge
New Orleans
Bossier City
Jennings
Lake Charles
Many
New Orleans
Vacherie
Baton Rouge
New Orleans
Covington
New Orleans
New Orleans
Ville Platte
Monroe
Houma
Natchitoches
Mansfield
Raceland
Houma
Vidalia
Shreveport
Metairie
Crowley
Ruston
New Iberia
Abbeville
Jonesboro
Rayne
Leesville
Cottonport
Saint Joseph
New Orleans
Gibsland
Vidalia
Plaquemine
DeRidder
Jeanerette
Morgan City
Jennings
Lake Charles
Jonesville
Opelousas
Delhi
Zachary
Ruston
Exchange Bank and Trust Company, Natchitoches, Louisiana Natchitoches
57
58
St. Landry Homestead Federal Savings Bank
Patterson State Bank
59 Washington State Bank
60
61
62
Guaranty Bank and Trust Company
Bank of Coushatta
Citizens Savings Bank
63 Winnsboro State Bank & Trust Company
64
65
66
67
68
CLB The Community Bank
Commercial Capital Bank
American Bank & Trust Company
Hibernia Bank
American Bank & Trust Company
69 Marion State Bank
Franklin State Bank & Trust Company
Bank of St. Francisville
Citizens Progressive Bank
Bank of Abbeville & Trust Company
Caldwell Bank & Trust Company
Plaquemine Bank & Trust Company
Bank of Sunset and Trust Company
Citizen's Bank & Trust Company of Vivian, Louisiana
Tensas State Bank
Anthem Bank & Trust
First National Bank USA
Citizens Bank & Trust Company
Colfax Banking Company
Landmark Bank
Simmesport State Bank
Bank of Winnfield & Trust Company
Vermilion Bank & Trust Company
Heritage Bank of St. Tammany
Feliciana Bank & Trust Company
South Lafourche Bank & Trust Company
Farmers State Bank & Trust Co.
State Bank & Trust Company
93 Mississippi River Bank
94
95
96
97
98
99
Bank of Erath
Eureka Homestead
Progressive National Bank of DeSoto Parish
Bank of Louisiana
Currency Bank
Hodge Bank & Trust Company
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
Opelousas
Patterson
Washington
New Roads
Coushatta
Bogalusa
Winnsboro
Jonesville
Delhi
Opelousas
New Orleans
Covington
Marion
Winnsboro
Saint Francisville
Winnsboro
Abbeville
Columbia
Plaquemine
Sunset
Vivian
Newellton
Plaquemine
Boutte
Covington
Colfax
Clinton
Simmesport
Winnfield
Kaplan
Covington
Clinton
Larose
Church Point
Golden Meadow
Belle Chasse
Erath
Metairie
Mansfield
New Orleans
Oak Grove
Hodge
Chatham
Gueydan
Deridder
Benton
Oak Ridge
Sicily Island
Jonesboro
Basile
White Castle
Rayne
Mer Rouge
Metairie
71
Farmers-Merchant Bank & Trust Company
Breaux Bridge
100 Peoples Bank
Homeland Federal Savings Bank
Bank of Commerce & Trust Co.
Columbia
Crowley
101 Bank of Gueydan
102 Beauregard FSB
Peoples Bank and Trust Company of Pointe Coupee Parish
New Roads
103 First National Bank of Benton
104 Bank of Oak Ridge
105 Sicily Island State Bank
106 Jackson Parish Bank
107 Basile State Bank
108 The Bank of Commerce
109 Abbeville Building & Loan (A State-Chartered Savings Bank)
Abbeville
110 Rayne Building and Loan Association
111 The Mer Rouge State Bank
Natchitoches
112 Mutual Savings and Loan Association
First Guaranty Bancshares, Inc.
CORPORATE INFORMATION
ANNUAL MEETING
The Annual Meeting of Shareholders will convene
at 2:00 PM Central Daylight Saving Time (CDT) on
Thursday, May 19, 2022 in the FGB Center,
206 S. Orange Street, Hammond, LA 70403
CORPORATE HEADQUARTERS
First Guaranty Square
400 East Thomas Street
Hammond, Louisiana 70401-3320
Telephone: (888) 375-3093
SHAREHOLDER SERVICES
First Guaranty Bancshares, Inc.
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.
72
FIRST GUARANTY BANCSHARES, INC. 2021 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 ................................. 110
Consolidated Balance Sheets ..................................................................................... 111
Consolidated Statements of Income ......................................................................... 113
Consolidated Statements of Comprehensive Income (Loss) ................................. 114
Consolidated Statements of Changes in Shareholders’ Equity .............................. 114
Consolidated Statements of Cash Flows .................................................................. 115
Notes to Consolidated Financial Statements .......................................................... 116
73
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.
Year End Balance Sheet Data:
Investment securities
Federal funds sold
Loans, net of unearned income
Allowance for loan and lease losses
Total assets
Total deposits
Borrowings
Shareholders' equity
Common shareholders' equity
At or For the Years Ended December 31,
2021
2020
2019
2018
2017
(in thousands, except for % and share data)
$
$
364,156
183
$
$
238,548
702
$
$
426,516
914
$
$
405,303
549
$
$
501,656
823
$ 2,159,359
$ 1,844,135
$ 1,525,490
$ 1,225,268
$ 1,149,014
$
24,029
$
24,518
$
10,929
$
10,776
$
9,225
$ 2,878,120
$ 2,473,078
$ 2,117,216
$ 1,817,211
$ 1,750,430
$ 2,596,492
$ 2,166,318
$ 1,853,013
$ 1,629,622
$ 1,549,286
$
$
$
49,635
223,889
190,831
$
$
$
116,630
178,591
178,591
$
$
$
86,747
166,035
166,035
$
$
$
34,538
147,284
147,284
$
$
$
52,938
143,983
143,983
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)
1.01%
14.06%
1.04%
15.98%
3.44%
83.65%
63.63%
63.32%
470
7.65%
7.02%
6.63%
6.04%
0.87 %
11.36 %
0.90 %
13.08 %
3.35 %
81.25 %
58.95 %
68.44 %
429
7.62%
6.86%
7.22%
6.51%
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%
74
FIRST GUARANTY BANCSHARES, INC. 2021 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)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
111,917
22,299
89,618
2,055
10,046
714
63,868
34,455
27,297
25,913
2.42
0.60
17.81
16.13
$
$
$
$
$
$
$
$
$
$
$
$
$
$
100,684
26,017
74,667
14,877
8,989
14,791
58,033
25,537
20,318
20,318
1.90
0.58
16.66
14.92
$
$
$
$
$
$
$
$
$
$
$
$
$
$
91,643
29,966
61,677
4,860
8,456
(157)
47,219
17,897
14,241
14,241
1.34
0.54
15.49
13.68
$
$
$
$
$
$
$
$
$
$
$
$
$
$
78,390
21,366
57,024
1,354
7,110
(1,830)
43,275
17,675
14,213
14,213
1.33
0.53
13.82
13.24
$
$
$
$
$
$
$
$
$
$
$
$
$
$
67,546
14,393
53,153
3,822
6,943
1,397
38,521
19,150
11,751
11,751
1.13
0.49
13.51
12.88
Dividend payout ratio for Common and Preferred
Weighted average number of shares outstanding
Number of shares outstanding
28.49%
30.68 %
40.74%
39.65%
44.34%
10,716,796
10,716,796
10,666,055
10,657,245
10,416,337
10,716,796
10,716,796
10,716,796
10,657,245
10,657,245
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 and lease loss to average loans
Allowance for loan and lease loss to total loans
0.70%
0.93%
0.83%
1.25 %
1.68 %
1.55 %
1.04%
1.44%
1.12%
0.55%
0.82%
0.73%
0.84%
1.28%
1.17%
119.95%
79.33 %
49.86%
107.48%
62.88%
0.13%
0.10%
1.11%
0.08 %
0.89 %
1.33 %
0.36%
0.37%
0.72%
(0.02)%
0.12%
0.88%
0.54%
0.36%
0.80%
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. All share and per share amounts have been restated to reflect the ten percent stock dividend paid December 17, 2021 to shareholders of record as of December
15, 2021.
75
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 Stock
Goodwill
Acquisition intangibles
Tangible common equity
Common shares outstanding1
Book value per common share1
At December 31,
2021
2020
2019
2018
2017
(in thousands, except for share data and %)
$ 223,889
$ 178,591
$
166,035
$
147,284
$
143,983
33,058
12,900
-
-
-
-
12,900
12,942
3,472
3,472
5,051
5,815
6,527
2,704
3,249
$ 172,880
$ 159,876
$ 146,566
$ 141,108
$ 137,262
10,716,796
10,716,796
10,716,796
10,657,245
10,657,245
$ 17.81
$ 16.66
$ 15.49
$ 13.82
$
$
13.51
12.88
Tangible book value per common share1
$ 16.13
$ 14.92
$ 13.68
$ 13.24
Tangible Assets
Total Assets
Adjustments:
Goodwill
Acquisition intangibles
Tangible Assets
$ 2,878,120
$ 2,473,078
$ 2,117,216
$ 1,817,211
$ 1,750,430
12,900
12,900
12,942
3,472
3,472
5,051
5,815
6,527
2,704
3,249
$ 2,860,169
$ 2,454,363
$ 2,097,747
$ 1,811,035
$ 1,743,709
Tangible common equity to tangible assets
6.04%
6.51%
6.99%
7.79%
7.87%
1All share amounts have been restated to reflect the ten percent stock dividend paid December 17, 2021 to shareholders of record as of December 15, 2021.
76
FIRST GUARANTY BANCSHARES, INC. 2021 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
For the Year Ended December 31,
2021
2020
2019
2018
2017
(in thousands, except for share data and %)
63.63%
58.95%
67.48%
69.46%
62.64%
$63,868
$58,033
$47,219
$43,275
$38,521
764
711
390
545
432
63,104
89,618
10,760
57,322
74,667
23,780
46,829
61,677
8,299
42,730
57,024
5,280
38,089
53,153
8,340
714
14,691
(157)
(1,830)
1,397
Noninterest income, excluding securities transactions
$ 10,046
$ 9,089
$ 8,456
$
7,110
$
6,943
Efficiency ratio
63.32%
68.44%
66.77%
66.63%
63.38%
77
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
on Form 10-K. This discussion and analysis contains forward-looking
statements that are subject to certain risks and uncertainties and are
based on certain assumptions that we believe are reasonable but may
prove to be inaccurate. Certain risks, uncertainties and other factors,
including those set forth under "Forward-Looking Statements," "Risk
Factors" and elsewhere in this Annual Report on Form 10-K, may cause
actual results to differ materially from those projected results discussed
in the forward-looking statements appearing in this discussion and
analysis. We assume no obligation to update any of these forward-
looking statements.
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, but not limited to, changes in general
economic conditions, either nationally or in our market areas, that
are worse than expected; the impact of the COVID-19 pandemic;
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 36 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, Waco, Texas and our new Mideast markets
in Kentucky and West Virginia. We emphasize personal relationships
and localized decision making to ensure that products and services are
matched to customer needs. We compete for business principally on
the basis of personal service to customers, customer access to officers
and directors and competitive interest rates and fees.
Total assets were $2.9 billion at December 31, 2021 and $2.5 billion at
December 31, 2020. Total deposits were $2.6 billion at December 31,
2021 and $2.2 billion at December 31, 2020. Total loans were $2.2
billion at December 31, 2021, an increase of $315.2 million, or 17.1%,
compared with $1.8 billion at December 31, 2020. Total shareholders'
equity was $223.9 million and $178.6 million at December 31, 2021
and December 31, 2020, respectively.
Net income was $27.3 million, $20.3 million and $14.2 million for
the years ended December 31, 2021, 2020 and 2019, respectively.
We generate most of our revenues from interest income on loans,
interest income on securities, sales of securities, ATM and debit card
fees and service charges, commissions and fees. We incur interest
expense on deposits and other borrowed funds and noninterest
expense such as salaries and employee benefits and occupancy and
equipment expenses. Net interest income is the difference between
interest income earned on interest-earning assets such as loans and
securities and interest expense paid on interest-bearing liabilities such
as deposits and borrowings which are used to fund those assets.
Net interest income is our largest source of revenue. To evaluate net
interest income, we measure and monitor: (1) yields on our loans and
other interest-earning assets; (2) the costs of our deposits and other
funding sources; (3) our net interest spread and (4) our net interest
margin. Net interest spread is the difference between rates earned on
interest-earning assets and rates paid on interest-bearing liabilities. Net
interest margin is calculated as net interest income divided by average
interest-earning assets. Because noninterest-bearing sources of funds,
such as noninterest-bearing deposits also fund interest-earning assets,
net interest margin includes the benefit of these noninterest-bearing
sources.
Changes in market interest rates and interest rates we earn on interest-
earning assets or pay on interest-bearing liabilities, as well as the
volume and types of interest-earning assets, interest-bearing and
noninterest-bearing liabilities are usually the largest drivers of periodic
changes in net interest spread, net interest margin and net interest
income. Fluctuations in market interest rates are driven by many
factors, including governmental monetary policies, inflation, deflation,
macroeconomic developments, changes in unemployment, the money
supply, political and international conditions, conditions in domestic
and foreign financial markets and in 2020 and 2021 the economic
and social effects of the COVID-19 pandemic. 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 2021 and 2020:
• Total assets increased $405.0 million, or 16.4%, to $2.9 billion at
December 31, 2021 when compared with December 31, 2020.
Total loans at December 31, 2021 were $2.2 billion, an increase
of $315.2 million, or 17.1%, compared with December 31, 2020.
Total deposits were $2.6 billion at December 31, 2021, an increase
of $430.2 million, or 19.9% compared with December 31, 2020.
Retained earnings were $56.7 million at December 31, 2021, an
increase of $19.5 million compared to $37.1 million at December
31, 2020. Shareholders' equity was $223.9 million and $178.6
million at December 31, 2021 and December 31, 2020, respectively.
• Net income for each of the years ended December 31, 2021 and
2020 was $27.3 million and $20.3 million, respectively.
78
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
• Earnings per common share were $2.42 for the year ended December
31, 2021 and $1.90 for the year ended December 31, 2020. Total
weighted average common shares outstanding were 10,716,796 at
December 31, 2021 and December 31, 2020.
• First Guaranty participated in the SBA Paycheck Protection Program
("PPP") under the Coronavirus Aid, Relief, and Economic Security
Act ("CARES Act"). The CARES Act authorized the SBA to guarantee
loans under a new 7(a) loan program known as the PPP. As a
qualified SBA lender, we were automatically authorized to originate
PPP loans. The SBA will guarantee 100% of the PPP loans made to
eligible borrowers and will forgive such loans. The program has been
conducted in two phases which First Guaranty classifies as Round 1
loans (originated in 2020) and Round 2 loans (originated in 2021).
As of December 31, 2021, First Guaranty had remaining Round 1
PPP loans of $12.7 million with deferred fees of $0.3 million and
Round 2 PPP loans of $22.6 million with deferred fees of $1.1 million
remaining. $2.0 million in PPP fees were recognized during 2021
compared to $2.2 million in PPP fees recognized in 2020.
• The allowance for loan and lease losses was 1.11% of total loans at
December 31, 2021 compared to 1.33% at December 31, 2020. First
Guaranty attributes the decrease in the allowance as a percentage
of loans to the improvement in factors related to the COVID-19
pandemic offset by growth in the loan portfolio identified risks.
First Guaranty had acquisition related loan discounts that totaled
approximately $1.4 million at December 31, 2021. First Guaranty
had $35.4 million at December 31, 2021 of SBA guaranteed PPP
loans that have no related allowance due to the 100% government
guarantee in accordance with regulatory guidance.
• First Guaranty had approximately $12.4 million of loans on deferral as
of December 31, 2021 due to Hurricane Ida that impacted Southeast
Louisiana on August 29, 2021.
• The provision for loan losses totaled $2.1 million for 2021 compared
to $14.9 million in 2020. The provision was primarily elevated in 2020
due to COVID-19 related economic conditions and due to growth in
the loan portfolio.
• Net interest income for 2021 was $89.6 million compared to $74.7
million for 2020.
• Noninterest income for 2021 was $10.8 million compared to $23.8
million for 2020. Excluding the impact of securities gains, noninterest
income for 2021 improved to $10.0 million from $9.0 million for
2020. The increase was primarily due to higher ATM and debit card
fees.
• The net interest margin was 3.44% for 2021 and 3.35% for 2020.
First Guaranty attributed the increase in the net interest margin to
an improved mix of loans compared to securities and cash along
with continued reduction in First Guaranty's cost of funds. Loans as
a percentage of average interest earning assets increased to 77.3%
at December 31, 2021 compared to 74.7% at December 31, 2020.
• Investment securities totaled $364.2 million at December 31, 2021,
an increase of $125.6 million when compared to $238.5 million
at December 31, 2020. Gains on the sale of securities were $0.7
million for 2021 as compared $14.8 million for 2020. At December
31, 2021, available for sale securities, at fair value, totaled $210.6
million, a decrease of $27.9 million when compared to $238.5 million
at December 31, 2020. At December 31, 2021, held to maturity
securities, at amortized cost, totaled $153.5 million as compared to
$0 at December 31, 2020.
• Nonaccrual loans increased $1.1 million to $16.7 million at December
31, 2021 compared to $15.6 million at December 31, 2020.
• First Guaranty is a smaller reporting company and has delayed the
adoption of ASU 2016-13, "Financial Instruments - Credit Losses:
Measurement of Credit Losses on Financial Instruments." First
Guaranty uses the incurred loss model for the calculation of its
allowance.
• Return on average assets was 1.01% and 0.87% for the years ended
December 31, 2021 and 2020, respectively. Return on average
common equity was 14.06% and 11.36% for 2021 and 2020,
respectively. Return on average assets is calculated by dividing net
income by average assets. Return on average common equity is
calculated by dividing net income by average common equity.
• Book value per common share was $17.81 as of December 31, 2021
compared to $16.66 as of December 31, 2020. Tangible book value
per common share was $16.13 as of December 31, 2021 compared
to $14.92 as of December 31, 2020. The increase in book value
was due primarily to an increase in retained earnings partially offset
by changes in accumulated other comprehensive income ("AOCI").
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 2021, which was the equivalent of $0.60 per
common share after adjusting for the 10% common stock dividend
paid in December 2021. First Guaranty also declared cash dividends
of $0.64 in 2020, which was the equivalent of $0.58 per common
share after adjusting for the 10% common stock dividend paid in
December 2021. First Guaranty has paid 114 consecutive quarterly
dividends as of December 31, 2021.
• On April 27, 2021, First Guaranty issued 34,500 shares of 6.75%
Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock, par
value $1,000 per share, with a liquidation preference of $1,000 per
share through an underwritten public offering of 1,380,000 depositary
shares, each representing a 1/40th ownership interest in a share of
the Series A Preferred Stock. Total gross proceeds from the preferred
stock offering were $34.5 million. The shares are listed on NASDAQ
under the symbol FGBIP. The proceeds were used to redeem $13.3
million in senior debt and increase the bank subsidiary capital by
$20.0 million effective April 30, 2021. First Guaranty paid preferred
cash dividends of $1.4 million during 2021.
Recent Developments
As disclosed in previous filings by First Guaranty Bancshares, Inc.,
for approximately 15 years First Guaranty Bank, a subsidiary of First
Guaranty Bancshares, Inc. has utilized an “Employee Stock Grant
Program” to incentivize and reward bank employees for performance.
Each quarter, the Board of Directors of First Guaranty Bank allocates
a $75,000 payment to an attorney to be used to purchase, on the
open market, shares of stock with First Guaranty Bancshares, Inc. The
attorney receives nominations which come from managers throughout
the Bank for awards to employees which range from clerical through top
Management. An average of just over 100 employees receive awards, in
full ownership with no vesting nor other requirements, each quarter with
an average award of approximately 37 shares per employee awarded.
The total cost of this program per year is approximately $300,000 with
total shares awarded of approximately 15,000 shares.
• Total loans net of unearned income were $2.2 billion at December
31, 2021 compared to $1.8 billion at December 31, 2020. Total loans
net of unearned income are reduced by the allowance for loan and
lease losses which totaled $24.0 million at December 31, 2021 and
$24.5 million at December 31, 2020.
In addition, the same process is utilized by First Guaranty Bancshares,
Inc. at the conclusion of each year for the grant of stock bonuses to
members of Management of First Guaranty Bank, selected by the
Board of Directors of First Guaranty Bancshares, Inc. Those awards
have averaged approximately $275,000 or 12,500 shares per year.
• Total impaired loans decreased $0.9 million to $15.0 million at
December 31, 2021 compared to $15.9 million at December 31, 2020.
The SEC has requested information concerning this practice. No
process has been instituted; only, a request for information.
79
Critical Accounting Estimates
Our consolidated financial statements are prepared to conform to
generally accepted accounting principles in the United States and with
predominant accounting practices within the banking industry. Certain
critical estimates require judgment and estimates which are used in the
preparation of the financial statements and accompanying notes.
We have identified the following critical accounting estimate that is
critical to an understanding of our financial condition and results of
operations.
Allowance for Loan and Lease Losses.
The allowance for loan and lease losses is established through a
provision for loan losses charged to expense. Loans are charged against
the allowance for loan and lease 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.
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 and lease 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
and lease 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 and lease 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 and lease losses. Acquired loans are segregated
between those with deteriorated credit quality at acquisition and those
deemed as performing. To make this determination, Management
considers such factors as past due status, nonaccrual status, credit risk
ratings, interest rates and collateral position. The fair value of acquired
loans deemed performing is determined by discounting cash flows, both
principal and interest, for each pool at prevailing market interest rates
as well as consideration of inherent potential losses. The difference
between the fair value and principal balances due at acquisition date,
the fair value discount, is accreted into income over the estimated life of
each loan pool. The fair value is estimated using an analysis of expected
cash flows to be received from the loan and may include the use of
third party appraisals to assist in the calculation. Performing acquired
loans are subsequently evaluated for any required allowance at each
reporting date.
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. First
Guaranty typically receives appraisals from independent third parties to
facilitate this calculation.
The general component covers non-classified loans and special mention
loans and is based on historical loss experience adjusted for qualitative
factors. Qualitative factors include analysis of levels and trends in
delinquencies, nonaccrual loans, charge-offs and recoveries, loan
risk ratings, trends in volume and terms of loans, changes in lending
policy, credit concentrations, portfolio stress test results, national and
local economic trends including the impact of COVID-19, industry
conditions, and other relevant factors. For example, in 2020 and 2021
economic conditions related to the COVID-19 pandemic resulted in a
higher allocation within this component of the allowance to hotel loans.
First Guaranty's commercial lease originations increased in 2021
which resulted in an increased allocation within this component of the
allowance primarily related to the trend in increased volume.
An unallocated component is maintained to cover uncertainties that
could affect the estimate of probable losses.
The allowance for loan and lease 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.
Financial Condition
Assets.
Our total assets were $2.9 billion at December 31, 2021, an increase of
$405.0 million, or 16.4%, from total assets of $2.5 billion at December
31, 2020. Assets increased primarily due to increases in net loans of
$315.7 million and investment securities of $125.6 million, partially
offset by a decrease in cash and cash equivalents of $37.7 million at
December 31, 2021 compared to December 31, 2020.
Loans.
Net loans increased $315.7 million, or 17.4%, to $2.1 billion at December
31, 2021 from $1.8 billion at December 31, 2020. Commercial lease
loan balances increased $141.9 million primarily due to new lease
originations. First Guaranty has continued to expand its commercial
lease portfolio which generally have higher yields than commercial real
estate loans but shorter average lives. Non-farm non-residential loan
balances increased $62.3 million primarily due to new originations.
Commercial and industrial loans increased $45.4 million primarily due
to new originations. SBA PPP loans totaled $35.4 million at December
31, 2021 compared to $92.3 million at December 31, 2020. These
totals are included in commercial and industrial loans. Round 1 SBA
80
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
PPP loans decreased from $92.3 million at December 31, 2020 to $12.7
million at December 31, 2021 due to SBA loan forgiveness. Partially
offsetting these payoffs were Round 2 SBA PPP loan originations with
total balances net of forgiveness payments of $22.6 million at December
31, 2021. Construction and land development loans increased $23.5
million principally due to advances on existing construction lines and
new originations. Multifamily loans increased $19.9 million primarily
due to the conversion of existing construction loans to permanent
financing. One-to four-family loans increased $17.1 million primarily
due to new originations. Farmland loans increased $4.9 million due to
increases on agricultural loan commitments. Consumer and other loans
increased $3.5 million primarily due to new originations. Agricultural
loans decreased $1.6 million primarily due to seasonal activity. First
Guaranty had approximately 5.2% of funded and 2.4% of unfunded
commitments in our loan portfolio to businesses engaged in support or
service activities for oil and gas operations. First Guaranty's hotel and
hospitality portfolio totaled $182.8 million at December 31, 2021. As
part of the management of risks in our loan portfolio, First Guaranty
had previously established an internal guidance limit of approximately
$187.0 million for its hotel and hospitality portfolio. First Guaranty had
$257.8 million in loans related to our Texas markets at December 31,
2021 which was an increase of $12.9 million or 5.3% from $244.9
million at December 31, 2020. First Guaranty continues to have
significant loan growth associated with its Texas branches. We anticipate
additional growth opportunities in Texas as it contains four major cities
in Austin, Dallas, Houston, and San Antonio, plus the continued growth
and development of these areas is exceeding that of other areas of the
country. Syndicated loans at December 31, 2021 were $47.4 million,
of which $17.6 million were shared national credits. Syndicated loans
decreased $27.8 million from $75.2 million at December 31, 2020.
As of December 31, 2021, 66.8% of our loan portfolio was secured
by real estate. The largest portion of our loan portfolio, at 40.9% as of
December 31, 2021, was non-farm non-residential loans secured by
real estate. Approximately 31.9% of the loan portfolio was based on a
floating rate tied to the prime rate or LIBOR as of December 31, 2021.
77.3% of the loan portfolio is scheduled to mature within five years from
December 31, 2021. First Guaranty had $53.6 million in loans that
were priced off of the LIBOR index rate at December 31, 2021. As it is
anticipated that LIBOR will be discontinued after 2021, First Guaranty
is reviewing its loan documents to determine alternative reference rates
and does not anticipate there will be a significant financial statement
impact with the transition.
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,
2021
2020
2019
2018
2017
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(in thousands, except for %)
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
Commercial leases
Consumer and other
Total Non-Real Estate
Total Loans Before
Unearned Income
$ 174,334
8.1% $ 150,841
8.2% $ 172,247
11.3% $ 124,644
10.1 % $ 112,603
31,810
288,347
65,848
886,407
1,446,746
1.5%
13.3%
3.0%
40.9%
66.8%
26,880
271,236
45,932
824,137
1.4%
14.7%
2.5%
44.6%
22,741
289,635
23,973
616,536
1,319,026
71.4% 1,125,132
1.5%
18.9%
1.6%
40.3%
73.6%
18,401
1.5 %
172,760
14.1 %
42,918
586,263
944,986
3.5 %
47.7 %
76.9 %
25,691
158,733
16,840
530,293
844,160
9.8%
2.2%
13.8%
1.4%
46.1%
73.3%
26,747
1.2%
28,335
1.5%
26,710
1.8%
23,108
1.9 %
21,514
1.9%
398,391
18.4%
353,028
19.1%
268,256
17.5%
200,877
16.4 %
230,638
20.0%
246,022
48,142
719,302
11.4%
2.2%
33.2%
104,141
44,642
5.6%
2.4%
70,125
38,743
4.6%
2.5%
25,906
33,537
2.1%
2.7 %
26,434
28,751
2.3%
2.5%
530,146
28.6%
403,834
26.4%
283,428
23.1 %
307,337
26.7%
2,166,048
100.0%
1,849,172
100.0% 1,528,966
100.0% 1,228,414
100.0 % 1,151,497
100.0%
Less: Unearned income
(6,689)
(5,037)
(3,476)
(3,146)
(2,483)
Total Loans Net Of
Unearned Income
$2,159,359
$1,844,135
$1,525,490
$1,225,268
$1,149,014
81
Loan Portfolio Maturities.
The following tables summarize the scheduled repayments of our loan portfolio at December 31, 2021 and 2020. 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, 2021
One Year
or Less
More Than One
Year Through
Five Years
More Than Five
Years Through
Fifteen Years
After Fifteen
Years
Total
(in thousands)
Real Estate:
Construction & land development
$ 36,038 $ 134,546 $ 3,370
$ 380
$ 174,334
Farmland
1– 4 family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Total Non-Real Estate
5,985
30,670
13,159
107,855
193,707
10,467
120,888
30,690
8,552
170,597
13,461
64,472
44,879
597,919
855,277
6,426
205,725
215,332
31,608
459,091
1,977
30,069
6,618
106,218
148,252
4,196
68,241
-
3,410
75,847
10,387
163,136
1,192
74,415
31,810
288,347
65,848
886,407
249,510
1,446,746
5,658
3,537
-
4,572
13,767
26,747
398,391
246,022
48,142
719,302
Total Loans Before Unearned Income
$ 364,304 $ 1,314,368 $ 224,099
$ 263,277
$ 2,166,048
Less: Unearned Income
Total Loans Net Of Unearned Income
(6,689)
$ 2,159,359
December 31, 2020
One Year
or Less
More Than One
Year Through
Five Years
More Than Five
Years Through
Fifteen Years
After Fifteen
Years
Total
(in thousands)
Real Estate:
Construction & land development
$ 23,276 $ 111,615 $ 13,349 $ 2,601
$ 150,841
Farmland
1– 4 family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Total Non-Real Estate
6,078
37,604
5,030
105,623
177,611
12,356
40,484
29,503
8,363
90,706
12,147
65,011
29,127
494,690
712,590
5,795
293,984
74,638
28,677
403,094
2,156
29,236
10,276
144,689
199,706
5,664
14,789
-
2,406
22,859
6,499
139,385
1,499
79,135
26,880
271,236
45,932
824,137
229,119
1,319,026
4,520
3,771
-
5,196
13,487
28,335
353,028
104,141
44,642
530,146
Total Loans Before Unearned Income
$ 268,317 $ 1,115,684 $ 222,565 $ 242,606
$ 1,849,172
Less: Unearned Income
Total Loans Net Of Unearned Income
(5,037)
$ 1,844,135
82
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
The following table sets forth the scheduled repayments of fixed and
adjustable-rate loans at December 31, 2021 that are contractually due
after December 31, 2022.
TOTAL ASSETS
In Billions
Due After December 31, 2022
(in thousands)
Fixed
Floating
Total
One to five years
926,640
385,509
1,312,149
Over five to 15 years
Over 15 years
Subtotal
Nonaccrual loans
Total
114,976
106,579
179,522
78,987
221,555
258,509
$ 1,221,138 $ 571,075 $ 1,792,213
16,715
$ 1,808,928
As of December 31, 2021, $349.1 million of floating rate loans were
at their interest rate floor. At December 31, 2020, $305.0 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
83
The following table shows the principal amounts and categories of our non-performing assets at December 31, 2021, 2020, 2019, 2018 and 2017.
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
Commercial leases
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
Commercial leases
Consumer and other
Total Non-Real Estate
Total loans 90 days and greater delinquent & still accruing
Total non-performing loans
December 31,
2021
2020
2019
2018
2017
(in thousands)
$ 530
$ 621
$ 381
$ 311
$ 371
787
2,861
-
8,733
12,911
2,302
699
-
803
3,804
16,715
246
-
514
162
281
1,203
-
23
-
19
42
1,245
$17,960
857
2,227
-
7,449
11,154
3,472
701
-
249
4,422
15,576
1,000
-
4,980
366
4,699
11,045
67
1,856
-
123
2,046
13,091
$28,667
1,274
2,759
-
4,646
9,060
4,800
327
-
216
5,343
14,403
48
-
923
-
1,603
2,574
-
15
-
1,293
2,246
-
864
4,714
3,651
317
-
61
4,029
8,743
-
-
26
-
-
26
-
53
-
65
1,953
-
3,758
6,147
1,496
4,826
-
81
6,403
12,550
-
-
-
-
-
-
41
798
-
50
65
2,639
$17,042
66
119
145
$ 8,888
-
839
839
$13,389
84
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
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
Commercial leases
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
Nonaccrual loans to total loans
Allowance for loan and lease losses to nonaccrual loans
December 31,
2021
2020
2019
2018
2017
(in thousands)
-
-
817
-
1,255
2,072
-
-
-
311
-
131
-
1,798
2,240
-
-
-
669
-
559
-
3,651
4,879
-
-
-
241
-
120
-
777
1,138
-
-
-
304
-
23
-
954
1,281
-
-
-
-
-
2,072
$20,032
-
-
2,240
$30,907
-
-
4,879
$21,921
-
-
1,138
$10,026
-
-
1,281
$14,670
0.93%
0.70%
0.83%
0.77%
143.76%
1.68%
1.25%
1.55%
0.84%
157.41%
1.44%
1.04%
1.12%
0.94%
75.88%
0.82%
0.55%
0.73%
0.71%
123.25%
1.28%
0.84%
1.17%
1.09%
73.51%
85
Troubled Debt Restructuring.
Another category of assets which contribute to our credit risk is troubled
debt restructurings ("TDRs"). A TDR is a loan for which a concession
has been granted to the borrower due to a deterioration of the borrower's
financial condition. Such concessions may include reduction in interest
rates, deferral of interest or principal payments, principal forgiveness
and other actions intended to minimize the economic loss and to
avoid foreclosure or repossession of the collateral. We strive to identify
borrowers in financial difficulty early and work with them to modify to
more affordable terms before such loan reaches nonaccrual status. In
evaluating whether to restructure a loan, management analyzes the
long-term financial condition of the borrower, including guarantor and
collateral support, to determine whether the proposed concessions will
increase the likelihood of repayment of principal and interest. TDRs
that are not performing in accordance with their restructured terms
and are either contractually 90 days past due or placed on nonaccrual
status are reported as non-performing loans. Our policy provides
that nonaccrual TDRs are returned to accrual status after a period
of satisfactory and reasonable future payment performance under
the terms of the restructuring. Satisfactory payment performance is
generally no less than six consecutive months of timely payments and
demonstrated ability to continue to repay.
Under section 4013 of the Coronavirus Aid, Relief, and Economic
Security Act (“CARES Act”), which was signed into law on March 27,
2020 and subsequently modified by later legislation, financial institutions
have the option to temporarily suspend certain requirements under
U.S. generally accepted accounting principles related to troubled debt
restructurings for a limited period of time to account for the effects of
COVID-19. This provision allows a financial institution the option to not
apply the guidance on accounting for troubled debt restructurings to
loan modifications, such as extensions or deferrals, related to COVID-19
made between March 1, 2020 and the earlier of (i) January 1, 2022
or (ii) 60 days after the end of the COVID-19 national emergency. The
relief can only be applied to modifications for borrowers that were not
more than 30 days past due as of December 31, 2019. First Guaranty
elected to adopt these provisions of the CARES Act.
The following is a summary of loans restructured as TDRs at December
31, 2021, 2020 and 2019:
ed as TDRs at December 31, 2020, 2019 and 2018:
For the years ended December 31, 2021 and 2020, gross interest
income which would have been recorded had the non-performing
loans been current in accordance with their original terms amounted
to $0.8 million and $0.6 million, respectively. We recognized $0.1
million and $22,000 of interest income on such loans during the years
ended December 31, 2021 and 2020, respectively. For the years
ended December 31, 2021 and 2020, gross interest income which
would have been recorded had the troubled debt restructured loans
been current in accordance with their original terms amounted to $0.2
million and $0.1 million, respectively. We recognized $0.2 million and
$11,000 of interest income on such loans during the years ended
December 31, 2021 and 2020, respectively.
Non-performing assets were $20.0 million, or 0.70%, of total assets
at December 31, 2021, compared to $30.9 million, or 1.25%, of total
assets at December 31, 2020, which represented a decrease in non-
performing assets of $10.9 million. The decrease in non-performing
assets occurred primarily due to a reduction in 90 day past due and
still accruing loans and other real estate owned offset by an increase
in nonaccrual loans.
Nonaccrual loans increased from $15.6 million at December 31, 2020
to $16.7 million at December 31, 2021. The increase in nonaccrual
loans was concentrated primarily in non-farm non-residential loans.
Non-performing assets included $2.6 million in loans with a government
guarantee, or 13.2% of non-performing assets. These are structured
as net loss guarantees in which up to 90% of loss exposure is covered.
At December 31, 2021 loans 90 days and greater delinquent and still
accruing totaled $1.2 million, a decrease of $11.8 million or 90 percent
from $13.1 million at December 31, 2020. The decrease in loans 90
days or greater delinquent and still accruing was concentrated primarily
in one-to four-family residential loans, non-farm non-residential
loans, commercial and industrial loans and construction and land
development loans. One-to-four family loans in the 90 day category
included loans acquired from the Union acquisition that contractually
matured but had not been renewed due to operations issues following
the acquisition. First Guaranty initiated a sustained effort that resulted
in satisfactorily renewing the majority of these acquired loans and
returning them to performing status.
Other real estate owned at December 31, 2021 totaled $2.1 million, a
decrease of $0.2 million from $2.2 million at December 31, 2020. The
largest piece of property in other real estate owned is a retail shopping
center that totals $1.7 million. First Guaranty has a reserve for other
real estate owned losses. This reserve totaled $0.5 million at December
31, 2021 compared to $0.4 million at December 31, 2020. Total write
downs and or reserves related to other real estate owned were $0.6
million in 2021 compared to $1.4 million in 2020. These expenses
were included in other non-interest expense.
At December 31, 2021, our largest non-performing assets were
comprised of the following nonaccrual loans, 90 day plus and still
accruing loans and other real estate owned: (1) a non-farm non-
residential loan secured by a hotel that totaled $3.4 million that is
classified as a troubled debt restructured loan or TDR; (2) a non-farm
non-residential loan secured by a childcare facility that totaled $1.8
million; (3) a $1.7 million non-farm non-residential property included
in other real estate owned; (4) a non-farm non-residential loan secured
by a mobile home facility that totaled $1.3 million; (5) a non-farm non-
residential loan secured by a waste treatment facility that totaled $0.9
million; and (6) an agricultural/farmland loan relationship that totaled
$0.9 million. The agricultural loan is partially guaranteed by the USDA
Farm Service Agency.
86
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
The following is a summary of loans restructured as TDRs at December
31, 2021, 2020 and 2019:
At December 31,
2021
2020
2019
(in thousands)
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
$ - $ - $ -
-
-
-
-
3,382
3,591
-
-
-
-
-
-
Total TDR
$ 3,382 $ 3,591
$ -
At December 31, 2021, First Guaranty had one outstanding TDR
which was a $3.4 million non-farm non-residential loan secured by
commercial real estate that is on nonaccrual. The restructuring of this
loan was related to interest rate and amortization concessions. The
loan is secured by a hotel facility. This loan was not eligible for a CARES
act modification.
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 and lease losses is not warranted. Assets that do
not currently expose the insured institution to sufficient risk to warrant
classification in one of the aforementioned categories but possess
weaknesses are designated as "special mention" by our management.
When an insured institution classifies problem assets as either
substandard or doubtful, it may establish general allowances in
an amount deemed prudent by management to cover losses that
were both probable and reasonable to estimate. General allowances
represent allowances which have been established to cover accrued
losses associated with lending activities that were both probable and
reasonable to estimate, but which, unlike specific allowances, have
not been allocated to particular problem assets. When an insured
institution classifies problem assets as "loss," it is required either to
establish a specific allowance for losses equal to 100% of that portion
of the asset so classified or to charge-off such amount. An institution's
determination as to the classification of its assets and the amount of its
valuation allowances is subject to review by the regulatory authorities,
which may require the establishment of additional general or specific
allowances.
In connection with the filing of our periodic regulatory reports and in
accordance with our classification of assets policy, we continuously
assess the quality of our loan portfolio and we regularly review the
problem loans in our loan portfolio to determine whether any loans
require classification in accordance with applicable regulations.
Loans are listed on the "watch list" initially because of emerging
financial weaknesses even though the loan is currently performing as
agreed, or delinquency status, or if the loan possesses weaknesses
although currently performing. Management reviews the status of our
loan portfolio delinquencies, by product types, with the full board of
directors on a monthly basis. Individual classified loan relationships
are discussed as warranted. If a loan deteriorates in asset quality,
the classification is changed to "special mention," "substandard,"
"doubtful" or "loss" depending on the circumstances and the evaluation.
Generally, loans 90 days or more past due are placed on nonaccrual
status and classified "substandard."
We also employ a risk grading system for our loans to help assure that
we are not taking unnecessary and/or unmanageable risk. The primary
objective of the loan risk grading system is to establish a method of
assessing credit risk to further enable management to measure loan
portfolio quality and the adequacy of the allowance for loan and
lease 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, 2021, 2020 and
2019. Classified assets totaled $53.4 million at December 31, 2021,
and included $18.0 million of non-performing loans.
At December 31,
2021
2020
2019
(in thousands)
$ 53,353
$ 50,062
$ 53,072
-
-
-
Classification of Loans:
Substandard
Doubtful
Total Classified Assets
$ 53,353
$ 50,062 $ 53,072
Special Mention
$ 138,718
$ 99,201
$ 24,083
87
The increase in classified assets at December 31, 2021 as compared to
December 31, 2020 was due to a $3.3 million increase in substandard
loans. Substandard loans at December 31, 2021 consisted of $18.8
million in non-farm non-residential, $9.8 million in one- to four-family
residential, $8.8 million in commercial and industrial, $7.0 million in
multifamily, $4.1 million in farmland, $2.7 million in agricultural, $1.1
million in construction and land development, and the remaining $1.0
million comprised of consumer and other loans. Special mention loans
increased by $39.5 million in 2021 primarily due to the downgrade
of loans in the portfolio. The increase in special mention loans was
primarily the result of loan relationships that were downgraded due to
ongoing economic conditions associated with COVID-19 or relationship
specific issues. The increase was concentrated with hotel loans. First
Guaranty anticipates upgrading several loan relationships from special
mention to pass status in the upcoming quarters.
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 $24.0 million at December 31, 2021
compared to $24.5 million at December 31, 2020.
Allowance for Loan Losses.
The allowance for loan and lease 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 including the
COVID-19 pandemic;
• nature and volume of loans;
• overall portfolio quality, loan concentrations and portfolio stress test
results;
• adequacy of loan collateral;
• quality of loan review system and degree of oversight by our board of
directors;
• competition and legal and regulatory requirements on borrowers;
• examinations of the loan portfolio by federal and state regulatory
agencies and examinations; and
• review by our internal loan review department and independent
accountants.
The data collected from all sources in determining the adequacy of
the allowance is evaluated on a regular basis by management with
regard to current national and local economic trends, prior loss
history, underlying collateral values, credit concentrations and industry
risks. An estimate of potential loss on specific loans is developed in
conjunction with an overall risk evaluation of the total loan portfolio.
This evaluation is inherently subjective as it requires estimates that
are susceptible to significant revision as new information becomes
available.
88
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
The balance in the allowance for loan and lease 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 and lease losses for the years indicated.
Balance at beginning of year
$
24,518
$ 10,929
$ 10,776
$
9,225
$ 11,114
At or For the Years Ended December 31,
2021
2020
2019
2018
2017
(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
Commercial leases
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
Commercial leases
Consumer and other
Total Non-Real Estate
Total recoveries
Net (charge-offs) recoveries
Provision for loan losses
Balance at end of year
Ratios:
(92)
-
(266)
(12)
(1,020)
(1,390)
(149)
(89)
-
(1,494)
(1,732)
(3,122)
-
90
44
-
7
141
17
96
4
320
437
578
(2,544)
2,055
(265)
-
(154)
-
(550)
(969)
(110)
(265)
-
(1,083)
(1,458)
(2,427)
-
-
39
-
178
217
70
128
388
336
922
1,139
(1,288)
14,877
-
-
(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)
3
-
90
20
89
202
26
1,642
-
216
1,884
2,086
197
1,354
-
-
(33)
-
(1,291)
(1,324)
(162)
(3,629)
(802)
(445)
(5,038)
(6,362)
43
-
92
40
85
260
138
30
-
223
391
651
(5,711)
3,822
$ 24,029
$ 24,518
$ 10,929
$ 10,776
$ 9,225
Net loan charge-offs to average loans
Net loan charge-offs to loans at end of year
Allowance for loan and lease losses to loans at end of year
Net loan charge-offs to allowance for loan and lease losses
Net loan charge-offs to provision charged to expense
0.13%
0.12%
1.11%
10.59%
123.80%
0.08%
0.07%
1.33%
5.25%
8.66%
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%
89
• Commercial leases increased during 2021. The increase in
the related loan loss allowance balance was due primarily to the
increased balances associated with commercial leases. Commercial
leases grew during 2021 from $104.1 million at December 31, 2020
to $246.0 million at December 31, 2021.
• First Guaranty continues to monitor the acquired loans from the
Union acquisition on November 7, 2019. Discounts on the acquired
Union loans were approximately $1.4 million at December 31, 2021.
First Guaranty charged off $3.1 million in loan balances during the
year ended December 31, 2021 as compared to $2.4 million for 2020.
Recoveries totaled $0.6 million for the year ended December 31, 2021
and $1.1 million during 2020. The charged-off loan balances were
concentrated in two loan relationships which totaled $1.0 million or
31.0% of the total charged off amount during the year ended December
31, 2021. The details of the $1.0 million in charged off loans were as
follows:
• First Guaranty charged off $0.6 million on a non-farm non-residential
loan secured by a waste treatment facility during the fourth quarter
of 2021. This loan had a remaining principal balance of $0.9 million
at December 31, 2021.
• First Guaranty charged off $0.4 million on a non-farm non-residential
loan secured by a mobile home facility during the fourth quarter of
2021. This loan had a remaining principal balance of $1.3 million at
December 31, 2021.
• Smaller loans and overdrawn deposit accounts comprised the
remaining $2.1 million of charge-offs for 2021.
A provision for loan losses of $2.1 million was made during the year
ended December 31, 2021 as compared to $14.9 million for 2020. The
provisions made in 2021 were taken to provide for current loan losses
and to maintain the allowance proportionate to risks inherent in the
loan portfolio. First Guaranty’s incurred loan loss calculation method
incorporates risk factors in the loan portfolio such as historical loss
rates along with qualitative and quantitative factors. The composition of
the loan portfolio affects the final allowance calculation. First Guaranty
attributes the primary decrease in the provision was due to economic
improvement in 2021 as compared to the COVID-19 uncertainty and
economic conditions present in 2020.
First Guaranty's qualitative and quantitative factors accounted for the
changes in economic conditions driven by the COVID-19 pandemic in
both 2020 and 2021. The key factors included the following: industry
specific conditions, loan growth, changes in specific concentrations,
changes in loan risk ratings, lending policy, and national and local
economic trends. First Guaranty continued to update its analysis of
these factors throughout 2020 and 2021.
The loan portfolio factors in 2021 that primarily affected the allocation
of the allowance included the following:
• The loan portfolio risks that changed and affected the allocation
of the allowance were due to changes in historical loss rates,
adjustments of certain qualitative factors to take into account
the current estimated impact of COVID-19 and related economic
conditions on borrowers' ability to repay loans and for allocations
to impaired loans within their respective categories. First Guaranty
adjusted allocations within its qualitative and quantitative factors
to account for changes in potential COVID-19 related losses. Loan
portfolio risks associated with COVID-19 declined in 2021 compared
to 2020.
• Construction and land development loans increased during 2021
due to advances on existing construction lines of credit and new
loan originations. Several loans previously in this category moved to
permanent financing and are now included in the multifamily loan
category as of December 31, 2021. The provision decrease related
to this portfolio was due to changes in the qualitative analysis of the
portfolio related to COVID-19 and improving economic conditions.
• One- to four-family residential loans increased during 2021. The
provision decrease related to this portfolio was due to changes in
the qualitative analysis of the portfolio related to COVID-19 and
improving economic conditions.
• Multifamily loans increased during 2021. The provision related to
this portfolio remained in line with the related provision from 2020
as improved economic conditions reduced portfolio risk even as the
portfolio increased by $19.9 million during 2021.
• Non-farm non-residential loans increased during 2021. The
provision decrease related to this portfolio was due to changes in the
qualitative analysis of the portfolio related to COVID-19 and historical
loss rates. First Guaranty continues to maintain a significant
allowance for hotel loans based on qualitative factors primarily
related to COVID-19 and related credit ratings for hotel loans. The
associated allowance for hotels did decline in 2021 compared to
2020 due to improved economic conditions.
• Commercial and industrial loans increased during 2021. The
provision decrease related to this portfolio was due to the changes
in historical loss rates and changes in the qualitative analysis of the
portfolio related to COVID-19 and improving economic conditions.
90
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Allocation of Allowance for Loan and Lease Losses.
The following tables set forth the allowance for loan and lease losses allocated by loan category and the percent of loans in each category to total
loans at the dates indicated. The allowance for loan and lease 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.
2021
Percent of
Allowance to
Total Allowance
for Loan and
Lease Losses
Allowance
for Loan and
Lease Losses
At December 31,
Percent of
Loans in Each
Category to
Total Loans
Allowance
for Loan and
Lease Losses
(dollars in thousands)
2020
Percent of
Allowance to
Total Allowance
for Loan and
Lease Losses
Percent of Loans
in Each Category
to Total Loans
Real Estate:
Construction and land development
$ 769
Farmland
1- 4 family
Multifamily
478
1,921
940
3.2%
2.0%
8.0%
3.9%
Non-farm non-residential
12,730
53.0%
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Unallocated
Total Allowance
183
2,363
2,486
1,371
788
$ 24,029
0.8%
9.8%
10.3%
5.7%
3.3%
100.0%
8.1%
1.5%
13.3%
3.0%
40.9%
1.2%
18.4%
11.4%
2.2%
-
100.0%
$ 1,029
462
2,510
978
15,064
181
2,802
583
907
2
$ 24,518
4.2%
1.9%
10.2%
4.0%
61.5%
0.7%
11.4%
2.4%
3.7%
-
100.0%
8.2%
1.4%
14.7%
2.5%
44.6%
1.5%
19.1%
5.6%
2.4%
-
100.0%
2019
Percent of
Allowance to
Total Allowance
for Loan and
Lease Losses
Allowance
for Loan and
Lease Losses
At December 31,
Percent of
Loans in Each
Category to
Total Loans
Allowance
for Loan and
Lease Losses
(dollars in thousands)
2018
Percent of
Allowance to
Total Allowance
for Loan and
Lease 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
Commercial leases
Consumer and other
Unallocated
Total Allowance
50
1,027
1,038
5,277
95
1,909
568
542
-
$ 10,929
3.9%
0.4%
9.4%
9.5%
48.3%
0.9%
17.5%
5.1%
5.0%
-
100.0%
11.3%
1.5%
18.9%
1.6%
40.3%
1.8%
17.5%
4.6%
2.5%
-
100.0%
$ 581
41
911
1,318
4,771
339
1,909
262
629
15
$ 10,776
5.4%
0.4%
8.5%
12.2%
44.3%
3.1%
17.7%
2.4%
5.9%
0.1%
100.0%
10.1%
1.5%
14.1%
3.5%
47.7%
1.9%
16.4%
2.1%
2.7%
-
100.0%
91
Real Estate:
Construction and land development
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Unallocated
Total Allowance
At December 31,
2017
Allowance for
Loan and Lease
Losses
Percent of Allowance to
Total Allowance for Loan
and Lease Losses
Percent of Loans
in Each Category
to Total Loans
(dollars in thousands)
$ 628
5
1,078
994
2,811
187
2,377
805
320
20
$ 9,225
6.8%
0.1%
11.7%
10.8%
30.4%
2.0%
25.8%
8.7%
3.5%
0.2%
100.0%
9.8%
2.2%
13.8%
1.4%
46.1%
1.9%
20.0%
2.3%
2.5%
-%
100.0%
The following table presents net charge-offs during the period to average loans outstanding:
December 31, 2021
December 31, 2020
Net
Charge-offs
Average Loans
Oustanding1
Net Charge-offs
During Period to
Average Loans
Oustanding
Net
Charge-offs
Average Loans
Oustanding1
Net Charge-offs
During Period to
Average Loans
Oustanding
(in thousands, except for %)
Real Estate:
Construction and land development
$ (92) $ 168,269
(0.1)%
$ (265)
$ 139,516
(0.2)%
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
90
(222)
(12)
(1,013)
(132)
7
4
(1,174)
28,596
281,835
95,936
845,428
30,888
357,746
220,747
43,957
0.3%
(0.1)%
-%
(0.1)%
(0.4)%
-%
-%
(2.7)%
-
(115)
-
(372)
(40)
(137)
388
(747)
25,536
278,561
35,293
727,965
30,791
349,138
80,268
42,288
-%
-%
-%
(0.1)%
(0.1)%
-%
0.5%
(1.8)%
1Average loans outstanding was calculated using the trailing four quarters total for loans.
92
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Investment Securities.
Investment securities at December 31, 2021 totaled $364.2 million,
an increase of $125.6 million, or 52.7%, compared to $238.5 million
at December 31, 2020. We purchase securities for our investment
portfolio to provide a source of liquidity, to provide an appropriate return
on funds invested, to manage interest rate risk and meet pledging
requirements for public funds and borrowings.
The securities portfolio consisted principally of U.S. Government and
Government agency securities, agency mortgage-backed securities,
corporate debt securities and municipal bonds. U.S. government
agencies consist of FHLB, 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, 2021, the U.S. Government and Government agency
securities and municipal bonds qualified as securities available to
collateralize public funds. Securities pledged as collateral totaled
$234.9 million at December 31, 2021 and $184.0 million at December
31, 2020. 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.
2021
At December 31,
2020
(in thousands)
2019
Amortized Cost
Fair Value
Amortized Cost
Fair Value
Amortized Cost
Fair Value
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate debt securities
Municipal bonds
Collateralized mortgage obligations
Mortgage-backed securities
$ -
$ -
$ 3,000
$ 3,000
$ -
$ -
116,733
79,344
15,543
-
576
116,110
78,225
15,699
-
586
169,986
169,658
36,153
27,381
-
1,208
36,489
28,162
-
1,239
16,380
94,561
30,297
16,400
16,393
95,369
32,153
16,397
179,546
179,625
Total available for sale securities
$ 212,196
$ 210,620
$ 237,728
$ 238,548
$ 337,184
$ 339,937
Held to maturity:
U.S. Government Agencies
Municipal bonds
Mortgage-backed securities
Total held to maturity securities
153,536
150,585
-
-
-
-
-
-
-
-
-
-
18,175
5,107
63,297
18,143
5,289
63,385
$ 153,536
$ 150,585
$ -
$ -
$ 86,579
$ 86,817
Our available for sale securities portfolio totaled $210.6 million at December 31, 2021, a decrease of $27.9 million, or 11.7%, compared to $238.5
million at December 31, 2020. The decrease was primarily due to the sale of securities, called bonds, and the transfer of AFS securities to the HTM
portfolio in the first quarter of 2021.
Our held to maturity securities portfolio had an amortized cost of $153.5 million at December 31, 2021, compared to $0 at December 31, 2020. The
held to maturity portfolio was terminated in the first quarter of 2002 due to economic conditions associated with COVID-19.
93
The following tables set forth the stated maturities and weighted average yields of our investment securities at December 31, 2021 and 2020.
One Year or Less
Carrying
Value
Weighted
Average
Yield
At December 31, 2021
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
$ -
-
-
-%
-%
-%
$ -
-
-%
-%
$
-
-
-%
-%
$
-
-%
116,110 2.3%
348
5.7%
77,877
2.9%
-
-%
643
3.3%
3,411
3.2%
3,513
3.9%
8,132 3.6%
-
-%
2
0.8%
6
1.4%
578 1.4%
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate and other debt securities
Municipal bonds
Mortgage-backed securities
Total available for sale securities
$ 643
3.3%
$ 3,761
3.5%
$ 81,396
3.0%
$ 124,820 2.4%
Held to maturity:
U.S. Government Agencies
Total held to maturity securities
$ -
$ -
-%
-%
$ -
$ -
-%
-%
$ 19,455
1.6%
$ 134,091 2.3%
$ 19,445
1.6%
$ 134,091 2.3%
One Year or Less
Carrying
Value
Weighted
Average
Yield
At December 31, 2020
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
$ 3,000
-
-%
-%
$ -
-
-%
-%
$
-
-%
$
-
-%
29,958
1.2%
139,700
2.0%
5,633
3.5%
1,037
4.1%
-
2.0%
-
-%
2,038
4.3%
27,762
4.9%
1,056
5.5%
4,956
3.9%
10,692
3.9%
11,477
3.2%
-
3
-%
0.9%
-
3
-%
2.0%
-
-%
1,233
1.0%
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate and other debt securities
Municipal bonds
Collateralized mortgage obligations
Mortgage-backed securities
Total available for sale securities
$ 9,670
2.5%
$ 6,997
4.0%
$ 68,415
3.1%
$ 153,466 2.1%
94
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
At December 31, 2021, $0.6 million, or 0.2%, 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 $258.3 million, or
70.9%, of the total portfolio at December 31, 2021. 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.
First Guaranty, in furtherance of the strategy adopted in March 2020,
initiated a plan to manage for economic uncertainty caused by the
COVID-19 pandemic by converting unrealized gains in the securities
portfolio to realized gains in the fourth quarter of 2020. First Guaranty
sold mortgage-backed securities and corporate securities in October
2020. First Guaranty generated $12.2 million in pre-tax gains in the
fourth quarter of 2020. First Guaranty has proceeded to reinvest the
proceeds in securities and loans and subsequently reduced FHLB
borrowings by $50.0 million in February 2021.
At December 31, 2021, 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, 2021
Amortized Cost
Fair Value
(in thousands)
Federal Home Loan Bank
$ 33,333
$ 33,071
Freddie Mac
Federal Farm Credit Bank
Total
95,230
142,279
93,401
140,807
$ 270,842
$
267,279
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, 2020 to December
31, 2021, total deposits increased $430.2 million, or 19.9%, to $2.6
billion. Noninterest-bearing demand deposits increased $121.2
million, or 29.4% to $532.6 million at December 31, 2021. The
increase in noninterest-bearing demand deposits was due to growth
of compensating balances associated with new loan originations,
economic conditions associated with the CARES Act, proceeds from
the SBA PPP program, and additional stimulus payments made due to
pandemic relief to First Guaranty's consumer and business customers.
Interest-bearing demand deposits increased $415.2 million, or 48.3%,
to $1,275.5 million at December 31, 2021. The increase in interest-
bearing demand deposits was primarily concentrated in public
funds interest-bearing demand deposits. Included in the increase in
interest-bearing demand deposits were public funds time deposits
that converted into interest-bearing deposits that were primarily
collateralized by reciprocal deposit insurance. Savings deposits
increased $32.8 million, or 19.4%, to $201.7 million at December
31, 2021, primarily related to increases in individual savings deposits.
Time deposits decreased $139.0 million, or 19.2%, to $586.7 million
at December 31, 2021, primarily due to the transition of several public
funds customers from time deposits to interest-bearing deposits.
As we seek to strengthen our net interest margin and improve our
earnings, attracting non-interest-bearing or lower cost deposits will be
a primary emphasis. Management will continue to evaluate and update
our product mix and related technology in its efforts to attract additional
customers. We currently offer a number of deposit products that are
competitively priced and designed to attract and retain customers with
primary emphasis on noninterest-bearing deposits and other lower
cost deposits. In the year 2022, First Guaranty has approximately
$236.5 million in non-public funds time deposits that are scheduled
to mature and represent an opportunity for repricing to more favorable
market terms. This includes approximately $89.5 million in one year
time deposits at an average rate of 0.56%, $41.1 million in two year
time deposits at an average rate of 1.22%, and approximately $77.1
million in greater than two year time deposits at an average rate of
2.61% that are scheduled to mature in the year 2022. First Guaranty
has over $200 million in time deposits with average rates in excess of
3.00% that are scheduled to mature during 2022 through 2024 with
the majority of the maturities in 2023 and 2024. First Guaranty expects
to renew the majority of these time deposits at lower market rates.
TOTAL DEPOSITS
In Millions
The Collateral Department understands fun and enjoys work!
95
The following table sets forth the distribution of deposit accounts, by account type, for the dates indicated.
Total Deposits
2021
2020
2019
For the Years Ended December 31,
Average
Balance
Percent
Weighted
Average Rate
Average
Balance
Percent
Weighted
Average Rate
Average
Balance
Percent
Weighted
Average Rate
Noninterest-bearing Demand
$ 477,802
19.8%
Interest-bearing Demand
1,082,922
45.0%
Savings
Time
Total Deposits
191,967
8.0%
655,025
27.2%
(in thousands except for %)
$ 393,734
19.2%
722,433
35.3%
163,332
8.0%
767,075
37.5%
-%
0.8%
0.2%
2.2%
-%
0.7%
0.1%
2.0%
$ 262,379
15.7%
592,113
35.4%
115,682
6.9%
703,685
42.0%
-%
1.8%
0.4%
2.4%
$2,407,716 100.0%
0.8%
$2,046,574 100.0%
1.1%
$1,673,859 100.0%
1.7%
Individual and Business Deposits
2021
2020
2019
For the Years Ended December 31,
Average
Balance
Percent
Weighted
Average Rate
Average
Balance
Weighted
Average Rate
Average
Balance
Percent
Percent
Weighted
Average Rate
Noninterest-bearing Demand
$ 471,371
29.7%
Interest-bearing Demand
Savings
Time
Total Individual and Business
Deposits
(in thousands except for %)
-%
1.0%
0.1%
2.2%
$ 382,940
27.5%
280,587
20.1%
127,804
9.2%
600,887
43.2%
-%
1.0%
0.1%
2.5%
$ 256,099
23.7%
241,290
22.3%
86,972
8.0%
498,521
46.0%
-%
1.4%
0.1%
2.6%
390,481
24.6%
154,560
9.8%
569,924
35.9%
$1,586,336 100.0%
1.0%
$1,392,218 100.0%
1.3%
$1,082,882 100.0%
1.5%
Public Fund Deposits
2021
2020
2019
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
$ 6,431
0.8%
Interest-bearing Demand
Savings
Time
692,441
84.3%
37,407
4.5%
85,101
10.4%
-%
0.5%
0.2%
0.8%
$ 10,794
1.7%
-%
$ 6,280
1.1%
441,846
67.5%
35,528
5.4%
166,188
25.4%
0.7%
0.4%
1.1%
350,823
59.3%
28,710
4.9%
205,164
34.7%
-%
2.0%
1.6%
2.1%
Total Public Fund Deposits
$ 821,380 100.0%
0.5%
$ 654,356 100.0%
0.8%
$ 590,977 100.0%
1.9%
At December 31, 2021, public funds deposits totaled $957.9 million
compared to $715.3 million at December 31, 2020. Public funds time
deposits totaled $31.4 million at December 31, 2021 compared to
$158.9 million at December 31, 2020. The decline in public funds
time deposits was the result of certain deposits moving into demand
or money market deposits from time deposits. Public funds deposits
increased due to new balances from existing customers along with
First Guaranty's expansion of its public funds deposits program in the
Texas market. 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. The majority of these
funds are under fiscal agency agreements with terms of three years or
less. Deposits under fiscal agency agreements are generally stable but
public entities may maintain the ability to negotiate term deposits on a
specific basis including with other financial institutions. These deposits
generally have stable balances as we maintain both operating accounts
and time deposits for these entities. There is a seasonal component
to public deposit levels associated with annual tax collections. Public
funds will increase at the end of the year and during the first quarter.
In addition to seasonal fluctuations, there are monthly fluctuations
associated with internal payroll and short-term tax collection accounts
for our public funds deposit accounts. Public funds deposit accounts
are collateralized by FHLB letters of credit, by expanded reciprocal
deposit insurance programs, by Louisiana municipal bonds and by
eligible government and government agency securities such as those
issued by the FHLB, FFCB, Fannie Mae, and Freddie Mac. First
Guaranty continues to grow the proportion of its public funds portfolio
that is collateralized by reciprocal deposit insurance as an alternative
to pledging securities or utilizing FHLB letters of credit. First Guaranty
initiated this strategy to more efficiently invest these deposits in higher
yielding loans to improve the net interest margin and earnings. Total
public funds collateralized by reciprocal deposit insurance programs
increased to $496.4 million at December 31, 2021 compared to
$217.7 million at December 31, 2020.
96
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
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,
2021
2020
2019
(in thousands except for %)
$
5,919
$
5,109
$
9,944
882,156
38,432
31,365
514,416
36,862
158,925
424,732
29,570
146,420
$ 957,872
$ 715,312
$ 610,666
$2,596,492
$2,166,318
$1,853,013
Total Public Funds as a percent of Total Deposits
36.9%
33.0%
33.0%
At December 31, 2021, the aggregate amount of outstanding
certificates of deposit in amounts greater than or equal to $250,000 was
approximately $159.1 million. At December 31, 2021, approximately
$80.3 million of our certificates of deposit greater than or equal to
$250,000 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 $250,000 at December 31, 2021.
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 $250,000
December 31,
2021
(in thousands)
$ 78,804
73,409
6,864
$ 159,077
The total amount of our uninsured deposits (deposits in excess of
$250,000, as calculated in accordance with FDIC regulations) were
estimated at $667.5 million at December 31, 2021.
The following table sets forth the maturity of certificates of deposits
greater than $250,000 at December 31, 2021.
Three months or less
Three to six months
Six months to one year
One to three years
More than three years
December 31,
2021
(in thousands)
$ 22,525
16,434
30,605
57,580
6,683
Total certificates of deposit greater
than $250,000
$ 133,827
agreements of $6.4 million. The advances outstanding at December
31, 2020 were comprised of a short-term advance that was originated
in response to the COVID-19 pandemic that totaled $50.0 million and
a long-term advance that totaled $3.4 million. First Guaranty paid
off the short-term advance acquired in response to the COVID-19
pandemic during the first quarter of 2021. First Guaranty participated
in the Federal Reserve Paycheck Protection Program Liquidity Facility
("PPPLF") in the second quarter of 2021. These borrowings were paid
off during the third quarter of 2021. First Guaranty has a long term
FHLB advance that was acquired from the Union transaction that
totaled $3.2 million at December 31, 2021 compared to $3.4 million
at December 31, 2020. First Guaranty had available lines of credit of
$26.5 million, with no outstanding balance at December 31, 2021.
At December 31, 2021, we had $250.7 million in FHLB letters of credit
outstanding obtained primarily for collateralizing public deposits. The
decline in the usage of FHLB letters of credit is due to First Guaranty
utilizing reciprocal deposit insurance programs as an alternative
collateralization solution to FHLB letters of credit.
The following table sets forth information concerning balances and
interest rates on our short-term borrowings at the dates and for the
years indicated.
At or For the Years Ended
December 31,
2021
2020
2019
(in thousands, except for %)
$ 6,439
$56,121
$19,919
$56,369
$10,458
$57,048
$48,277
$19,919
$ 3,320
1.40%
0.95%
2.00%
2.23%
0.89%
2.00%
Balance at end of year
Maximum month-end
outstanding
Average daily outstanding
Weighted average rate
during the year
Weighted average rate
at the end of the year
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 $6.4 million
in short-term borrowings outstanding at December 31, 2021 compared
to $56.1 million outstanding at December 31, 2020. The short-term
borrowings at December 31, 2021 were comprised of repurchase
First Guaranty had senior long-term debt totaling $25.2 million at
December 31, 2021 and $42.4 million at December 31, 2020.
First Guaranty paid off $13.3 million in senior long-term debt using
proceeds from its preferred stock capital offering during the second
quarter of 2021.
First Guaranty also had junior subordinated debentures totaling $14.8
million at December 31, 2021 and December 31, 2020.
97
to increased personnel expenses, higher occupancy and equipment
expenses, software expense, marketing and public relations expenses,
legal fees, ATM fees, taxes and higher regulatory assessments due to
increased deposit balances. Earnings per common share for the years
ended December 31, 2021 was $2.42 per common share, an increase
of 27.4% or $0.52 per common share from $1.90 per common share
for the year ended December 31, 2020 (as adjusted for the 10% stock
dividend in December 2021). Earnings per share was affected by the
increase in earnings.
Year ended December 31, 2020 compared with year ended December
31, 2019. Net income for the year ended December 31, 2020 was
$20.3 million, an increase of $6.1 million, or 42.7%, as compared to
$14.2 million for the year ended December 31, 2019. The increase in
net income of $6.1 million for the year ended December 31, 2020 was
the result of several factors. First Guaranty experienced an increase in
interest income associated with loans, increased noninterest income
due to increased securities sales and lower interest expense. This
was partially offset by an increase in the provision for loan losses and
increased noninterest expense. Loan interest income increased due
to the growth in First Guaranty's loan portfolio, including the loans
acquired in the fourth quarter of 2019 in the Union acquisition and
loan fees recognized as an adjustment to yield from the origination of
the SBA guaranteed PPP loans. Noninterest income increased due to
larger securities gains on sales for the year ended December 31, 2020
compared to losses on securities sales for the year ended December
31, 2019. Interest expense declined due to declines in market interest
rates and First Guaranty's strategy to reduce interest expense. Interest
expense declined during 2020 even after factoring in the additional
deposit balances acquired from the Union acquisition, an increase in
deposit balances associated with SBA PPP loans and stimulus payments,
and additional borrowings associated with our COVID-19 contingency
plans. Factors that partially offset income include increased noninterest
expense primarily associated with the Union acquisition including one-
time merger related expenses of $0.5 million paid in 2020 for the data
conversion. The provision for loan losses increased to provide for current
loan losses and to maintain the allowance proportionate to risks inherent
in the loan portfolio, including risks emerging from the COVID-19
pandemic and portfolio growth. Earnings per common share for the
years ended December 31, 2020 was $1.90 per common share, an
increase of 41.8% or $0.56 per common share from $1.34 per common
share for the year ended December 31, 2019 (as adjusted for the 10%
stock dividend in December 2021). Earnings per share was affected by
the increase in earnings.
TOTAL NET INCOME
In Millions
Shareholders' Equity
Total shareholders' equity increased to $223.9 million at December
31, 2021 from $178.6 million at December 31, 2020. The increase in
shareholders' equity was principally the result of an increase of $33.1
million in preferred stock and an increase of $19.5 million in retained
earnings, partially offset by a decrease of $7.3 million in accumulated
other comprehensive income. The $33.1 million increase in preferred
stock was the result of the issuance of 34,500 shares of non-cumulative
perpetual preferred stock on April 27, 2021. The $19.5 million increase
in retained earnings was due to net income of $27.3 million during the
year ended December 31, 2021, partially offset by $6.4 million in cash
dividends paid on shares of our common stock and $1.4 million in
cash dividends paid on shares of our preferred stock. The decrease in
accumulated other comprehensive income was primarily attributed to
the increase in unrealized losses on available for sale securities during
the year ended December 31, 2021.
TOTAL COMMON SHAREHOLDERS' EQUITY
In Millions
Results of Operations
Performance Summary
Year ended December 31, 2021 compared with year ended December
31, 2020. Net income for the year ended December 31, 2021 was
$27.3 million, an increase of $7.0 million, or 34.3%, as compared to
$20.3 million for the year ended December 31, 2020. The increase in
net income of $7.0 million for the year ended December 31, 2021 was
the result of several factors. First Guaranty experienced an increase in
interest income associated with loans, a decrease in interest expense
and a decrease in the provision for loan losses. This was partially offset
by a decrease in interest income associated with securities, a decrease
in noninterest income and an increase in noninterest expense. Loan
interest income increased due to the growth in First Guaranty's loan
portfolio, including loan fees recognized as an adjustment to yield from
the origination of the SBA guaranteed PPP loans. Interest expense
declined due to declines in market interest rates and First Guaranty's
plan to reduce interest expense by increasing core deposits. Interest
expense declined in 2021 even after factoring in an increase in deposit
balances associated with SBA PPP loans and stimulus payments,
and additional borrowings associated with our COVID-19 contingency
plans. First Guaranty attributes the primary decrease in the provision
to economic improvement in 2021 as compared to the COVID-19
uncertainty and economic conditions present in 2020. Factors
that partially offset the increase in net income included decreased
securities interest income due to the decrease in average balance of
the investment portfolio. Noninterest income decreased primarily due
to lower securities gains. Noninterest expense increased primarily due
98
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Net Interest Income
Our operating results depend primarily on our net interest income,
which is the difference between interest income earned on interest-
earning assets, including loans and securities, and interest expense
incurred on interest-bearing liabilities, including deposits and other
borrowed funds. Interest rate fluctuations, as well as changes in
the amount and type of interest-earning assets and interest-bearing
liabilities, combine to affect net interest income. First Guaranty’s assets
and liabilities are generally most affected by changes in the Federal
Funds rate, LIBOR rate, short term Treasury rates such as one month
and three month Treasury bills, and longer term Treasury rates such as
the U.S. ten year Treasury rate. Our net interest income is affected by
changes in the amount and mix of interest-earning assets and interest-
bearing liabilities. There may also be a time lag in the effect of interest
rate changes on assets and liabilities. It is also affected by changes
in yields earned on interest-earning assets and rates paid on interest-
bearing deposits and other borrowed funds.
A financial institution's asset and liability structure is substantially
different from that of a non-financial company, in that virtually all
assets and liabilities are monetary in nature. Accordingly, changes in
interest rates may have a significant impact on a financial institution's
performance. The impact of interest rate changes depends on the
sensitivity to the change of our interest-earning assets and interest-
bearing liabilities. The effects of the changing interest rate environment
in recent periods and our interest sensitivity position is discussed
below.
Year ended December 31, 2021 compared with year ended December
31, 2020. Net interest income for the years ended December 31,
2021 and 2020 was $89.6 million and $74.7 million, respectively. The
increase in net interest income for the year ended December 31, 2021
as compared to the prior year was primarily due to an increase in the
average balance of our total interest-earning assets, and a decrease in
the average rate of our total interest-bearing liabilities, partially offset
by a decrease in the average yield of our total interest-earning assets
and an increase in the average balance of our total interest-bearing
liabilities. For the year ended December 31, 2021, the average balance
of our total interest-earning assets increased by $379.4 million to $2.6
billion due to increased cash and due average balances, and strong
growth in commercial leases and our other loan portfolios. The average
yield of our interest-earning assets decreased by 23 basis points to
4.29% from 4.52% for the year ended December 31, 2020 due to the
general decline in market interest rates that affect the pricing of our
assets and due to the increased lower yielding average cash balances
on the balance sheet. For the year ended December 31, 2021, the
average balance of our total interest-bearing liabilities increased by
$249.3 million to $2.0 billion due to the growth in low cost deposits
and the average rate of our total interest-bearing liabilities decreased
by 37 basis points to 1.11% from 1.48% for the year ended December
31, 2020 due to the decrease in market rates. As a result, our net
interest rate spread increased 14 basis points to 3.18% for the year
ended December 31, 2021 from 3.04% for the year ended December
31, 2020. Our net interest margin increased nine basis points to
3.44% for the year ended December 31, 2021 from 3.35% for the
year ended December 31, 2020.
Year ended December 31, 2020 compared with year ended December
31, 2019. Net interest income for the years ended December 31,
2020 and 2019 was $74.7 million and $61.7 million, respectively. The
increase in net interest income for the year ended December 31, 2020
as compared to the prior year was primarily due to an increase in the
average balance of our total interest-earning assets and a decrease
in the average rate of our total interest-bearing liabilities, partially
offset by a decrease in the average yield of our total interest-earning
assets and by an increase in the average balance of our total interest-
bearing liabilities. For the year ended December 31, 2020, the average
balance of our total interest-earning assets increased by $417.3 million
to $2.2 billion due to the assets acquired from the Union acquisition,
COVID-19 related lending activities, including SBA PPP loans and loan
growth. The average yield of our interest-earning assets decreased by
54 basis points to 4.52% from 5.06% for the year ended December 31,
2019 due to the general decline in market interest rates that affect the
pricing of our assets and due to the increased lower yielding average
cash balances on the balance sheet. For the year ended December
31, 2020, the average balance of our total interest-bearing liabilities
increased by $310.9 million to $1.8 billion as our average deposits and
average borrowings increased due to COVID-19 related contingency
planning and government relief programs, and the average rate of
our total interest-bearing liabilities decreased by 58 basis points to
1.48% from 2.06% for the year ended December 31, 2019 due to
the decrease in market rates. As a result, our net interest rate spread
increased four basis points to 3.04% for the year ended December
31, 2020 from 3.00% for the year ended December 31, 2019. Our
net interest margin decreased six basis points to 3.35% for the year
ended December 31, 2020 from 3.41% for the year ended December
31, 2019.
Interest Income
Year ended December 31, 2021 compared with year ended December
31, 2020. Interest income increased $11.2 million, or 11.2%, to $111.9
million for the year ended December 31, 2021 as compared to the prior
year. First Guaranty's loan portfolio expanded during 2021 due to growth
associated with our loan originations, including commercial leases.
These factors contributed to the increase in interest income as the
average balance of our total interest-earning assets, primarily associated
with loans, increased, partially offset by a decrease in the average yield
of interest-earning assets, due to the decline in market interest rates. The
average balance of our interest-earning assets increased $379.4 million
to $2.6 billion for the year ended December 31, 2021 as compared to
the prior year. The average yield of interest-earning assets decreased
by 23 basis points to 4.29% for the year ended December 31, 2021
compared to 4.52% for the year ended December 31, 2020.
Interest income on securities decreased $1.2 million to $8.2 million
for the year ended December 31, 2021 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 $48.4 million to $332.6
million for the year ended December 31, 2021 from $381.0 million
for the year ended December 31, 2020 primarily due to a decrease in
the average balance of our mortgage-backed securities and corporate
securities portfolios compared to the prior year. The average yield on
securities decreased by one basis point to 2.48% for the year ended
December 31, 2021 from 2.49% for the year ended December 31,
2020 due to the decrease in market interest rates.
Interest income on loans increased $12.5 million, or 13.8%, to $103.4
million for the year ended December 31, 2021 as a result of an increase
in the average balance of loans. The average balance of loans (excluding
loans held for sale) increased by $351.2 million to $2.0 billion for the
year ended December 31, 2021 from $1.7 billion for the year ended
December 31, 2020 as a result of new loan originations. The average
yield on loans (excluding loans held for sale) decreased by 33 basis
points to 5.13% for the year ended December 31, 2021 from 5.46%
for the year ended December 31, 2020 due to the decrease in market
interest rates and the impact of SBA PPP loans which have a 1.00%
interest rate.
Year ended December 31, 2020 compared with year ended December
31, 2019. Interest income increased $9.0 million, or 9.9%, to $100.7
million for the year ended December 31, 2020 as compared to the
prior year. First Guaranty's loan portfolio expanded during 2020 due to
growth associated with the SBA PPP lending program and our other loan
originations such as commercial leases and non-farm non-residential
99
loans. These factors contributed to the increase in interest income as
the average balance of our total interest-earning assets, both loans
and securities, including assets from the Union acquisition increased,
partially offset by a decrease in the average yield of interest-earning
assets due to the decline in market interest rates. The average balance
of our interest-earning assets increased $417.3 million to $2.2 billion for
the year ended December 31, 2020 as compared to the prior year. The
average yield of interest-earning assets decreased by 54 basis points to
4.52% for the year ended December 31, 2020 compared to 5.06% for
the year ended December 31, 2019.
Interest income on securities decreased $0.3 million to $9.5 million
for the year ended December 31, 2020 as compared to the prior year
primarily as a result of a decrease in the average yield on securities. The
average balance of securities increased $31.7 million to $381.0 million
for the year ended December 31, 2020 from $349.2 million for the year
ended December 31, 2019 due to an increase in balances, particularly
corporate securities, as part of First Guaranty's strategy initiated at the
end of the first quarter in 2020 to provide earnings and liquidity during
the COVID-19 pandemic. The average yield on securities decreased by
32 basis points to 2.49% for the year ended December 31, 2020 from
2.81% for the year ended December 31, 2019 due to the decrease in
market interest rates.
Interest income on loans increased $11.9 million, or 15.1%, to $90.8
million for the year ended December 31, 2020 as a result of an increase
in the average balance of loans. The average balance of loans (excluding
loans held for sale) increased by $347.4 million to $1.7 billion for the
year ended December 31, 2020 from $1.3 billion for the year ended
December 31, 2019 as a result of new loan originations, primarily SBA
PPP loans, commercial leases, non-farm non-residential loans, and
acquired loans from the Union acquisition. The average yield on loans
(excluding loans held for sale) decreased by 53 basis points to 5.46%
for the year ended December 31, 2020 from 5.99% for the year ended
December 31, 2019 due to the decrease in market interest rates and the
impact of SBA PPP loans which have a 1.0% interest rate.
Interest Expense
Year ended December 31, 2021 compared with year ended December
31, 2020. Interest expense decreased $3.7 million, or 14.3%, to $22.3
million for the year ended December 31, 2021 from $26.0 million for
the year ended December 31, 2020 due primarily to a decrease in
market interest rates partially offset by an increase in the average
balance of interest-bearing liabilities. The average rate of interest-
bearing demand deposits decreased by 17 basis points during the year
ended December 31, 2021 to 0.67% as compared to 0.84% for the
prior year. The decrease 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 that declined during the current period.
The average rate of time deposits decreased 23 basis points during the
year ended December 31, 2021 to 1.97% as compared to 2.20% for
the prior year. The decrease in the average rate of time deposits was
due to a significant decline in market interest rates primarily associated
with the economic conditions from the COVID-19 pandemic. Partially
offsetting the decrease in interest expense was an increase in the
average balance of interest-bearing liabilities, which increased $249.3
million during the year ended December 31, 2021 to $2.0 billion as
compared to the prior year as a result of a $360.5 million increase
in the average balance of interest-bearing demand deposits, a $28.6
million increase in the average balance of savings deposits, which were
partially offset by a $112.1 million decrease in the average balance of
time deposits and a $27.7 million decrease in the average balance of
borrowings.
Year ended December 31, 2020 compared with year ended December
31, 2019. Interest expense decreased $3.9 million, or 13.2%, to $26.0
million for the year ended December 31, 2020 from $30.0 million for
the year ended December 31, 2019 due primarily to a decrease in
market interest rates partially offset by an increase in the average
balance of interest-bearing liabilities. The average rate of interest-
bearing demand deposits decreased by 92 basis points during the year
ended December 31, 2020 to 0.84% as compared to 1.76% for the
prior year. The decrease in the average rate on interest-bearing demand
deposits was due to those deposits, primarily public funds NOW and
DDA 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 that declined sharply
beginning in the first quarter of 2020. The average rate of time deposits
decreased 24 basis points during the year ended December 31, 2020
to 2.20% as compared to 2.44% for the prior year. The decrease in
the average rate of time deposits was due to First Guaranty's strategy
to reduce deposit costs by expanding non-interest bearing and lower
cost interest bearing deposits that has provided an alternative to higher
cost time deposits and has helped First Guaranty maintain liquidity
while lowering rates on time deposits. Partially offsetting the decrease
in interest expense was an increase in the average balance of interest-
bearing liabilities, which increased $310.9 million during the year
ended December 31, 2020 to $1.8 billion as compared to the prior
year as a result of a $130.3 million increase in the average balance
of interest-bearing demand deposits, a $69.5 million increase in the
average balance of borrowings, a $63.4 million increase in the average
balance of time deposits and a $47.7 million increase in the average
balance of savings deposits.
Average Balances and Yields
The following table sets forth average balance sheet balances, average
yields and costs, and certain other information for the years indicated.
No tax-equivalent yield adjustments were made, as the effect thereof
was not material. All average balances are daily average balances.
Nonaccrual loans were included in the computation of average
balances, but have been reflected in the table as loans carrying a zero
yield. Loans, net of unearned income, include loans held for sale. The
yields set forth below include the effect of deferred fees, discounts
and premiums that are amortized or accreted to interest income or
expense.
The net interest income yield presented below is calculated by dividing
net interest income by average interest-earning assets and is a measure
of the efficiency of the earnings from the balance sheet activities. It
is affected by changes in the difference between interest on interest-
earning assets and interest-bearing liabilities and the percentage of
interest-earning assets funded by interest-bearing liabilities.
100
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
December 31, 2021
December 31, 2020
December 31, 2019
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
Yield/
Rate
(in thousands, except for %)
$ 258,916 $
332,566
1,052
16
2,014,095
2,606,645
316
8,248
-
-
103,353
111,917
0.12%
2.48%
-%
-%
5.13%
4.29%
$ 182,339 $
380,991
678
377
1,662,875
2,227,260
404
9,471
1
21
90,787
100,684
0.22%
2.49%
0.08%
5.56%
5.46%
4.52%
$ 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%
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(6)
Total interest-earning assets
Noninterest-earning assets:
Cash and due from banks
Premises and equipment, net
Other assets
Total assets
15,077
59,739
26,551
$2,708,012
12,955
58,411
49,859
$2,348,485
11,951
45,037
15,256
$1,882,229
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
$ 1,082,922
191,967
655,025
82,565
2,012,479
7,237
204
12,893
1,965
22,299
0.67%
0.11%
1.97%
2.38%
1.11%
$ 722,433
163,332
767,075
110,292
1,763,132
6,089
268
16,908
2,752
26,017
0.84%
0.16%
2.20%
2.50%
1.48%
$ 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%
477,802
10,619
2,500,900
207,112
$2,708,012
$ 594,166
393,734
12,714
2,169,580
178,905
$2,348,485
262,379
9,204
1,723,829
158,400
$1,882,229
$89,618
$74,667
$61,677
3.18%
3.44%
$ 464,128
3.04%
3.35%
$ 357,739
3.00%
3.41%
129.52%
126.32%
124.63%
(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 3.44%, 3.36% and 3.42% for the years ended December 31, 2021, 2020 and 2019. A 21% tax rate was used to
calculate the effect on securities income from tax exempt securities for the years ended December 31, 2021, 2020 and 2019.
(6) Includes loan fees of $7.2 million, $6.3 million and $3.5 million for the years ended December 31, 2021, 2020 and 2019. PPP loan fee income of $2.0 million
and $2.2 million was recognized for the years ended December 31, 2021 and 2020, respectively.
101
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, 2021 vs. 2020
For the Years Ended
December 31, 2020 vs. 2019
Increase (Decrease) Due To
Increase (Decrease) Due To
Volume
Rate
Increase/
Decrease
Volume
Rate
Increase/
Decrease
(in thousands except for %)
$ 133
$ (221)
$ (88)
$ 621
$ (3,173)
$ (2,552)
(1,201)
-
(10)
18,278
17,200
(22)
(1)
(11)
(5,712)
(5,967)
2,594
42
(1,446)
(106)
(2,317)
(1,698)
(664)
(345)
(123)
(3,373)
(1,223)
846
(1,175)
(1)
(21)
12,566
11,233
1,148
(64)
(4,015)
(787)
(3,718)
-
4
-
(7)
19,433
20,904
(7,508)
(11,863)
1,943
163
1,473
2,032
5,611
(6,301)
(422)
(1,706)
(1,131)
(9,560)
(329)
-
(3)
11,925
9,041
(4,358)
(259)
(233)
901
(3,949)
Interest earned on:
Interest-earning deposits with banks
Securities (including FHLB stock)
Federal funds sold
Loans held for sale
Loans, net of unearned income
Total interest income
Interest paid on:
Demand deposits
Savings deposits
Time deposits
Borrowings
Total interest expense
Change in net interest income
$ 17,545
$ (2,594)
$ 14,951
$ 15,293
$ (2,303)
$ 12,990
levels. We expect economic uncertainty due to the ongoing COVID-19
pandemic to continue which may result in additional increases to the
allowance for loan losses in future periods.
For the year ended December 31, 2020, the provision for loan losses
was $14.9 million compared to $4.9 million for 2019. The allowance for
loan losses at December 31, 2020 was $24.5 million or 1.33% of total
loans, compared to $10.9 million or 0.72% of total loans at December
31, 2019. The increase in the provision was attributable to the increase
in the loan portfolio, the effects of the COVID-19 pandemic and charge-
offs not previously provided for. Total charge-offs were $2.4 million for
the year ended December 31, 2020 and $5.3 million for 2019.
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 and lease 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 $2.1 million provision for loan losses for the year
ended December 31, 2021 compared to $14.9 million for 2020. The
allowance for loan losses at December 31, 2021 was $24.0 million or
1.11% of total loans, compared to $24.5 million or 1.33% of total loans
at December 31, 2020. The decrease in the provision was attributable
to economic improvement in 2021 as compared to the COVID-19
uncertainty and economic conditions present in 2020. Total charge-
offs were $3.1 million for the year ended December 31, 2021 and
$2.4 million for 2020. We believe that the allowance is adequate to
cover potential losses in the loan portfolio given the current economic
conditions that are significantly influenced by the COVID-19 pandemic,
and current expected net charge-offs and non-performing asset
102
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
noninterest expense totaled $23.0 million for the year ended December
31, 2021 and $20.7 million for 2020. The following are notable
changes that occurred within noninterest expense. Marketing and
public relations expense increased $0.7 million during 2021 compared
to 2020 as these expenses were lower during 2020 primarily due to the
impacts of COVID-19. Tax expense increased primarily due to higher
capital taxes in 2021. Software expense and amortization increased $0.7
million in 2021 compared to 2020 due to the continued development of
First Guaranty's loan and deposit platforms. First Guaranty's regulatory
assessment increased by $0.2 million in 2021 compared to 2020 due
to the growth in deposits. Data processing expense declined in 2021
compared to 2020 as First Guaranty did not have data conversion
expenses in 2021 related to the Union merger.
Noninterest expense totaled $58.0 million for the year ended December
31, 2020 and $47.2 million for the year ended December 31, 2019.
Salaries and benefits expense totaled $29.6 million for the year ended
December 31, 2020 and $25.0 million for the year ended December
31, 2019. The increase in salaries and benefits expense was primarily
due to the increase in personnel expense from the Union acquisition,
new hires and expenses associated with COVID-19. Occupancy and
equipment expense increased to $7.7 million for the year ended
December 31, 2020 from $6.1 million for the year ended December 31,
2019 due to the new offices acquired in the Union acquisition. Other
noninterest expense totaled $20.7 million for the year ended December
31, 2020 and $16.1 million for 2019. The following are notable changes
that occurred within noninterest expense. Marketing and public
relations expense declined $0.4 million during 2020 primarily due to
the impacts of COVID-19. Software expense and amortization increased
$1.0 million in 2020 compared to 2019 due to the Union acquisition
and the continued development of First Guaranty's loan and deposit
platforms. The amortization of core deposits increased $0.3 million due
to the Union acquisition. Net costs from other real estate owned and
repossessions increased by $1.2 million as First Guaranty established a
reserve for other real estate expense and wrote down other real estate
properties. First Guaranty's regulatory assessment increased by $1.0
million in 2020 compared to 2019 due to the Union acquisition and the
substantial growth in deposits associated with COVID-19.
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 $10.8 million for the year ended December
31, 2021, a decrease of $13.0 million from $23.8 million for the
year ended December 31, 2020. The decrease was primarily due to
decreased gains on the sale of securities. Net securities gains were
$0.7 million for the year ended December 31, 2021 as compared to
net securities gains of $14.8 million for 2020. The gains on securities
sales occurred as First Guaranty sold investment securities in order to
fund loan growth and convert unrealized gains into realized earnings
as previously noted as part of First Guaranty's plan to manage for
economic uncertainty. Service charges, commissions and fees totaled
$2.7 million for the year ended December 31, 2021 as compared to
$2.6 million for 2020. ATM and debit card fees totaled $3.6 million
for the year ended December 31, 2021 and $3.0 million for 2020.
The increase in these fees can be attributed to changes in customer
behavior associated with the COVID-19 pandemic as customers used
their debit cards as an alternative to cash. Net gains on the sale of
loans were $0.9 million for the year ended December 31, 2021 and
$1.1 million for 2020. Other noninterest income totaled $2.8 million
and $2.3 million for the years ended December 31, 2021 and 2020,
respectively.
Noninterest income totaled $23.8 million for the year ended December
31, 2020, an increase of $15.5 million from $8.3 million for the year
ended December 31, 2019. The increase was primarily due to gains
on the sale of securities. Net securities gains were $14.8 million for the
year ended December 31, 2020 as compared to net securities losses
of $0.2 million for 2019. The gains on securities sales occurred as
First Guaranty sold investment securities in order to fund loan growth
and convert unrealized gains into realized earnings as previously noted
as part of First Guaranty's plan to manage for economic uncertainty.
Service charges, commissions and fees totaled $2.6 million for the
year ended December 31, 2020 as compared to $2.8 million for 2019.
The decline in these fees for 2020 compared to 2019 was the result
of waivers initially provided for during the beginning of the COVID-19
pandemic. ATM and debit card fees totaled $3.0 million for the year
ended December 31, 2020 and $2.3 million for 2019. The increase in
these fees can be attributed to growth from the Union acquisition and to
changes in customer behavior associated with the COVID-19 pandemic
as customers used their debit cards as an alternative to cash. Net gains
on the sale of loans were $1.1 million for the year ended December 31,
2020 and $1.4 million for 2019. Other noninterest income totaled $2.3
million and $2.0 million for the years ended December 31, 2020 and
2019, respectively.
Noninterest Expense
Noninterest expense
includes salaries and employee benefits,
occupancy and equipment expense and other types of expenses.
Noninterest expense totaled $63.9 million for the year ended December
31, 2021 and $58.0 million for the year ended December 31, 2020.
Salaries and benefits expense totaled $32.2 million for the year ended
December 31, 2021 and $29.6 million for the year ended December
31, 2020. The increase in salaries and benefits expense was primarily
due to the increase in personnel expense from new hires. Occupancy
and equipment expense increased to $8.7 million for the year ended
December 31, 2021 from $7.7 million for the year ended December
31, 2020 due to the new facilities put into service during 2021. Other
103
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
December 31, 2021
December 31, 2020
December 31, 2019
(in thousands)
$ 3,375
$ 2,919
$ 2,648
1,794
1,760
1,711
1,755
853
3,071
826
398
764
564
801
1,945
3,391
2,465
1,332
1,046
1,251
921
2,354
726
256
712
393
1,653
1,716
2,980
1,972
1,217
1,456
1,094
674
1,308
908
193
390
603
422
683
2,536
$ 23,008
$ 20,724
$ 16,104
Income Taxes
investment securities.
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, 2021, 2020 and 2019 was $7.2 million, $5.2
million and $3.7 million, respectively. The provision for income taxes
in 2021 increased as compared to 2020 due to the increase in income
before income taxes. First Guaranty's statutory tax rate was 21.0% for
the years ended December 31, 2021, 2020 and 2019.
Impact of Inflation
Our consolidated financial statements and related notes included
elsewhere in this Annual Report on Form 10-K have been prepared
in accordance with GAAP. These require the measurement of financial
position and operating results in terms of historical dollars, without
considering changes in the relative value of money over time due to
inflation or 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
First Guaranty's cash and cash equivalents totaled $261.9 million at
December 31, 2021 compared to $299.6 million at December 31,
2020. Loans maturing within one year or less at December 31, 2021
totaled $357.1 million compared to $265.9 million at December 31,
2020. At December 31, 2021, time deposits maturing within one
year or less totaled $267.0 compared to $355.1 million at December
31, 2020. Time deposits maturing after one year through three years
totaled $269.7 million at December 31, 2021 compared to $234.1
million at December 31, 2020. Time deposits maturing after three
years totaled $50.0 million at December 31, 2021 compared to
$136.5 million at December 31, 2020. First Guaranty's held to maturity
("HTM") investment securities portfolio at December 31, 2021 was
$153.5 million or 42.2% of the investment portfolio compared to $0 at
December 31, 2020. First Guaranty's available for sale ("AFS") portfolio
was $210.6 million, or 57.8% of the investment portfolio at December
31, 2021 compared to $238.5 million, or 100.0% at December
31, 2020. 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 $456.3
million and $161.2 million at December 31, 2021 and December
31, 2020, respectively with $3.2 million and $53.4 million in FHLB
advances outstanding at December 31, 2021 and December 31,
2020, respectively. The advances outstanding at December 31,
2020 were comprised of a short-term advance that was originated in
response to the COVID-19 pandemic that totaled $50.0 million and
a long-term advance that totaled $3.4 million. First Guaranty paid
off the short-term advance acquired in response to the COVID-19
pandemic during the first quarter of 2021. In the second quarter of
2021, First Guaranty increased liquidity by utilizing a $49.4 million
advance under the Federal Reserve PPPLF. First Guaranty redeemed
the PPPLF advance during the third quarter of 2021 as the additional
liquidity was not required. At December 31, 2021, First Guaranty
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FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
maintained the $3.2 million long-term FHLB advance acquired from
the Union acquisition. The change in borrowing capacity with the
Federal Home Loan Bank was due to changes in the value that First
Guaranty receives on pledged collateral and due to First Guaranty's
usage of the line. First Guaranty has increasingly transitioned public
funds deposits into reciprocal deposit programs for collateralization as
an alternative to FHLB letters of credit. At December 31, 2021, we had
outstanding letters of credit from the FHLB in the amount of $250.7
million that were primarily used to collateralize public funds deposits.
We also maintain federal funds lines of credit at various correspondent
banks with borrowing capacity of $100.5 million and two revolving
lines of credit totaling $26.5 million secured by a pledge of the Bank's
common stock, with no outstanding balance at December 31, 2021.
We also have a discount window line with the Federal Reserve Bank
that totaled $14.2 million at December 31, 2021. First Guaranty had
loans eligible to be pledged under the Federal Reserve's PPP lending
facility that totaled $35.4 million at December 31, 2021. First Guaranty
did not have any advances under this facility at December 31, 2021.
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 $223.9 million at December
31, 2021 from $178.6 million at December 31, 2020. The increase in
shareholders' equity was principally the result of an increase of $33.1
million in preferred stock and an increase of $19.5 million in retained
earnings, partially offset by a decrease of $7.3 million in accumulated
other comprehensive income. The $33.1 million increase in preferred
stock was the result of the issuance of 34,500 shares of non-
cumulative perpetual preferred stock on April 27, 2021. The $19.5
million increase in retained earnings was due to net income of $27.3
million during the year ended December 31, 2021, partially offset by
$6.4 million in cash dividends paid on our common stock and $1.4
million in cash dividends paid on shares of our preferred stock. The
decrease in accumulated other comprehensive income was primarily
attributed to the increase in unrealized losses on available for sale
securities during the year ended December 31, 2021.
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, 2021, First Guaranty Bank was classified as well-
capitalized. First Guaranty Bank's capital conservation buffer was
3.22% at December 31, 2021.
The following table presents First Guaranty Bank's capital ratios as of the indicated dates.
"Well Capitalized
Minimums"
At December 31, 2021
"Well Capitalized
Minimums"
At December 31, 2020
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%
8.71%
10.22%
11.22%
10.22%
5.00%
8.00%
10.00%
6.50%
8.58%
10.97%
12.22%
10.97%
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 Credit Department enjoys the photo shoot!
105
The notional amounts of the financial instruments with off-balance sheet risk at December 31, 2021, 2020 and 2019 are as follows:
Contract Amount
December 31, 2021
December 31, 2020
December 31, 2019
Commitments to Extend Credit
Unfunded Commitments under lines of credit
Commercial and Standby letters of credit
$ 198,444
$ 250,231
$ 13,787
(in thousands)
$ 154,047
$ 169,151
$ 11,728
$ 117,826
$ 148,127
$ 11,258
our liabilities, consisting primarily of deposits. As a result, a principal
part of our business strategy is to manage interest rate risk and reduce
the exposure of our net interest income to changes in market interest
rates. The board of directors of First Guaranty Bank has established two
committees, the management asset liability committee and the board
investment committee, to oversee the interest rate risk inherent in our
assets and liabilities, for determining the level of risk that is appropriate
given our business strategy, operating environment, capital, liquidity
and performance objectives, and for managing this risk consistent with
the guidelines approved by the board of directors. The management
asset liability committee is comprised of senior officers of the Bank
and meets as needed to review our asset liability policies and interest
rate risk position. The board ALCO investment committee is comprised
of certain members of the board of directors of the Bank and meets
monthly. The management asset liability committee provides a monthly
report to the board ALCO investment committee.
The need for interest sensitivity gap management is most critical in
times of rapid changes in overall interest rates. We generally seek to
limit our exposure to interest rate fluctuations by maintaining a relatively
balanced mix of rate sensitive assets and liabilities on a one-year
time horizon and greater than one-year time horizon. Because of the
significant impact on net interest margin from mismatches in repricing
opportunities, we monitor the asset-liability mix periodically depending
upon the management asset liability committee's assessment of
current business conditions and the interest rate outlook. We maintain
exposure to interest rate fluctuations within prudent levels using varying
investment strategies. These strategies include, but are not limited to,
frequent internal modeling of asset and liability values and behavior
due to changes in interest rates. We monitor cash flow forecasts closely
and evaluate the impact of both prepayments and extension risk.
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, 2021, the largest concentrations of unfunded
commitments were lines of credit associated with construction and
land development loans and commercial and industrial loans.
Commercial and standby letters of credit are conditional commitments
to guarantee the performance of a customer to a third party. These
guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing and
similar transactions. The majority of these guarantees are short-term
(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, 2021, 2020 and 2019.
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
106
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
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, 2021 illustrated
below reflects a liability-sensitive position with a negative cumulative gap on a one-year basis.
December 31, 2021
Interest Sensitivity Within
3 Months
Or Less
Over 3
Months thru
12 Months
Total One
Year
Over One
Year
Total
(dollars in thousands)
$ 608,701
$ 175,726
$ 784,427
$ 1,374,932
$ 2,159,359
1,669
183
249,294
333
-
-
2,002
183
249,294
363,513
-
-
365,515
183
249,294
$ 859,847
$ 176,059
$ 1,035,906
$ 1,738,445
$ 2,774,351
$ 1,275,544
$ -
$ 1,275,544
$ -
$ 1,275,544
201,699
80,741
-
25,170
-
-
-
186,996
-
-
-
-
201,699
267,737
-
25,170
-
-
-
318,934
5,988
3,208
14,818
661,253
201,699
586,671
5,988
28,378
14,818
661,253
$ 1,583,154
$ 186,996
$ 1,770,150
$ 1,004,201
$ 2,774,351
$ (723,307)
$ (10,937)
$ (734,244)
$ 734,244
$ (723,307)
$ (734,244)
$ (734,244)
$ -
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
(26.1)%
(26.5)%
(26.5)%
107
although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in
market interest rates. Also, the interest rates on certain types of assets
and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in
market rates. Also, the ability of many borrowers to service their debt
may decrease in the event of an interest rate increase. We consider all
of these factors in monitoring exposure to interest rate risk.
First Guaranty continues to pursue its strategy to increase loans as a
percentage of average assets compared to securities. First Guaranty
has also been collateralizing more of its public funds deposits with
either FHLB letters of credit or with reciprocal deposit insurance
programs. This facilitates the investment of our deposits in higher
yielding loans rather than lower yielding securities that generally have
higher interest rate risk. This strategy is designed to reduce interest
rate risk and improve net interest income. New loans that are originated
generally are either floating rate or were fixed rate with maturities that
did not exceed five years. Loans as a percentage of average interest-
earning assets increased to 77.3% in 2021 compared to 74.7% in
2020. Securities as a percentage of average interest-earning assets
decreased from 17.1% in 2020 to 12.8% in 2021.
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, 2021. 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 -25
basis points) from base case. We do not present shifts less than 25
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, 2021
Instantaneous Changes in
Interest Rates (basis points)
Percent Change in
Net Interest Income
+400
+300
+200
+100
Base
-25
5.68%
4.83%
3.96%
2.57%
0%
(1.17)%
Gradual Changes in
Interest Rates (basis points)
Percent Change in
Net Interest Income
+400
+300
+200
+100
Base
-25
0.94%
1.03%
0.9%
0.63%
0%
(0.10)%
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,
108
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
STRONG
PERFORMANCE
PROFITABILITY
REPORT RESUMES ON PAGE 110
109
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
First Guaranty Bancshares, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying balance sheets of First Guaranty Bancshares, Inc. and Subsidiary (First Guaranty) as of December 31,
2021 and 2020, and the related statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years
in the three-year period ended December 31, 2021, and the related notes collectively referred to as the financial statements. We also have
audited First Guaranty's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First Guaranty as of
December 31, 2021 and 2020 and the results of its operations and its cash flows for each of the years in the three-year period ended December
31, 2021, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, First Guaranty
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established
in Internal Control—Integrated Framework (2013) issued by COSO.
Basis for Opinion
First Guaranty’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on First Guaranty’s financial statements and
an opinion on First Guaranty’s internal control over financial reporting based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (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 audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and
whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements 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. Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
110
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to
the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Allowance for Loan and Lease Losses
As described in Notes 1, 5 and 6 to the financial statements, at December 31, 2021 First Guaranty’s total loans were $2.1 billion and the
associated allowance for loan and lease losses balance was $24.0 million. The allowance for loan and lease losses is management’s best
estimate of probable incurred losses inherent in its loan portfolio and is based on historical loss experience by loan segment and class with
adjustments for current events and conditions. These factors include, among others, loan loss experience, current loan portfolio quality,
present economic, political and regulatory conditions, specific credit risks, industry concentrations, and unidentified losses inherent in the
current loan portfolio.
We identified management’s asset quality ratings of loans and determination of qualitative factors, which is based on general economic
conditions and other qualitative risk factors both internal and external to First Guaranty, both of which are used in the allowance for loan
and lease losses calculation, as a critical audit matter. First Guaranty uses asset quality risk ratings to monitor portfolio performance and
trends and to adjust historical loss percentages for classified loans. First Guaranty stratifies loans into pools based on collateral and type of
loan, based on regulatory guidelines, and estimates inherent loss rates for each of the loan pools, which are used in the calculation of the
allowance for loan and lease losses. The general valuation allowance portion of the allowance for loan and lease losses is used to estimate
losses and is based on management’s evaluation of various factors that are not captured in the historical credit loss factors or on the specific
impairment component. Auditing management’s judgments regarding the determination of the quantitative and qualitative portion of the
allowance for loan and lease losses involved a high degree of subjectivity.
The primary procedures we performed to address the critical audit matters included:
•
•
Testing the design, implementation, and operating effectiveness of controls relating to management’s calculation of the allowance for
loan and lease losses, including controls over the accuracy of asset quality ratings of loans, the loan pools based on collateral type, and
the determination of the qualitative and quantitative factors of the allowance for loan and lease losses.
Testing a risk-based targeted selection of loans to gain substantive evidence that First Guaranty is appropriately rating these loans in
accordance with its policies, and that the asset quality ratings for the loans are reasonable.
• Obtaining management’s analysis and supporting documentation related to the qualitative factors and testing whether the qualitative
risk factors both internal and external to First Guaranty used in the calculation of the allowance for loan and lease losses are supported
by the analysis provided by management.
•
Testing the appropriateness of the methodology and assumptions used in the calculation of the allowance for loan and lease losses,
and testing the calculation itself, including completeness and accuracy of the data used in the calculation, application of the qualitative
factors determined by management and used in the calculation, and recalculation of the allowance for loan and lease losses balance.
We have served as First Guaranty's auditor since 2001.
Castaing, Hussey & Lolan, LLC
New Iberia, Louisiana
March 16, 2022
111
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 $150,585 and $0, respectively)
Investment securities
Federal Home Loan Bank stock, at cost
Loans held for sale
Loans, net of unearned income
Less: allowance for loan and lease 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
December 31, 2021
December 31, 2020
(in thousands, except share data)
$ 261,749
183
261,932
$ 298,903
702
299,605
210,620
153,536
364,156
1,359
-
2,159,359
24,029
2,135,330
238,548
-
238,548
3,351
-
1,844,135
24,518
1,819,617
58,637
12,900
5,922
2,072
12,047
23,765
$ 2,878,120
59,892
12,900
6,587
2,240
11,933
18,405
$ 2,473,078
$ 532,578
1,275,544
201,699
586,671
2,596,492
$ 411,416
860,394
168,879
725,629
2,166,318
-
6,439
4,480
3,208
25,170
14,818
3,624
2,654,231
50,000
6,121
5,292
3,366
42,366
14,777
6,247
2,294,487
Shareholders' Equity
Common stock:
Preferred stock, Series A - $1,000 par value - 100,000 shares authorized
Non-cumulative perpetual; 34,500 and 0 shares issued and outstanding,
respectively
Common stock, $1 par value - 100,600,000 shares authorized and 10,716,796
shares issued1
Surplus
Retained earnings
Accumulated other comprehensive (loss) income
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity
See Notes to the Consolidated Financial Statements.
1 All share and per share amounts have been restated to reflect the ten percent stock dividend paid December 17, 2021 to shareholders of record as
of December 15, 2021.
10,717
130,093
56,654
(6,633)
223,889
$ 2,878,120
10,717
130,093
37,134
647
178,591
$ 2,473,078
$ -
$ 33,058
112
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Interest Income:
Loans (including fees)
Deposits with other banks
Securities (including FHLB stock)
Federal funds sold
Total Interest Income
Interest Expense:
Demand deposits
Savings deposits
Time deposits
Borrowings
Total Interest Expense
Net Interest Income
Less: Provision for loan losses
Net Interest Income after Provision for Loan Losses
Noninterest Income:
Service charges, commissions and fees
ATM and debit card fees
Net gains (losses) 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
Less: Preferred stock dividends
Years Ended December 31,
2020
2019
2021
(in thousands, except share data)
$ 103,353
316
8,248
-
111,917
7,237
204
12,893
1,965
22,299
89,618
2,055
87,563
2,699
3,562
714
942
2,843
10,760
32,179
8,681
23,008
63,868
34,455
7,158
27,297
1,384
$ 90,808
404
9,471
1
100,684
6,089
268
16,908
2,752
26,017
74,667
14,877
59,790
2,571
3,022
14,791
1,054
2,342
23,780
29,600
7,709
20,724
58,033
25,537
5,219
20,318
-
$ 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
-
Net Income Available to Common Shareholders
$ 25,913
$ 20,318
$ 14,241
Per Common Share1:
Earnings
Cash dividends paid
$ 2.42
$ 0.60
$ 1.90
$ 0.58
$ 1.34
$ 0.54
Weighted Average Common Shares Outstanding
10,716,796
10,716,796
10,666,055
See Notes to Consolidated Financial Statements
1 All share and per share amounts have been restated to reflect the ten percent stock dividend paid December 17, 2021 to
shareholders of record as of December 15, 2021.
113
FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years Ended December 31,
2020
2019
2021
Net Income
Other comprehensive income:
Unrealized (losses) gains on securities:
Unrealized holding (losses) gains arising during the period
Reclassification adjustments for (gains) losses included in net income
Reclassification of OTTI losses included in net income
Change in unrealized (losses) gains on securities
Tax impact
Other comprehensive (loss) income
Comprehensive Income
See Notes to Consolidated Financial Statements
(in thousands)
$ 27,297
$ 20,318
$ 14,241
(8,501)
(714)
-
(9,215)
1,935
(7,280)
12,757
(14,791)
100
(1,934)
406
(1,528)
11,435
353
-
11,788
(2,475)
9,313
$ 20,017
$ 18,790
$ 23,554
FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Balance December 31, 2018
Net Income
Common stock issued in private placement,
59,551 shares1
Other comprehensive income
Cash dividends on common stock ($0.54 per share)1
Balance December 31, 2019
Net income
Other comprehensive income (loss)
Cash dividends on common stock ($0.58 per share)1
Balance December 31, 2020
Net income
Preferred stock issued, 34,500 shares, net of costs
Other comprehensive income (loss)
Preferred stock dividends
Cash dividends on common stock ($0.60 per share)1
Preferred
Stock
$1,000 Par
Common
Stock
$1 Par
Surplus
Retained
Earnings
Accumulated
Other
Comprehensive
Income/(Loss)
Total
(in thousands, except share data)
$ -
$ 10,657
$ 128,938
$ 14,827
$ (7,138) $ 147,284
-
-
-
-
-
60
-
-
-
14,241
1,155
-
-
(215)
-
(5,803)
-
-
9,313
14,241
1,000
9,313
-
(5,803)
$ -
$ 10,717
$ 130,093
$ 23,050
$ 2,175
$ 166,035
-
-
-
-
-
-
-
-
-
20,318
-
-
(1,528)
(6,234)
-
20,318
(1,528)
(6,234)
$ -
$ 10,717
$ 130,093
$ 37,134
$ 647
$ 178,591
-
33,058
-
-
-
-
-
-
-
-
-
-
-
27,297
-
-
(1,384)
(6,393)
-
-
(7,280)
-
-
27,297
33,058
(7,280)
(1,384)
(6,393)
Balance December 31, 2021
$ 33,058
$ 10,717
$ 130,093
$ 56,654
$ (6,633)
$ 223,889
See Notes to Consolidated Financial Statements
1 All share and per share amounts have been restated to reflect the ten percent stock dividend paid December 17, 2021 to shareholders of record as of
December 15, 2021.
114
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows From Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses
Depreciation and amortization
Amortization/Accretion of investments
Gain (loss) on sale/call of securities
Other than temporary impairment charge on 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 AFS securities
Funds invested in preferred securities
Proceeds from redemption of preferred securities
Proceeds from sale/redemption of Federal Home Loan Bank stock
Funds invested in Federal Home Loan Bank stock
Net increase in loans
Purchases of premises and equipment
Proceeds from sales of premises and equipment
Proceeds from sales of other real estate owned
Cash paid in excess of cash received in acquisition
Net Cash Used In Investing Activities
Cash Flows From Financing Activities:
Net increase in deposits
Net (decrease) increase in federal funds purchased and short-term borrowings
Proceeds from long-term borrowings, net of costs
Repayment of long-term borrowings
Net proceeds from issuance of preferred stock
Common stock issued in private placement
Dividends paid on preferred stock
Dividends paid common stock
Net Cash Provided By Financing Activities
Years Ended December 31,
2021
2020
2019
(in thousands)
$ 27,297
$ 20,318
$ 14,241
2,055
4,775
(104)
(714)
-
(965)
536
(13)
-
(6,347)
26,520
-
417,557
(551,563)
(1,000)
1,500
2,160
(155)
(320,347)
(2,204)
77
1,330
-
(452,645)
430,174
(49,682)
-
(17,321)
33,058
-
(1,384)
(6,393)
388,452
14,877
3,781
2,594
(14,791)
100
(1,054)
1,245
(43)
-
(3,268)
23,759
34,022
1,242,559
(1,078,450)
-
-
-
-
(322,745)
(6,313)
127
2,345
-
(128,455)
313,210
36,202
-
(6,302)
-
-
-
(6,234)
336,876
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
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
(37,673)
299,605
$ 261,932
232,180
67,425
$ 299,605
(60,540)
127,965
$ 67,425
Noncash Activities:
Acquisition of real estate in settlement of loans
Transfer of securities from HTM to AFS
Transfer of securities from AFS to HTM
Cash Paid During the Period:
Interest on deposits and borrowed funds
Federal income taxes
State income taxes
See Notes to the Consolidated Financial Statements.
$ 1,782
$ -
$ 160,014
$ 951
$ 52,553
-
$ 2,789
$ -
-
$ 23,111
$ 11,400
$ 36
$ 26,772
$ 4,800
$ 25
$ 27,871
$ 3,250
$ 23
115
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 and a financial holding company 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 offers
a wide range of financial services and focuses on building client
relationships and providing exceptional customer service. 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-six banking facilities and forty-nine automated
teller machines (ATMs) in Southeast, Southwest, Central and North
Louisiana, North Central Texas, Kentucky and West Virginia.
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.
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 and lease 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 and lease 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.
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
116
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
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 and lease 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.
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 and lease losses.
Acquired loans are segregated between those with deteriorated credit
quality at acquisition and those deemed as performing. To make
this determination, Management considers such factors as past
due status, nonaccrual status, credit risk ratings, interest rates and
collateral position. The fair value of acquired loans deemed performing
is determined by discounting cash flows, both principal and interest,
for each pool at prevailing market interest rates as well as consideration
of inherent potential losses. The difference between the fair value and
principal balances due at acquisition date, the fair value discount, is
accreted into income over the estimated life of each loan pool.
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 and lease losses. Performing acquired
loans are subsequently evaluated for any required allowance at each
reporting date. An allowance for loan and lease losses is calculated
using a similar methodology for originated loans.
117
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 and lease losses
The allowance for loan and lease losses is established through a
provision for loan losses charged to expense. Loans are charged
against the allowance for loan and lease 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 including the impact of the COVID-19
pandemic, adequacy of loan collateral and other relevant factors.
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 and lease losses in the near term. However, the
amount of the change that is reasonably possible cannot be estimated.
The evaluation of the adequacy of loan collateral is often based upon
estimates and appraisals. Because of changing economic conditions,
the valuations determined from such estimates and appraisals may
also change.
Accordingly, First Guaranty may ultimately incur losses that vary from
Management's current estimates. Adjustments to the allowance for
loan and lease 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 and lease losses when the loss
actually occurs or when the collectability of the principal is unlikely.
Recoveries are credited to the allowance at the time of recovery.
The allowance consists of specific, general, and unallocated
components. The specific component relates to loans that are
classified as doubtful, substandard, and impaired. For such loans
that are also classified as impaired, an allowance is established when
the discounted cash flows (or collateral value or observable market
price) of the impaired loan is lower than the carrying value of that
loan. Also, a specific reserve is allocated for syndicated loans. The
general component covers non-classified loans and special mention
loans and is based on historical loss experience adjusted for qualitative
factors. Qualitative factors include analysis of levels and trends in
delinquencies, non-accrual loans, charge-offs and recoveries, loan
risk ratings, trends in volume and terms of loans, changes in lending
policy, credit concentrations, portfolio stress test results, national and
local economic trends including the impact of COVID-19, industry
conditions, and other relevant factors. An unallocated component is
maintained to cover uncertainties that could affect the estimate of
probable losses.
The allowance for loan and lease 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. Goodwill represents the excess
of the purchase price over the fair value of the net identifiable assets
acquired in an acquisition. 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 in accordance with ASC Topic
350.
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.
Premises and equipment
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 and lease losses. Subsequent to foreclosure, losses on the
periodic revaluation of the property are charged to current period
earnings as other real estate expense or to the allowance for other real
estate. 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.
118
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Off-balance sheet financial instruments
Earnings per common share
In the ordinary course of business, First Guaranty has entered into
commitments to extend credit, including commitments under credit
card arrangements, commitments to fund commercial real estate,
construction and land development loans secured by real estate, and
performance standby letters of credit. Such financial instruments are
recorded when they are funded.
Income taxes
First Guaranty and its subsidiary file a consolidated federal income
tax return on a calendar year basis. In lieu of Louisiana state income
tax, the Bank is subject to the Louisiana bank shares tax, which is
included in noninterest expense in First Guaranty's consolidated
financial statements. With few exceptions, First Guaranty is no longer
subject to U.S. federal, state or local income tax examinations for years
before 2018. 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.
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. See Note 19 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.
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 2021, First
Guaranty issued a pro rata, 10% common stock dividend. The shares
issued for the stock dividend have been retrospectively factored into
the calculation of earnings per share as well as cash dividends paid on
common stock and represented on the face of the financial statements.
No convertible shares of First Guaranty's stock are outstanding.
Operating Segments
All of First Guaranty's operations are considered by management to
be aggregated into one reportable operating segment. While the chief
decision-makers monitor the revenue streams of the various products
and services, the identifiable segments are not material. Operations
are managed and financial performance is evaluated on a Company-
wide basis.
Reclassifications
Certain reclassifications have been made to prior year end financial
statements in order to conform to the classification adopted for
reporting in 2021.
Note 2. Recent Accounting Pronouncements
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 a smaller reporting company and has delayed
the adoption of ASU 2016-13.
Note 3. 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, 2021
and 2020. At December 31, 2021 First Guaranty had three accounts
at correspondent banks, excluding the Federal Reserve Bank, that
exceeded the FDIC insurable limit of $250,000. These accounts
were over the insurable limit by $2.0 million. At December 31, 2020
First Guaranty had no accounts at correspondent banks, excluding
the Federal Reserve Bank, that exceeded the FDIC insurable limit of
$250,000.
119
Note 4. Securities
A summary comparison of securities by type at December 31, 2021 and 2020 is shown below.
December 31, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
December 31, 2020
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Fair Value
Amortized
Cost
(in thousands)
$ -
$ -
$ -
$ -
$ 3,000
$ -
$ -
$ 3,000
116,733
79,344
15,543
576
-
732
156
10
(623)
116,110
169,986
(1,851)
-
-
78,225
15,699
586
36,153
27,381
1,208
77
604
781
31
(405)
(268)
-
-
169,658
36,489
28,162
1,239
Available for sale:
U.S. Treasuries
U.S. Government Agencies
Corporate debt securities
Municipal bonds
Mortgage-backed securities
Total available for sale securities
$ 212,196
$ 898
$ (2,474) $ 210,620
$ 237,728
$ 1,493
$ (673) $ 238,548
Held to maturity:
U.S. Government Agencies
$ 153,536
$ -
$ (2,951) $ 150,585
$ -
$ -
$ - $ -
Total held to maturity securities
$ 153,536
$ -
$ (2,951) $ 150,585
$ -
$ -
$ -
$ -
First Guaranty designated available for sale U.S. Government Agency
securities with an amortized cost of $160.0 million and a corresponding
fair value of $152.9 million for held to maturity status in the first quarter
of 2021. The net unrealized loss net of taxes at the date of transfer was
$5.7 million. This was done following the review of guidance for held to
maturity portfolios in light of the COVID-19 pandemic. First Guaranty
had terminated its held to maturity portfolio in the first quarter of 2020
due to the economic conditions associated with COVID-19. ASC 320-
10-25 provides an exemption for events that are isolated, nonrecurring,
and unusual for the reporting entity. The termination of the held to
maturity portfolio in the first quarter of 2020 did not taint the portfolio
under this guidance. The securities designated as held to maturity are
agency securities that are part of First Guaranty’s investment strategy
and public funds collateralization program.
The fair value of the held to maturity securities at the date of transfer
becomes the securities' new cost basis. The unrealized holding loss
at the time of transfer continues to be reported in accumulated other
comprehensive income, net of tax and is amortized over the remaining
lives of the securities as an adjustment of the yield. The amortization
of the unamortized holding loss reported in accumulated other
comprehensive income will directly offset the effect on interest income
from the accretion of the reduced amortized cost for the transferred
securities. Because of this transfer, the total losses less than 12
months and greater than 12 months reported in the table below will
not agree to the unrealized losses reported in the inventory of held to
maturity securities. The inventory table reports unrealized gains and
losses based upon the transferred securities adjusted cost basis and
current fair value. The reporting of losses less than 12 months and
greater than 12 months represents that actual period of time that these
securities have been in an unrealized loss position and the securities
amortized cost basis as if the transfer did not occur.
120
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
The scheduled maturities of securities at December 31, 2021, 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
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
December 31, 2021
Amortized Cost
Fair Value
(in thousands)
$ 641
$ 643
3,885
82,320
124,774
211,620
576
3,759
81,390
124,242
210,034
586
$ 212,196
$ 210,620
$ -
$ -
-
19,445
134,091
-
19,122
131,463
Total held to maturity securities
$ 153,536
$ 150,585
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, 2021.
Less Than 12 Months
12 Months or More
At December 31, 2021
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
Municipal bonds
Mortgage-backed securities
Total available for sale securities
Held to maturity
U.S. Government Agencies
Total held to maturity securities
-
13
61
1
-
75
16
16
$ -
$ -
-
$ -
$ -
116,110
(623)
61,551
(1,677)
66
-
-
-
$177,727
$(2,300)
$ 150,585
$(2,951 )
$150,585
$(2,951)
-
2
-
6
8
-
-
-
445
-
9
-
(174)
-
-
$ 454
$ (174)
$ -
$ -
$ -
$ -
-
13
63
1
6
83
16
16
$ -
$ -
116,110
61,996
(623)
(1,851)
66
9
-
-
$178,181
$ (2,474)
$150,585
$ (2,951)
$150,585
$ (2,951)
121
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, 2020.
Less Than 12 Months
12 Months or More
At December 31, 2020
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
Municipal bonds
Mortgage-backed securities
Total available for sale securities
-
12
17
1
-
30
$ -
$ -
-
$ -
$ -
131,455
10,286
66
-
(405)
(144)
-
-
-
4
-
6
-
-
1,254
(124)
-
11
-
-
$141,807
$ (549)
10
$ 1,265
$ (124)
-
12
21
1
6
40
$ -
$ -
131,455
11,540
66
11
(405)
(268)
-
-
$143,072
$ (673)
As of December 31, 2021, 99 of First Guaranty's debt securities had
unrealized losses totaling 1.6% of the individual securities' amortized
cost basis and 1.5% of First Guaranty's total amortized cost basis of
the investment securities portfolio. Eight of the 99 securities had been
in a continuous loss position for over 12 months at such date. The 8
securities had an aggregate amortized cost basis of $0.6 million and
an unrealized loss of $0.2 million at December 31, 2021. Management
has the intent and ability to hold these debt securities until maturity or
until anticipated recovery.
Securities are evaluated for other-than-temporary impairment at least
quarterly and more frequently when economic or market conditions
warrant such evaluation. Consideration is given to (i) the length of time
and the extent to which the fair value has been less than cost, (ii)
the financial condition and near-term prospects of the issuer, (iii) the
recovery of contractual principal and interest and (iv) the intent and
ability of First Guaranty to retain its investment in the issuer for a period
of time sufficient to allow for any anticipated recovery in fair value.
Investment securities issued by the U.S. Government and Government
sponsored enterprises with unrealized losses and the amount of
unrealized losses on those investment securities that are the result
of changes in market interest rates will not be other-than-temporarily
impaired. First Guaranty has the ability and intent to hold these
securities until recovery, which may not be until maturity.
Corporate debt securities in a loss position consist primarily of
corporate bonds issued by businesses in the financial, insurance,
utility, manufacturing, industrial, consumer products and oil and gas
industries. There were no securities with an other-than-temporary
impairment loss at December 31, 2021. 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 year ended December 31, 2021. There was
one other-than-temporary impairment loss of $100,000 recognized on
securities during the year ended December 31, 2020. The security
had an original book value of $0.1 million and was in default. First
Guaranty's analysis of the company and the current market value of the
security resulted in the determination that a write down was warranted.
There were no other-than-temporary impairment losses recognized on
securities during the year December 31, 2019.
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, 2021, 2020, and 2019:
Year Ended
December 31,
2021
Year Ended
December 31,
2020
(in thousands)
Year Ended
December 31,
2019
Beginning balance of credit losses at beginning of year
$ 100
$ -
$ 60
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
-
-
-
(100)
100
-
-
-
Ending balance of cumulative credit losses recognized in earnings at end of year
$
-
$
100
$
-
-
-
(60)
-
122
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
In 2021, 2020 and 2019 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, 2021 and 2020 the carrying value of pledged
securities totaled $234.9 million and $184.0 million, respectively.
Gross realized gains on sales of securities were $1.0 million, $14.7
million and $0.8 million for the years ended December 31, 2021,
2020 and 2019, respectively. Gross realized losses were $0.4 million,
$0.1 million and $1.1 million for the years ended December 31, 2021,
2020 and 2019. The tax applicable to these transactions amounted to
$0.1 million, $3.1 million, and $(79,000) for 2021, 2020 and 2019,
respectively. Proceeds from sales of securities classified as available
for sale amounted to $49.7 million, $394.9 million and $90.5 million
for the years ended December 31, 2021, 2020 and 2019, respectively.
Net unrealized losses on available for sale securities included in
accumulated other comprehensive income (loss) ("AOCI"), net of
applicable income taxes, totaled $6.6 million at December 31, 2021.
At December 31, 2020 net unrealized gains included in AOCI, net of
applicable income taxes, totaled $0.6 million. During 2021 net gains,
net of tax, reclassified out of AOCI into earnings totaled $0.6 million.
During 2020 net gains, net of tax, reclassified out of AOCI into earnings
totaled $11.7 million.
At December 31, 2021, First Guaranty's exposure to investment
securities issuers that exceeded 10% of shareholders' equity was as
follows:
December 31, 2021
Amortized
Cost
Fair Value
(in thousands)
Federal Home Loan Bank (FHLB)
$ 33,333
$ 33,071
Federal Home Loan Mortgage
Corporation (Freddie Mac-FHLMC)
Federal Farm Credit Bank (FFCB)
Total
95,230
142,279
93,401
140,807
$ 270,842
$ 267,279
Note 5. Loans
The following table summarizes the components of First Guaranty's loan portfolio as of December 31, 2021 and December 31, 2020:
December 31,
2021
2020
Balance
As % of Category
Balance
As % of Category
(in thousands, except for %)
Real Estate:
Construction & land development
$ 174,334
Farmland
1- 4 Family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other(1)
Total Non-Real Estate
Total Loans Before Unearned Income
Unearned income
31,810
288,347
65,848
886,407
1,446,746
26,747
398,391
246,022
48,142
719,302
2,166,048
(6,689)
8.1%
1.5%
13.3%
3.0%
40.9%
66.8%
1.2%
18.4%
11.4%
2.2%
33.2%
100.0%
$ 150,841
26,880
271,236
45,932
824,137
1,319,026
28,335
353,028
104,141
44,642
530,146
1,849,172
(5,037)
8.2%
1.4%
14.7%
2.5%
44.6%
71.4%
1.5%
19.1%
5.6%
2.4%
28.6%
100.0%
Total Loans Net of Unearned Income
$ 2,159,359
$ 1,844,135
(1) Includes PPP loans fully guaranteed by the SBA of $35.4 million and $92.3 million at December 31, 2021 and December 31, 2020, respectively.
123
The following table summarizes fixed and floating rate loans by contractual maturity, excluding nonaccrual loans, as of December 31, 2021 and
December 31, 2020 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.
2021
December 31,
(in thousands)
2020
Fixed
Floating
Total
Fixed
Floating
Total
$ 239,423
$ 117,697
$ 357,120
$
186,252
$ 79,680
$ 265,932
926,640
385,509
1,312,149
114,976
106,579
179,522
78,987
221,555
258,509
740,358
128,860
146,830
368,259
1,108,617
91,032
92,325
219,892
239,155
$ 1,460,561
$ 688,772
$ 2,149,333
1,202,300
$ 631,296
1,833,596
16,715
2,166,048
(6,689)
$ 2,159,359
15,576
1,849,172
(5,037)
$ 1,844,135
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, 2021, $349.1 million of floating rate loans were at their interest rate floor. At December 31, 2020, $305.0 million of floating
rate loans were at their interest rate floor. Nonaccrual loans have been excluded from these totals.
124
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
The following tables present the age analysis of past due loans at December 31, 2021 and December 31, 2020:
As of December 31, 2021
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
$ 956
$ 776
$ 1,732
$ 172,602
$ 174,334
$ 246
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Total Non-Real Estate
17
3,932
1,669
1,352
7,926
97
1,233
-
920
2,250
787
3,375
162
9,014
14,114
2,302
722
-
822
3,846
804
7,307
1,831
10,366
22,040
2,399
1,955
-
1,742
6,096
31,006
281,040
64,017
876,041
31,810
288,347
65,848
886,407
-
514
162
281
1,424,706
1,446,746
1,203
24,348
396,436
246,022
46,400
713,206
26,747
398,391
246,022
48,142
719,302
-
23
-
19
42
Total Loans Before Unearned Income
$ 10,176
$ 17,960
$ 28,136
$2,137,912
2,166,048
$ 1,245
Unearned income
Total Loans Net of Unearned Income
(6,689)
$ 2,159,359
As of December 31, 2020
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
$ 8,088
$ 1,621
$ 9,709
$ 141,132
$ 150,841
$ 1,000
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Total Non-Real Estate
227
6,050
190
15,792
30,347
143
663
180
996
1,982
857
7,207
366
12,148
22,199
3,539
2,557
-
372
6,468
1,084
13,257
556
27,940
52,546
3,682
3,220
180
1,368
8,450
25,796
257,979
45,376
796,197
26,880
271,236
45,932
824,137
-
4,980
366
4,699
1,266,480
1,319,026
11,045
24,653
349,808
103,961
43,274
521,696
28,335
353,028
104,141
44,642
530,146
67
1,856
-
123
2,046
Total Loans Before Unearned Income
$ 32,329
$ 28,667
$ 60,996
$1,788,176
1,849,172
$ 13,091
Unearned income
Total Loans Net of Unearned Income
(5,037)
$ 1,844,135
The tables above include $16.7 million and $15.6 million of nonaccrual loans for December 31, 2021 and 2020, respectively. See the tables below
for more detail on nonaccrual loans.
125
The following is a summary of nonaccrual loans by class at the dates indicated:
As of December 31,
2021
2020
(in thousands)
Real Estate:
Construction & land development
$ 530
$ 621
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Total Non-Real Estate
Total Nonaccrual Loans
787
2,861
-
8,733
12,911
2,302
699
-
803
3,804
857
2,227
-
7,449
11,154
3,472
701
249
4,422
$ 16,715
$ 15,576
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:
Non-farm non-residential
795,495
72,103
18,809
1,301,945
103,996
40,805
As of December 31, 2021
As of December 31, 2020
Pass
Special
Mention
Sub-
standard Doubtful
Total
Pass
Special
Mention
Sub-
standard Doubtful
Total
(in thousands)
$ 151,220 $ 21,997 $ 1,117
$ -
$ 174,334 $ 139,032
$ 10,785 $ 1,024
$ - $ 150,841
27,678
270,866
56,686
40
7,644
2,212
4,092
9,837
6,950
23,952
128
245,869
46,804
-
374
2,667
8,764
153
964
672,032
34,722
12,548
-
-
-
-
-
-
-
-
-
31,810
22,822
46
4,012
288,347
251,315
7,252
12,669
65,848
36,146
1,841
7,945
886,407
756,760
51,355
16,022
1,446,746
1,206,075
71,279
41,672
26,747
24,180
92
398,391
321,957
27,388
246,022
103,961
48,142
43,736
-
442
4,063
3,683
180
464
719,302
493,834
27,922
8,390
-
-
-
-
-
-
-
-
-
-
26,880
271,236
45,932
824,137
1,319,026
28,335
353,028
104,141
44,642
530,146
$ 1,973,977 $138,718 $ 53,353
$ - $2,166,048 $1,699,909
$ 99,201 $ 50,062 $ -
1,849,172
(6,689)
$2,159,359
(5,037)
$1,844,135
Real Estate:
Construction & land
development
Farmland
1- 4 family
Multifamily
Total Real Estate
Non-Real Estate:
Agricultural
Commercial leases
Consumer and other
Total Non-Real Estate
Total Loans Before Unearned
Income
Unearned income
Total Loans Net of Unearned
Income
Commercial and industrial
355,407
34,220
126
FIRST GUARANTY BANCSHARES, INC. 2021 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, 2021 and 2020.
As of December 31, 2021
As of December 31, 2020
(in thousands)
Real Estate:
Construction & land development
$ 146
$ 397
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Total Non-Real Estate
Total
-
1,848
-
2,192
4,186
159
798
-
-
957
$ 5,143
-
4,102
900
2,396
7,795
343
1,017
-
-
1,360
$ 9,155
For those purchased loans disclosed above, there was an allowance for
loan and lease losses of $0.7 million at December 31, 2021 and $0.5
million at December 31, 2020.
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, 2021 and
2020.
Balance, beginning of period
Acquisition accretable yield
Accretion
Net transfers from nonaccretable difference to accretable yield
Year Ended
December 31, 2021
Year Ended
December 31, 2020
(in thousands)
$ 2,892
$ 3,647
-
(514)
-
30
(785)
-
Balance, end of period
$ 2,378
$ 2,892
127
Note 6. Allowance for Loan and Lease Losses
A summary of changes in the allowance for loan and lease losses, by loan type, for the years ended December 31, 2021, 2020 and 2019 are as
follows:
As of December 31,
2021
2020
Beginning
Allowance
(12/31/20)
Charge-
Offs
Recoveries Provision
Ending
Allowance
(12/31/21)
Beginning
Allowance
(12/31/19)
Charge-
Offs
(in thousands)
Recoveries
Provision
Ending
Allowance
(12/31/20)
Real Estate:
Construction & land
development
Farmland
1- 4 family
Multifamily
Non-farm non-
residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and
industrial
Commercial leases
Consumer and other
Unallocated
$ 1,029 $ (92
)
$ -
$ (168 )
$ 769
$ 423 $ (265
)
$ -
$ 871
$ 1,029
462
-
2,510
(266)
978
(12)
15,064
(1,020)
20,043
(1,390)
181
(149)
2,802
(89)
583
907
2
-
(1,494)
-
90
44
-
7
141
17
96
4
320
-
437
(74 )
(367 )
(26)
478
1,921
940
(1,321)
(1,956)
12.730
16,838
50
1,027
1,038
5,277
7,815
-
(154)
-
(550)
(969)
-
39
-
412
1,598
(60)
462
2,510
978
178
217
10,159
15,064
12,980
20,043
134
183
95
(110)
70
126
181
(446
)
1,899
1,638
786
4,011
2,363
2,486
1,371
788
7,191
1,909
(265)
568
542
-
-
(1,083)
-
3,114
(1,458)
128
388
336
-
922
1,030
2,802
(373)
1,112
2
583
907
2
1,897
4,475
Total Non-Real Estate
4,475
(1,732)
Total
$24,518 $(3,122)
$ 578
$ 2,055
$24,029
$10,929 $(2,427)
$1,139
$14,877
$24,518
As of December 31,
2019
Beginning Allowance
(12/31/18)
Charge-Offs
Recoveries
Provision
(in thousands)
Ending Allowance
(12/31/19)
Real Estate:
Construction & land development
$ 581
$ -
$ -
$ (158)
$ 423
Farmland
1- 4 family
Multifamily
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Commercial leases
Consumer and other
Unallocated
Total Non-Real Estate
Total
41
911
1,318
4,771
7,622
339
1,909
262
629
15
-
(552)
-
(2,603)
(3,155)
(40)
(879)
-
(1,190)
-
3,154
(2,109)
-
39
-
5
44
-
267
-
246
-
513
9
629
(280)
3,104
3,304
(204)
612
306
857
(15)
1,556
50
1,027
1,038
5,277
7,815
95
1,909
568
542
-
3,114
$ 10,776
$ (5,264)
$ 557
$ 4,860
$ 10,929
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.
128
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
A summary of the allowance along with loans and leases, 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
Commercial leases
Consumer and other
Unallocated
Total Non-Real Estate
Total
Unearned Income
Total Loans Net of
Unearned Income
As of December 31, 2021
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)
$ -
$ -
$ 769
$ 769
$ - $ 146
$ 174,188
$ 174,334
19
258
-
1,822
2,099
-
72
-
-
-
72
-
-
-
509
509
-
216
-
-
-
216
459
1,663
940
10,399
14,230
478
1,921
940
12,730
16,838
183
183
2,075
2,486
1,371
788
6,903
2,363
2,486
1,371
788
7,191
496
961
-
10,899
12,356
1,383
1,286
-
-
-
-
1,848
-
2,192
4,186
159
798
-
-
-
31,314
285,538
65,848
31,810
288,347
65,848
873,316
886,407
1,430,204
1,446,746
25,205
26,747
396,307
246,022
48,142
-
398,391
246,022
48,142
-
2,669
957
715,676
719,302
$ 2,171
$ 725
$ 21,133
$ 24,029
$ 15,025 $ 5,143
$ 2,145,880
$ 2,166,048
(6,689)
$ 2,159,359
129
As of December 31, 2020
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)
Real Estate:
Construction & land
development
Farmland
1- 4 family
Multifamily
Non-farm non-
residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and
industrial
Commercial leases
Consumer and other
Unallocated
Total Non-Real Estate
Total
Unearned Income
Total Loans Net of
Unearned Income
$ -
$ -
$ 1,029 $ 1,029
$ - $ 397
$ 150,444
$ 150,841
-
266
-
2,280
2,546
-
97
-
-
-
97
-
-
-
334
334
-
142
-
-
-
462
2,244
978
12,450
17,163
462
2,510
978
15,064
20,043
543
1,480
-
9,800
11,823
-
26,337
26,880
4,102
900
2,396
7,795
265,654
271,236
45,032
45,932
811,941
824,137
1,299,408
1,319,026
181
181
2,531
343
25,461
28,335
2,563
2,802
1,544
1,017
350,467
353,028
583
907
2
583
907
2
-
-
-
-
-
-
104,141
104,141
44,642
44,642
-
-
142
4,236
4,475
4,075
1,360
524,711
530,146
$ 2,643
$ 476
$ 21,399
$ 24,518
$ 15,898 $ 9,155
$ 1,824,119
$ 1,849,172
(5,037)
$ 1,844,135
As of December 31, 2021, 2020 and 2019, First Guaranty had loans totaling $16.7 million, $15.6 million and $14.4 million, respectively, not
accruing interest. As of December 31, 2021, 2020 and 2019, First Guaranty had loans past due 90 days or more and still accruing interest
totaling $1.2 million, $13.1 million and $2.6 million, respectively. The average outstanding balance of nonaccrual loans in 2021 was $17.1 million
compared to $19.8 million in 2020 and $12.0 million in 2019.
As of December 31, 2021, First Guaranty has no outstanding commitments to advance additional funds in connection with impaired loans.
130
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
The following is a summary of impaired loans, excluding loans acquired with deteriorated credit quality, by class at December 31, 2021:
As of December 31, 2021
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
Commercial leases
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
Commercial leases
Consumer and other
Total Non-Real Estate
-
-
-
-
-
-
5,164
5,164
5,818
5,818
1,383
470
1,668
470
-
-
-
-
1,853
7,017
2,138
7,956
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,935
5,935
1,412
479
-
-
1,891
7,826
-
496
961
-
-
626
961
-
-
19
258
-
-
515
968
-
5,735
7,192
5,996
7,583
1,822
2,099
5,842
7,325
-
816
-
-
-
816
-
-
816
816
-
72
-
-
72
-
875
-
-
875
8,200
-
-
-
137
137
-
30
-
-
30
167
-
-
56
-
90
146
-
28
-
-
28
174
-
-
-
101
101
-
33
-
-
33
134
-
-
62
-
95
157
-
52
-
-
52
209
Total Impaired Loans with an allowance recorded
8,008
8,399
2,171
Total Impaired Loans
$15,025
$16,355
$ 2,171
$16,026
$ 341
$ 343
131
The following is a summary of impaired loans, excluding loans acquired with deteriorated credit quality, by class at December 31, 2020:
As of December 31, 2020
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
Commercial leases
Consumer and other
Total Non-Real Estate
543
511
-
1,227
2,281
552
534
-
1,227
2,313
2,531
2,661
601
-
3,132
5,413
601
-
3,262
5,575
-
-
969
-
8,573
9,542
-
943
-
-
-
-
969
-
8,619
9,588
-
943
-
-
943
943
-
-
-
-
-
-
-
-
-
-
-
-
266
-
2,280
2,546
-
97
-
-
97
543
527
-
1,218
2,288
2,594
821
-
3,415
5,703
-
-
969
-
7,550
8,519
-
981
-
-
981
Total Impaired Loans with an allowance recorded
10,485
10,531
2,643
9,500
-
-
-
80
80
-
48
-
48
-
-
-
72
72
-
47
-
47
128
119
-
-
5
-
60
65
-
79
-
-
-
-
5
-
80
85
-
57
-
-
79
144
57
142
Total Impaired Loans
$15,898
$16,106
$ 2,643
$15,203
$ 272
$ 261
132
FIRST GUARANTY BANCSHARES, INC. 2021 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 and lease losses. First Guaranty has not restructured any loans
that are considered TDRs in the year ended December 31, 2021. First
Guaranty restructured one loan that is considered TDR in the year
ended December 31, 2020. At December 31, 2021, First Guaranty
had one outstanding TDR.
Under section 4013 of the Coronavirus Aid, Relief, and Economic
Security Act (“CARES Act”), which was signed into law on March 27,
2020, financial institutions have the option to temporarily suspend
certain requirements under U.S. generally accepted accounting
principles related to troubled debt restructurings for a limited period
of time to account for the effects of COVID-19. This provision allows a
financial institution the option to not apply the guidance on accounting
for troubled debt restructurings to loan modifications, such as
extensions or deferrals, related to COVID-19 made between March 1,
2020 and the earlier of (i) December 31, 2020 or (ii) 60 days after
the end of the COVID-19 national emergency. The relief can only be
applied to modifications for borrowers that were not more than 30 days
past due as of December 31, 2019. First Guaranty elected to adopt
these provisions of the CARES Act.
The following table is an age analysis of TDRs as of December 31, 2021 and December 31, 2020:
December 31, 2021
December 31, 2020
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
Commercial leases
Consumer and other
Total Non-Real Estate
Total
$
-
-
-
-
-
-
-
-
-
-
-
$ -
$
(in thousands)
$
$
-
-
-
-
$
-
-
-
-
3,382
3,382
3,382
3,382
-
-
-
-
-
-
-
-
-
-
$ 3,382
$ 3,382
-
-
-
-
-
-
-
-
-
-
-
-
$
$
-
-
-
-
-
-
-
-
-
-
-
-
$
$
-
-
-
-
-
-
-
-
3,591
3,591
3,591
3,591
-
-
-
-
-
-
-
-
-
-
$ 3,591
$3,591
-
-
-
-
-
-
-
-
-
-
-
-
133
The following table discloses TDR activity for the year ended December 31, 2021.
Trouble Debt Restructured Loans Activity
Year Ended December 31, 2021
Beginning
balance
(December
31, 2020)
Charge-Offs
post-
modification
Transferred
to
ORE
New
TDRs
Paydowns
Construction
to
permanent
financing
Restructured
to market
terms
Other
adjustments
Ending balance
(December 31,
2021)
(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
Commercial leases
Consumer and other
Total Non-Real Estate
Total Impaired Loans
with no related
allowance
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
-
-
-
3,591
3,591
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(250)
(250)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41
41
-
-
-
-
-
-
-
-
3,382
3,382
-
-
-
-
-
$ 3,591 $ -
$ -
$ -
$ (250)
$ -
$ -
$ 41
$ $3,382
There were no commitments to lend additional funds to debtors whose terms have been modified in a troubled debt restructuring at December 31, 2021.
134
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Note 7. Premises and Equipment
The components of premises and equipment at December 31, 2021 and 2020 are as follows:
Land
Bank premises
Furniture and equipment
Construction in progress
Acquired value
Less: accumulated depreciation
December 31,
2021
2020
(in thousands)
$ 15,284
$ 15,180
53,899
30,481
536
100,200
41,563
40,906
28,511
13,562
98,159
38,267
Net book value
$ 58,637
$ 59,892
Depreciation expense amounted to $3.4 million, $2.8 million and $2.3 million for 2021, 2020 and 2019, respectively. Interest cost capitalized as
a construction cost was $61,000, $55,000, and $91,000 for 2021, 2020, and 2019, respectively.
Note 8. 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 at December 31, 2021 and 2020, respectively.
The following table summarizes intangible assets subject to amortization.
December 31,
2021
2020
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Core deposit intangibles
Loan servicing assets
Total
$ 16,266
$ 11,215
$ 5,051
$ 16,266
$ 10,451
(in thousands)
2,133
1,262
$ 18,399
$ 12,477
871
$ 5,922
1,826
1,054
$ 18,092
$ 11,505
$ 6,587
$ 5,815
772
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 7.3 years.
Amortization expense relating to purchase accounting intangibles
totaled $0.8 million, $0.7 million, and $0.4 million for the years ended
December 31, 2021, 2020, and 2019, respectively.
Amortization expense of the core deposit intangible assets for the next
five years is as follows:
Note 9. Other Real Estate
Other real estate owned consists of the following at the dates indicated:
December 31,
2021
2020
(in thousands)
Real Estate Owned Acquired by
Foreclosure:
Residential
$ 817
$ 131
For the Years Ended
Estimated Amortization Expense
Construction & land development
(in thousands)
Non-farm non-residential
December 31, 2022
December 31, 2023
December 31, 2024
December 31, 2025
December 31, 2026
$696
$696
$696
$696
$696
Total Other Real Estate Owned and
Foreclosed Property
Allowance for Other Real Estate
Owned losses
Net Other Real Estate Owned and
Foreclosed Property
-
1,776
311
2,203
2,593
2,645
(521)
(405 )
$ 2,072
$ 2,240
135
Note 10. Deposits
A schedule of maturities of all time deposits are as follows:
2022
2023
2024
2025
December 31, 2021
(in thousands)
$ 267,016
152,920
116,771
19,482
2026 and thereafter
30,482
Total
$ 586,671
The table above includes $3.4 million in brokered deposits for
December 31, 2021. The aggregate amount of jumbo time deposits,
each with a minimum denomination of $250,000 totaled $159.1 million
and $248.8 million at December 31, 2021 and 2020, respectively.
Note 11. Borrowings
Short-term borrowings are summarized as follows:
December 31,
2021
December 31,
2020
(in thousands)
Federal Home Loan Bank
advances
$ -
$ 50,000
Repurchase agreements
6,439
6,121
Total short-term borrowings
$ 6,439
$ 56,121
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 $6.4 million
in short-term borrowings outstanding at December 31, 2021 compared
to $56.1 million outstanding at December 31, 2020. First Guaranty has
available lines of credit of $26.5 million, with no outstanding balance
at December 31, 2021.
Available lines of credit totaled $597.6 million at December 31, 2021
and $297.2 million at December 31, 2020.
The following schedule provides certain information about First
Guaranty's short-term borrowings for the periods indicated:
December 31,
2021
2020
2019
(in thousands, except for %)
Outstanding at year end
$ 6,439
$56,121
$ 19,919
Maximum month-end
outstanding
Average daily outstanding
Weighted average rate
during the year
Weighted average rate at
year end
$56,369
$10,458
$57,048
$19,919
$48,277
$ 3,320
1.40%
0.95 %
2.00%
2.23%
0.89 %
2.00%
Long-term debt is summarized as follows:
Long-term Federal Home Loan Bank advance, fixed at 2.12%, totaled
$3.2 million at December 31, 2021 and $3.4 million at December 31,
2020. 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
Wall Street Journal Prime less 25 basis points (3.00%), totaled $0 at
December 31, 2021 and $14.0 million at December 31, 2020. First
Guaranty paid off this loan using proceeds from its preferred stock
capital offering during the second quarter of 2021. This long-term debt
was 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 (3.00%), totaled $25.2 million
at December 31, 2021 and $28.4 million at December 31, 2020. First
Guaranty pays $812,500 principal plus interest quarterly. This loan
was renewed 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 $14.8 million at December 31, 2021 and
2020. 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. The Note qualifies for treatment as Tier 2 capital
for regulatory capital purposes.
First Guaranty maintains two revolving lines of credit. A $6.5 million
line of credit with an availability of $6.5 million at December 31, 2021.
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 4.25%. A $20.0 million line of credit
with an availability of $20.0 million at December 31, 2021. This line
of credit is secured by a pledge of 85% (4,823,899 shares) of First
Guaranty's interest in First Guaranty Bank (a wholly owned subsidiary)
and is priced at 3.00%.
At December 31, 2021, letters of credit issued by the FHLB totaling
$250.7 million were outstanding and carried as off-balance sheet
items, all of which expire by 2024. At December 31, 2020, letters of
credit issued by the FHLB totaling $365.8 million were outstanding
and carried as off-balance sheet items, all of which expire by 2024.
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.
As of December 31, 2021 obligations on long-term advances from
FHLB, senior long-term debt and junior subordinated debentures
totaled $43.2 million.
136
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
The scheduled payments are as follows:
2022
2023
2024
2025
2026
2026 and thereafter
Subtotal
Debt issuance costs
Total
Long-term
Advances
from FHLB
Senior
Long-term
Debts
(in thousands)
Junior
Subordinated
Debentures
$ -
$ 3,250
$ -
-
-
-
-
3,208
3,250
18,687
-
-
-
-
-
-
15,000
-
$ 3,208
$ 25,187
$ 15,000
-
(17)
(182)
$ 3,208
$ 25,170
$ 14,818
Note 12. 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
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, 2021 and
2020, 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 assets above the amount necessary to meet
its minimum risk-based capital requirements. First Guaranty Bank's
capital conservation buffer was 3.22% at December 31, 2021.
In addition, as a result of the legislation, the federal banking agencies
have developed a "Community Bank Leverage Ratio" (the ratio of a
bank's Tier 1 capital to average total consolidated assets) for financial
institutions with assets of less than $10 billion. A "qualifying community
bank" that exceeds this ratio will be deemed to be in compliance with
all other capital and leverage requirements, including the capital
requirements to be considered "well capitalized" under Prompt
Corrective Action statutes. The federal banking agencies may consider
a financial institution's risk profile when evaluating whether it qualifies
as a community bank for purposes of the capital ratio requirement.
The federal banking agencies set the new Community Bank Leverage
Ratio at 9%. Pursuant to the CARES Act, the federal banking
agencies set the Community Bank Leverage Ratio at 8% beginning
in the second quarter of 2020 through the end of 2020. Beginning in
2021, the Community Bank Leverage Ratio increased to 8.5% for the
calendar year. Community banks will have until Jan. 1, 2022, before
the Community Bank Leverage Ratio requirement will return to 9%. A
financial institution can elect to be subject to this new definition. The
new rule took effect on January 1, 2020. The Bank did not elect to
follow the Community Bank Leverage Ratio.
As of December 31, 2021, 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.
137
First Guaranty Bank's actual capital amounts and ratios as of December 31, 2021 and 2020 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, 2021
Total Risk-Based Capital:
Tier 1 Capital:
Tier 1 Leverage Capital:
$ 268,002
11.22 % $ 191,069
$ 243,973
10.22 % $ 143,302
$ 243,973
8.71 % $ 112,018
Common Equity Tier One Capital:
$ 243,973
10.22 % $ 107,476
December 31, 2020
Total Risk-Based Capital:
Tier 1 Capital:
Tier 1 Leverage Capital:
$ 233,391
12.22 % $ 152,805
$ 209,507
10.97 % $ 114,604
$ 209,507
8.58 % $ 97,683
Common Equity Tier One Capital:
$ 209,507
10.97 % $ 85,953
8.00 %
6.00 %
4.00 %
4.50 %
8.00 %
6.00 %
4.00 %
4.50 %
$ 238,837
10.00 %
$ 191,069
$ 140,023
$ 155,244
8.00 %
5.00 %
6.50 %
$ 191,006
10.00 %
$ 152,805
$ 122,104
$ 124,154
8.00 %
5.00 %
6.50 %
Note 13. 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 2022 without permission
will be limited to 2022 earnings plus the undistributed earnings of $8.7
million from 2021.
Accordingly, at January 1, 2022, $246.6 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 14. 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, 2021 and 2020
follows:
December 31,
2021
2020
(in thousands)
Balance, beginning of year
$ 79,399
$ 61,820
Net Increase (Decrease)
Balance, end of year
13,871
17,579
$ 93,270
$ 79,399
Unfunded commitments to First Guaranty and Bank directors and
executive officers totaled $45.4 million and $40.8 million at December
31, 2021 and 2020, respectively. At December 31, 2021 First
Guaranty and the Bank had deposits from directors and executives
totaling $64.0 million. There were no participations in loans purchased
from affiliated financial institutions included in First Guaranty's loan
portfolio in 2021 or 2020.
During the years ended 2021, 2020 and 2019, First Guaranty paid
approximately $0.3 million, $0.5 million and $0.5 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.
During the years ended 2021, 2020 and 2019, First Guaranty paid
interest of $0.8 million, $0.6 million and $0.6 million, respectively, for
this note.
138
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
During the years ended 2021, 2020 and 2019, First Guaranty
paid approximately $0.1 million, $27,000 and $0.1 million,
the purchase and maintenance of First
respectively,
Guaranty's automobiles
to subsidiaries of Hood Automotive
Group, of which William K. Hood, a director of First Guaranty, is
President.
for
During the years ended 2021, 2020 and 2019, First Guaranty
paid approximately $0, $0.1 million and $69,000, 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 2021, 2020 and 2019, First Guaranty paid
approximately $0.6 million, $0.5 million and $0.3 million, respectively,
to Centurion Insurance, an insurance brokerage agency, to bind
coverage at market terms for property casualty insurance and health
insurance. First Guaranty owns a 50% interest in Centurion and
accounts for this investment under the equity method.
Note 15. Employee Benefit Plans
First Guaranty has an employee savings plan to which employees, who
meet certain service requirements, may defer 1% up to the IRS legal
limit of their base salaries, 6% of which may be matched up to 100%,
at its sole discretion. Contributions to the savings plan were $396,000,
$173,000 and $149,000 in 2021, 2020 and 2019, 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
2021, 2020 or 2019. As of December 31, 2021, the ESOP held 3,047
shares. First Guaranty is in the process of terminating the plan.
Note 16. Other Expenses
The following is a summary of the significant components of other
noninterest expense:
December 31,
2021
2020
2019
(in thousands)
Other noninterest expense:
Legal and professional fees
$ 3,375
$ 2,919
$ 2,648
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
1,794
1,760
1,711
1,755
853
2,465
1,332
1,046
1,972
1,217
1,456
1,251
1,094
921
674
3,071
2,354
1,308
826
398
764
564
801
1,945
3,391
726
256
712
393
1,653
1,716
2,980
908
193
390
603
422
683
2,536
Total other noninterest expense
$23,008
$20,724
$16,104
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 $1.0
million, $0.4 million and $0.8 million for 2021, 2020 and 2019,
respectively.
Note 17. Income Taxes
The following is a summary of the provision for income taxes included
in the Consolidated Statements of Income:
December 31,
2021
2020
2019
(in thousands, except for %)
$ 7,970
$ 8,964
$ 3,770
(812)
(3,745)
(114)
$ 7,158
$ 5,219
$ 3,656
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:
December 31,
2021
2020
2019
(in thousands, except for %)
21.0%
21.0%
21.0%
$ 7,236
$ 5,363
$ 3,758
(81)
3
(124)
(20)
(140)
38
$ 7,158
$ 5,219
$ 3,656
Statutory tax rate
Federal income taxes at
statutory rate
Tax exempt municipal income
Other
Total
139
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, 2021 and
2020 are as follows:
December 31,
2021
2020
(in thousands)
Deferred tax assets:
Allowance for loan and lease losses
$ 4,817
$ 4,748
Other real estate owned
219
239
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
Other
331
1,098
781
7,246
-
1,190
581
6,758
(1,917)
(1,952)
(1,059)
(1,214)
-
(164)
(687)
(172)
(161)
(625)
Gross deferred tax liabilities
(3,827)
(4,124)
Net deferred tax assets (liabilities)
$ 3,419
$ 2,634
First Guaranty determined that the net deferred tax asset at December
31, 2021 and 2020 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 $5.2
million as of December 31, 2021 and $5.7 million in 2020. 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, 2021,
2020 and 2019, 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.
Note 18. 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. The same
credit policies are used in making commitments and conditional
obligations as it does for balance sheet 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, 2021 and
December 31, 2020.
December 31,
2021
2020
(in thousands)
Contract Amount
Commitments to Extend Credit
$ 198,444
$ 154,047
Unfunded Commitments under lines of
credit
$ 250,231
$ 169,151
Commercial and Standby letters of credit
$ 13,787
$ 11,728
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
2021, 2020 or 2019.
140
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Note 19. 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, 2021 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, 2021 and 2020 are determined by sales agreement or appraisal,
and costs to sell are based on estimation per the terms and conditions
of the sales agreement or amounts commonly used in real estate
transactions. Inputs include appraisal values or recent sales activity
for similar assets in the property's market; thus OREO measured at
fair value would be classified within either Level 2 or Level 3 of the
hierarchy.
Certain non-financial assets and non-financial liabilities are measured
at fair value on a non-recurring basis including assets and liabilities
related to reporting units measured at fair value in the testing of goodwill
impairment, as well as intangible assets and other non-financial long-
lived assets measured at fair value for impairment assessment.
The following table summarizes financial assets measured at fair value
on a recurring basis as of December 31, 2021 and 2020, segregated
by the level of the valuation inputs within the fair value hierarchy
utilized to measure fair value:
December 31,
2021
2020
(in thousands)
Available for Sale Securities Fair Value
Measurements Using:
Level 1: Quoted Prices in Active Markets
For Identical Assets
Level 2: Significant Other Observable
Inputs
$ -
$ 3,000
198,315
209,359
Level 3: Significant Unobservable Inputs
12,305
26,189
Securities available for sale measured at
fair value
$ 210,620
$ 238,548
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, 2020 was due to a net decrease in Treasury bills of $3.0 million.
The change in Level 2 securities available for sale from December
31, 2020 was due to the increase in corporate securities offset by
the transfer of $152.9 million in U.S. Government agency securities
from the available for sale to the held to maturity portfolio. $1.8
million in corporate securities and $3.1 million in municipal securities
were transferred from Level 3 to Level 2 from December 31, 2020 to
December 31, 2021. There were no transfers between Level 1 and 2
securities available for sale from December 31, 2020 to December 31,
2021.
141
The following table reconciles assets measured at fair value on a
recurring basis using unobservable inputs (Level 3):
Level 3 Changes
December 31,
2021
2020
(in thousands)
Balance, beginning of year
$ 26,189
$ 9,398
Total gains or losses (realized/unrealized):
Included in earnings
Included in other comprehensive income
Purchases, sales, issuances and
settlements, net
Transfers in and/or out of Level 3
Balance as of end of year
-
(195 )
-
256
(8,845 )
5,361
(4,844 )
11,174
$ 12,305
$ 26,189
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, 2021.
The following table measures financial assets and financial liabilities
measured at fair value on a non-recurring basis as of December 31,
2021 and December 31, 2020, segregated by the level of valuation
inputs within the fair value hierarchy utilized to measure fair value:
December 31,
2021
2020
(in thousands)
Fair Value Measurements Using: Impaired
Loans
Level 1: Quoted Prices in Active Markets
For Identical Assets
$
Level 2: Significant Other Observable
Inputs
$
-
-
-
-
Level 3: Significant Unobservable Inputs
12,836
7,842
Impaired loans measured at fair value
$ 12,836
$ 7,842
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
$
-
$
-
817
1,255
363
1,877
$
2,072
$ 2,240
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 20. Financial Instruments
Fair value estimates are generally subjective in nature and are
dependent upon a number of significant assumptions associated
with each instrument or group of similar instruments, including
estimates of discount rates, risks associated with specific financial
instruments, estimates of future cash flows and relevant available
market information. Fair value information is intended to represent
an estimate of an amount at which a financial instrument could be
exchanged in a current transaction between a willing buyer and seller
engaging in an exchange transaction. However, since there are no
established trading markets for a significant portion of First Guaranty's
financial instruments, First Guaranty may not be able to immediately
settle financial instruments; as such, the fair values are not necessarily
indicative of the amounts that could be realized through immediate
settlement. In addition, the majority of the financial instruments, such
as loans and deposits, are held to maturity and are realized or paid
according to the contractual agreement with the customer.
Quoted market prices are used to estimate fair values when available.
However, due to the nature of the financial instruments, in many
instances quoted market prices are not available. Accordingly,
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.
142
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
Investment Securities.
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. 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, 2021 and 2020 the fair value of guarantees under
commercial and standby letters of credit was not material.
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.
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.
Cash Surrender of BOLI.
The cash surrender value of BOLI approximates fair value.
Accrued interest receivable.
The carrying amount of accrued interest receivable approximates its
fair value.
Deposits.
The fair value of customer deposits, excluding certificates of deposit,
is the amount payable on demand. Market values of certificates of
deposit 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.
143
The carrying amounts and estimated fair values of financial instruments at December 31, 2021 were as follows:
Fair Value Measurements at December 31, 2021 Using
Carrying
Amount
Level 1
Level 2
Level 3
Total
(in thousands)
$
261,749
$ 261,749
$
183
210,620
153,536
2,135,330
5,568
12,047
$ 2,596,492
$
$
-
-
-
-
$
261,749
183
198,315
150,585
12,305
210,620
-
150,585
-
-
-
-
-
-
-
-
-
-
2,152,590
2,152,590
5,568
12,047
5,568
12,047
$ 2,606,635
$ 2,606,635
-
6,462
4,480
3,208
25,187
15,000
-
6,462
4,480
3,208
25,187
15,000
183
-
-
-
-
-
-
-
-
-
-
-
-
$
Assets
Cash and due from banks
Federal funds sold
Securities, available for sale
Securities, held for maturity
Loans, net
Cash surrender value of BOLI
Accrued interest receivable
Liabilities
Deposits
Short-term advances from Federal Home Loan Bank
Repurchase agreements
Accrued interest payable
Long-Term advances from Federal Loan Bank
Senior long-term debt
Junior subordinated debentures
-
6,439
4,480
3,208
25,170
14,818
144
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
The carrying amounts and estimated fair values of financial instruments at December 31, 2020 were as follows:
Fair Value Measurements at December 31, 2020 Using
Carrying
Amount
Level 1
Level 2
Level 3
Total
(in thousands)
Assets
Cash and due from banks
Federal funds sold
Securities, available for sale
Securuties, held for maturity
Loans, net
Cash surrender value of BOLI
Accrued interest receivable
Liabilities
Deposits
Short-term advances from Federal Home Loan Bank
Repurchase agreements
Accrued interest payable
Long-Term advances from Federal Loan Bank
Senior long-term debt
Junior subordinated debentures
50,000
6,121
5,292
3,366
42,366
14,777
$
298,903
$ 298,903
$
702
238,548
-
1,819,617
5,427
11,933
$ 2,166,318
$
$
-
-
-
-
$
298,903
702
209,359
26,189
238,548
-
-
-
-
-
-
-
-
-
-
-
-
-
1,846,738
1,846,738
5,427
11,933
5,427
11,933
$ 2,179,004
$ 2,179,004
50,000
50,000
6,154
5,292
3,366
42,408
14,452
6,154
5,292
3,366
42,408
14,452
702
3,000
-
-
-
-
-
-
-
-
-
-
-
$
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 21. 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, 2021. 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 36.9% of First Guaranty's deposits are derived from local
governmental agencies at December 31, 2021. 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 $957.9 million at December 31, 2021.
Note 22. 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, 2021 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. First Guaranty settled a case in the third quarter of 2021
for $1.1 million. A receivable for $0.9 million has been recorded for
recovery through First Guaranty's insurance coverage.
145
Note 23. 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,
2021
2020
(in thousands)
$ 5,143
$ 1,796
255,291
3,893
228,869
5,665
$264,327
$236,330
$ 25,170
$ 42,366
14,818
450
40,438
223,889
14,777
596
57,739
178,591
Total Liabilities and Shareholders' Equity
$264,327
$236,330
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
December 31,
2021
2020
2019
(in thousands)
$ 20,733
$ 17,100
$13,982
-
414
-
332
196
424
21,147
17,432
14,602
1,624
198
1,298
3,120
2,197
132
1,225
3,554
1,795
208
953
2,956
Income before income tax benefit and increase in equity in undistributed earnings of subsidiary
18,027
13,878
11,646
Income tax benefit
Income before increase in equity in undistributed earnings of subsidiary
Increase in equity in undistributed earnings of subsidiary
Net Income
568
18,595
8,702
720
14,598
5,720
494
12,140
2,101
$ 27,297
$ 20,318
$14,241
146
FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
First Guaranty Bancshares, Inc.
Condensed Statements of Cash Flows
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Increase in equity in undistributed earnings of subsidiary
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 sales of equity securities
Funds invested in equity securities
Funds invested in bank subsidiary
Purchases of premises and equipment
Cash paid in acquisition
December 31,
2021
2020
2019
(in thousands)
$ 27,297
$ 20,318
$ 14,241
(8,702)
(5,720)
(2,101)
102
-
(145)
1,235
92
-
189
(1,301)
80
(196)
(444)
(601)
19,787
13,578
10,979
1,500
(1,000)
(25,000)
-
-
10
1,196
-
-
-
-
-
-
(136)
(43,383)
Net cash (used in) provided by investing activities
(24,500 )
10
(42,323)
Cash flows from financing activities:
Proceeds from long-term debt, net of costs
Repayment of long-term debt
Net proceeds from issuance of preferred stock
Common stock issued in private placement
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
-
-
32,465
(17,221)
(6,191)
(3,754)
33,058
-
-
-
-
1,000
(7,777)
(6,234)
(5,803)
8,060
(12,425)
23,908
3,347
1,796
1,163
633
(7,436)
8,069
$ 5,143
$ 1,796
$ 633
147
Item 9 - Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
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 Market
under the symbol "FGBI". As of December 31, 2021, 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 114 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 2021.
There were no changes in or disagreements with accountants on
accounting and financial disclosures for the year ended December 31,
2021.
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, 2021, 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). 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, 2021.
First Guaranty's independent registered public accounting firm has
also issued an attestation report, which expresses an unqualified
opinion on the effectiveness of First Guaranty's internal control over
financial reporting as of December 31, 2021.
148 FIRST GUARANTY BANCSHARES, INC. 2021 ANNUAL REPORT
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ANNUAL REPORT 2021
www.fgb.net