Financial Overview of First Guaranty Bank

First Guaranty Bank, a regional financial institution, has released its financial results for the year ended December 31, 2024. The report highlights the bank’s solid performance and growth during a challenging economic environment.

Assets and Loans First Guaranty’s total assets increased by $420 million, or 11.8%, to $4 billion at the end of 2024. This growth was driven primarily by increases in cash, cash equivalents, and investment securities.

The bank’s loan portfolio, however, decreased slightly by $54.9 million, or 2%, to $2.7 billion. This decline was due to paydowns in several loan categories, including commercial and industrial loans, construction and land development loans, and commercial lease loans. On the other hand, the bank saw increases in one-to-four family residential loans, multifamily loans, and non-farm non-residential loans.

The allowance for credit losses, which represents the bank’s reserve for potential loan defaults, increased to $34.8 million, or 1.29% of total loans, at the end of 2024, up from 1.13% the prior year. This increase was due to changes in the loan portfolio and higher charge-offs experienced during the year.

Deposits and Borrowings Total deposits grew significantly, increasing by $467.2 million, or 15.5%, to $3.5 billion. This growth was driven by a $630 million, or 76.8%, increase in time deposits, which included a substantial increase in brokered time deposits. Noninterest-bearing demand deposits and interest-bearing demand deposits both declined during the year.

First Guaranty reduced its short-term borrowings, paying down $59.3 million in FHLB advances and a line of credit. The bank also issued $30 million in subordinated debt in a private placement to help fund operations and reduce reliance on short-term funding.

Earnings and Profitability Net income for 2024 was $12.4 million, an increase of $3.2 million, or 35%, compared to 2023. This improvement was driven by higher net interest income, increased noninterest income, and lower noninterest expenses.

Net interest income grew by $3.7 million, or 4.4%, to $88.4 million. This was due to an increase in the average balance of interest-earning assets, primarily loans, as well as an increase in the average yield on those assets. However, the net interest margin declined from 2.69% in 2023 to 2.47% in 2024 as the cost of interest-bearing liabilities, particularly deposits, increased more than the yield on earning assets.

Noninterest income more than doubled, increasing by $14.2 million to $24.7 million. This was largely attributable to a $13.3 million pre-tax gain on the sale-leaseback of two branch locations and a portion of the bank’s headquarters.

Noninterest expenses decreased by $2.5 million, or 3.2%, to $77.1 million. This was driven by reductions in legal and professional fees, marketing, travel and lodging, and data processing costs.

Earnings per common share for 2024 were $0.81, up from $0.62 in 2023, an increase of 30.6%.

Asset Quality and Credit Risk Asset quality deteriorated during 2024, with nonperforming assets (loans 90 days or more past due or in nonaccrual status, plus other real estate owned) increasing from $41.7 million, or 1.17% of total assets, at the end of 2023 to $120.4 million, or 3.03% of total assets, at the end of 2024.

The increase in nonperforming assets was primarily due to an $83.3 million increase in nonaccrual loans, concentrated in the non-farm non-residential and multifamily loan portfolios. The bank also experienced $18.6 million in net charge-offs during the year, up from $4.4 million the prior year.

To address the deterioration in asset quality, First Guaranty increased its provision for credit losses to $20 million in 2024, compared to $3.7 million in 2023. The allowance for credit losses as a percentage of total loans increased from 1.13% at the end of 2023 to 1.29% at the end of 2024.

The bank’s commercial real estate (CRE) portfolio, which accounts for 42.9% of total loans, has received increased regulatory scrutiny due to concerns about valuations and the impact of the COVID-19 pandemic. First Guaranty has implemented enhanced risk management practices for its CRE portfolio, including annual stress testing, conservative loan-to-value ratios, and personal guarantees on CRE loans.

Liquidity and Capital First Guaranty maintained strong liquidity, with cash and cash equivalents totaling $564.2 million at the end of 2024, up from $286.5 million the prior year. The bank also had significant borrowing capacity with the Federal Home Loan Bank and other sources, providing additional liquidity as needed.

Shareholders’ equity increased to $255 million at the end of 2024, up from $249.6 million the prior year. This was primarily due to an increase in retained earnings, which grew by $5 million to $73 million. The bank’s capital ratios remained well above regulatory “well-capitalized” minimums, with a Tier 1 leverage ratio of 6.42% and a total risk-based capital ratio of 11.73% at the end of 2024.

Outlook and Strategic Initiatives First Guaranty has taken several steps to position the bank for continued success in the current economic environment. The bank modified its business strategy in 2024 to reduce its exposure to commercial real estate, particularly non-owner occupied properties and construction loans. This was in response to increased regulatory scrutiny and concerns about valuations in the CRE sector.

Additionally, the bank closed three branches and consolidated two existing branches in the first quarter of 2025. This is expected to improve efficiency and reduce operating costs without materially affecting the bank’s overall operations.

Looking ahead, First Guaranty remains focused on prudent risk management, diversifying its loan portfolio, and maintaining a strong capital position. The bank will continue to monitor economic conditions and adjust its strategies as necessary to navigate the evolving market environment and deliver value to its shareholders.

Conclusion First Guaranty Bank’s 2024 financial results demonstrate the bank’s ability to navigate a challenging economic landscape. While the bank faced some asset quality challenges, it was able to grow its balance sheet, improve profitability, and maintain a solid capital position. By implementing strategic initiatives to reduce risk and improve efficiency, First Guaranty is well-positioned to continue serving its customers and communities in the years to come.