FGBI 10-K & 10-Q changes, risk factors and insider trading

At December 31, 2024,2025, our non-performing assets, which consist of non-performing loans and other real estate owned, were $120.4$95.5 million, or 3.03%2.34% of total assets,assets. anAlthough increasethis ofrepresents 188.4%a decrease from December 31, 2023.2024 levels, our level of non-performing assets remains significantly above our historical levels and above that of many of our peers. Our non-performing assets adversely affect our net income in various ways:

Adverse events in LouisianaLouisiana, Texas, Kentucky, and Texas,West Virginia, where our business is concentrated, along with our new Mideast markets in Kentucky and West Virginia could adversely affect our results of operations and future growth.

At December 31, 2024,2025, $1.2$819.6 billion,million, or 46.2%39.6% of our total loans consisted of short-term loans, defined as loans whose payments are typically based on ten to 20-year amortization schedules but have maturities typically ranging from one to five years. This results in our borrowers having significantly higher final payments due at maturity, known as "balloon payments." In the event our borrowers are unable to make their balloon payments when they are due, we may incur significant losses in our loan portfolio. Moreover, while the shorter maturities of our loan portfolio help us to manage our interest rate risk, they also increase the reinvestment risk associated with new loan originations. During an economic slow-down, we might incur significant losses as our loan portfolio matures.

We are subject to regulatory enforcement risk, reputation risk and litigation risk regarding our participation in the Paycheck Protection Program ("PPP") and Main Street Lending Program and we are subject to the risk that the SBA may not fund some or all PPP loan guarantees.

The majority of our banking assets are monetary in nature and subject to risk from changes in interest rates. Like most financial institutions, our earnings and cash flows depend to a great extent upon the level of our net interest income, or the difference between the interest income we earn on loans, investments and other interest-earning assets, and the interest we pay on interest-bearing liabilities, such as deposits and borrowings. Changes in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes. The Federal Reserve Board increased interest rates significantly during 2022 and 2023. As a result of this rapid increase in interest rates, unrealized losses in First Guaranty's investment securities portfolio increased dramatically and thereby negatively impacted First Guaranty's accumulated other comprehensive income. These gross unrealized losses were approximately $55.8 million as of December 31, 2025 compared to $73.8 million as of December 31, 2024 compared toand $69.1 million as of December 31, 2023 and $80.9 million as of December 31, 2022.2023. Such losses could be realized into earnings should liquidity needs and/or business strategy necessitate the sale of securities in a loss position, which could adversely affect First Guaranty's financial condition, capital ratios, and results of operations.

Liquidity is essential to our business. We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations. An inability to raise funds through deposits, borrowings, the sale of our investment securities, the sale of loans and other sources could have a substantial negative effect on our liquidity. Our most important source of funds is deposits. Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff. Recent increases in interest rates have resulted in increased competition for deposits. If customers move money out of bank deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest income and net income. The 2023 bank failures increased awareness of the risks of uninsured deposit balances. As discussed further below, public funds are a sizeable portion of our deposits. Loss of a large public funds depositor at the end of a contract would negatively impact liquidity. First Guaranty participates in reciprocal deposit programs that offer expanded deposit insurance for customers with large balances. First Guaranty utilizes these reciprocal deposit networks to collateralize a large portion of its public funds deposit balances. A disruption to the use of these programs, including regulatory restrictions, could negatively impact First Guaranty’s liquidity position.

Net interest income is the most significant component of our operating income. For the year ended December 31, 2024,2025, our net interest income totaled $88.4$86.9 million in comparison to our total noninterest income of $24.7$8.5 million earned during the same year. We do not rely onhave nontraditional sources of fee income utilized by some community banks, such as fees from sales of insurance, securities or investment advisory products or services. The amount of our net interest income is influenced by the overall interest rate environment, competition, and the amount of interest-earning assets relative to the amount of interest-bearing liabilities. In the event that one or more of these factors were to result in a decrease in our net interest income, we have limited sources of noninterest income to offset any decrease in our net interest income.

A significant portion of our noninterest revenue is derived from service charge income. During the year ended December 31, 2025, service charges, commissions and fees represented $3.3 million, or 38.8% of our total noninterest income excluding losses on securities. During the year ended December 31, 2024, service charges, commissions and fees represented $3.2 million, or 12.9% of our total noninterest income excluding losses on securities. During the year ended December 31, 2023, service charges, commissions and fees represented $3.4 million, or 32.2% of our total noninterest income excluding gains on securities. The largest component of this service charge income is overdraft-related fees. Management believes that changesChanges in banking regulations pertaining to rules on certain overdraft payments on consumer accounts have and will continue tocould have an adverse impact on our service charge income. Additionally, changes in customer behavior, as well as increased competition from other financial institutions,institutions and non-bank competitors, may result in declines in deposit accounts or in overdraft frequency resulting in a decline in service charge income. A reduction in deposit account fee income could have a material adverse effect on our earnings.

The areabanking industry in which we operate is a highly competitive industry, and we have historically faced competition in our markets from other community banks as well as regional and national banks and certain non-bank lenders. Our market areas are generally considered attractive from an economic and demographic viewpoint, and is aconstitute highly competitive banking market.markets. We compete for loans and deposits with numerous regional and national banks and other community banking institutions, as well as other kinds of financial institutions and enterprises, such as securities firms, insurance companies, savings associations, credit unions, mortgage brokers and private lenders. In recent years, non-bank competitors, particularly fintech companies, have increasingly competed against us, and we expect the competition from such non-bank competitors to increase in the future. Many competitors have substantially greater resources than we do. The differences in resources may make it harder for us to compete profitably, reduce the rates that we can earn on loans and investments, increase the rates we must offer on deposits and other funds, and adversely affect our overall financial condition and earnings.

We face risks related to our operational, technological and organizational infrastructure.infrastructure, including those related to artificial intelligence.

Our ability to grow and compete is dependent on our ability to build or acquire the necessary operational and technological infrastructure and to manage the cost of that infrastructure as we expand. Similar to other large corporations, operationalOperational risk can manifest itself in many ways, such as errors related to failed or inadequate processes, faulty or disabled computer systems, fraud by employees or outside persons and exposure to external events.events such as cyber-attacks. As discussed below, we are dependent on our operational infrastructure to help manage these risks. In addition, we are heavily dependent on the strength and capability of our technology systemssystems, including those provided by third parties, which we use both to interface with our customers and to manage our internal financial systems and other systems. Our ability to develop and deliver new products that meet the needs of our existing customers and attract new ones depends on the functionality of our technology systems. The use of artificial intelligence in business is rapidly evolving and the legal and regulatory environment remains uncertain for this new technology. Additionally, our ability to run our business in compliance with applicable laws and regulations is dependent on these infrastructures.

We are required to test goodwill and core deposit intangible assets for impairment on a periodic basis. The impairment testing process considers a variety of factors, including macroeconomic conditions, industry and market considerations, cost factors, and financial performance. During the year ended December 31, 2025, we performed an impairment test that resulted in the impairment of all $12.9 million of goodwill on our books. The impairment was the result of First Guaranty's stock price trading below book value and the recent increase in credit provisions. If an impairment determination is made in a future reporting period,period with respect to our remaining core deposit intangible assets of $2.3 million as of December 31, 2025 or other intangible assets we may acquire in the future, our earnings and the book value of these intangible assets will be reduced by the amount of the impairment which would adversely affect our financial performance.

While we attempt to invest a significant percentage of our assets in loans (our loan to deposit ratio was 77.5%57.0% at December 31, 20242025), we invest a portion of our total assets (15.2%24.5% at December 31, 20242025) in investment securities with the primary objectives of providing a source of liquidity, generating an appropriate return on funds invested, managing interest rate risk, meeting pledging requirements of our public funds deposits and meeting regulatory capital requirements. At December 31, 2024,2025, the carrying value of our securities portfolio was $602.7$999.3 million. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. For example, fixed-rate securities are generally subject to decreases in market value when interest rates rise, as we experienced in 2022 and 2023, resulting in unrealized losses of $73.8 million as of December 31, 2024.2023. Additional factors include, but are not limited to, rating agency downgrades of the securities, defaults by the issuer or individual borrowers with respect to the underlying securities, and instability in the credit markets. Any of the foregoing factors could cause a credit related impairment in future periods and result in realized losses. The process for determining whether impairment is credit related usually requires difficult, subjective judgments about the future financial performance of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security. At December 31, 2024,2025, First Guaranty had no allowance for credit losses on available for sale securities. Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or unrealized losses in future periods, which could have an adverse effect on our business, financial condition and results of operations.

Our market area in Southeast Louisiana is close to New Orleans and the Gulf of Mexico,America, areas which are susceptible to hurricanes, tropical storms, flooding and other natural disasters and adverse weather conditions which could result in a disruption of our operations and increases in loan losses. In recent years, hurricanes have affected several of our markets in Southeast Louisiana. Similar future events could potentially cause widespread property damage, require the relocation of an unprecedented number of residents and business operations, and severely disrupt normal economic activity in our market areas, which may have an adverse effect on our operations, loan originations and deposit base. Moreover, our ability to compete effectively with financial institutions whose operations are not concentrated in areas affected by hurricanes or other adverse weather conditions or whose resources are greater than ours will depend primarily on our ability to continue normal business operations following such event. The severity and duration of the effects of hurricanes or other adverse weather conditions will depend on a variety of factors that are beyond our control, including the amount and timing of government, private and philanthropic investments including deposits in the region, the pace of rebuilding and economic recovery in the region and the extent to which a hurricane's property damage is covered by insurance. The occurrence of any such event could have a material adverse effect on our business, financial condition and results of operations.

As of December 31, 2024,2025, $43.2$72.2 million, or 1.6%3.5% of our total loan portfolio, was comprised of loans where all or some portion of the loans were guaranteed through the SBA, USDA or Farm Service Agency ("FSA") lending programs, and we intend to grow this segment of our portfolio in the future.programs. From time to time, the government agencies that guarantee these loans reach their internal limits and cease to guarantee loans. In addition, these agencies may change their rules for loans or Congress may adopt legislation that would have the effect of discontinuing or changing the loan programs. Non-governmental programs could replace government programs for some borrowers, but the terms might not be equally acceptable. Therefore, if these changes occur, the volume of loans to small business, industrial and agricultural borrowers of the types that now qualify for government guaranteed loans could decline. Also, the profitability of these loans could decline.

RiskRisks Associated with an Investment in our Securities

Our principal shareholders (Marshall T. Reynolds, the estate of William K. Hood and Edgar R. Smith III) beneficially own, approximately 45%60% of our outstanding common stock as of December 31, 2024.2025. Each of these shareholders will continue to have the ability to independently vote a meaningful percentage of our outstanding common stock on all matters put to a vote of our shareholders, including the election of our board of directors and certain other significant corporate transactions, such as a merger or acquisition transaction. On any such matter, the interests of these shareholders may not coincide with the interests of the other holders of our common stock and any such difference in interests may result in that shareholder voting its shares in a manner inconsistent with the interests of other shareholders. Additional shares are owned by family members or associates of our principal shareholders; the interests of these shareholders may coincide more with the interests of the principal shareholder than with the interests of the other holders of our common stock.

We have no obligation to continue paying dividends, and we may change our dividend policy at any time without prior notice to our common shareholders. In addition, our ability to pay dividends will continue to be subject, among other things, to certain regulatory guidance and/or restrictions.restrictions, including, as noted above, certain regulatory restrictions that we may not be allowed to disclose. Future dividends, if any, will be declared and paid at the discretion of our board of directors and will depend on a number of factors, including our and First Guaranty Bank’s capital levels. Subject to certain exceptions, the terms of our senior debt and subordinated debt prohibit us from paying dividends on shares of our capital stock at times when we are deferring the payment of interest on such subordinated debt. Moreover, our ability to pay dividends on our common stock is limited by the terms of our Series A Preferred Stock, which provide that if we have not paid dividends on the Series A Preferred Stock for the most recently completed dividend period, then no dividend or distribution shall be declared, paid, or set aside for payment on shares of our common stock.

Dividends on the Series A Preferred Stock are non-cumulative and discretionary. If our board of directors does not authorize and declare a dividend for any dividend period, the holder of the Series A Preferred Stock, and therefore the holders of the depositary shares, will not be entitled to receive a dividend for such period, and such undeclared dividend will not accrue and be payable. We will have no obligation to pay dividends for such dividend period, whether or not dividends are authorized and declared for any subsequent dividend period with respect to the Series A Preferred Stock. Our board of directors may determine that it would be in our best interests to pay less than the full amount of the stated dividends on the Series A Preferred Stock or no dividend for any dividend period even if funds are available. Factors that would be considered by our board of directors in making this determination include our financial condition, liquidity and capital needs, the impact of current and pending legislation and regulations, economic conditions, our ability to service any equity or debt obligations senior to the Series A Preferred Stock, any credit agreements to which we are a party, tax considerations and such other factors as our board of directors may deem relevant. In addition, regulatory restrictions, including those which we may not be allowed to disclose, may limit our ability to pay dividends on the Series A Preferred Stock.

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 3530 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 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.

Net (loss) income was $12.4$(56.0) million and $9.2$12.4 million for the years ended December 31, 20242025 and 2023,2024, 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. The increasedecrease in net income was causedthe principallyresult byof ana increasedecrease in net interest income of $3.7$1.5 million, an increase of $61.7 million in the provision to the credit allowance, a decrease in noninterest income of $16.3 million, and an increase in noninterest income of $14.2 million, and a decrease in noninterest expense of $2.5$5.1 million, partiallywhich offsetwas byattributable anto increasea ingoodwill provisionimpairment for credit lossescharge of $16.3$12.9 million.

•Net (loss) income for each of the years ended December 31, 20242025 and 20232024 was $12.4$(56.0) million and $9.2$12.4 million, respectively.respectively, a decrease of $68.5 million. The loss in 2025 was primarily driven by the provision for credit losses and a $12.9 million goodwill impairment charge.

•Earnings(Loss) earnings per common share were $(4.17) for the year ended December 31, 2025 and $0.81 for the year ended December 31, 2024 and $0.62 for the year ended December 31, 2023.2024. Total weighted average common shares outstanding were 12,501,03513,985,460 and 11,165,30312,501,035 at December 31, 20242025 and December 31, 2023,2024, respectively.

•Investment securities totaled $999.3 million at December 31, 2025, an increase of $396.5 million when compared to $602.7 million at December 31, 2024, an increase of $198.6 million when compared to $404.1 million at December 31, 2023.2024. At December 31, 2024,2025, available for sale securities, at fair value, totaled $281.1$676.6 million, an increase of $197.6$395.5 million when compared to $83.5$281.1 million at December 31, 2023.2024. The increase in available for sale securities was primarily due to purchases of mortgage-backed securities. At December 31, 2024,2025, held to maturity securities, at amortized cost and net of the allowance for credit losses, totaled $321.6$322.7 million as compared to $320.6$321.6 million at December 31, 2023.2024. The allowance for credit losses for HTM securities was $0.2 million at December 31, 2024,2025 an increase of $0.1 million when compared to $0.1 million atand December 31, 2023.2024.

•Total loans net of unearned income were $2.7$2.1 billion at December 31, 20242025 a net decrease of $54.9$624.0 million from December 31, 2023.2024. Total loans net of unearned income are reduced by the allowance for credit losses which totaled $40.8 million at December 31, 2025 and $34.8 million at December 31, 20242024, and $30.9 million at December 31, 2023. First Guaranty adopted ASC 326 effective January 1, 2023 and recorded a cumulative adoption adjustment to the allowance of $7.1 million.respectively.

•Return on average assets was 0.34%(1.43)% and 0.28%0.34% for the years ended December 31, 20242025 and 2023,2024, respectively. Return on average common equity was 4.58%(27.05)% and 3.36%4.58% for 20242025 and 2023,2024, 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.

Net loans decreased $58.8$629.9 million, or 2.2%,23.7%, to $2.7$2.0 billion at December 31, 20242025 from December 31, 2023.2024. CommercialFirst Guaranty adopted a change in its business plan in July 2024 that focused on reducing risk in the balance sheet, including risk associated with the loan portfolio. As part of this strategy, First Guaranty has reduced loan originations, charged-off loan balances and industrialconducted loansselect loan sales, which have each contributed to a decline in loan balances. Non-farm non-residential loan balances decreased $77.5$211.3 million primarily due to paydowns.the sale of loans and payoffs. Construction and land development loans decreased $69.4$180.6 million principally due to the sale of loans, charge-offs, and the conversion of existing loans to permanent financing. Commercial lease loan balances decreased $65.2$144.6 million primarily due to paydowns on the existing lease portfolio.portfolio and charge-offs. First Guaranty's commercial lease portfolio generally has higher yields than commercial real estate loans but shorter average lives. Commercial and industrial loans decreased $28.8 million primarily due to paydowns. One-to four-family loans decreased $21.6 million primarily due to paydowns. Multifamily loans decreased $20.9 million primarily due to paydowns and charge-offs. Consumer and other loans decreased $12.2$9.2 million primarily due to paydowns. Agricultural loans decreased $0.3$5.5 million primarily due to seasonal activity. Farmland loans increaseddecreased $3.5$3.8 million due to seasonal activity. One-to four-family loans increased $5.5 million primarily due to new originations. Multifamily loans increased $46.2 million primarily due to the conversion of existing construction loans to permanent financing and the origination of new loans. Non-farm non-residential loan balances increased $114.0 million primarily due to new originations and the conversion of construction and land development loans to permanent financing. First Guaranty had approximately 3.0%3.3% of funded and 1.7% 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 $178.9$157.6 million at December 31, 2024.2025. As part of the management of risks in our loan portfolio, First Guaranty had previously established an internal guidance limit of approximately $200.0 million for its hotel and hospitality portfolio. First Guaranty had $407.1$192.6 million in loans related to our Texas markets at December 31, 20242025 which was ana increasedecrease of $31.4$214.4 million or 8.4%52.7% from $375.7$407.1 million at December 31, 2023.2024. As noted above, First Guaranty has entered into an agreement to sell its Texas operations. First Guaranty had $335.5$323.1 million in loans related to our new Mideast markets in Kentucky and West Virginia at December 31, 20242025 which was ana increasedecrease of $57.5$12.5 million or 20.7%3.7% from $278.1$335.5 million at December 31, 2023.2024. Syndicated loans at December 31, 20242025 were $53.9$50.3 million, of which $27.6$21.1 million were shared national credits. Syndicated loans decreased $22.8$3.6 million from $76.7$53.9 million at December 31, 2023.2024.

As of December 31, 2024,2025, 79.2%82.0% of our loan portfolio was secured by real estate. The largest portion of our loan portfolio, at 42.9%45.7% as of December 31, 2024,2025, was non-farm non-residential loans secured by real estate. As of December 31, 2024,2025, approximately 53.1%57.0% of the loan portfolio was based on a floating rate tied to the prime rate, SOFR or Treasury rates. 46.2%39.6% of the loan portfolio is scheduled to mature within five years from December 31, 2024. First Guaranty initiated a process to transfer any LIBOR indexed loans to alternative reference rates such as the prime rate or SOFR as LIBOR was discontinued for repricings after June 30, 2023.2025.

Commercial real estate (“CRE”) has received increased regulatory scrutiny in recent quarters due to valuation concerns associated with the increase in market interest rates and the impact of the COVID-19 pandemic. First Guaranty has utilized enhanced risk management practices for CRE concentration analysis for several years. First Guaranty Bank’s credit department conducts an annual stress test for CRE related loans that is presented to the Bank’s board of directors. The stress test analyzes the impact of changes in interest rates and cash flow on loan customers with credit exposures of $2.5 million or greater. First Guaranty generally requires personal guaranteesguaranties on CRE loans. First Guaranty generally approves CRE loans with loan-to-values of 80% or less. First Guaranty also generally requires for construction related CRE loans that the borrower provides their equity contribution upfront before loan funds are advanced. First Guaranty modified its business strategy in 2024 to reduce exposure to commercial real estate related loans, particularly loans secured by non-owner occupied properties and construction loans for commercial real estate. First Guaranty continued this strategy in 2025.

First Guaranty has diversified its CRE portfolio across both industries and geographic location. The following is a summary of the largest CRE related loans associated with hotel and motels, office properties, apartment complexes, healthcare related properties, and properties under construction as of December 31, 2024.2025. First Guaranty generally does not finance multi-story office buildings in major metropolitan areas. The largest CRE loan secured by a hotel or motel totaled $19.9$19.4 million. The property is a flagged hotel located in Texas. The largest CRE loan secured by an office related property totaled $21.3$20.9 million and is located in West Virginia. The largest CRE loan secured by an apartment complex totaled $26.0$40.4 million and is located in Texas.Louisiana. The largest healthcare related loan is a $32.9$33.5 million property secured by an assisted living center located in Alabama. The largest CRE loan under construction totaled $40.4$16.6 million for ana apartmentmultipurpose complexCRE building and is secured by a property located in Louisiana.

Non-performing assets were $95.5 million, or 2.34%, of total assets at December 31, 2025, compared to $120.4 million, or 3.03%, of total assets at December 31, 2024, compared to $41.7 million, or 1.17%, of total assets at December 31, 2023, which represented ana increasedecrease in non-performing assets of $78.6$24.9 million. The increasedecrease in non-performing assets occurred primarily due to ana increasedecrease in nonaccrual loans,loans partially offset by a decrease inand loans 90 days greater delinquent and still accruingaccruing, andpartially offset by an increase in other real estate owned. Nonperforming loans included loans previously classified as purchase credit deteriorated following the adoption of CECL.

Nonaccrual loans increaseddecreased from $25.2 million at December 31, 2023 to $108.5 million at December 31, 2024.2024 to $59.6 million at December 31, 2025. The increasedecrease in total nonaccrual loans was concentrated primarily in non-farm non-residential and multifamily loans. Non-performing assets included $3.9$4.5 million in loans with a government guarantee, or 3.24%4.73% of non-performing assets. These are structured as net loss guarantees in which up to 90% of loss exposure is covered.

At December 31, 20242025 loans 90 days and greater delinquent and still accruing totaled $11.5$0.8 million, a decrease of $3.8$10.7 million or 24.8%93.1% from $15.3$11.5 million at December 31, 2023.2024. The decrease in loans 90 days or greater delinquent and still accruing was concentrated primarily in construction and land development and non-farm non-residential loans.

1.A $28.7$23.3 million loan relationship secured by an assistedindependent living center located in Louisiana; the loan was placedtransferred onto nonaccrualother real estate owned in the fourth quarter of 2024.2025.

2.A $26.0$14.9 million loan relationship secured by aan multifamilyassisted apartmentliving complexcenter located in TexasLouisiana; the loan was placed on nonaccrual in the second quarter of 2025. Payments received on the loan in the fourth quarter of 2024.2025 reduced the balance by $0.2 million.

6.A3.An $2.0$8.8 million loan relationship secured by aan one-assisted toliving four- family residential propertycenter located in West VirginiaTexas; the loan was placed on nonaccrual atin Junethe 30,third 2024.quarter of 2025.

The following discussion of First Guaranty's financial condition and results of operations is intended to highlight the significant factors affecting First Guaranty's financial condition and results of operations presented in the consolidated financial statements included in this Form 10-Q. This discussion is designed to provide readers with a more comprehensive view of the operating results and financial position than would be obtained from reading the consolidated financial statements alone. Reference should be made to those statements for an understanding of the following review and analysis. The financial data at MarchJune 31,30, 2026 and for the three and six months ended MarchJune 31,30, 2026 and 2025 have been derived from unaudited consolidated financial statements and include, in the opinion of management, all adjustments (consisting of normal recurring accruals and provisions) necessary to present fairly First Guaranty's financial position and results of operations for such periods.

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, our ability to comply with the requirements imposed by the regulatory consent order; changes in general economic conditions, either nationally or in our market areas, that are worse than expected; competition among depository and other financial institutions; inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; adverse changes in the securities markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate acquired entities; 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; increases in our provision for credit losses 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. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

FirstSecond Quarter and ThreeSix Months Ended MarchJune 31,30, 2026, Financial 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 30 banking facilities primarily located in the MSAs of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, and Alexandria, Louisiana and Dallas-Fort Worth-Arlington, Waco, Texas and Mideast markets in Kentucky and West Virginia. As announced in a Current Report on Form 8-K filed on MarchAugust 10,6, 2026, First Guaranty hascompleted enteredthe intosale aof purchasethe Bank's Texas operations, consisting of five branches and assumptionrelated agreementdeposits, pursuantloans and certain other assets, to whichArmstrong itBank, wouldMuskogee, exitOklahoma. theThe Dallas-Fortsale Worth-Arlingtonwas andcompleted Waco,on TexasJuly markets.31, 2026. 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.

Financial highlights for the firstsecond quarter and threesix months ended MarchJune 31,30, 2026 are as follows:

•Net income (loss) for the three months ended MarchJune 31,30, 2026 and 2025 was $2.7$3.4 million and $(6.27.3) million, respectively. Net income (loss) for the six months ended June 30, 2026 and 2025 was $6.2 million and $(13.5) million, respectively, an increase of $8.9$19.6 million.

•Total assets decreased $119.8$183.3 million and were $4.0$3.9 billion at MarchJune 31,30, 2026 compared to $4.1 billion at December 31, 2025. Total loans at MarchJune 31,30, 2026 were $1.9$1.8 billion, a decrease of $145.2$304.6 million, or 7.0%,14.7%, compared with December 31, 2025. Total deposits were $3.5 billion at MarchJune 31,30, 2026, a decrease of $125.3$175.8 million, or 3.4%,4.8%, compared with December 31, 2025. Retained earnings were $16.1$18.7 million at MarchJune 31,30, 2026, an increase of $2.0$4.7 million compared to $14.1 million at December 31, 2025. Shareholders' equity was $224.0$227.4 million and $226.2 million at MarchJune 31,30, 2026 and December 31, 2025, respectively.

•Earnings (loss) per common share were $0.14$0.17 and $(0.540.61) for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Total weighted average shares outstanding were 15,796,04016,326,060 and 12,506,79212,910,785 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Earnings (loss) per common share were $0.31 and $(1.15) for the six months ended June 30, 2026 and 2025, respectively. Total weighted average shares outstanding were 16,062,514 and 12,709,905 for the six months ended June 30, 2026 and 2025, respectively.

•The allowance for credit losses was 2.00%1.94% of total loans at MarchJune 31,30, 2026 compared to 1.97% at December 31, 2025.

•Net interest income for the three months ended MarchJune 31,30, 2026 was $20.7$22.3 million compared to $22.2 million for the three months ended MarchJune 31,30, 2025. Net interest income for the six months ended June 30, 2026 was $43.0 million compared to $44.5 million for the six months ended June 30, 2025.

•The provision for credit losses for the three months ended MarchJune 31,30, 2026 was $2.6 million compared to $14.5$16.6 million for the three months ended MarchJune 31,30, 2025. The provision for credit losses for the six months ended June 30, 2026 was $5.3 million compared to $31.2 million for the six months ended June 30, 2025.

•Charge-offs were $5.4$7.7 million during the three months ended MarchJune 31,30, 2026 and $6.9$1.1 million during the same period in 2025. Recoveries totaled $0.5$0.9 million during the three months ended MarchJune 31,30, 2026 and $0.2 million during the same period in 2025. Charge-offs were $13.2 million during the six months ended June 30, 2026 and $8.0 million during the same period in 2025. Recoveries totaled $1.5 million during the six months ended June 30, 2026 and $0.4 million during the same period in 2025.

•First Guaranty had $28.9$29.7 million of other real estate owned as of MarchJune 31,30, 2026 compared to $35.1 million at December 31, 2025.

•The net interest margin for the three months ended MarchJune 31,30, 2026 was 2.07%2.37% which was an increase of 3 basis points from the net interest margin of 2.34% for the same period in 2025. The net interest margin for the six months ended June 30, 2026 was 2.22% which was a decrease of 2813 basis points from the net interest margin of 2.35% for the same period in 2025. Loans as a percentage of average interest earning assets decreased to 49.5% at MarchJune 31,30, 2026 compared to 68.5%66.5% at MarchJune 31,30, 2025.

•Investment securities totaled $1.2 billion at MarchJune 31,30, 2026, an increase of $177.6$214.7 million when compared to $999.3 million at December 31, 2025. At MarchJune 31,30, 2026, available for sale securities, at fair value, totaled $853.9$890.8 million, an increase of $177.3$214.2 million when compared to $676.6 million at December 31, 2025. At MarchJune 31,30, 2026, held to maturity securities, at amortized cost and net of the allowance for credit losses totaled $322.9$323.2 million, an increase of $0.3$0.5 million when compared to $322.7 million at December 31, 2025. The allowance for credit losses for HTM securities was $0.2 million at MarchJune 31,30, 2026 and December 31, 2025.

•Total loans net of unearned income were $1.9$1.8 billion at MarchJune 31,30, 2026, a net decrease of $145.2$304.6 million from December 31, 2025. Total loans net of unearned income are reduced by the allowance for credit losses which totaled $38.5$34.3 million at MarchJune 31,30, 2026 and $40.8 million at December 31, 2025, respectively.

•Nonaccrual loans decreased $5.2$19.0 million to $54.4$40.6 million at MarchJune 31,30, 2026 compared to $59.6 million at December 31, 2025.

•At MarchJune 31,30, 2026, the largest 10 non-performing loan relationships comprise 77%78% of total non-performing assets. Additional details on the non-performing relationships are as follows:

1.A•A $23.3 million loan relationship secured by an independent living center located in Louisiana; the loan was transferred to other real estate owned in the fourth quarter of 2025.

10.A•A $1.0$10.8 million loan relationship secured by aan cattleassisted farmliving center located in LouisianaTexas; the loan was placed on nonaccrual duringin the third quarter of 2025.

2.First•A Guaranty charged off $1.0$1.5 million on a non-farm non-residential loan relationship secured by retaila realhotel estatein Louisiana; the loan was placed on nonaccrual during the firstsecond quarter of 2026. This loan relationship had noa remainingspecific principalreserve balanceof $0.6 million as of MarchJune 31,30, 2026.

3.Smaller•Smaller loans and overdrawn deposit accounts comprised the remaining $2.6$0.5 million of charge-offs for the firstsecond quarter of 2026.

•Special mention loan relationships totaled $316.1$186.6 million as of MarchJune 31,30, 2026, a decline of $13.4$142.9 million compared to December 31, 2025.

•Substandard loan relationships totaled $300.9$276.6 million as of MarchJune 31,30, 2026, a decline of $46.7$70.9 million compared to December 31, 2025.

•DoubtfulThere were no doubtful loan relationships totaled $5.7 million as of MarchJune 31,30, 2026, a decline of $3.7$9.4 million compared to December 31, 2025.

•Noninterest expense totaled $17.2 million for the second quarter 2026, $16.7 million for the first quarter 2026, $16.8 million for the fourth quarter of 2025, $30.2 million for the third quarter of 2025 (including $12.9 million of goodwill impairment), and $17.3 million for the second quarter of 2025, and $18.0 million for the first quarter of 2025. Full time equivalent employees totaled 330333 at MarchJune 31,30, 2026 compared to 380360 at MarchJune 31,30, 2025.

•Return on average assets for the three months ended MarchJune 31,30, 2026 and 2025 was 0.27%0.35% and (0.630.75)%, respectively. Return on average assets for the six months ended June 30, 2026 and 2025 was 0.31% and (0.69)%, respectively. Return on average common equity for the three months ended MarchJune 31,30, 2026 and 2025 was 4.52%5.95% and (12.2914.33)%, respectively. Return on average common equity for the six months ended June 30, 2026 and 2025 was 5.24% and (13.31)% respectively. Return on average assets is calculated by dividing annualized net income by average assets. Return on average common equity is calculated by dividing annualized net income by average common equity.

•Book value per common share was $11.91$11.75 as of MarchJune 31,30, 2026 compared to $12.23 as of December 31, 2025. The decrease was due primarily to the changes in accumulated other comprehensive income ("AOCI") and recent issuance of new shares. AOCI is comprised of unrealized gains and losses on available for sale securities, including unrealized losses on available for sale securities at the time of transfer to held to maturity.

•First Guaranty's Board of Directors declared cash dividends of $0.01 per common share in the firstsecond quarter of 2026 and 2025. First Guaranty has paid 131132 consecutive quarterly dividends as of MarchJune 31,30, 2026.

•First Guaranty paid preferred stock dividends of $0.6$1.2 million during the first threesix months of 2026 and 2025.