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FG

First Guaranty Bancshares, Inc. (FGBI)·Q1 2025 Earnings Summary

Executive Summary

  • FGBI posted a GAAP net loss of $6.2M (–$0.54 EPS) on elevated $14.5M credit loss provision tied to the sale of two deteriorating CRE loans ($70M UPB; $5.8M loss), and rising nonaccruals concentrated in six relationships .
  • EPS missed S&P Global consensus by a wide margin: –$0.54 actual vs $0.17 consensus (1 estimate), driven by the provision and loan sale charges; revenue consensus was not available (S&P Global) *.
  • Management is executing a de-risking plan: shrinking loans (–$181M QoQ), cutting unfunded CRE construction (to $58M), and maintaining leaner costs (~$18.0M noninterest expense; headcount down to 380) .
  • NIM of 2.35% stabilized sequentially (+3 bps vs Q4) but remains below prior year (–23 bps YoY); deposits fell seasonally (–$137M QoQ) while liquidity remains elevated .
  • Near-term stock drivers: credit clean-up cadence (timing/sizing of resolutions), trajectory of nonaccruals and provision, pace of CRE risk reduction, and proof points on capital/liquidity improvement and expense discipline .

What Went Well and What Went Wrong

  • What Went Well

    • Credit de-risking actions: Sold two problem CRE loans ($70.0M), absorbing a $5.8M loss through ACL/charge-offs to reduce portfolio risk .
    • Expense control: Noninterest expense at $18.0M vs $18.9M in Q1’24; FTEs reduced to 380 from 491 at 12/31/23, contributing to structural savings .
    • Strategic focus reiterated: “reduce risk-weighted assets… improve capital ratios” with bank risk-weighted capital ratio at 12.74% as of 3/31/25; “approximately $12 million in annualized savings” since last year (CEO) .

  • What Went Wrong

    • Credit costs spiked: Provision of $14.5M (vs $2.3M Q1’24) produced a GAAP loss; gross charge-offs were $6.9M in the quarter .
    • Asset quality deteriorated: Nonaccrual loans rose to $133.4M (from $108.5M at 12/31/24), concentrated in assisted living (AL) and multifamily; largest six relationships = 78% of NPLs .
    • Balance sheet contraction: Loans fell to $2.51B (–$181M QoQ) and deposits to $3.34B (–$137M QoQ, largely seasonal public funds), dampening earning asset base .

Financial Results

Sequential P&L and Margin Summary

MetricQ3 2024Q4 2024Q1 2025
Net Interest Income ($M)22.698 22.577 22.223
Noninterest Income ($M)4.405 2.500 2.354
Provision for Credit Losses ($M)4.904 6.021 14.548
Total Business Revenue, Net of Provision ($M)22.199 19.056 10.029
Net Income (Loss) ($M)1.927 1.010 (6.166)
Diluted EPS ($)0.11 0.03 (0.54)
Net Interest Margin (%)2.51% 2.32% 2.35%

YoY Comparison (Q1)

MetricQ1 2024Q1 2025
Net Interest Income ($M)21.921 22.223
Noninterest Income ($M)2.308 2.354
Provision for Credit Losses ($M)2.304 14.548
Total Business Revenue, Net of Provision ($M)21.925 10.029
Net Income (Loss) ($M)2.310 (6.166)
Diluted EPS ($)0.14 (0.54)
Net Interest Margin (%)2.58% 2.35%

Balance Sheet and Credit KPIs

KPIQ3 2024Q4 2024Q1 2025
Loans, net of unearned ($M)2,769.651 2,693.780 2,512.788
Deposits ($M)3,429.925 3,476.260 3,339.466
Nonaccrual Loans ($M)65.788 108.529 133.393
ACL / Total Loans (%)1.20% 1.29% 1.71%
Non-performing Loans / Total Loans (%)2.38% 4.46% 5.32%
Non-performing Assets / Total Assets (%)1.71% 3.03% 3.50%
Book Value per Share ($)17.86 17.75 17.21

Loan Mix (Amounts, % of total)

CategoryQ3 2024Q4 2024Q1 2025
Total Real Estate Loans$2,162.372M; 77.8% $2,141.373M; 79.2% $2,024.317M; 80.3%
Total Non-Real Estate Loans$616.228M; 22.2% $560.707M; 20.8% $495.876M; 19.7%

Key drivers and context:

  • Provision and charge-offs: $14.5M provision (incl. $5.8M tied to $70M CRE loan sale) and $6.9M charge-offs drove the loss .
  • Asset quality concentration: top six non-performing relationships = 78% of NPLs; includes AL centers in AL/LA, large TX multifamily, Midwest retail centers, TX land, and a residential loan in WV .
  • NIM: 2.35% (–23 bps YoY) as asset mix and higher funding costs weighed; sequential stabilization vs Q4 .
  • Deposits: –$136.8M QoQ largely seasonal public funds; loans down –$181.0M QoQ as part of de-risking .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per common shareQ1 2025$0.01 per share (Q4 2024) $0.01 per share Maintained
CRE concentration target2025+Not previously quantifiedTarget ~300% CRE concentration to total capital (strategic objective) Introduced/Reiterated strategy
CRE exposure trajectory2025Directional reduction communicated“Anticipates continuing to reduce commercial real estate secured loans in 2025” Lower (directional)
Capital buildOngoingDividend reduction enacted in 2H24Continued low dividend to build capital; RWA ratio at 12.74% (bank) Maintained focus

Note: No formal quantitative revenue/expense/earnings guidance provided in Q1 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Credit remediation/NPAQ3: NPLs up on Midwest shopping center; Q4: added large AL (LA) and TX multifamily to nonaccrual Sold $70M CRE loans (loss $5.8M); provision $14.5M; nonaccruals to $133.4M; six relationships dominate Deterioration acknowledged; aggressive clean-up actions
NIM/funding costsQ3 NIM 2.51% (pressures from higher liability costs) NIM 2.35% (vs 2.32% Q4), YoY –23 bps Stabilizing sequentially, still compressed YoY
Expense disciplineQ3 noninterest expense $19.7M; Q4 $17.9M Q1 $18.0M; FTE 380 (vs 491 at 12/31/23) Sustained lower run-rate
CRE risk reductionQ3 CRE commitments $108M; Q4 $72M Q1 $58M; continue CRE reduction in 2025 Improving (reduced pipeline/exposure)
Capital/liquidityLiquidity build initiated in 2H24 Bank RWA ratio 12.74%; liquidity emphasized Improving capital resilience
Branch/footprintN/AClosed/consolidated LA branches (March 7, 2025) Footprint optimization

Management Commentary

  • Prepared strategic messages (CEO, AGM): “reduce risk-weighted assets… improve the capital ratios… [RWA ratio] 12.74% as of March 31, 2025… enact cost reduction measures, approximately $12 million in annualized savings” .
  • Credit clean-up and P&L impact (CFO, AGM): “sold $70 million worth of loans… resulting in a $5.8 million provision expense… total provision for the quarter was $14.5 million… loss of $0.54 per share” .
  • Nonperforming asset concentration (CFO, AGM): “bulk of our nonperforming assets” in six credits (AL in AL/LA, TX multifamily, Midwest shopping center, TX land, WV residential) .
  • Strategic tone (CEO): “Enough is never enough… we are working… we will continue to drive [capital] number higher” .

Q&A Highlights

  • No dedicated Q1 earnings call transcript was available; the May 15, 2025 Annual Shareholder Meeting included prepared remarks and procedural Q&A, but no detailed analyst Q&A transcript was provided .
  • Management reiterated strategic priorities (de-risking, capital build, cost actions) without issuing formal quantitative guidance .

Estimates Context

  • EPS: Consensus $0.17 vs actual –$0.54; miss driven by $14.5M provision and $5.8M loan sale loss flowing through ACL/charge-offs * .
  • Revenue: No Q1 2025 revenue consensus available; S&P Global shows actual “Total Business Revenue, Net of Provision” of ~$10.03M aligning with company presentation (no estimate count) *.
  • Estimate breadth: EPS had 1 estimate in the quarter *.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Provision-driven loss masks otherwise stable core NII and disciplined expenses; direction of credit costs will drive near-term earnings power .
  • Asset quality remains the key swing factor: concentrated NPAs in a handful of CRE/AL credits—resolution timing could be a material catalyst for the stock .
  • De-risking is tangible (loan sales, shrinking CRE exposure/commitments, loan book contraction); expect continued balance sheet right-sizing through 2025 .
  • Capital/Liquidity trajectory improving (RWA ratio 12.74%, deposit seasonal dynamics managed); continued low dividend prioritizes capital .
  • NIM appears to have stabilized sequentially; further improvement likely requires funding cost relief and/or mix shift as de-risking progresses .
  • Short-term trading: watch headlines on large-credit resolutions, further loan sales/charge-offs, and monthly NPA updates; large EPS beats/misses likely around provision volatility .
  • Medium-term thesis: successful credit clean-up plus sustained expense discipline can reset earnings baseline; pace of CRE runoff and capital accretion will influence valuation re-rating .