First Guaranty Bancshares, Inc. (FGBI)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered a net loss of $7.3M and diluted EPS of $(0.61), driven by a larger provision for credit losses ($16.6M) including a subsequent $1.9M addition after the initial press release; net interest margin was 2.34% .
• Loans fell to $2.41B (-10.5% vs. Dec 2024) as management continued to de-risk and reduce CRE concentrations; deposits were stable at $3.48B .
• Nonperforming assets decreased by $6.8M vs. Mar 31, aided by an assisted-living workout and the sale of an $8.8M non-accrual CRE loan in July; nonaccrual loans were $119.2M .
• Operating discipline persisted: noninterest expense fell to $17.3M (down $0.8M q/q and $3.3M y/y), implying an annual run-rate savings ≈$13.4M per earlier plans .
• EPS missed scant Wall Street consensus: Q2 actual $(0.61) vs. $(0.20)*; similar misses in Q1 2025 and Q4 2024 suggest estimates will need to reset lower given elevated credit costs (values retrieved from S&P Global).

What Went Well and What Went Wrong

What Went Well

• “First Guaranty continued with its business strategy to reduce risk in the loan portfolio,” cutting NPAs by $6.8M q/q and exiting an $8.8M non-accrual CRE loan in July; the largest OREO ($7.4M land) is under a sales agreement targeting Q4 2025 .
• Expense control: noninterest expense fell to $17.3M (−$0.8M q/q, −$3.3M y/y), consistent with a ~$13.4M annual run-rate savings target set in 2Q24 .
• Net interest income increased y/y: $22.2M vs. $21.2M in Q2 2024, aided by lower cost of interest-bearing liabilities and higher average earning assets .

What Went Wrong

• Provision for credit losses rose to $16.6M, including a subsequent $1.9M increase after the press release, pushing quarterly EPS to $(0.61) vs. the press release’s initial $(0.50) .
• Credit metrics remain elevated: nonaccrual loans $119.2M; six largest non-performing relationships comprise 75% of NPLs, concentrated in assisted living and multifamily CRE .
• Margin compression: net interest margin fell to 2.34% (−14 bps y/y), with loans as a share of average earning assets down to 66.5% as balance sheet mix shifts .

Financial Results

Loan Portfolio Composition ($USD Millions)

Key KPIs

Guidance Changes

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript was available in the document set (only AGM/other transcripts dated May 15, 2025) . Themes below reflect management commentary across filings.

Management Commentary

• “First Guaranty continued with its business strategy to reduce risk in the loan portfolio during the second quarter of 2025,” reducing NPAs by $6.8M q/q and selling an $8.8M non-accrual CRE loan in July; largest OREO ($7.4M land) under contract to sell in Q4 2025 .
• “Noninterest expense totaled $17.3 million… a decline of $0.8 million compared to the first quarter of 2025… Comparing the second quarter of 2025 with the second quarter of 2024, First Guaranty reduced noninterest expense by $3.3 million… annual run rate savings of approximately $13.4 million” .
• “The allowance for credit losses was $58.9 million or 2.44% of total loans… subsequent to the filing of First Guaranty’s press release… an additional provision of $1.9 million” .

Q&A Highlights

• No Q2 2025 earnings call transcript or Q&A was available in the filings; therefore, no analyst Q&A themes or guidance clarifications can be reported .

Estimates Context

Values retrieved from S&P Global.*
Implication: Repeated EPS misses highlight that consensus did not fully reflect heightened credit provisioning in 2025; expect estimate cuts until credit costs stabilize.

Key Takeaways for Investors

• Credit costs are the swing factor: Q2 provision ($16.6M, +$1.9M subsequent) drove the loss; monitor progression of individually-evaluated CRE credits and reserve trajectory .
• De-risking is progressing: CRE and unfunded construction commitments declined; sale of a significant non-accrual CRE loan and OREO sale agreement suggest incremental improvement in nonperforming assets .
• Margin/mix pressure persists: NIM at 2.34% with loans composing a smaller share of earning assets; securities/cash balances rising ease liquidity but cap near-term NII growth .
• Operating leverage tailwind: noninterest expense reductions are tracking plan, providing a cushion against elevated credit costs .
• Capital actions: continued dividend cut ($0.01) reflects capital preservation; equity up ytd via debt-to-equity conversion and private placements—monitor regulatory capital buffers and Texas ratio disclosures .
• Near-term trading lens: headline risk around credit provisioning and CRE exposures likely dominates price action; catalysts include OREO disposition closing, further loan sales/workouts, and reserve stability (all referenced in filings) .
• Medium-term thesis: success in CRE de-risking plus expense discipline could reset earnings power; sustained improvement requires demonstrable reductions in NPLs and provisions while maintaining NIM .

Additional Notes

• Cross-reference discrepancy: The Q2 press release reported EPS $(0.50) and provision $14.7M; the 10-Q later increased the provision by $1.9M, revising EPS to $(0.61), which should anchor analyses .
• Other Q2 press releases were non-financial (e.g., SW Graduate School of Banking), with no impact on earnings narrative .