Edgar R. Smith III
About Edgar R. Smith III
Edgar R. Smith III (age 61) has served on First Guaranty Bancshares, Inc.’s board since October 16, 2014 and on First Guaranty Bank’s board since February 2007. He is Chairman (since 2012) and CEO (since 1999) of Smitty’s Supply Inc., and holds senior roles at Latch Oil, Inc. (Chairman/President/CEO since 2013), CAM2 International, LLC (Sole Shareholder and Chairman since 2014), and Big 4 Trucking (President since 2012), bringing extensive operating experience in manufacturing and distribution .
Past Roles
| Organization | Role | Tenure | Notes/Impact |
|---|---|---|---|
| First Guaranty Bancshares, Inc. | Director | Appointed Oct 16, 2014 | Board service through present |
| First Guaranty Bank | Director | Since Feb 2007 | Long-serving bank board member |
External Roles
| Organization | Role | Tenure | Focus/Expertise |
|---|---|---|---|
| Smitty’s Supply Inc. | Chairman (since 2012), CEO (since 1999) | Ongoing | Leading lubricant manufacturer/distributor |
| Latch Oil, Inc. | Chairman, President, CEO | Since 2013 | Energy/oil operations |
| CAM2 International, LLC | Sole Shareholder, Chairman | Since 2014 | Lubricants brand oversight |
| Big 4 Trucking | President | Since 2012 | Logistics/transport leadership |
Board Governance
- Independence: The board determined Smith is independent under Nasdaq rules, considering relationships including those in “Transactions with Related Parties” .
- Attendance: In 2024, the FGBI board met 18 times; all directors attended at least 75% of aggregate board and committee meetings. All six FGBI board members attended the 2024 annual meeting .
- Leadership structure: Separate Chair and CEO roles; Audit Committee has an identified financial expert (Jack Rossi) .
- Committees (FGBI level): Smith serves on Audit and Nominating & Corporate Governance; he is not on the Compensation Committee .
| Committee | Smith Member? | Chair | 2024 Meetings |
|---|---|---|---|
| Audit (FGBI) | Yes | Jack Rossi | 6 |
| Nominating & Corporate Governance | Yes | Marshall T. Reynolds | 1 |
| Compensation | No | Marshall T. Reynolds | Not disclosed |
Engagement: Smith also received fees for participation in First Guaranty Bank Board, FGBI Audit Committee, Bank Executive Committee, and Investment Committee meetings, indicating active involvement across entities .
Fixed Compensation (Director)
| Component (2024) | Amount |
|---|---|
| Fees Earned or Paid in Cash | $26,500 |
| All Other Compensation (travel reimbursement) | $322 |
| Total | $26,822 |
| Meetings Included in Fees | FGBI Board; Bank Board; FGBI Audit; Executive Committee; Investment Committee |
- No equity retainer or option awards are reported for directors; the disclosed director compensation for 2024 reflects cash fees and reimbursements only .
- Stock ownership requirements: None adopted for directors or executives .
Performance Compensation (Director)
| Performance-Linked Elements (2024) | Disclosure |
|---|---|
| Director performance metrics tied to pay | Not disclosed; director pay presented as cash fees and reimbursements |
| Director equity awards (RSUs/Options/DSUs) | Not reported for 2024 |
| Clawback or malus provisions for director compensation | Not disclosed |
Other Directorships & Interlocks
| Entity | Nature | Detail |
|---|---|---|
| Smith & Hood Holding Company, LLC | Co-owned holding | 1,062,817 FGBI shares (8.5% of outstanding); co-owned by Smith and director William K. Hood; shared voting/investment power |
| Smith & Hood Investments, LLC | Co-owned holding | 340,637 FGBI shares; Smith and Hood share voting/investment power |
| Big 4 Investments | Smith-controlled entity | 340,344 FGBI shares; sole voting/investment power by Smith |
| Smith-Hoover Investments, LLC | Smith member | 17,063 FGBI shares; shared voting/investment power |
| MACSMITH, LLC | Smith member | 7,449 FGBI shares; shared voting/investment power |
Interlocks: Significant co-ownership structures with another director (Hood) create governance interlocks and potential influence concentration .
Expertise & Qualifications
- Operating executive with decades in manufacturing/distribution (lubricants) and transportation; multiple CEO/Chair roles across private companies .
- Board assigns him to Audit and Nominating, signaling expected governance and oversight competencies; Audit Committee chaired by a financial expert (Rossi), with Smith as a member .
Equity Ownership
| Metric | Value |
|---|---|
| Total Beneficial Ownership (shares) | 2,608,406 |
| Ownership (% of 12,504,717 shares outstanding) | 20.9% |
| Breakdown: Big 4 Investments | 340,344 (sole voting/investment by Smith) |
| Breakdown: Smith & Hood Holding Co., LLC | 1,062,817 (shared voting/investment; Smith and Hood) |
| Breakdown: Smith & Hood Investments, LLC | 340,637 (shared voting/investment; Smith and Hood) |
| Breakdown: Smith-Hoover Investments, LLC | 17,063 (shared voting/investment) |
| Breakdown: MACSMITH, LLC | 7,449 (shared voting/investment) |
| Shares Outstanding (record date) | 12,504,717 |
| Shares Pledged (Smith) | None disclosed for Smith; pledging disclosure pertains to other insiders (e.g., Reynolds) |
| Hedging Policy | No policy restricting hedging/derivatives for directors or employees |
| Stock Ownership Guidelines | None adopted for directors/executives |
Insider Trades & Section 16 Compliance
| Topic | Disclosure |
|---|---|
| Late Section 16 filings (2024) | Edgar R. Smith III: 1 late Form 4 reporting 1 late transaction |
| Insider Trading Policy | Adopted; applies to directors, officers, employees, households and controlled entities |
| Hedging Transactions | No policy restricting hedging/offsetting transactions by directors/employees |
Related Party Transactions (Conflict Risk)
| Transaction | Counterparty | Terms/Amounts (2024) | Governance Implication |
|---|---|---|---|
| Sale-leaseback of branches and HQ portion | Partnership owned by directors Reynolds, Hood, Smith | Sold for $14.7m; pre-tax gain $13.3m ($10.5m after tax); Bank paid ~$0.6m lease expense in 2024 | Ongoing payments to director-owned real estate vehicle; potential conflict in lease terms oversight |
| Subordinated Note (2022) | Edgar R. Smith III | $15.0m; 10-year; Prime + 75bps; interest paid $1.4m in 2024 and $1.2m in 2023 | Material financing from a director; independence/perception risk |
| Subordinated Note (2024) | Smith & Tate Investments, LLC (controlled by Smith) | $30.0m; 10-year; Prime + 75bps; interest paid $1.9m in 2024 | Adds $30m of related-party debt; interest and terms require rigorous oversight |
| Aggregate extensions of credit to insiders (group) | Directors, executive officers, principal shareholders & associates | $48.0m funded (18.8% of total equity); $22.6m unfunded commitments as of 12/31/2024 | Elevated insider exposure relative to equity; monitoring needed |
The board states non-interested members review and approve related party transactions and that terms are comparable to third-party market terms .
Compensation Committee Analysis (Context)
- Committee composition: Marshall T. Reynolds (Chair), William K. Hood; no outside compensation consultant hired in 2024 .
- Delegation: Authority may be delegated to the Chair to set CEO/CFO pay; 2024 CEO pay was reviewed/set by the Chair; CEO set senior officers’ pay; boards approved certain annual cash bonuses .
- Pay versus performance disclosure provided for executives; not considered in pay decisions; net income $10.119m in 2024 and $6.890m in 2023 .
Governance Assessment
- Strengths
- Independent classification; separation of Chair/CEO roles; all directors met ≥75% attendance; audit committee includes a designated financial expert (Rossi) .
- Smith’s deep operating background aligns with bank oversight needs; active participation across board and bank committees .
- Concerns/RED FLAGS
- Significant related-party financing and transactions involving Smith: $45m total subordinated notes outstanding to Smith-controlled parties (2022 $15m; 2024 $30m) with $3.3m interest paid in 2024, plus sale-leaseback to a partnership owned by directors with ongoing lease payments—these are material and require robust independent oversight .
- Hedging policy gap: Company has no policy restricting director/employee hedging, which can undermine alignment with shareholder value .
- No stock ownership guidelines: Although Smith holds 20.9% of shares, the absence of formal guidelines is a governance weakness for broader board alignment .
- Section 16 compliance issue: One late Form 4 for Smith; mitigated by enhanced procedures but indicative of process rigor risk .
- Insider credit exposure: Aggregate insider credit equals 18.8% of total equity—heightens related-party risk concentration .
Implications: While Smith’s independence is affirmed, the combination of large personal holdings/interlocks and substantial related-party financing/real estate relationships poses perceived conflict risks that can weigh on investor confidence unless mitigated through transparent, arm’s-length terms, recusal, and enhanced disclosure/oversight .