Breaking Down First Guaranty Bancshares, Inc. (FGBI) Financial Health: Key Insights for Investors

You're looking at First Guaranty Bancshares, Inc. (FGBI) and the headline numbers from the third quarter of 2025 are defintely jarring, so let's cut through the noise. The bank holding company reported a substantial net loss of $45.0 million for Q3 2025, a dramatic swing from the $1.9 million net income a year prior, translating to a diluted Earnings Per Share (EPS) of -$3.01. Here's the quick math: that loss was primarily driven by a massive $47.9 million provision for credit losses-largely tied to a single, bankrupt commercial lease exposure-plus a $12.9 million goodwill impairment charge. Still, while total assets have dipped to $3.8 billion as of September 30, 2025, and total loans are down 15.4% year-to-date to $2.3 billion, the consolidated Total Risk-based Capital ratio held at a respectable 11.97%. We need to map out if management's risk-reduction strategy-evidenced by the dividend cut to just $0.01 per share-is enough to stabilize the ship and capitalize on the remaining core business value.

Revenue Analysis

The core takeaway for First Guaranty Bancshares, Inc. (FGBI) is that while the primary revenue engine-Net Interest Income-remained relatively stable in 2025, the overall financial picture was completely overshadowed by a massive credit event, which is the real story here.

As a bank holding company, First Guaranty Bancshares, Inc.'s primary revenue source is Net Interest Income (NII), which is the difference between the interest it earns on loans and investments and the interest it pays on deposits. For the third quarter of 2025, NII was $22.2 million, which accounts for the vast majority of the company's operating revenue net of interest expense.

The overall revenue net of interest expense for Q3 2025 was $24.1 million, meaning noninterest income (from fees, service charges, etc.) contributed only about $1.9 million. This structure is typical for a community bank, but the small contribution from non-interest sources means the bank is heavily exposed to interest rate risk and credit risk in its loan portfolio. That's a classic concentration risk.

Looking at year-over-year trends, the revenue picture is showing clear signs of pressure. The Net Interest Income of $22.2 million in Q3 2025 was a slight decrease of 2.2% from the $22.7 million reported in Q3 2024. More broadly, the total revenue net of interest expense for Q3 2025 was $24.1 million, which is an 11.07% decline from the $27.1 million reported in the same period a year prior.

The most significant change in the financial profile isn't technically a revenue stream shift, but an extreme credit event that fundamentally altered the bottom line. In Q3 2025, the company recorded a massive $47.9 million provision for credit losses (ACL), which is a charge against earnings to cover expected loan losses. The vast majority of this-$39.8 million-was tied to a single commercial lease financing relationship with an auto parts manufacturer that filed for Chapter 11 bankruptcy. This single exposure highlights the near-term risk in their commercial lending segment, especially in the commercial real estate (CRE) and commercial lease portfolios, which the bank is actively trying to de-risk. You can dig deeper into who is holding the bag on this in Exploring First Guaranty Bancshares, Inc. (FGBI) Investor Profile: Who's Buying and Why?

The core business is still generating interest income, but the risk management on the asset side has defintely failed to keep pace with the quality of the loan book. For the nine months ended September 30, 2025, NII was $66.7 million, a modest increase from $65.9 million in the prior year period, but this marginal growth is meaningless when a single credit loss wipes out years of profit. Your immediate action should be to model the impact of further asset sales and loan charge-offs on their capital ratios.

Profitability Metrics

The core takeaway for First Guaranty Bancshares, Inc. (FGBI) in 2025 is a sharp deterioration in profitability, driven by a massive provision for credit losses tied to a single, concentrated exposure.

You're seeing a clear shift from a profitable run-rate to a significant net loss, which is a major red flag for capital preservation. For the nine months ended September 30, 2025, FGBI reported a net loss of $(58.5) million, a dramatic swing from the $11.4 million in net income reported for the same period in 2024. This isn't just margin pressure; it's a balance sheet shock.

Gross, Operating, and Net Profit Margins

In banking, the closest metric to a Gross Profit is Net Interest Income (NII), the difference between interest earned on loans and interest paid on deposits. FGBI's NII for the first nine months of 2025 was $66.7 million, only a slight increase from 2024, but the profitability ratios tell the real story of what happened after interest income.

The trailing twelve months (TTM) margins show the heavy impact of the credit event and subsequent goodwill write-down on the overall financial picture. Honestly, these margins are deep into negative territory, which is defintely a call to action for management.

• Gross Profit Margin (TTM): 7.92%
• Operating Profit Margin (TTM): -38.69%
• Net Profit Margin (Q3 2025): -4.49%

The TTM Operating Profit Margin of -38.69% highlights that the bank's core revenue (NII plus non-interest income) is insufficient to cover operating expenses, provisions, and the goodwill impairment charge. The goodwill impairment alone was a one-time, non-cash charge of $12.9 million in the third quarter of 2025 [cite: 1, 2 (from step 1)].

Profitability Trends and Industry Comparison

The trend is a sharp reversal. The primary driver of the nine-month net loss was a $47.9 million provision for credit losses, largely related to a single commercial lease exposure in the auto parts sector [cite: 2 (from step 1), 9 (from step 1)]. This is a classic case of concentration risk blowing up the bottom line.

Here's the quick math comparing FGBI's core profitability to the US community bank average. Remember, FGBI's total assets of $3.8 billion at September 30, 2025, place it squarely in the community bank category (typically defined as under $10 billion in assets) [cite: 2 (from step 1), 4 (from step 2)].

FGBI's Net Interest Margin of 2.34% is significantly below the community bank average of 3.62% [cite: 3 (from step 2)]. This indicates a fundamental weakness in its core banking function, as the cost of funding deposits is outpacing the yield on earning assets. The industry is expanding margins, but FGBI is contracting.

Operational Efficiency and Cost Management

To be fair, management has shown some discipline in controlling non-interest expenses, which is a necessary action when revenue is under pressure. Excluding the non-cash goodwill impairment, non-interest expense was stable in Q3 2025 [cite: 9 (from step 1)].

This focus on operational efficiency is visible in the workforce reduction, where the full-time equivalent (FTE) count declined to 339 from 404 year-over-year [cite: 9 (from step 1)]. They are actively managing the cost side of the equation, closing three branches and consolidating two others in Q1 2025 to streamline the operating model [cite: 7 (from step 1)]. This is a positive sign of management taking clear action to mitigate the credit risks that have materialized.

The strategic shift is clear: reduce risk and preserve capital. You can see their stated goals and values here: Mission Statement, Vision, & Core Values of First Guaranty Bancshares, Inc. (FGBI).

Next Step: Risk Team: Model the impact of resolving the remaining $34.8 million in substandard commercial leases on Q4 provision expense by end of next week.

Debt vs. Equity Structure

You need to know how First Guaranty Bancshares, Inc. (FGBI) is funding its operations, and right now, the balance sheet tells a story of aggressive capital preservation and risk reduction. The company's financing strategy in 2025 has been heavily focused on converting debt into equity and raising fresh capital to shore up its position, especially following significant credit loss provisions in the third quarter.

For a bank, the Debt-to-Equity (D/E) ratio is a critical measure of financial leverage, showing how much debt is used to finance assets relative to shareholder equity. As of November 2025, First Guaranty Bancshares' Debt-to-Equity ratio is approximately 0.81. To be fair, banks naturally have high leverage because deposits are counted as liabilities, but this 0.81 ratio is notably higher than the US regional bank industry average of roughly 0.5 as of November 2025.

• Higher-than-average D/E signals greater reliance on non-equity funding.
• The D/E ratio is a key indicator of financial risk.
• The company's total shareholders' equity stood at $221.1 million as of September 30, 2025.

The total liabilities, which include customer deposits of approximately $3.4 billion as of September 30, 2025, and other borrowings, amount to about $3.58 billion. Here's the quick math: Total Assets of $3.80 billion minus Total Equity of $221.1 million equals Total Liabilities of $3,578.9 million. The scale of deposits relative to equity is typical for a bank, but the recent actions highlight a conscious effort to re-balance the capital stack.

The company's recent activity shows a clear pivot toward equity funding to reduce its debt burden and improve capital ratios. This is a crucial near-term action. The most significant move in the 2025 fiscal year was the conversion of a $15.0 million Floating Rate Subordinated Note into common stock in the second quarter. This move immediately reduced long-term debt and simultaneously increased common equity, strengthening the balance sheet without a cash outlay.

Also, First Guaranty Bancshares has been actively raising equity through private placements, issuing 122,503 shares of common stock during the third quarter of 2025 alone. This is a proactive measure to boost capital. In another debt management move, the company amended a loan agreement in June 2025 to waive a $1,007,812.50 quarterly principal payment for one year, providing immediate liquidity relief.

The market's view on the company's financial health is reflected in its credit profile. While the company's prior ratings were withdrawn by KBRA in November 2023 at the issuer's request, the bank subsidiary received a D rating from Weiss Ratings in October 2025, signaling a weak financial position. This is why the focus on capital preservation is so critical; the reduction of the common dividend to $0.01 per share in Q3 2025 is another clear sign of this strategy. You can review the strategic priorities that guide these decisions in the Mission Statement, Vision, & Core Values of First Guaranty Bancshares, Inc. (FGBI).

Liquidity and Solvency

You need to know if First Guaranty Bancshares, Inc. (FGBI) has the cash flow to weather a credit storm, especially after the significant loss reported in the third quarter of 2025. The direct takeaway is this: traditional liquidity ratios look dire, but the bank is actively managing its balance sheet by shedding riskier assets and preserving capital, which is a necessary, albeit painful, near-term action.

For a bank, the standard Current Ratio (Current Assets / Current Liabilities) and Quick Ratio are not always the best indicators, as a bank's core liability is customer deposits. Still, the reported trailing twelve-month (TTM) Current Ratio and Quick Ratio for FGBI are both near 0.00 as of the end of Q3 2025. This is a red flag in a non-financial company, but for a bank, it simply highlights that deposits (a current liability) far outweigh cash and short-term assets. The real liquidity picture is in the balance sheet composition and cash flow trends.

The working capital (Net Current Asset Value) trend is deeply negative at approximately $-3.56 billion (TTM), which is a function of the bank's business model. More important is the balance sheet contraction, which shows a deliberate de-risking strategy. Total loans were reduced by $414.0 million, or 15.4%, from December 31, 2024, to September 30, 2025. This reduction is a massive, positive source of cash for the bank, effectively boosting internal liquidity.

Here's the quick math on the cash flow shift:

• Operating Cash Flow (OCF): The TTM OCF is extremely low, around $1.72 million. This reflects the net loss of $(58.5) million for the nine months ended September 30, 2025, which was driven by the massive $47.9 million provision for credit losses in Q3. OCF is defintely under pressure.
• Investing Cash Flow (ICF): This is where the liquidity management is clearest. The $414.0 million reduction in loans is a significant cash inflow, which the bank is partially redeploying into investment securities, which increased by $117.0 million at June 30, 2025. This is a strategic move to hold more liquid, lower-risk assets.
• Financing Cash Flow (FCF): Total deposits decreased by $121.4 million (a 3.5% drop) through September 30, 2025, which is an outflow. To counter this and preserve capital, the bank drastically cut its common stock dividend in Q3 2025 from $0.08 to just $0.01 per share. That's a clear capital preservation signal.

The primary liquidity concern is the credit quality shock: the $52.0 million exposure to a single auto parts commercial lease relationship that triggered the huge Q3 provision. However, the strength is the improved bank-level Risk-Weighted Capital Ratio, which rose to 12.34% at September 30, 2025, from 11.66% a year prior. This shows regulatory capital remains strong despite the loss, which is a key measure of a bank's long-term solvency.

To dig deeper into the market's reaction to these moves, you should read Exploring First Guaranty Bancshares, Inc. (FGBI) Investor Profile: Who's Buying and Why?

Here is a summary of the near-term liquidity position:

The bank is trading short-term profitability for long-term balance sheet stability. That is a realist's move in a tough credit environment.

Valuation Analysis

You want to know if First Guaranty Bancshares, Inc. (FGBI) is overvalued or undervalued right now, and the short answer is that traditional metrics point to a deep undervaluation, but the underlying risks make it a classic value trap. The stock's price-to-book (P/B) ratio, a key metric for banks, is signaling a major discount, yet the price action reflects serious credit quality concerns.

The Deep Discount: Price-to-Book (P/B)

As of November 2025, the most compelling valuation signal for First Guaranty Bancshares, Inc. is its Price-to-Book (P/B) ratio. The P/B ratio compares the stock's market price to its book value per share (the company's assets minus liabilities). For FGBI, this ratio sits at approximately 0.36 or even lower at 0.27.

• A P/B below 1.0 suggests the stock is trading for less than the paper value of its net assets.
• A P/B of 0.36 means you are, theoretically, buying $1.00 of the bank's net assets for only about $0.36.

This is a significant discount, especially when you consider that most healthy regional banks trade closer to a P/B of 1.0 or higher. The market is defintely pricing in a high probability of future asset write-downs or losses that will erode that book value.

P/E and EV/EBITDA: Distorted by Losses

The Price-to-Earnings (P/E) ratio and Enterprise Value-to-EBITDA (EV/EBITDA) are less useful right now because the company has been posting losses. Here's the quick math: when earnings are negative, the P/E ratio is also negative, which makes it impossible to compare to profitable peers. FGBI's P/E ratio is around -5.64 or -4.79 because of the substantial net loss of $45.0 million reported in the third quarter of 2025.

This loss was largely driven by a massive $47.9 million provision for credit losses, much of which was tied to a single commercial lease exposure related to an auto parts manufacturer's Chapter 11 bankruptcy. Similarly, the EV/EBITDA is distorted. For a bank, P/B is the key metric, and its low value is a direct consequence of these credit shocks.

Stock Price and Analyst Consensus

The stock price trend over the last year tells the story of this financial distress. The 52-week trading range for First Guaranty Bancshares, Inc. has been wide, from a high of $15.25 to a low of $5.64. With the stock trading around $4.87 as of mid-November 2025, it's near its 52-week low and has seen a substantial drop of nearly 50% in 2025.

Analyst consensus reflects this pessimism. The average rating is a Sell, with two analysts specifically rating the stock a Sell. The consensus forecast for the 2025 fiscal year EPS is a loss of -$1.76 per share.

Dividend and Payout Ratio

The dividend picture confirms the capital preservation strategy. The company has reduced its quarterly cash dividend to $0.01 per common share in Q3 2025, down from $0.08 in the same quarter of 2024. The annualized dividend rate is now $0.04, resulting in a low dividend yield of about 0.7%. The payout ratio is negative at -3.96% because of the net loss, meaning the company is not earning the money to cover the dividend. They cut the dividend to preserve capital, which is the right move for a bank facing credit risk, but it removes a key incentive for long-term income investors.

If you want to dig deeper into the drivers of this value disconnect, you need to look at the balance sheet risks detailed in Breaking Down First Guaranty Bancshares, Inc. (FGBI) Financial Health: Key Insights for Investors. Finance: Track the resolution of the auto-parts lease exposure in the Q4 2025 earnings release.

Risk Factors

You're looking at First Guaranty Bancshares, Inc. (FGBI) and seeing a bank actively navigating a tough credit cycle. The direct takeaway is that while management is taking aggressive, necessary steps to de-risk the balance sheet, the near-term financial health is under significant pressure from specific, large credit events in the 2025 fiscal year. This isn't a systemic issue across the entire portfolio, but rather a few outsized problems that hit hard.

The most immediate and critical internal risk is the sudden deterioration of credit quality. The entire third quarter of 2025 was defined by a single, catastrophic event: a commercial lease financing exposure related to an auto parts manufacturer that filed for Chapter 11 bankruptcy. This forced the company to take a massive $47.9 million provision for credit losses, with $39.8 million directly tied to that single relationship. This is a huge hit for a bank of this size. It drove the Q3 2025 net loss to $45.0 million and a diluted Earnings Per Share (EPS) of $(3.01). That's a painful quarter, plain and simple.

• Nonperforming assets (NPA) have surged from less than 1% to over 5% of gross loans.
• The bank recorded a $12.9 million non-cash goodwill impairment charge in Q3 2025.
• Net Interest Margin (NIM) compressed to 2.34% in Q3 2025, down from 2.51% in the prior year period.

Beyond that specific credit shock, the external and strategic risks are centered on concentration and market conditions. Like many regional banks, First Guaranty Bancshares, Inc. has been exposed to the softer Commercial Real Estate (CRE) market. This is a strategic risk they've been working to mitigate since late 2024. The total loan portfolio has declined to $2.28 billion by the end of Q3 2025, down from $2.69 billion at the end of 2024, as they actively shed riskier CRE exposure. Here's the quick math: that's a reduction of over $400 million in loan balances in nine months.

The regulatory environment also presents an external risk. While the bank remains Well-Capitalized with a consolidated Total Risk-based Capital ratio of 11.97% at September 30, 2025, the heightened scrutiny on credit quality and CRE concentration means they have little room for error. The cost of funding (deposits) remains elevated, which is why the Net Interest Margin (NIM) is under pressure. This is a universal challenge, but it impacts a bank focused on de-risking even more acutely.

Management's mitigation strategy is clear and action-oriented. They are focused on capital preservation and aggressive risk reduction. To absorb potential losses, they proactively built the Allowance for Credit Losses (ACL) to 3.76% of total loans in Q3 2025, a strong defensive move. They also cut the common stock dividend to just $0.01 per share in Q1 and Q3 2025 to conserve capital. On the operational side, they've reduced Full-Time Equivalent (FTE) employees to 339 and kept noninterest expense (excluding the goodwill charge) stable at about $17.3 million in Q3 2025, showing defintely strong cost discipline.

The near-term action is the planned sale of their largest Other Real Estate Owned (OREO) property, a $7.4 million land development in Texas, anticipated to close in the fourth quarter of 2025. This will further clean up the balance sheet. For more on the long-term vision guiding these decisions, you can check out their Mission Statement, Vision, & Core Values of First Guaranty Bancshares, Inc. (FGBI).

Growth Opportunities

You're looking at First Guaranty Bancshares, Inc. (FGBI) right now and seeing the recent noise, but the real story for future growth is in the strategic pivot they've been executing. The path forward isn't about aggressive expansion; it's about shoring up the balance sheet to enable sustainable growth down the line.

The most immediate growth driver is the successful execution of their risk-reduction strategy, which is designed to stabilize earnings and rebuild investor confidence. Management is actively reducing risk in the loan portfolio, specifically targeting a reduction in commercial real estate secured loans throughout 2025. This move is defintely a necessary step to clean up the book and focus on core, relationship-driven banking in their Louisiana, Texas, and selective central Florida markets.

Here's the quick math on the strategic shift: The company anticipates realizing pre-tax cost savings of approximately $3.0 million per quarter for the 2025 fiscal year, stemming from a business strategy change initiated last year. That cost control is a direct boost to future profitability.

The competitive advantage for First Guaranty Bancshares, Inc. centers on its deep roots in community banking, which allows for local decision-making and personalized service. This model is crucial for attracting and retaining small- to medium-sized business clients, especially when larger banks are pulling back.

• Focus on core markets (Louisiana, Texas, Florida) for stable deposit growth.
• Leverage technology for cash management and mobile banking services.
• Improve capital ratios to support future, prudent lending.

Looking at the analyst consensus for the full 2025 fiscal year, the company is expected to report a consensus Earnings Per Share (EPS) forecast of -$1.76 on revenues of approximately $97.9 million. What this estimate hides is the significant impact of the one-time charges in the third quarter of 2025, which included a $47.9 million provision for credit losses and a $12.9 million goodwill impairment charge.

So, while the near-term numbers are ugly-the Q3 2025 net loss was $45.0 million-the long-term view is a projected rebound. Analyst forecasts for the following year (2026) suggest earnings could grow to $1.22 per share, a major turnaround from the 2025 loss. That's a 37.08% expected increase in EPS, which is why you need to watch their capital position closely. The risk-weighted capital ratio already improved to 12.34% as of September 30, 2025, up from prior periods, demonstrating progress on capital preservation.

The primary risk remains the credit exposure, specifically the $52.0 million in commercial lease financing tied to a single auto parts manufacturer that filed for bankruptcy. The company has proactively reserved against this, but its resolution in Q4 2025 will be key for the 2026 outlook.

The real opportunity is in the post-cleanup phase.

For a deeper dive into who is betting on this turnaround, you should read Exploring First Guaranty Bancshares, Inc. (FGBI) Investor Profile: Who's Buying and Why?

Here is a summary of the key 2025 financial metrics and future projections:

The strategic initiatives are currently a defensive play: reduce risk, cut costs, and build capital. Once that foundation is solid, the company can pivot back to measured, profitable growth in its established regional markets.