FDIC Consent Order Finds First Guaranty Bank Capital Short

First Guaranty Bancshares (NASDAQ: FGBI) is the Hammond, Louisiana holding company for First Guaranty Bank, a 92-year-old Louisiana state-chartered institution with roughly $3.9 billion in total assets, $1.8 billion in loans, and $3.5 billion in deposits across 30 locations in Louisiana, Kentucky, and West Virginia. The bank completed the sale of its Texas franchise — five branches, approximately $234 million in deposits, and approximately $88 million in loans — to Armstrong Bank on July 31, 2026, shrinking its footprint as part of a deliberate strategy to reduce balance sheet risk.

2025 was catastrophic. The bank swung from $12.4 million in net income in 2024 to a $56.0 million net loss, driven by an $81.7 million provision for credit losses and a $12.9 million non-cash goodwill impairment. The single largest hit came in Q3 2025, when an auto parts manufacturer bankruptcy triggered a $47.9 million provision — $39.8 million tied to that one credit. The bank has since posted three consecutive profitable quarters, earning $2.5 million in Q4 2025, $2.7 million in Q1 2026, and $3.4 million in Q2 2026, while systematically reducing nonperforming assets from $126.3 million at September 30, 2025 to $70.3 million at June 30, 2026.

The recovery has come with balance sheet reshaping that has structural consequences. To shore up credit quality and capital ratios, management has been shrinking the loan book and parking liquidity in securities and cash, which has depressed the Tier 1 leverage ratio — a measure calculated against total average assets, not risk-weighted assets. That ratio has now become the central constraint under a formal regulatory order.