FGBI Web v2

Named in honor of William B. Burkenroad Jr.
, an alumnus and a longtime supporter

of Tulane’s business school, and funded through contributions from his family and
friends, Burkenroad Reports is a nationally recognized program, publishing objec-
tive, investment research reports on public companies in our region. Students at
Tulane University’s Freeman School of Business prepare these reports. November 10, 2022
Alumni of the Burkenroad Reports program graduated on to careers at a number of
highly respected institutions including: First Guaranty Bancshares Inc.
ABN AMRO Bank · Aegis Value Fund · Invesco/AIM Capital Management · Alpha FGBI/NASDAQ
Omega Capital Partners · American General Investment Management · Ameriprise
Financial · Atlas Capital · Banc of America Securities · Bank of Montreal · Bancomer Continuing Coverage: Economic turmoil on horizon?
· Barclays Capital · Barings PLC · Bearing Point · Bessemer Trust · Black Gold Capital·
Blackstone · Bloomberg · BNP Paribas · Brookfield Asset Management · Brown Investment Rating: Market Underperform
Brothers Harriman Capital · Blackrock Financial Management · Boston Consulting PRICE: $ 24.70 S&P 500: 3,956.37 DJIA: 33,715.37 RUSSELL 2000: 1,867.93
Group · Buckingham Research · California Board of Regents · Cambridge Associates· • Strong management provides consistent dividends and excellent revenue
Canaccord Genuity · Capital One Southcoast · Cantor Fitzgerald · Chaffe & Associates growth
· Citadel Investment Group · Citibank · Citigroup Private Bank · City National Bank • Expansions into Kentucky & West Virginia open new avenues for revenue
· Cornerstone Resources · Credit Suisse · D. A. Davidson & Co. · Deutsche Banc growth
· Duquesne Capital Management · Equitas Capital Advisors· Factset Research · • Management’s increased focus on technology and cybersecurity
Financial Models · First Albany · Fiduciary Trust · Fitch Investors Services · Forex • First Guaranty Bancshares, Inc. joins the Russell 2000 index
Trading · Franklin Templeton · Friedman Billings Ramsay · Fulcrum Global Partners · • Net Interest margin could compress with rising interest rates
Gintel Asset Management · Global Hunter Securities · Goldman Sachs · Great Gable • Negative macroeconomic factors may halt Bank’s growth in 2023, impacts
Partners · Greer Anderson · Grosever Funds · Gruntal & Co. · Guggenheim Securities to credit quality might require additional asset reserves and provision
, LLC · HSBC Private Bank · Hancock Investment Services · Healthcare Markets expense increase
Group · Heikkinen Capital · Hillspire, LLC · Invesco Capital Markets · IBERIABANK • Our 12-month target price is $24.00.
Capital Markets · J.P. Morgan Securities · Janney Montgomery Scott · Jefferies & Co.
· Johnson Rice & Co. · Janus Capital Group · KBC Financial · KDI Capital Partners · Key Valuation 2021 A 2022 E 2023 E**
Investments · Keystone Investments · Lazard Freres · Legacy Capital · Liberty Mutual EPS* $2.42 $2.41 -$0.02
· LongueVue Capital · Lowenhaupt Global Advisors · Mackay Shields · Macquarie P/E 8.5x 10.3x NM
Capital Manulife/John Hancock Investments · Marsh & McLennan · Mercer Partners · TBVPS $19.14 $20.11 $19.52
Merrill Lynch · Miramar Asset Management · Mitsubishi UFJ Financial Group · Moodys P/TBVPS 1.1x 1.2x 1.3x
Investor Services · Morgan Keegan · Morgan Stanley · Nuveen Investments · New
* Excluding non-recurring items
York Stock Exchange · Orleans Capital Management · Pan American Life Insurance
** Includes analyst projected increase in reserves due to projected downturn in economy
· Perkins Wolf McDonnell · Piper Jaffray & Co. · Professional Advisory Services ·
_______1993
Purdential Investments · Quanta Capital Services · Quarterdeck Investment Services · Market Capitalization Stock Data
SINCE
RBC · Raymond James · Regions Bank-Restoration Capital · Rice Voelker, LLC · Robotti Equity Market Cap (MM): $264.70 52-Week Range: $19.13 - $29.65
& Co. · Royal Bank of Scotland· Sandler O'Neill & Partners · Sanford Bernstein & Co. Enterprise Value (MM): NM 12-Month Stock Performance: 22.31%
Shares Outstanding (MM): 10.72 Dividend Yield: 2.17%
· Scotia Capital · Scotia Howard Weil Incorporated · Scottrade · Second City Trading Estimated Float (MM): 5.42 Book Value Per Share: $21.60
LLC · Sentinel Trust · Sequent Energy · Sidoti & Co · Simmons & Co. · Southwest 6-Mo. Avg. Daily Volume: 12,417 Beta: 0.48
Securities · Stephens & Co. · Sterne Agee · Stewart Capital LLC · Stifel Nicolaus · Sun- Short Ratio 11.86 EV/EBITDA NM
Trust Capital Markets · Susquehanna Investment Group · Thomas Weisel Partners Company Quick View:
· TD Waterhouse Securities · Texas Employee Retirement System · Texas Teachers
First Guaranty Bank is a regional community bank located primarily
Retirement System · ThirtyNorth Investments · Thornburg Investment Management
· Tivoli Partners · Tudor Pickering & Co. · Tulane University Endowment Fund · Turner within Louisiana and Texas. Established in 1934, it currently operates 36
Investment Partners · UBS · Valmiki Capital · Value Line Investments · Vaughan locations, including two new facilities in Kentucky and West Virginia.
Nelson Investment Management · Wellington Management · Wells Fargo Capital
Management · Whitney National Bank · William Blair & Co. · Zephyr Management Analysts: Investment Research Manager:
Michelle Corcoran Anna Brown
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Freeman School of Business
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Company shell 3435 PMS 2022.indd 1 4/11/22 10:46 AM

First Guaranty Bancshares Inc. (FGBI) November 10, 2022
Figure 1: Five-year Stock Price Performance
Source: Yahoo Finance
INVESTMENT SUMMARY
We have given First Guaranty Bancshares, Inc. a Market Underperform rating with a $24 target
price. While the Company performed excellently through staggering adversity during COVID-19
and we believe that management is doing almost everything right, our model predicts that the
macroeconomic factors discussed below will blunt the Company’s performance in 2023.
However, following the economic turmoil to come within the next one to two years, our model
predicts a return to excellent performance and steady growth for First Guaranty Bank.
The Company declared its 117th consecutive quarterly cash dividend of $0.16 per share on
August 22, 2022. Management also reported a hefty 21% revenue increase from the first
quarter of 2021 to the second quarter of 2022 and a commitment to a regular stock dividend.
These announcements strengthen First Guaranty’s reputation as a reliable and continuously
improving company.
Late last year, First Guaranty established loan and deposit production offices in Vanceburg,
Kentucky, and Bridgeport, West Virginia. These new locations are performing well and are
launch points for increased operations in the new Mideast region. First Guaranty is in the
process of converting the locations into full-service branches.
2
First Guaranty is currently implementing new technologies in many of its divisions. These
platforms and software systems will improve financial analysis and management practices and
will decrease cybersecurity risks.
The firm was added to the Russell 2000 Index during the index’s annual restructuring in 2022.
This addition will increase First Guaranty’s visibility to investors.
The Federal Reserve has hiked interest rates by 225 basis points in 2022. For companies like
First Guaranty, increasing interest rates are a double-edged sword. Over the long-term, the
rising interest rates will provide the Company with higher income through its surviving loans.
However, over the short-term, the higher rates may cause a decline in the growth of its loan
portfolio and a rise in loan defaults and interest expense on deposits. This rise in loan defaults
could be compounded by the Company’s dedication to providing altruistic loans. Our model
implements this prediction as a marked rise in provision expense in 2023.
Recently, macroeconomic factors like the health of housing markets, the movement of federal
interest rates, and consumer inflation have been trending negatively, casting a foreboding
shadow over the revenue growth that first guaranty has maintained into 2022.
Table 1: Historical Burkenroad Ratings and Prices

Report Date Stock Price* Investment Rating 12 Month Target Price
11/10/2022 $24.70 Market Underperform $24.00
11/25/2021 $22.62 Market Outperform $28.00
11/11/2018 $22.45 Market Perform $26.00
*Price at time of report date
3
INVESTMENT THESIS
We give First Guaranty Bancshares, Inc. a Market Underperform rating with a $24 target price.
While the Company performed well through staggering adversity during COVID-19 and we
believe that management is doing almost everything right, our model predicts that the
macroeconomic factors discussed below will blunt the Company’s performance in 2023.
However, following the economic turmoil to come within the next one to two years, our model
predicts a return to excellent performance and steady growth for First Guaranty Bank.
Strong management provides consistent dividends and excellent revenue growth
The Company declared its 117th consecutive quarterly cash dividend of $0.16 per share on
August 22, 2022. The Company has historically paid a 10% stock dividend to shareholders every
two years; the next 10% stock dividend is due in December of 2023. First Guaranty’s
uninterrupted payment of dividends should spawn trust in investors that the Company is stable.
The cash dividend has also increased at a regular rate since 2016. This increase schedule is an
indication that the Company is growing healthily.
Additionally, First Guaranty's net income for the second quarter of 2022 was $8.1 million; the
Company has exceeded expectations through its second-quarter performance. The bank's
earnings per share were $0.58 in second quarter 2021, which grew to $0.70 per share in second
quarter 2022. In the second quarter of 2022, it earned $7.5 million in total common shareholder
income, a rise of 21.4% from $6.2 million in the corresponding period in 2021.
Expansions into Kentucky & West Virginia open new avenues for revenue growth
Late last year, First Guaranty established new locations in Vanceburg, Kentucky, and Bridgeport,
West Virginia. Globe Newswire reported an excellent second-quarter of 2022 total loans growth
of $171,500,000 from the new mid-east locations alone. Our regression model suggests a strong
correlation between housing prices within states where the Company operates and its primary
revenue vehicle, its loan portfolio. West Virginia housing prices have increased steadily since
2020. Kentucky’s housing prices have shown a similar increase to West Virginia’s since 2020.
Therefore, if First Guaranty continues to expand operations in its mid-east region, and the new
branches continue to perform as well as they have, the Company will likely see a marked
increase in revenues.
Risk can arise when a business’s revenues are as closely tied to a specific factor as First
Guaranty’s revenues are tied to housing prices in specific states. The two expansions into the
Kentucky and West Virginia markets make up a small portion of the Company’s geographical
footprint, but it demonstrates an intention to diversify. This diversification is crucial for First
Guaranty now, considering the recent decline of Louisiana’s housing prices.
4
Management looks to the future with increased focus on technology and cybersecurity
The Company’s updated and new systems will improve efficiency and profitability and will help
with customer growth. Within the credit department, there is a new risk-based pricing model
and stress-testing software that will help the Company better determine the risk of issuing a
new loan. First Guaranty’s wire system has been updated, allowing it to manage its increase in
transactions easily and makes the platform more reliable and scalable for growth. The biggest
technological expansion has been in IT for cyber security and through the partnership with Q2, a
platform that offers online banking tools. The Q2 banking platform has fully digitalized the
banking practices of First Guaranty.
The Q2 platform has many programs and offers tools that are helping the Company expand its
customer base. Programs such as Auto books, Give Worx, FinTech, Card Swap, and Junior
Banking accounts provide customers and small businesses with more efficient banking tools.
The Auto books program will help small businesses with accounting and financials. The Give
Worx program embodies First Guaranty’s community focus by allowing customers to donate
through their platform to different organizations. The FinTech program will enable customers to
manage personal finance through their banking app. Card Swap is a program that allows
customers to link their subscription services to an account and easily switch payment cards for
multiple services at once within the account. Junior Banking Accounts provide a banking service
for minors and offer an educational function to teach youth about basic financial management.
These online banking platforms will help First Guaranty compete in the evolving digital banking
world.
First Guaranty Bancshares, Inc. joins the Russell 2000 index
On July 8, 2022, First Guaranty Bancshares, Inc. announced that the Company joined the Russell
2000 index during the index’s annual reconstitution. Investment managers and institutional
investors frequently use the Russell 2000 index as a benchmark for active investment
techniques in index funds. First Guaranty can now provide its clients with improved service and
will be more visible to investors due to joining the Russell index. The addition of the Company to
the index is evidence of the bank's ongoing growth and the effectiveness of its unique ideology.
Net Interest margin could compress with rising interest rates
The Federal Reserve has hiked interest rates by 225 basis points in 2022. For companies like
First Guaranty, increasing interest rates are a double-edged sword. Over the long-term, the
rising interest rates will provide the Company with higher income through its surviving loans.
However, over the short-term, the higher rates will cause a decline in the growth of its loan
portfolio and a rise in loan defaults and interest expense on deposits.
5
Additionally, First Guaranty has a history of providing altruistic loans to those affected by
natural disasters in its operating territory, many of which provide little to no income to the
Company. Management have stated a commitment to continue providing these altruistic loans.
With the frequency of natural disasters surging due to climate change, especially near Louisiana
and Texas, the downside of these altruistic loans will continue to grow. Our model implements
these predictions as a marked rise in provision expense on the Company’s 2023 income
statement. We believe the negative sides of rising interest rates have not yet factored into the
Company’s financial performance and will markedly affect its earnings in 2023.
Negative macroeconomic factors may halt Bank’s growth in 2023, impacts to credit quality might
require additional asset reserves and provision expense increase
Recently, macroeconomic factors like the health of housing markets, the movement of federal
interest rates, and consumer inflation have been trending negatively, casting a foreboding
shadow over the growth that First Guaranty has maintained into 2022. The number of homes
sold in Louisiana and Texas has declined since August, and while the Company is taking steps to
reduce the impact of the decline, it may still affect its bottom line. Consumers will continue to
decelerate their home purchases in the current inflationary climate, as they will have less
money to spend on a mortgage under high interest rates. The Federal Reserve is not showing
signs of decreasing rates anytime soon, and our model considers this a primary driver behind
First Guaranty’s earnings.
VALUATION
Our team considered a variety of valuation methods to determine First Guaranty’s 12-month
target price. We chose to construct a relative multiple method model using both price-to-
earnings and price-to-tangible-book-value as multiples, and a dividends discount model (DDM)
because of the Company’s status as a financial institution and its consistent dividend payout.
We gave First Guaranty a Market Underperform rating with a $24 target price.
Dividend Discount Model Method
The dividends discount model projects a company's future dividend payments based off specific
dividend per share and growth rate assumptions. This forecast allows for valuations on the
equity values of the company. We determined the appropriate discount rate for the Company
to be approximately 7%, given the Company’s access to cheap capital, its relatively low risk of
the investment, and the dividend yield that investors receive as return on investment. We also
determined the growth rate of dividends to be 3%, similar to the long-term inflationary growth
rate of banks and the economy.
6
Relative Multiple Method - P/E
The price-to-earnings ratio is calculated by the stock's price divided by its earnings per share.
The P/E ratio is widely discussed in the market and usually refers to the static P/E ratio; it is
often used to compare whether stocks at different prices are overvalued or undervalued. A high
price-to-earnings ratio means investors have more confidence in a stock's future earnings
growth and are willing to pay more for the stock. A low P/E ratio means a company is less
profitable and shows that investors are less confident than stocks with high P/E ratios.
Typically, the P/E ratio level indicates:
<0: that the Company's profit is negative,
0-13: that the Company is undervalued,
14-20: that the Company is valued correctly,
21-28: that the Company is overvalued, or
28+: there is a speculative bubble in the stock market.
Our calculations show First Guaranty has a current P/E ratio of 9.97x. We decided not to use this
valuation method in our final analysis, as we had concerns over the impact of the provision for
taxes projection on our final earnings-per-share amount.
Relative Multiple Method – P/TBV
The price-to-tangible-book-value ratio represents a Company’s share price as a percentage of

the tangible book value that is shown on the balance sheet of the Company. Through evaluating
Investar Bank, Origin Bank, First Bank, and Summit Bank, we determined the current average
P/TBV multiple for the Company’s peer group to be 1.38x. This multiple is very close to the
Company's current P/TBV multiple of 1.41X. The projected target price using the peer multiple
over the next 12 months is $28.07.
The result of our methods used to determine the Company’s target price is represented in
Figure 2.
7
Figure 2: Summary of Valuation Methods
$33.00
$30.00
$27.00
$24.00 12-Month Target
$21.00 Price: $24.00
$18.00
$15.00
$12.00 Current Price: $24.70
$9.00
$6.00
$3.00
$0.00
P/TBV DDM
INDUSTRY ANALYSIS
First Guaranty Bank participates in the regional commercial banking industry, comprised of
companies that provide various loans and depository services to the public, businesses, and
governments across multiple states. As of June 30, 2022, First Guaranty reported about $107.3
million in total revenue, while regional banks totaled about $248 billion in revenue. Interest
payments on loans and fees incurred through consumer banking services like ATM or credit card
use make up over 60% of regional banks’ revenue.
The Industry is dense, consisting of mostly minor players like First Guaranty. Because of the
density of firms in the industry, competition is high. However, the federal government passed
legislation within the last few years that affects the regulatory environment of regional banks,
encouraging mergers and acquisitions. This change will likely increase the concentration of
larger firms within the industry to a small degree.
Over the past few years, regional banking firms have inflated their marketing costs from 2.1% of
revenue in 2016 to 2.5% in 2021. This rise in spending is likely a function of intensifying
competition and increasing regulation within the industry, diminishing the number of ways that
the firms can differentiate services. Firms can set themselves apart from their peers by offering
competitive interest rates, extending innovative credit card rewards, or reducing fees.
Despite the high costs of differentiation and a relatively high barrier to entry, the Company is
growing into more markets; in 2021, the Company opened its first depository institutions in its
new markets of Kentucky and West Virginia. Growth caused by macroeconomic events is
consistent with the broader industry. In the short term, higher federal interest rates will
stimulate consumer deposits as consumers save their money. In contrast, in the long term,
overall growth in the economy will stimulate loan activity. Consumers need banking services
regardless of market performance. This need buoys the industry when the broader market is
doing poorly.
8
The main customers of regional banks like First Guaranty IIe Individuals, families, and
businesses. A diverse range of individuals and families in terms of ethnicity, age, income, and
political beliefs take advantage of regional banks’ consumer banking services and residential
loans, including mortgages.
Threat of Entry
The regional banking industry is uniquely difficult to enter, as it is highly regulated and requires
multiple levels of approval and monitoring. The barriers to entry are in place to ensure that the
institution can fulfill its role as the financial system for the whole economy.
Starting a bank involves a long approval process that requires the permission of a federal or
state charter and then the Federal Deposit Insurance Corporation. Both entities must determine
if the bank can act adequately and has a strong chance of survival. If a company controls the
bank or a bank wants to become a member of the Federal Reserve, they need additional
approval from the Federal Reserve. The Federal Reserve then highly monitors the banks until
they become well established.
The complicated entry process Is discouraging to new entries. Since the banking Industry Is so
well-established, larger banks with reputations make it harder for smaller banks to compete.
These larger banks can better scale their offers and rates and often have less strict regulations
due to their size and reputation.
Bargaining Power of Suppliers
The customers in the banking industry are also the clients and the suppliers of the banks’ profits
and capital. The bargaining power is with the customers, as a bank relies on its investment
decisions such as deposits, loans and mortgages, mortgage-backed securities, and loans from
other financial services for its income. The power of the supplier can change slightly with
changes in the macroeconomic field, but for the most part, banks need to maintain capital from
those sources to remain profitable. Because of this, the bargaining power of the supplier
fluctuates from medium to very high.
Bargaining Power of Buyers
The customers in the banking industry are the clients and the buyers in the banking industry.
They have the power to choose who they invest their money with, making switching costs a high
factor in the bargaining power of buyers. Often, a person wants all their financial services
delivered through one entity, making it difficult for them to switch banks once established.
Banks will offer low rates or high-yield savings accounts with competitive rates to catch
consumers’ attention and convince them to switch banks. The ease of online banking has
diminished some of the switching costs, but most people prefer to stay with their established
bank. The buyer or client has high bargaining power because of their many options in the
industry.
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Competitive Rivalry
Since banking has existed for millennia, it is a service that most people use, making it a highly
competitive industry. Because of this, banks must compete to earn clients by offering lower
financing interest rates, higher investment return rates, and greater conveniences than other
rival banks. First Guaranty bank competes against large firms such as Bank of America, JP
Morgan, Citigroup, and others, and smaller regional firms like in the southeast. First Guaranty’s
biggest local competitors as of 2022 are First Farmers Bank & Trust Co., Investar Bank, Origin
Bancorp Inc., First Bank, and Summit State Bank.
ABOUT FIRST GUARANTY
First Guaranty Bancshares, Inc. (NASDAQ/FGBI) is the financial holding company that owns
First Guaranty Bank. First Guaranty Bank was established in 1934 in Amite, Louisiana, and has
since relocated its headquarters to Hammond, Louisiana. It is based primarily in Louisiana and
Texas, operating 36 locations, including two new facilities as of 2021 in Kentucky and West
Virginia. In 1993, an investor group led by current Chairman Marshall T. Reynolds recapitalized
the Company and shifted its business plan to focus on affording community bank access to
Louisianians. The Company has since expanded its operations both organically and through
various acquisitions. In 2015, the Company completed an initial public offering, raising over $9
million, and began trading its shares on the NASDAQ. As of August 2022, First Guaranty
Bancshares declared its 117th consecutive quarterly dividend to its shareholders.
Products and Services
The Company provides full-suite commercial banking services to individuals, families,

businesses, and municipalities. In addition to consumer banking services like deposit accounts,
credit cards, lockboxes, unmanaged individual retirement accounts, and ATM access, the
Company issues various loans, including mortgages, agricultural loans, residential and
commercial real estate loans, land development loans, industrial loans, and more. As of 2021,
the Company had $2.1 billion in its loan portfolio, with over 40% of it consisting of non-farm,
non-residential loans.
The Company also offers comprehensive online banking and an app called MyFGB that
aggregates some of the Company’s services into an accessible platform. Consumers can register
accounts, pay bills, use several branded money management tools, and take advantage of most
of the Company’s other services all online.
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Strategy
First Guaranty Bank is a community centered institution that takes pride in providing the best
possible financial services to individuals and small businesses. Its business strategies are aimed
at increasing operational efficiency and profits. Financially, First Guaranty Bank focuses on
decreasing interest rate risk, growing liquidity, and reworking budgeting models. The Company
is also prioritizing improvements in its data information systems and analysis tools to help
improve the profits and efficiency of its business.
First Guaranty devised a strategy to reduce interest rate risk by increasing the percentage of
loans issued and decreasing its percentage of securities. The high-yield loans will provide less
risk, with its maturity dates, than the lower yielding securities. Total loans increased by 11.1%, a
dollar value of $2.3 billion, and the average loan yield was 5.36% by the end of the second
quarter 2022.
As a way of increasing non-interest-bearing deposits, the Company is focusing on innovative

marketing and management techniques. By offering highly attractive product bundles and
advancing digital banking platforms, First Guaranty has increased deposits by $63.3 million, $24
million of which is non-interest-bearing. While strengthening relationships with customers, the
Company is increasing liquidity without having to pay interest.
Prioritizing technology advancements, First Guaranty has implemented multiple platforms and
software systems in different departments both for financial analysis and management
purposes. In the credit department, a new risk-based pricing platform and stress-testing
software are being implemented to evaluate risk. For management client ease, a new banking
platform, Q2 was implemented in 2022, that upgraded and digitized many banking processes
that were still physically documented. First Guaranty has also updated its wiring system to make
it a more reliable and easily scalable platform that is conducive to the increase in volume
transactions over the last five years.
Competitors
First Guaranty Bank currently operates throughout Louisiana, Kentucky, Texas, and West
Virginia. It competes within the deposit and loan markets of these states. The Company's main
competitors are larger banking firms and therefore have greater resources both financially and
in terms of the services and products they provide.
Among First Guaranty Bank's main competitors, which are similar in size and offer similar
services, are Origin Bancorp Inc, First Farmers Bank & Trust Co, and Investar Bank. Origin
Bancorp is headquartered in Ruston, Louisiana, and operates 42 branches across the states of
Texas, Louisiana, and Mississippi. First Farmers Bank & Trust Co. is headquartered in Converse,
Indiana, and has 36 branches throughout Indiana and Illinois. The headquarters of Investar Bank
is located in Baton Rouge, Louisiana, and they operate 31 branches spread throughout the
states of Louisiana, Texas, and Alabama. Table 2 displays the market cap, net income, number of
branches, and number of employees of First Guaranty Bank and its main competitors.
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Table 2: Key Competitors

Market Cap Net Income
Company Nº of Branches Nº of Employees
($ mm) ($ mm)
First Guaranty Bank 238.77 31.5 36 349
Origin Bancorp Inc 972.54 97.3 42 797
First Farmers Bank
414.91 36.1 36 377
& Trust Co
Investar Bank 216.41 16.5 31 318
Source: Seeking Alpha
Among these competitors, Origin Bancorp stands out with a net income of $97.3 million, well
above the $36.1 million of First Farmers Bank & Trust Co, and the $31.5 million net income of
First Guaranty Bank, which is in third place. Lastly, we find Investar Bank with $16.5 million of
net income. In addition, First Guaranty Bank is also in the third position regarding market cap
and number of employees. According to CSIMarket.com, First Guaranty Bank's market share is
0.11% across the banking market in the US.
Recent Developments
First Guaranty mentioned pursuing a new loan portfolio to increase loans as a percentage of
assets in its 2021 10-K filing. As of December 31, 2021, First Guaranty's loan-to-deposit ratio was
83.2%. The loan portfolio's growth helps reduce the interest rate exposure to fixed-rate
investment securities and widen the net interest margin. An increase in the loan portfolio can
attract a customer base. However, the operating environment against the backdrop of COVID-
19 remains challenging and uncertain.
First Guaranty maintains lending relationships with other financial institutions and Federal
Home Loan Bank (FHLB) to meet its liquidity needs. The Company had a sharp decrease in short-
term borrowing balance of $6.4 million on December 31, 2021, compared to its outstanding
short-term borrowings of $56.1 million on December 31, 2020. First Guaranty repaid short-term
advances received as part of its COVID-19 planning in the first quarter of 2021. As of December
31, 2021, short-term borrowings included $6.4 million in repurchase agreements.
The Company continues to perform well despite the impact of the COVID-19 outbreak. First
Guaranty generated $27.3 million in revenue in 2021, a 34% increase from the previous year.
First Guaranty's total assets on December 31, 2021, increased 16.4% from 2.47 billion to 2.87
billion compared with its total asset on December 31, 2020. The Company's stock price has
increased 29.15%, from 17.25 (Closing on August 01, 2021) to 22.28 (Closing on August 01,
2022). This growth rate is significantly higher than the iShares Russell 2000 ETF (IWM)'s year-to-
date (YTD) growth rate of -17.19%.
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PEER ANALYSIS
The Company's main competitors are other regional banks that offer loan and deposit services,
headquartered in the Southeastern United States. We consider First Guaranty Bank’s public
peers to be First Farmers Bank & Trust Co., Investar Bank, Origin Bancorp Inc., First Bank and
Summit State Bank. And we have also considered their private peers to be BancorpSouth Inc
and Capital One, National Association
Table 3: Peer Group Comparison Chart

First First Farmers Origin First Bankers'
Investar Summit
Company Guaranty Bank & Trust Bancorp Banc Securities
Bank State Bank
Bank Co Inc Inc
Ticker FGBI/ FFMR/ ISTR/ OBNK/ FRBA/ SSBI/
Symbol NASDAQ OTCMKTS NASDAQ NASDAQ NASDAQ NASDAQ
Market
256.35 407.804 210.50 1248 292.2 101.7
Cap ($mm)
P/E 8.76x 10.18x 13.05x 9.82x 8.74x 6.39x
Debt-to-
0.23 0.48 1.33 1.57 0.05 0.31
equity
EPS 2.73 5.70 1.61 4.15 1.72 2.38
Share price 23.15 57.24 20.95 41.45 15.27 15.15
Book value 16.13 34.69 21.88 27.15 14.10 12.66
Revenue
107.51 105.36 105.14 268.35 92.32 46.10
($mm)
Source: S&P Capital IQ as of Sep-08-2022
Public Peers
First Farmers Bank & Trust Co (FFMR)

First Farmers Bank & Trust is a community bank that provides personal banking, farm loans,
business loans, and mortgages. First Farmers Bank & Trust has grown to become one of the
Midwest's top community banks, serving over 60,000 customers in Indiana and Illinois through
34 locations. The corporation is headquartered in Converse, Indiana, with approximately 400
employees and over $2 billion in assets.
On June 30, 2022, First Farmers Bank & Trust Co reported total assets of $2.486 billion, which
grew from $2.439 billion in 2021 to $2.213 billion in 2020.
13
Investar Bank (ISTR)

Investar Bank is a community bank that offers various loan services, cash management, specialty
accounts, bill-paying services, and electronic transactions to individuals and businesses. Its
headquarters are in Baton Rouge, Louisiana, and it operates 31 branches spread throughout the
states of Louisiana, Texas, and Alabama. It has been recognized for six years in a row as LSU's
Top 100 Fastest Growing Businesses owned or led by LSU graduates.
Investar Bank reported total assets of $2.553 billion on June 30, 2022, lower than the $2.650
billion in assets reported in the previous year on June 30, 2021.
Origin Bancorp Inc (OBNK)

Origin Bancorp is headquartered in Ruston, Louisiana, and operates 42 branches across the
states of Texas, Louisiana, and Mississippi. It offers financial and banking services to both
businesses and individual customers.
Origin Bancorp, Inc. reported net income of $20.7 million for the fiscal quarter ended March 31,
2022. This income is significantly lower compared to the fiscal quarter ended December 31,
2021, which reported net income of $28.3 million. It is also lower than the fiscal quarter ended
March 31, 2021 where it reported net income of $25.5 million.
First Bank (FRBA)

First Bank, a broker-dealer incorporated company founded in Hamilton, New Jersey, in 2007,
has 18 branches and 225 employees across New Jersey. The first bank primarily provides various
banking products and services to individuals, businesses, and government entities.
As of June 30, 2022, First Bank has generated total assets of $2568.1 million, an increase of 5.1%
over the previous year. The company's total revenue was $89.4 million, an increase of 8% from
a year earlier, and its net income decreased 4.24% over the previous year to $33.9 million.
Summit State Bank (SSBI)

Summit State Bank is a state-chartered commercial bank established in 1982 and headquartered
in Santa Rosa, California. The bank provides various banking products and services primarily to
individuals and businesses in Sonoma County, California, and its subsidiaries offer trust deed
services to the bank. The company has 99 employees and operates through five depository
offices and loan production offices in California and Arizona.
As of June 30, 2022, the company produced total assets of $980.78 million, an increase of 8.78%
over the previous year. Its total revenue was $44.47 million, an increase of 18.57% from a year
earlier. Summit State Bank generated a net profit of $15.91 million in the first half of 2022, the
highest in nearly five years.
14
Private Peers
BancorpSouth, Inc
BancorpSouth, Inc. is a regional bank founded in 1876 and headquartered in Tupelo, Mississippi.
The bank has 287 offices in 151 cities across Mississippi, Tennessee, Alabama, Arkansas, Texas,
Louisiana, and Florida. BancorpSouth Bank acquired the company on October 31, 2017.
BancorpSouth, Inc. provides customers with personal and business banking products,
investment financial management and related advisory services, employer solutions, and other
services.
Capital One, National Association

Capital One, National Association, is classified as a diversified bank. The bank was founded in
1933 as Hibernia National Bank, headquartered in McLean, Virginia. In April 2006, the company
changed its name to Capital One, National Association.
The company's main business is to provide customers with demand deposits, non-interest-
bearing time deposits, and savings deposits. In addition, the company offers various loan
services, including loans to finance agricultural production, as well as loans to financial
institutions such as banks.
MANAGEMENT, ENVIRONMENTAL & SOCIAL GOVERNANCE (ESG)
More and more investors are concerned with the social responsibility commitment of the
companies in which they invest. Below, we list sources that describe First Guaranty’s
performance in the Environment, Social, and Governance (ESG) space. First Guaranty's ESG
score from Refinitiv at the end of 2021 was 24 out of 100, with 100 denoting the best possible
ESG performance. With an ESG score of 24, First Guaranty has significant opportunities for
growth and potential as it seeks to increase efficiency.
First Guaranty Bank's board of directors consists of six positions, five are filled by males, and
one is held by a woman. These positions serve annual terms with renewable options. On
September 15, 2022, Vanessa R. Drew was elected to join the board, making her the only
woman currently serving. The Company has four committees: Nominating, Audit,
Compensation, and Corporate Governance. The only member that participates in all four
committees is William Hood. Employees uphold the Company's core values, enriching the
corporate culture.
15
Board Makeup
First Guaranty Bank is led by Chief Executive Officer, Vice Chairman, and President Alton Lewis.
The other board members are Independent Director Jack Rossi, Independent Director Edgar
Smith, Independent Director William Hood, Director Vanessa R. Drew, and Independent
Chairman of the Board Marshall Reynolds. The Board of Directors takes qualifications,
backgrounds, and conflicts of interest into account despite not having a codified policy on
diversity. The term of the Board members is one year and is voted on annually.
At the annual meetings, shareholders choose the board members from a selection of
nominees. The current board members propose future board candidates. Using a proxy,
shareholders can elect all nominees, a specific nominee, or none of the nominees at all.
Board Compensation
The compensation of the C-suite is determined using a plan created by the compensation
committee, which is comprised of independent board members Reynolds and Hood. Executive
compensation is a combination of base salary, annual cash bonuses, and stock bonuses, with a
possible addition of other bonuses. Compensation is determined through executives' individual
and departmental performance. Performance is determined by evaluating earnings relative to
budget plans, asset growth, business plans, and companies' safety and soundness.
Stock Bonuses are part of the broad-based employee bonus program and are paid quarterly
and annually to employees and executives. In 2021, Lewis and Dosch received 5,348 and 2,698
shares in the form of stock bonuses, respectively (see Table 4).
Table 4: Compensation Breakdown

All other
Name Position Salary Bonus Total
Compensation
Vice Chairman,
396,250 133,902 21,089 551,241
Alton B. Lewis President & CEO
Treasurer,
165,472 66,151 2,339 233,962
Eric J. Dosch Secretary & CFO
Source: United States Security and Exchange Commission, Schedule 14A, Oct. 21, 2022
*Director compensation is paid through fees earned through attendance to duties. In 2021, non-
employee directors are paid $1,000 for each board meeting, $300 for each committee meeting
(excluding director loan committee meeting), and $500 for each director loan committee
meeting attended.
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Table 5: Compensation Breakdown

Director Other Director
Name Position Total
Fee Compensation
William K. Hood Independent Director 66,100 246 66,346
Marshall T. Independent Chairman
31,800 N/A 31,800
Reynolds of the Board
Jack Rossi Independent Director N/A N/A 27,500
Edgar R. Smith Independent Director 25,100 269 25,369
Source: United States Security and Exchange Commission, Schedule 14A, Oct. 21, 2022
Inside Ownership
First Guaranty’s executives own 32.30% of the shares within the Company. The total
percentage of shares owned by insiders, when including Corporations and LLCs held by the
directors, is 49.44%. Executives Alton Lewis and Eric Dosch currently hold 0.80% 0.22% of the
company. Chairman of the Board Marshall Reynolds holds the largest amount at 22.99% and
has a corporation that holds an additional 0.06%. Directors Edgar Smith and William Hood hold
4.90% and 3.38%, respectively, and two LLCs hold a combined ownership of 17.07%. Director
Jack Rossi holds 0.01% of shares outstanding. Figure 3 below illustrates the shares owned by
the insiders for each individual of the C-Suite
Figure 3: Market Shares Owned by Insiders
Source: Capital IQ Public Ownership as of Oct. 21, 2022

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Environment, Social and Governance
Environment, Social, and Corporate Governance (ESG) are non-financial factors that investors
need to consider. Based on the ESG score given by Refinitiv, the overall score of First Guaranty
Bank at the end of 2021 was 24 out of 100, of which the social pillar score was 49.6%, the
governance pillar score was 36%, and the environmental pillar was the lowest score among the
three with a score of 14.4 %. Based on the FGBI management team's explanation, ESG factors
are generally irrelevant to the banking industry. It usually includes energy sources such as oil
and gas and other factors such as manufacturing. Banks typically don't have a tremendous
environmental impact like manufacturing and traditional energy companies.
Environment
First Guaranty Bank's has no plans to stop lending to the oil and gas industry. Its proportion of
loans to the energy sector is a small part of its total loan portfolio at about 5%.
Social
Although Refinitiv gave FGBI a social pillar score of 49.6% at the end of 2020, our team believes
this figure is underestimated. After meeting with the senior management of FGBI, we realized
that First Guaranty Bank had made great efforts to maintain community, customer, and
employee relations.
The Company's philosophy is "Provide the best for the customer." FGBI never closed in 2020
during the COVID-19 period. The Company insists on giving offline services to its customers; Its
staff continued to work and provided face-to-face assistance to its customers during the
pandemic.
Internally, FGBI's philosophy is "Treat staff better." First Guaranty Bank communicates clearly
and honestly with its employees and wants them to feel valued. The Company has customized
and distributed personal bags to each employee in 2022.
FGBI stands concerned about the development of the community. The bank annually donates
2% of its profits to the community to promote its growth. The Company also designated
learning weeks to provide courses like marketing and management for the children in the
community. FGBI supports those in need even in the most critical times. During Hurricane Ida,
FGBI maintained operations to shelter people in the community despite power outages.
Governance
The directors of First Guaranty are elected by vote, and the minimum board size is five
members; the board of directors conducts performance evaluations of the Company, and its
members have the right to consult external advisors. Shareholders cannot change the board
size but can choose to hold a special meeting.
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Institutional Shareholder Services Score
The ISS Governance QualityScore is a group of scores that measure the corporate governance
risk of certain companies. The scores fall on a scale between 1 and 10, with 1 indicating the
lowest amount of governance risk and 10 representing the highest amount of governance risk.
The ISS rated First Guaranty on October 1, 2022, giving scores of 8 in Audit & Risk Oversight, 8
in Board Structure, 2 in Shareholder Rights, and 3 in Compensation. These scores indicate a
moderate amount of governance risk.
Key Financial Management Metrics
To illustrate First Guaranty’s management’s competence, some key financial metrics that track
any given bank’s performance are included in Table 6. We matched First Guaranty’s metrics
against the industry averages for net interest margin, return on assets, and efficiency ratio. Net
interest margin is calculated by dividing net interest income by average earning assets and is a
long-term profitability indicator. Return on assets is calculated by dividing net income by total
assets and is an indicator of how efficiently a company uses its assets. The efficiency ratio is
calculated by dividing non-interest expenses by total revenue and is a measure of
management’s ability to control overhead expenses.
First Guaranty Bank’s metrics are all above the industry averages, with its net interest margin
being significantly higher than the industry average. The Company’s net interest margin shows
that management knows how to make a profit and is doing that better than its competitors.
Table 6: Key Financial Management Metrics for Q2 2022

Metric Average for Industry First Guaranty Bank
Net Interest Margin 2.8% 3.72%
Return on Assets 1.05 1.06
Efficiency Ratio 58.7% 61.8%
Source: FDIC Quarterly Banking Report Q2 2022
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SHAREHOLDER ANALYSIS
First Guaranty Bank had 10.72 million shares outstanding as of September 15, 2022. Its market
capitalization totals $248.42 million. Its leading institutional investors are The Vanguard Group,
BlackRock, and Morgan Dempsey Capital Management.
If we compare the list of institutional investors with last year's data, we see that it has changed
considerably. The most significant change occurred with Blackrock, whose number of shares
held increased by 354.51%, moving from fifth to third position. State Street Global Advisors
increased shares by 335.21%, and Northern Trust Global Investments increased holdings by
352.82%. On the other hand, Benjamin Partners sold almost half of its shares, with a 45.25%
decrease.
Table 7: Top-ten Institutional Investors
Change in
Company Shares Outstanding % Outstanding % Change
Shares
The Vanguard Group,
296,329 2.765 26,094 9.66
Inc.
BlackRock, Inc. 239,742 2.237 186,049 354.51
Morgan Dempsey
Capital Management, 141,001 1.316 6 0.00
LLC
Geode Capital
102,235 0.954 82,339 431.85
Management, LLC
Bridgeway Capital
73,130 0.682 - 0.00
Management, LLC
State Street Global
60,764 0.567 46,802 335.21
Advisors, Inc.
EAM Investors, LLC 52,672 0.491 52,672 New investor
Northern Trust Global
50,512 0.471 39,357 352.82
Investments
Acadian Asset
44,414 0.414 25,691 137.22
Management LLC
Benjamin Partners,
42,537 0.397 (35,155) (45.25)
LLC
Source: IQ Capital, Sep-15-2022
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Inside Investors
The six principal insider investors control 26.91% of the outstanding shares, a total of 991,113
shares. The top three insider investors are Marshall T. Reynolds, Edgar R. Smith III, and William
K. Hood; they own 25.879% of the outstanding shares. Table 8 shows in detail the number of
shares held by the Top 6 Insider Investors and the position each holds within the Company.
Table 8: Top Inside Investors

Shares
Holder Position % Outstanding Position date
Outstanding
Independent
Marshall T. Reynolds Chairman of the 1,888,558 17.662 09/12/2022
Board
Independent
Edgar R. Smith, III 517,965 4.833 08/31/2022
Director
Independent
William K. Hood 362,658 3.384 08/31/2022
Director
Vice Chairman,
Alton B. Lewis, Jr. 85,501 0.798 03/21/2022
President & CEO
Treasurer,
Eric John Dosch 23,779 0.222 03/21/2022
Secretary & CFO
Independent
Jack Rossi 1,210 0.011 03/21/2022
Director
Source: IQ Capital, Sep-15-2022
RISK ANALYSIS AND INVESTMENT CAVEATS
Operational Risks
Operational risk for a bank refers to the risk of loss associated with poor internal controls,
management, technological systems, and external forces. First Guaranty Bank’s focus for
operational risk is to mitigate its technological and infrastructure risk.
Technology and Infrastructure

First Guaranty Bank relies on its strong technological systems for both customer interactions
and managing internal financial decisions and systems. By modifying and improving its
technological capabilities, it can protect from an impairment to liquidity, a disruption in
business, a leak of confidential information, and damage to its reputation. First Guaranty is
improving its operating efficiency by integrating new internal analysis systems, a more secure
wire system, and a new customer relation management system.
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First Guaranty’s threat of technology also has to do with its ability to compete in a changing
banking market where online banking has decreased the importance of geographic location
when banking. Online banking has created a new market of banking that allows customers to
get banking services without visiting a site. To keep up with technology, First Guaranty will be
introducing new automated marketing programs that advertise its new online deposit platform
Q2. The Q2 platform will eliminate the paper method of banking, perform card swaps, provide
personal financing information, and help small companies and individuals with Autobooks for
taxes.
Financial Risks
Credit Risk
Credit risk refers to the risk of economic losses caused by counterparties failing to fulfil their
contractual obligations. The creditor's expected and actual income deviates from its actual
income because of the recipient's failure to fulfill the responsibility of repaying the principal
and interest, which is the primary type of financial risk. The main source of income for First
Guaranty is loan income. Therefore, the bank will suffer losses due to loan default.
There are many sources of credit risk, which can be divided into two categories: 1. There is a
problem with the borrower's willingness to fulfill the contract. 2. There is a problem with the
borrower's ability to fulfill the contract. Loans are repaid by obtaining operating income, selling
an asset, or borrowing funds. Non-real estate loans account for 31.3% of the bank’s loan
portfolio and commercial and industrial loans account for 17.3% of the bank’s loan portfolio.
The stability of this part of the interest income depends on the operation of industrial and
commercial enterprises. If these businesses cannot generate sufficient cash flow, it will be
difficult for them to pay interest to First Guaranty Bank.
First Guaranty Bank is a regional commercial bank. Its assets used for loan security are highly
concentrated in Louisiana and Texas, making First Guaranty Bank's business and its clients
vulnerable to development in these regions. About 68.7% of the Company's real estate is in
these areas. Any economic and policy changes will cause uncontrollable factors to the bank's
operations. For example, the uncertainty brought by the COVID epidemic caused local
companies to suffer losses. The volatility of the stock market and real estate has also caused
credit risk to First Guaranty. Because loans are the most crucial income of First Guaranty bank,
this single-income structure dramatically increases the chances of threats that banks may take
and weakens First Guaranty's ability to resist credit risk.
Liquidity Risk
Liquidity risk is the threat of being unable to pay off financial obligations or engage in regular
business activities because one cannot convert capital quickly enough from a non-liquid asset
to a liquid one, like cash. First Guaranty must maintain the liquid funds required for customers
to use its consumer banking functions, like ATMs, their bank accounts, etc. The Dodd-Frank Act,
passed in 2010, mandated higher liquidity requirements for banks. In accordance with Dodd-
Frank, the Company sustains a portfolio of liquid assets like cash and securities to have money
on hand, reducing liquidity risk, but not eliminating it entirely.
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Regulatory Risks
First Guaranty Bank and its holding company are subject to regulations originating from both
the Louisiana and federal legislatures, the Louisiana Office of Financial Institutions (the OFI),
the Federal Reserve Board, and the FDIC. Legislative regulation is unlikely to be passed in the
short term due to the split Congress and little deliberation of banking regulation taking place in
the Louisiana legislature. With COVID rocking the boat for most industries and creating a
turbulent financial landscape, we expect tightening on compliance measures and increased
scrutiny on operational processes by regulatory agencies like the Federal Reserve Board, the
FDIC, and the OFI. Even with this trend in consideration, we do not expect new material
regulatory challenges for First Guaranty in the near future.
The long-term horizon is more volatile. The global recession may bring increased regulation to
the already highly regulated industry. The fluctuation of the various interest rates set by the
Fed concerns the profitability of regional banks like First Guaranty. These rates will likely
normalize as the economy recovers from COVID’s uncertainty, but the timetable for this
normalization is indeterminate.
Risk from competition is useful to consider when discussing regulation, as the amount of
regulation in an industry can affect the barriers to entry. Luckily for First Guaranty, the high
amount of regulation already present makes creating a new bank or expanding a smaller one
difficult. First Guaranty is abreast of this issue because of its recent expansion into new markets
and its ongoing acquisition initiative.
FINANCIAL PERFORMANCE AND PROJECTIONS
Revenue Projection
To forecast revenue, we created a model based on loan growth, as loans are the bank's main
form of income. We calculated a historical growth rate of loans for First Guaranty to be
11.36%. We also analyzed a regression model containing correlating factors that seem to
influence revenue growth; we based our analysis on goodwill accounting for acquisitions and
the housing market in the state of Louisiana (the Company's primary market). We found that
loan growth, which drives revenue, was highly correlated to housing in the state of Louisiana.
Additional significant factors include mortgage rates and intangibles. We decided to use the
regression forecast for a short window through 2023, as we predict the current housing market
and mortgage rate will affect loans growth in the short term. We then utilized the historical
growth rate of loans for the long-term outlook. We tried to predict and implement safeguards
related to the slowing of the economy and the rising interest rates which will affect housing.
Operating Activities
For the bulk of the companies operating costs, we utilized the historical common size amount
average to forecast these expenses. There are two very notable exceptions to this, including
both the Company’s interest expense on deposits and the Company’s expected provision
expense on loans.
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Interest Expense on Deposits

Interest expense on deposits is expected to grow significantly over the next 12 months as
indicated by the significant growth over the past two quarters. As the Federal Reserve raises
interest rates to combat inflation, it is highly likely that interest rates on deposits within all
banks will need to rise significantly to compete with other risk-free cash type investments like
treasuries. We have forecasted a rise in the Company's deposit expense rate through mid 2023
in alignment with current expectations and predictions by the market on the terminal federal
rate of close to 5%.
Provision Expense Rate

The Company's current ending balance of reserves as a percentage of average loans is
approximately 1.1%. This means the amount of reserve in capital held due to the potential of
bad loans is about 1% of total loans at any point in time. We believe that the Federal Reserve
will continue to raise interest rates, and that the rates will force the economy into a recession
with growing unemployment levels. An impact of this will be for the company to raise the
provision expense charged in order to protect the company’s capital and reserves. We forecast
a rise in reserves to nearly 1.25% of average loans. This rise in reserves directly increases the
provision expense allocated on the income statement, and this rising expense likely explains
our significant difference in earnings per share versus those estimates of other analysts. The
rise in rate was determined by evaluating historical events, including the rise in rates during the
COVID pandemic (up to 1.42% in 2020), and elevated rates due to weak financial conditions
observed in 2013 to 2015.
SITE VISIT
Our team and Investment Research Manger Anna Brown, traveled to Hammond, Louisiana on
October 14, 2022, to visit First Guaranty Bank Headquarters and to ask questions to
management regarding our research findings and their financial outlook. We met with Alton
Lewis, Chief Executive Officer; Eric Dosch, Chief Financial Officer; Desiree Simmons, Senior Vice
President of Marketing and Loan Administration; Mark Ducoing, Chief Deposit Officer; Matthew
Wise, Chief Credit Officer; and, Randy Vicknair, Chief Lending Officer. The main topics we
discussed were to the Company's continued commitment to their community and culture (as
demonstrated through their response to COVID-19 and Hurricane Ida), the Company's recent
growth plans, and the Company's intentions and outlook for the future.
Importance of Community Culture
Management emphasized the importance of the community aspect of the bank and their
confidence in that image and culture. Mr. Lewis demonstrated a commitment to staying true to
their community-focused identity despite the bank's growth. He assured us that a large part of
the bank’s success is because of the excellent treatment and care it gives to its employees,
which, in turn, is passed on to the customers.
24
During the COVID-19 pandemic, large companies automated many processes, so it was difficult
for them to react quickly when circumstances changed. However, this was not the case for First
Guaranty Bank, as all its employees worked together in person throughout the pandemic,
which allowed it to solve the new problems caused by the pandemic quickly and efficiently.
Something similar happened in 2021 with hurricane Ida, as it remained open to attend to its
customers.
Technological Growth
The Company also gave us insights into the new online banking practices it is currently
implementing. Management told us that after the pandemic, implementing digital services
became one of their main priorities and they had already launched more than seven projects to
achieve this goal. One of their initiatives is launching a junior banking program to reach out to
younger customers virtually, and therefore attract the children of existing customers.
Outlook of the Future Economy
Overall, management indicated a positive view of the future economy. Management views
rising interest rates with cautious optimism, as the Company’s loan volume is less affected by
macroeconomic trends than by aspects of the housing market in which the Company operates.
To remedy any issues related to localized declines in state housing markets like Louisiana’s, the
Company is attempting to increase the credit quality of its loans by being more discerning with
approving them and by increasing the geographical diversity of its loan operations.
Site Visit Photo
25
INDEPENDENT OUTSIDE RESEARCH
We consulted different sources to research the Company. We met with experienced

investment bankers, and we used the Uniform Bank Performance Report (UBPR) and Piper
Sandler's report.
To produce a fully comprehensive understanding of the banking industry and see how it differs
from other commercial industries, our team met with two financial experts with more than 30
years of combined experience in the banking world who are highly familiar with the region and
the sector. They explained that the multitude of regulations and high up-front cost of banking
has created a highly competitive market in which the number of bank branches has decreased
steadily within the last 12 years. The best growth model for a bank is then through acquisition
of bank branches that are no longer able to compete and looking to exit the market. This
provides banks like First Guaranty facilities set up for banking security, lowering the cost of
expansion.
As part of our outside research, we also consulted The Uniform Bank Performance Report
(UBPR) where we obtained several reports that included information on the bank's
performance in different areas. Thanks to this information, we were able to see the effect of
economic conditions and management decisions on the performance of First Guaranty Bank.
We also used Piper Sandler's report. It evaluated the Company's lower net interest margin
(NIM) expectations and funding pressures in the coming quarters that limit the upside of FGBI's
NIM. Based on this information, Piper Sander gave FGBI a neutral rating. At the same time, it
believes that FGBI's $200 million long-term certificate of deposit will re-price during the 2023-
2024 period. Therefore, the net interest margin may rise in 2023.
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First Guaranty Bancshares Inc. (FGBI)
Quarterly and Annual Earnings
In thousands 2022 E
For the period ended 2019 A 2020 A 2021 A 30-Mar-22 A 29-Jun-22 A 29-Sep-22 A 30-Dec-22 E 2022 E
Interest income:
Loans $ 78,886 $ 90,808 $ 103,353 $ 28,038 $ 29,999 $ 32,386 $ 32,107 $ 122,530
Deposits with other banks 2,956 404 316 102 261 561 113 1,037
Securities 9,800 9,471 8,248 2,339 2,280 2,303 2,494 9,416
Federal funds sold 1 1
Total interest income 91,643 100,684 111,917 30,479 32,540 35,250 34,713 132,982
Interst Expense:
Demand deposits 10,447 6,089 7,237 2,276 2,884 6,243 6,244 17,647
Savings deposits 527 268 204 61 101 267 99 528
Time deposits 17,141 16,908 12,893 2,755 2,540 2,533 2,526 10,354
Borrowings 1,851 2,752 1,965 404 705 758 1,189 3,056
Total interest expense 29,966 26,017 22,299 5,496 6,230 9,801 10,058 31,585
Net interest income 61,677 74,667 89,618 24,983 26,310 25,449 24,656 101,398
Less: provision for loan losses 4,860 14,877 2,055 632 757 1,509 3,547 6,445
Net interest income after provision for loan losses 56,817 59,790 87,563 24,351 25,553 23,940 21,109 94,953
Noninterest income:
Service charges, commissions and fees 2,808 2,571 2,699 777 773 814 812 3,176
ATM and debit card fees 2,254 3,022 3,562 823 904 864 949 3,540
Net gains on securities (157) 14,791 714 (17) (17)
Net gain on sale of loans 1,376 1,054 942 (1) 90 1,624 1,713
Other 2,018 2,342 2,843 380 760 716 716 2,572
Total noninterest income 8,299 23,780 10,760 1,962 2,527 4,018 2,477 10,984
Noninterest expense:
Salaries and employee benefits 25,019 29,600 32,179 8,980 9,085 9,181 9,278 36,524
Occupancy and equipment expense 6,096 7,709 8,681 2,201 2,252 2,295 2,424 9,172
Other 16,104 20,724 23,008 5,570 6,482 6,312 6,312 24,676
Total noninterest expense 47,219 58,033 63,868 16,751 17,819 17,788 18,014 70,372
Income before income taxes 17,897 25,537 34,455 9,562 10,261 10,170 5,572 35,565
Provision for income taxes 3,656 5,219 7,158 1,977 2,137 2,117 1,226 7,457
Net Income 14,241 20,318 27,297 7,585 8,124 8,053 4,346 28,108
Preferred stock Dividends (1,384) 582 582 582 582 2,328
Net income available to common shareholders $ 14,241 $ 20,318 $ 25,913 $ 7,003 $ 7,542 $ 7,471 $ 3,764 $ 25,780
Net income (loss) per common share:

Basic
Earnings per share $ 1.47 $ 2.09 $ 2.42 0.65 $ 0.70 $ 0.70 $ 0.35 $ 2.41
Diluted
Earnings per share $ 1.47 $ 2.09 $ 2.42 0.65 $ 0.70 $ 0.70 $ 0.35 $ 2.41
Weighted average shares outstanding:

Basic 9,695 9,741 10,716 10,716 10,716 10,716 10,716 10,716
Diluted 9,695 9,741 10,716 10,716 10,716 10,716 10,716 10,716
Cash dividends paid $ 0.64 $ 0.64 $ 0.60 0.16 $ 0.16 $ 0.16 $ 0.16 $ 0.64
27
First Guaranty Bancshares Inc. (FGBI) 2022 E 2023 E
SELECTED COMMON-SIZE AMOUNTS as % of Interest Income 2019 A 2020 A 2021 A 30-Mar-22 A 29-Jun-22 A 29-Sep-22 A 30-Dec-22 E 2022 E 30-Mar-23 E 29-Jun-23 E 29-Sep-23 E 30-Dec-23 E 2023 E
Loans 86.08% 90.19% 92.35% 91.99% 92.19% 91.88% 92.49% 92.14% 92.59% 92.76% 92.49% 93.01% 92.71%
Deposits with other banks 3.23% 0.40% 0.28% 0.33% 0.80% 1.59% 0.32% 0.78% 0.31% 0.74% 1.47% 0.30% 0.71%
Securities 10.69% 9.41% 7.37% 7.67% 7.01% 6.53% 7.18% 7.08% 7.11% 6.50% 6.04% 6.68% 6.58%
Demand deposits 11.40% 6.05% 6.47% 7.47% 8.86% 17.71% 17.99% 13.27% 21.47% 25.35% 26.47% 30.16% 25.89%
Savings deposits 0.58% 0.27% 0.18% 0.20% 0.31% 0.76% 0.29% 0.40% 0.40% 0.32% 0.40% 0.72% 0.46%
Time deposits 18.70% 16.79% 11.52% 9.04% 7.81% 7.19% 7.28% 7.79% 9.47% 9.97% 9.39% 9.74% 9.64%
Borrowings 2.02% 2.73% 1.76% 1.33% 2.17% 2.15% 3.42% 2.30% 4.54% 4.56% 4.32% 4.26% 4.42%
Total interest expense 32.70% 25.84% 19.92% 18.03% 19.15% 27.80% 28.97% 23.75% 35.88% 40.19% 40.58% 44.88% 40.41%
Net interest income 67.30% 74.16% 80.08% 81.97% 80.85% 72.20% 71.03% 76.25% 64.12% 59.81% 59.42% 55.12% 59.59%
Less: provision for loan losses 5.30% 14.78% 1.84% 2.07% 2.33% 4.28% 10.22% 4.85% 6.55% 17.86% 14.40% 14.87% 13.41%
Net interest income after provision for loan losses 62.00% 59.38% 78.24% 79.89% 78.53% 67.91% 60.81% 71.40% 57.57% 41.95% 45.01% 40.25% 46.18%
Service charges, commissions and fees 3.06% 2.55% 2.41% 2.55% 2.38% 2.31% 2.34% 2.39% 2.34% 2.35% 2.34% 2.35% 2.34%
ATM and debit card fees 2.46% 3.00% 3.18% 2.70% 2.78% 2.45% 2.73% 2.66% 2.74% 2.74% 2.73% 2.75% 2.74%
Net gains on securities -0.17% 14.69% 0.64% -0.06% 0.00% 0.00% 0.00% -0.01% 0.00% 0.00% 0.00% 0.00% 0.00%
Other 2.20% 2.33% 2.54% 1.25% 2.34% 2.03% 2.06% 1.93% 2.00% 2.04% 1.96% 1.96% 1.99%
Total noninterest income 9.06% 23.62% 9.61% 6.44% 7.77% 11.40% 7.14% 8.26% 7.08% 7.13% 7.04% 7.06% 7.08%
Salaries and employee benefits 27.30% 29.40% 28.75% 29.46% 27.92% 26.05% 26.73% 27.47% 26.76% 26.81% 26.73% 26.88% 26.79%
Occupancy and equipment expense 6.65% 7.66% 7.76% 7.22% 6.92% 6.51% 6.98% 6.90% 6.99% 7.00% 6.98% 7.02% 7.00%
Other 17.57% 20.58% 20.56% 18.27% 19.92% 17.91% 18.18% 18.56% 17.65% 18.01% 17.30% 17.29% 17.56%
Total noninterest expense 51.52% 57.64% 57.07% 54.96% 54.76% 50.46% 51.89% 52.92% 51.40% 51.81% 51.01% 51.19% 51.35%
Income before income taxes 19.53% 25.36% 30.79% 31.37% 31.53% 28.85% 16.05% 26.74% 13.26% -2.73% 1.04% -3.88% 1.91%
Net Income 15.54% 20.18% 24.39% 24.89% 24.97% 22.85% 12.52% 21.14% 10.34% -2.13% 0.81% -3.02% 1.49%
YEAR TO YEAR CHANGE

Loans 21.67% 15.11% 13.81% 18.05% 19.07% 21.36% 15.81% 18.55% 18.08% 8.38% 4.21% 5.78% 8.82%
Securities -24.27% -3.36% -12.91% 53.38% 32.64% -13.42% 6.40% 14.16% 8.62% -0.08% -4.26% -2.16% 0.51%
Total interest income 16.91% 9.87% 11.16% 20.28% 20.57% 19.84% 15.04% 18.82% 17.32% 7.72% 3.52% 5.18% 8.15%
Demand deposits 22.46% -41.72% 18.85% 42.70% 75.43% 214.83% 209.87% 143.84% 237.29% 208.06% 54.75% 76.38% 111.00%
Savings deposits 29.48% -49.15% -23.88% 17.31% 102.00% 434.00% 90.82% 158.94% 136.77% 9.34% -45.30% 166.05% 25.88%
Time deposits 60.35% -1.36% -23.75% -21.73% -23.75% -17.73% -14.75% -19.69% 22.97% 37.55% 35.25% 40.78% 33.89%
Borrowings 6.50% 48.68% -28.60% -29.37% 36.63% 61.28% 192.06% 55.50% 301.41% 126.84% 108.01% 30.75% 107.87%
Total interest expense 40.25% -13.18% -14.29% -4.23% 12.43% 75.58% 84.98% 41.64% 133.45% 126.13% 51.10% 62.93% 84.00%
Net interest income 8.16% 21.06% 20.02% 27.45% 22.67% 6.78% -0.33% 13.14% -8.23% -20.32% -14.80% -18.37% -15.48%
Less: provision for loan losses 258.94% 206.11% -86.19% 3.95% -15.89% 396.38% 1359.83% 213.64% 270.32% 726.94% 248.26% 53.09% 199.22%
Net interest income after provision for loan losses 2.06% 5.23% 46.45% 28.20% 24.36% 1.75% -13.82% 8.44% -15.46% -42.45% -31.39% -30.38% -30.06%
Service charges, commissions and fees -6.02% -8.44% 4.98% 7.77% 17.66% 46.40% 6.15% 17.67% 7.77% 6.38% 4.86% 5.78% 6.18%
ATM and debit card fees 6.22% 34.07% 17.87% 14.15% -3.00% -1.14% 3.96% -0.61% 25.96% 6.33% 15.48% 5.78% 11.34%
Other 17.19% 16.06% 21.39% -39.97% 0.93% 1.42% -4.66% -9.53% 88.42% -5.79% 0.00% 0.00% 11.35%
Total noninterest income 57.18% 186.54% -54.75% -15.65% -29.77% 94.86% -10.70% 2.08% 29.06% -1.09% -36.10% 4.11% -7.34%
Salaries and employee benefits 9.31% 18.31% 8.71% 19.18% 13.39% 12.91% 9.14% 13.50% 6.54% 3.42% 6.23% 5.78% 5.49%
Occupancy and equipment expense 8.84% 26.46% 12.61% -5.17% 2.46% 3.05% 25.26% 5.65% 13.55% 8.99% 11.02% 5.78% 9.75%
Other 8.91% 28.69% 11.02% 8.53% 11.49% 17.02% -5.34% 7.25% 13.32% -2.62% 0.00% 0.00% 2.32%
Total noninterest expense 9.11% 22.90% 10.05% 11.76% 11.20% 12.93% 5.32% 10.18% 9.72% 1.93% 4.64% 3.76% 4.93%
Income before income taxes 1.26% 42.69% 34.92% 51.01% 26.35% 3.37% -45.18% 3.22% -50.42% -109.34% -96.26% -125.41% -92.27%
Provision for income taxes 5.60% 42.75% 37.15% 51.03% 26.67% 3.42% -42.04% 4.17% -47.25% -109.86% -96.04% -125.41% -91.89%
Net Income 0.20% 42.67% 34.35% 51.01% 26.27% 3.36% -46.01% 2.97% -51.25% -109.20% -96.31% -125.41% -92.37%
Net income available to common shareholders 0.20% 42.67% 27.54% 39.42% 17.22% 3.63% -48.07% -0.51% -55.51% -117.63% -103.82% -144.81% -100.72%
28
Quarterly and Annual Balance Sheets 2417327 loans
In thousands 2022 E 2023 E
As of 31-Dec-19 A 31-Dec-20 A 31-Dec-21 A 30-Mar-22 A 29-Jun-22 A 29-Sep-22 A 30-Dec-22 E 31-Dec-22 E 30-Mar-23 E 29-Jun-23 E 29-Sep-23 E 30-Dec-23 E 31-Dec-23 E
Cash and cash equivalents:
Cash and due from banks $ 66,511 $ 298,903 $ 261,749 $ 132,209 $ 120,164 $ 109,174 $ 295,729 $ 295,729 $ 315,101 $ 301,052 $ 318,425 $ 318,221 $ 318,221
Federal funds sold 914 702 183 533 234 183 773 773 824 787 833 832 832
Cash and cash equivalents 67,425 299,605 261,932 132,742 120,398 109,357 296,503 296,503 315,925 301,839 319,258 319,053 319,053
Investment securities:
Available for sale, at fair value 340,434 238,548 210,620 133,233 131,091 131,318 131,318 131,318 131,318 131,318 131,318 131,318 131,318
Held to maturity, at cost 86,579 153,536 319,562 319,731 319,899 319,725 319,725 319,551 319,377 319,203 319,029 319,029
Investment securities: 427,013 238,548 364,156 452,795 450,822 451,217 451,043 451,043 450,869 450,695 450,521 450,347 450,347
FHLB stock, at cost 3,308 3,351 1,359 1,360 1,476 4,830 4,830 4,830 4,830 4,830 4,830 4,830 4,830
Loans, net of unearned income 1,525,490 1,844,135 2,159,359 2,231,119 2,295,738 2,417,327 2,476,681 2,476,681 2,553,833 2,508,083 2,603,378 2,619,851 2,619,851
Less: allowance for loan losses 10,929 24,518 24,029 24,144 23,583 23,468 26,181 26,181 26,712 29,992 31,224 32,588 32,588
Net Loans 1,514,561 1,819,617 2,135,330 2,206,975 2,272,155 2,393,859 2,450,501 2,450,501 2,527,122 2,478,091 2,572,154 2,587,263 2,587,263
Premises and equipment, net 56,464 59,892 58,637 58,371 58,394 58,209 58,098 58,098 58,240 58,401 58,565 58,719 58,719
Goodwill 12,942 12,900 12,900 12,900 12,900 12,900 12,900 12,900 12,900 12,900 12,900 12,900 12,900
Intangible assets, net 7,166 6,587 5,922 5,520 5,313 5,267 5,093 5,093 4,919 4,745 4,571 4,397 4,397
Other real estate owned, net 4,879 2,240 2,072 1,854 1,634 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667
Accred interest receivable 8,412 11,933 12,047 12,579 12,359 12,067 15,082 15,082 14,341 15,639 15,162 15,613 15,613
Other assets 15,046 18,405 23,765 25,027 23,905 47,424 47,424 47,424 47,424 47,424 47,424 47,424 47,424
Total assets $ 2,117,216 $ 2,473,078 $ 2,878,120 $ 2,910,123 $ 2,959,356 $ 3,096,797 $ 3,343,141 $ 3,343,141 $ 3,438,237 $ 3,376,232 $ 3,487,052 $ 3,502,213 $ 3,502,213
Liabilities and shareholders equity
Deposits:
Noninterest-bearing demand $ 325,888 $ 411,416 $ 532,578 $ 555,966 $ 560,624 $ 534,548 $ 602,777 602,777 $ 621,624 $ 609,564 $ 632,701 $ 636,418 636,418
Interst-bearing demand 635,942 860,394 1,275,544 1,299,366 1,340,412 1,421,877 1,394,479 1,394,479 1,438,081 1,410,180 1,463,707 1,472,305 1,472,305
Savings 135,156 168,879 201,699 205,578 221,708 217,820 235,076 235,076 242,426 237,723 246,746 248,196 248,196
Time 756,027 725,629 586,671 563,025 537,317 534,327 716,646 716,646 739,054 724,715 752,224 756,642 756,642
Total Deposits 1,853,013 2,166,318 2,596,492 2,623,935 2,660,061 2,708,572 2,948,978 2,948,978 3,041,185 2,982,181 3,095,378 3,113,561 3,113,561
Short-term borrowings 13,079 50,000 10,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
Repurchase Agreements 6,840 6,121 6,439 6,103 6,361 6,408 6,408 6,408 6,408 6,408 6,408 6,408 6,408
Accrued interest payable 6,047 5,292 4,480 3,584 3,138 3,641 7,530 7,530 9,819 10,663 11,087 12,268 12,268
Long-Term advances from Federal Home Loan Bank 3,533 3,366 3,208 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000
Senior long-term debt 48,558 42,366 25,170 24,359 23,549 22,738 22,738 22,738 21,937 21,136 20,334 19,533 19,533
Junior subordinated debentures 14,737 14,777 14,818 14,830 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
Other liabilities 5,374 6,247 3,624 5,560 4,711 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000
Total liabilities 1,951,181 2,294,487 2,654,231 2,688,371 2,732,820 2,865,359 3,109,654 3,109,654 3,203,349 3,144,388 3,257,207 3,275,770 3,275,770
Stockholders' equity:
Non-cumulative perpetual preferred stock 33,058 33,058 33,058 33,058 33,058 33,058 33,058 33,058 33,058 33,058 33,058
Common Stock 9,741 9,741 10,717 10,717 10,717 10,717 10,717 10,717 10,717 10,717 10,717 10,717 10,717
Surplus 110,836 110,836 130,093 130,093 130,093 130,093 130,093 130,093 130,093 130,093 130,093 130,093 130,093
Retained earnings 43,283 57,367 56,654 61,942 67,769 73,526 75,575 75,575 76,976 73,932 71,932 68,531 68,531
Accumulated other comprehensive income (loss) 2,175 647 (6,633) (14,058) (15,101) (15,956) (15,956) (15,956) (15,956) (15,956) (15,956) (15,956) (15,956)
Total stockholders equity 166,035 178,591 223,889 221,752 226,536 231,438 233,487 233,487 234,888 231,844 229,844 226,443 226,443
Total liabilities and stockholders' equity $ 2,117,216 $ 2,473,078 $ 2,878,120 $ 2,910,123 $ 2,959,356 $ 3,096,797 $ 3,343,141 $ 3,343,141 $ 3,438,237 $ 3,376,232 $ 3,487,052 $ 3,502,213 $ 3,502,213
29
First Guaranty Bancshares Inc. (FGBI) 2022 E 2023 E
SELECTED COMMON SIZE BALANCE SHEET AMOUNTS (% of net sales) 31-Dec-19 A 31-Dec-20 A 31-Dec-21 A 30-Mar-22 A 29-Jun-22 A 29-Sep-22 A 30-Dec-22 E 31-Dec-22 E 30-Mar-23 E 29-Jun-23 E 29-Sep-23 E 30-Dec-23 E 31-Dec-23 E
Interest-earning demand dposits with banks 72.58% 296.87% 233.88% 433.77% 369.28% 309.71% 851.92% 222.38% 881.20% 858.86% 872.61% 871.53% 221.27%
Investment securities: 94.47% 0.00% 137.19% 1048.47% 982.58% 907.51% 921.04% 240.43% 893.64% 911.14% 874.74% 873.74% 221.83%
Loans held for sale 3.61% 3.33% 1.21% 4.46% 4.54% 13.70% 13.91% 3.63% 13.51% 13.78% 13.24% 13.23% 3.36%
Net Loans 11.93% 24.35% 21.47% 79.22% 72.47% 66.58% 75.42% 19.69% 74.70% 85.56% 85.57% 89.25% 22.66%
Other real estate owned, net 7.82% 6.54% 5.29% 18.11% 16.33% 14.94% 14.67% 3.83% 13.76% 13.54% 12.53% 12.04% 3.06%
Accred interest receivable 5.32% 2.22% 1.85% 6.08% 5.02% 4.73% 4.80% 1.25% 4.66% 4.76% 4.57% 4.57% 1.16%
Other assets 9.18% 11.85% 10.76% 41.27% 37.98% 34.23% 43.45% 11.34% 40.11% 44.62% 41.55% 42.76% 10.86%
Total assets 16.42% 18.28% 21.23% 82.11% 73.46% 134.54% 136.62% 35.66% 40.11% 135.29% 129.96% 129.88% 32.98%
Interst-bearing demand 355.61% 408.62% 475.87% 1824.10% 1722.88% 1516.45% 1736.43% 453.28% 1738.41% 1739.00% 1733.85% 1742.99% 442.53%
Savings 693.93% 854.55% 1139.72% 4263.15% 4119.27% 4033.69% 4017.11% 1048.62% 4021.68% 4023.04% 4011.14% 4032.27% 1023.75%
Time 147.48% 167.73% 180.22% 674.49% 681.34% 617.93% 677.19% 176.77% 677.96% 678.19% 676.18% 679.74% 172.58%
Total Deposits 824.97% 720.70% 524.20% 1847.26% 1651.25% 1515.82% 2064.46% 538.90% 2066.81% 2067.51% 2061.39% 2072.25% 526.12%
Senior long-term debt 6.60% 5.26% 4.00% 11.76% 9.64% 10.33% 21.69% 5.66% 27.46% 30.42% 30.38% 33.60% 8.53%
Junior subordinated debentures 52.99% 42.08% 22.49% 79.92% 72.37% 64.50% 65.50% 17.10% 61.35% 60.30% 55.72% 53.50% 13.58%
Other liabilities 16.08% 14.68% 13.24% 48.66% 46.10% 42.55% 43.21% 11.28% 41.95% 42.79% 41.11% 41.08% 10.43%
Total liabilities 5.86% 6.20% 3.24% 18.24% 14.48% 25.53% 25.93% 6.77% 25.17% 25.68% 24.66% 24.65% 6.26%
SELECTED COMMON SIZE BALANCE SHEET AMOUNTS (% of total assets)
Available for sale, at fair value 16.08% 9.65% 7.32% 4.58% 4.43% 4.24% 3.93% 3.93% 3.82% 3.89% 3.77% 3.75% 3.75%
Held to maturity, at cost 4.09% 0.00% 5.33% 10.98% 10.80% 10.33% 9.56% 9.56% 9.29% 9.46% 9.15% 9.11% 9.11%
Investment securities: 20.17% 9.65% 12.65% 15.56% 15.23% 14.57% 13.49% 13.49% 13.11% 13.35% 12.92% 12.86% 12.86%
Loans, net of unearned income 72.05% 74.57% 75.03% 76.67% 77.58% 78.06% 74.08% 74.08% 74.28% 74.29% 74.66% 74.81% 74.81%
Less: allowance for loan losses 0.52% 0.99% 0.83% 0.83% 0.80% 0.76% 0.78% 0.78% 0.78% 0.89% 0.90% 0.93% 0.93%
Net Loans 71.54% 73.58% 74.19% 75.84% 76.78% 77.30% 73.30% 73.30% 73.50% 73.40% 73.76% 73.88% 73.88%
Noninterest-bearing demand 15.39% 16.64% 18.50% 19.10% 18.94% 17.26% 18.03% 18.03% 18.08% 18.05% 18.14% 18.17% 18.17%
Interst-bearing demand 30.04% 34.79% 44.32% 44.65% 45.29% 45.91% 41.71% 41.71% 41.83% 41.77% 41.98% 42.04% 42.04%
Savings 6.38% 6.83% 7.01% 7.06% 7.49% 7.03% 7.03% 7.03% 7.05% 7.04% 7.08% 7.09% 7.09%
Time 35.71% 29.34% 20.38% 19.35% 18.16% 17.25% 21.44% 21.44% 21.50% 21.47% 21.57% 21.60% 21.60%
Total Deposits 87.52% 87.60% 90.21% 90.17% 89.89% 87.46% 88.21% 88.21% 88.45% 88.33% 88.77% 88.90% 88.90%
Total liabilities 92.16% 92.78% 92.22% 92.38% 92.35% 92.53% 93.02% 93.02% 93.17% 93.13% 93.41% 93.53% 93.53%
Surplus 5.23% 4.48% 4.52% 4.47% 4.40% 4.20% 3.89% 3.89% 3.78% 3.85% 3.73% 3.71% 3.71%
Retained earnings 2.04% 2.32% 1.97% 2.13% 2.29% 2.37% 2.26% 2.26% 2.24% 2.19% 2.06% 1.96% 1.96%
Total stockholders equity 7.84% 7.22% 7.78% 7.62% 7.65% 7.47% 6.98% 6.98% 6.83% 6.87% 6.59% 6.47% 6.47%
30
Quarterly and Annual Statements of Cash Flows
In thousands 2022 E 2023 E
For the period ended 2019 A 2020 A 2021 A 30-Mar-22 A 29-Jun-22 A 29-Sep-22 A 30-Dec-22 E 2022 E 30-Mar-23 E 29-Jun-23 E 29-Sep-23 E 30-Dec-23 E 2023 E
Cash Flow From Operations:
Net income $ 14,241 $ 20,318 $ 27,297 $ 7,585 $ 8,124 $ 8,054 $ 4,346 $ 28,109 $ 3,698 $ (747) $ 297 $ (1,104) $ 2,143
Adjustments to reconcile net income to net cash:
Provision for loan losses 4,860 14,877 2,055 632 757 1,509 2,713 5,611 531 3,280 1,231 1,364 6,407
Depreciation and amortization 3,057 3,781 4,775 630 1,266 1,104 1,389 4,389 1,421 1,434 1,444 1,464 5,764
Amortization/accretion of investments 1,347 2,594 (104) 164 646 488 174 1,472 174 174 174 174 696
Gain on sale/ cale of securities 157 (14,791) (714) 17 17
Other than temporary impairment charge on securities 100
Loss (gain) on sale of assets (1,304) (1,054) (965) 1 (151) (1,624) (1,774)
OREO repossessed asset write downs, gains and loss on dispositions 90 1,245 536 9 119 18 146
FHLB stock dividends (63) (43) (13) (1) (1) (5) (7)
Net increase in loans held for sale 344
Change in other assets and liabilities, net 6,349 (3,268) (6,347) (711) 1,312 3,620 873 5,094 3,030 (454) 902 730 4,207
Net cash provided by (used in) operating activities 29,078 23,759 26,520 8,326 12,072 13,164 9,495 43,057 8,854 3,687 4,048 2,628 19,218
Cash flows from investing activities
Proceeds from maturities and calls of HTM securities 21,190 34,022 3,426 (3,426)
Proceeds from maturities, calls and sales of AFS securities 279,590 1,242,559 417,557 3,595 49,281 52,876
Funds invested in AFS securities (274,437) (1,078,450) (551,563) (101,807) (51,246) (153,053)
Funds invested in preferred securities (1,000)
Proceeds from redemption of preferred securities 1,500
Proceeds from sale/redemption of FHLB stock 2,160
Funds invested in Federal Home Loan Bank stock (155) (115) (3,349) (3,464)
Net increase in loans (123,553) (322,745) (320,347) (70,752) (67,098) (143,765) (59,354) (340,969) (77,152) 45,750 (95,294) (16,474) (143,170)
Purchase of premises and equipment (11,933) (6,313) (2,204) (533) (795) (575) (1,104) (3,007) (1,389) (1,421) (1,434) (1,444) (5,688)
Proceeds from sales of premises and equipment 12 127 77 47 47
Proceeds from sales of other real estate owned 550 2,345 1,330 686 101 787
Cash paid in excess of cash received in acquisition (23,325)
Net cash used in investing activities (131,906) (128,455) (452,645) (168,980) (67,691) (149,654) (60,458) (446,783) (78,540) 44,329 (96,728) (17,918) (148,858)
Cash flows from financing activities
Net increase (decrease) in deposits 18,408 313,210 430,174 27,443 36,126 48,511 240,406 352,486 92,207 (59,004) 113,197 18,183 164,582
Net (decrease) increase in federal funds purchased and short-term
borrowings (28) 36,202 (49,682) 9,664 10,258 80,047 99,969
Proceeds from long-term borrowings 32,465
Repayment of long-term borrowings (3,754) (6,302) (17,321) (3,346) (812) (812) (4,970) (801) (801) (801) (801) (3,205)
Net proceeds from issuance of preferred stock 33,058 (582) 582
Redemption of common stock, net of costs 1,000
Dividends paid on preferred stock (1,384) (1,164) (583) (582) (2,329) (582) (582) (582) (582) (2,329)
Dividends paid on common stock (5,803) (6,234) (6,393) (1,715) (1,715) (1,714) (1,715) (6,859) (1,715) (1,715) (1,715) (1,715) (6,858)
Net cash provided by (used in) financing activities 42,288 336,876 388,452 31,464 43,275 125,449 238,110 438,298 89,109 (62,102) 110,099 15,085 152,191
Increase (decrease) in cash and cash equivalents (60,540) 232,180 (37,673) (129,190) (12,344) (11,041) 187,146 34,571 19,423 (14,086) 17,419 (205) 22,550
Cash and cash equivalents at beginning of year 127,965 67,425 299,605 261,932 132,742 120,398 109,357 261,932 296,503 315,925 301,839 319,258 296,503
Cash and cash equivalents at end of year 67,425 299,605 261,932 132,742 120,398 109,357 296,503 296,503 315,925 301,839 319,258 319,053 319,053
31
Ratios
2022 E 2023 E
For the period ended 2019 A 2020 A 2021 A 30-Mar-22 A 29-Jun-22 A 29-Sep-22 A 30-Dec-22 E 2022 E 30-Mar-23 E 29-Jun-23 E 29-Sep-23 E 30-Dec-23 E
Performance Measurements
Gross interest margin 4.84% 4.57% 4.33% 1.09% 1.14% 1.20% 1.12% 4.42% 1.09% 1.06% 1.10% 1.08%
Net interest margin 3.26% 3.39% 3.47% 0.89% 0.93% 0.87% 0.79% 3.37% 0.70% 0.64% 0.65% 0.59%
Loan interest margin 5.73% 5.39% 5.16% 1.28% 1.33% 1.37% 1.31% 5.29% 1.32% 1.28% 1.32% 1.30%
Accrued interest receivable 33.50 43.26 39.29 37.14 34.56 31.49 39.97 41.40 36.10 40.60 38.23 39.34
Accrued payable expenses 73.66 74.24 73.33 58.69 45.84 34.18 68.87 87.01 68.87 68.87 68.87 68.87
Interest expense on deposits as a % of deposits 1.93% 1.42% 1.06% 0.25% 0.27% 0.42% 0.39% 1.29% 0.47% 0.52% 0.55% 0.60%
Interest expense on short-term borrowings 3.34% 3.00% 2.67% 0.91% 1.31% 1.30% 2.06% 6.25% 2.83% 2.83% 2.83% 2.83%
Interest expense on long-term debt 3.78% 4.57% 4.05% 1.02% 1.81% 1.99% 3.15% 7.86% 4.34% 4.38% 4.41% 4.45%
Return on Average Assets 1.11% 1.33% 1.48% 1.45% 1.46% 1.39% 0.72% 1.30% 0.61% -0.12% 0.05% -0.17%
Return on Average Equity 9.09% 11.79% 13.56% 13.62% 14.50% 14.07% 7.48% 12.29% 6.32% -1.28% 0.51% -1.94%
Return on Average Tangible Equity 9.95% 13.32% 14.99% 14.86% 15.79% 15.28% 8.11% 13.37% 6.84% -1.39% 0.56% -2.10%
Efficiency Ratios 51.52% 57.64% 57.07% 54.96% 54.76% 50.46% 51.89% 52.92% 51.40% 51.81% 51.01% 51.19%
Provision for loan losses ratio 0.35% 0.88% 0.10% 0.03% 0.03% 0.06% 0.14% 0.28% 0.09% 0.25% 0.21% 0.21%
Loans to Deposits ratio 82.32% 85.13% 83.16% 85.03% 86.30% 89.25% 83.98% 83.98% 83.97% 84.10% 84.11% 84.14%
Tier one capital ratio 6.65% 5.55% 4.53% 4.69% 5.00% 5.18% 4.58% 4.58% 4.50% 4.42% 4.11% 3.89%
Earning assets to interest-bearing liabilities 71.29% 74.11% 75.92% 82.12% 83.26% 85.19% 81.38% 77.09% 81.19% 83.30% 81.12% 82.43%
Non-interest expense to average assets 2.40% 2.53% 2.39% 0.58% 0.61% 0.59% 0.56% 2.26% 0.54% 0.53% 0.54% 0.53%
Non-interest revenue to total revenue 9.06% 23.62% 9.61% 6.44% 7.77% 11.40% 7.14% 8.26% 7.08% 7.13% 7.04% 7.06%
Equity to Assets Ratio 7.96% 7.51% 7.52% 7.70% 7.64% 7.56% 7.22% 7.35% 6.91% 6.85% 6.73% 6.53%
32
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BURKENROAD REPORTS RATING SYSTEM
MARKET OUTPERFORM: This rating indicates that we believe forces are in place that would enable this
company's stock to produce returns in excess of the stock market averages over the next 12 months.
MARKET PERFORM: This rating indicates that we believe the investment returns from this company's stock
will be in line with those produced by the stock market averages over the next 12 months.
MARKET UNDERPERFORM: This rating indicates that while this investment may have positive attributes, we
believe an investment in this company will produce subpar returns over the next 12 months.
BURKENROAD REPORTS CALCULATIONS

 CPFS is calculated using operating cash flows excluding working capital changes.
 All amounts are as of the date of the report as reported by Bloomberg or Yahoo Finance unless
otherwise noted. Betas are collected from Bloomberg.
 Enterprise value is based on the equity market cap as of the report date, adjusted for long‐term
debt, cash, & short‐term investments reported on the most recent quarterly report date.
 12‐month Stock Performance is calculated using an ending price as of the report date.
The stock performance includes the 12‐month dividend yield.
2022-2023 COVERAGE UNIVERSE Hibbett Sports (HIBB)
Amerisafe Inc. (AMSF) Home Bancorp, Inc. (HBCP)
Bristow Group (VTOL) Investar Holding Corp. (ISTR)
Business First Bank (BFST) Lamar Advertising Company (LAMR)
CalIon Petroleum Company (CPE) Legacy Housing Corporation (LEGH)
Cal-Maine Foods Inc. (CALM) Marine Products Corp. (MPX)
Computer Programs & Systems, Inc. (CPSI) Mr. Cooper (COOP)
Conn's Inc. (CONN) National Vision Holdings, Inc. (EYE)
Crawford & Co. (CRD) Navigator Holdings Ltd. (NVGS)
Crown Crafts Inc. (CRWS) Newpark Resources Inc. (NR)
Daseke Inc. (DSKE) Pool Corporation (POOL)
EastGroup Properties Inc. (EGP) Powell Industries Inc. (POWL)
Farmer Bros. Co. (FARM) RPC Incorporated (RES)
First Bancshares (FBMS) Ruth’s Hospitality Group Inc. (RUTH)
First Guaranty Bancshares Inc. (FGBI) Seacor Marine Holdings Inc. (SMHI)
Globalstar (GSAT) Sunnova Energy Intl. Inc. (NOVA)
Great Lakes Dredge & Dock Corp (GLDD) Vistra Corp. (VST)
Gulf Island Fabrication Inc. (GIFI)
PETER RICCHIUTI Ray Howze BURKENROAD REPORTS

Director of Research Ashley Sterbcow Tulane University
Founder of Burkenroad Reports Associate Directors of Research New Orleans, LA 70118‐5669
Peter.Ricchiuti@tulane.edu (504) 862‐8489
(504) 865‐5430 Fax
ANTHONY WOOD
Senior Director of Accounting
Awood11@tulane.edu
Named in honor of William B. Burkenroad Jr., an alumnus and a longtime supporter
of Tulane’s business school, and funded through contributions from his family and
friends, Burkenroad Reports is a nationally recognized program, publishing objec-
tive, investment research reports on public companies in our region. Students at
Tulane University’s Freeman School of Business prepare these reports.
Alumni of the Burkenroad Reports program graduated on to careers at a number of
highly respected institutions including:
ABN AMRO Bank · Aegis Value Fund · Invesco/AIM Capital Management · Alpha
Omega Capital Partners · American General Investment Management · Ameriprise
Financial · Atlas Capital · Banc of America Securities · Bank of Montreal · Bancomer
· Barclays Capital · Barings PLC · Bearing Point · Bessemer Trust · Black Gold Capital·
Blackstone · Bloomberg · BNP Paribas · Brookfield Asset Management · Brown
Brothers Harriman Capital · Blackrock Financial Management · Boston Consulting
Group · Buckingham Research · California Board of Regents · Cambridge Associates·
Canaccord Genuity · Capital One Southcoast · Cantor Fitzgerald · Chaffe & Associates
· Citadel Investment Group · Citibank · Citigroup Private Bank · City National Bank
· Cornerstone Resources · Credit Suisse · D. A. Davidson & Co. · Deutsche Banc
· Duquesne Capital Management · Equitas Capital Advisors· Factset Research ·
Financial Models · First Albany · Fiduciary Trust · Fitch Investors Services · Forex
Trading · Franklin Templeton · Friedman Billings Ramsay · Fulcrum Global Partners ·
Gintel Asset Management · Global Hunter Securities · Goldman Sachs · Great Gable
Partners · Greer Anderson · Grosever Funds · Gruntal & Co. · Guggenheim Securities
, LLC · HSBC Private Bank · Hancock Investment Services · Healthcare Markets
Group · Heikkinen Capital · Hillspire, LLC · Invesco Capital Markets · IBERIABANK
Capital Markets · J.P. Morgan Securities · Janney Montgomery Scott · Jefferies & Co.
· Johnson Rice & Co. · Janus Capital Group · KBC Financial · KDI Capital Partners · Key
Investments · Keystone Investments · Lazard Freres · Legacy Capital · Liberty Mutual
· LongueVue Capital · Lowenhaupt Global Advisors · Mackay Shields · Macquarie
Capital Manulife/John Hancock Investments · Marsh & McLennan · Mercer Partners ·
Merrill Lynch · Miramar Asset Management · Mitsubishi UFJ Financial Group · Moodys
Investor Services · Morgan Keegan · Morgan Stanley · Nuveen Investments · New
York Stock Exchange · Orleans Capital Management · Pan American Life Insurance
· Perkins Wolf McDonnell · Piper Jaffray & Co. · Professional Advisory Services ·
_______1993
Purdential Investments · Quanta Capital Services · Quarterdeck Investment Services ·
SINCE
RBC · Raymond James · Regions Bank-Restoration Capital · Rice Voelker, LLC · Robotti
& Co. · Royal Bank of Scotland· Sandler O'Neill & Partners · Sanford Bernstein & Co.
· Scotia Capital · Scotia Howard Weil Incorporated · Scottrade · Second City Trading
LLC · Sentinel Trust · Sequent Energy · Sidoti & Co · Simmons & Co. · Southwest
Securities · Stephens & Co. · Sterne Agee · Stewart Capital LLC · Stifel Nicolaus · Sun-
Trust Capital Markets · Susquehanna Investment Group · Thomas Weisel Partners
· TD Waterhouse Securities · Texas Employee Retirement System · Texas Teachers
Retirement System · ThirtyNorth Investments · Thornburg Investment Management
· Tivoli Partners · Tudor Pickering & Co. · Tulane University Endowment Fund · Turner
Investment Partners · UBS · Valmiki Capital · Value Line Investments · Vaughan
Nelson Investment Management · Wellington Management · Wells Fargo Capital
Management · Whitney National Bank · William Blair & Co. · Zephyr Management
To receive complete reports on any of the companies we follow, contact:
Peter Ricchiuti, Founder & Director of Research
Tulane University
Freeman School of Business
Burkenroad Reports
Phone: (504) 862-8489 The Burkenroad Reports are produced solely as a part of an educational program of Tulane University's Freeman
Fax: (504) 865-5430 School of Business. The reports are not investment advice and you should not and may not rely on them in
E-mail: Peter.Ricchiuti@Tulane.edu making any investment decision. You should consult an investment professional and/or conduct your own
Please visit our web site at www.burkenroad.org primary research regarding any potential investment.
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Named in honor of William B. Burkenroad Jr.

, an alumnus and a longtime supporter

Company shell 3435 PMS 2022.indd 1 4/11/22 10:46 AM

Figure 1: Five-year Stock Price Performance

Source: Yahoo Finance

Table 1: Historical Burkenroad Ratings and Prices

Strong management provides consistent dividends and excellent revenue growth

First Guaranty Bancshares, Inc. joins the Russell 2000 index

Net Interest margin could compress with rising interest rates

Dividend Discount Model Method

Relative Multiple Method - P/E

<0: that the Company's profit is negative,

0-13: that the Company is undervalued,

14-20: that the Company is valued correctly,

21-28: that the Company is overvalued, or

28+: there is a speculative bubble in the stock market.

Relative Multiple Method – P/TBV

The price-to-tangible-book-value ratio represents a Company’s share price as a percentage of

Figure 2: Summary of Valuation Methods

Bargaining Power of Suppliers

Bargaining Power of Buyers

ABOUT FIRST GUARANTY

Products and Services

The Company provides full-suite commercial banking services to individuals, families,

As a way of increasing non-interest-bearing deposits, the Company is focusing on innovative

Table 2: Key Competitors

Table 3: Peer Group Comparison Chart

First Farmers Bank & Trust Co (FFMR)

Investar Bank (ISTR)

Origin Bancorp Inc (OBNK)

First Bank (FRBA)

Summit State Bank (SSBI)

Capital One, National Association

MANAGEMENT, ENVIRONMENTAL & SOCIAL GOVERNANCE (ESG)

Table 4: Compensation Breakdown

Table 5: Compensation Breakdown

Figure 3: Market Shares Owned by Insiders

Source: Capital IQ Public Ownership as of Oct. 21, 2022

Environment, Social and Governance

Institutional Shareholder Services Score

Key Financial Management Metrics

Table 6: Key Financial Management Metrics for Q2 2022

Table 8: Top Inside Investors

RISK ANALYSIS AND INVESTMENT CAVEATS

Technology and Infrastructure

FINANCIAL PERFORMANCE AND PROJECTIONS

Interest Expense on Deposits

Provision Expense Rate

Importance of Community Culture

Outlook of the Future Economy

Site Visit Photo

INDEPENDENT OUTSIDE RESEARCH

We consulted different sources to research the Company. We met with experienced

Net income (loss) per common share:

Weighted average shares outstanding:

YEAR TO YEAR CHANGE

BURKENROAD REPORTS CALCULATIONS

PETER RICCHIUTI Ray Howze BURKENROAD REPORTS

Company shell 3435 PMS 2022.indd 1 4/11/22 10:46 AM

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