First Guaranty Bancshares (FGBI -7.04%), a regional bank with a significant branch presence across Louisiana, Texas, Kentucky, and West Virginia, released its second quarter results for 2025 on July 31, 2025. The bank reported a GAAP net loss and a wider-than-expected loss per share, reflecting the ongoing pressures from credit issues and portfolio restructuring. Earnings per share (GAAP) were a loss of $0.50, underperforming analyst expectations by $0.30 (GAAP). Net interest income (GAAP) showed modest growth, but the bank’s profitability remains heavily impacted by elevated provisions for credit losses. Overall, the quarter marked continued progress in reducing portfolio risk but did not translate into improved bottom-line results.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | ($0.50) | ($0.20) | $0.53 | (194.3%) |
| Net Interest Income | $22.2 million | $21.2 million | 4.7% | |
| Net Income (GAAP) | ($5.8 million) | $7.2 million | (180.7%) | |
| Noninterest Expense | $17.3 million | $20.6 million | (16.0%) | |
| Allowance for Credit Losses / Total Loans | 2.36% | 1.29%(Dec 31, 2024) | +1.07 pp |
Source: Analyst estimates for the quarter provided by FactSet.
Business overview and recent priorities
First Guaranty Bancshares is a community-focused commercial bank with 35 branches in Louisiana, Texas, Kentucky, and West Virginia. Its core operations include providing loans and deposit products to individual customers, small businesses, and corporations. The company is particularly noted for its significant presence in the Hammond metropolitan area, where its deposit market share is among the highest.
Recently, the bank’s key priorities have been centered on controlling risk within its loan portfolio, especially commercial real estate. Cost management and operational efficiency have become a focus, with measures including staff reductions and tighter expense controls. The company is also emphasizing improved credit risk management and prudent capital allocation to support stability and future growth.
Quarter in detail: Financial performance and operational moves
The quarter’s financial results were marked by a steep decline in profitability, as GAAP net income fell to a loss of $5.8 million from $7.2 million in Q2 2024. Net income (GAAP) moved sharply into the red at a $5.8 million loss, compared to a $7.2 million profit in Q2 2024. Return on assets (net income divided by average assets, GAAP) was (0.60)%, down from 0.81% for Q2 2024. Likewise, return on average equity dropped to (11.66)% from 12.16% (GAAP). This swing results mainly from a large increase in provision for credit losses, which was $14.7 million, up from $6.8 million for Q2 2024. Elevated provision reflects management’s concern about several large, troubled loans that have yet to be resolved.
Net interest income, which is the difference between what the bank earns on its loans and pays on deposits and funding, saw moderate growth from a year ago, increasing to $22.2 million (GAAP) from $21.2 million for Q2 2024, as cost controls within noninterest expense ($17.3 million, down 16% compared to Q2 2024, GAAP) began to show up in the results. The decline in noninterest expense comes from staff reductions -- total headcount was reduced by 135 over the past year, from 495 to 360 employees at quarter-end, and ongoing cost-savings drives.
Asset quality remains a central concern. The allowance for credit losses (GAAP) increased to 2.36% of total loans, up from 1.29% at December 31, 2024. Management cited the need for increased reserves based on adverse trends in its loan book and specific large problem relationships, particularly in commercial real estate. While non-performing assets fell sequentially by $6.8 million due to a workout and sale of a large non-accrual loan, levels of troubled loans remain high. Non-performing loans made up 4.96% of total loans (up from 4.46% at the prior year-end, GAAP), and the company identified six large loan relationships as representing 75% of its nonperforming balance as of June 30, 2025.
The bank’s shift to reduce its overall loan portfolio, especially in commercial real estate, continued through the quarter. Real estate secured loans dropped to $1.94 billion, comprising 80.1% of the total portfolio (GAAP), with the bank expecting this to fall further as more sales and charge-offs are completed. No major expansion in new branches occurred, but the bank maintained operations across its existing 35 locations. On capital, the company completed a debt-to-equity conversion and a private placement of new shares, improving regulatory capital metrics but also diluting book value per share to $15.31 as of June 30, 2025, from $17.75 as of December 31, 2024. The quarterly dividend was reduced substantially to $0.01 per share, from $0.16 in Q2 2024 (calendar year basis), as the bank prioritizes capital preservation during its restructuring work.
Looking ahead
Management did not provide specific forward-looking revenue or earnings guidance in its earnings release. The company continues to signal it will maintain a focus on reducing commercial real estate loan exposures and plans further asset sales, especially of larger legacy problem loans, in upcoming quarters.
The sharp decline in the dividend (from $0.16 per common share in Q2 2024 to $0.01 per common share in Q2 2025) was implemented to increase capital as part of First Guaranty’s new business strategy.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
