Company: FGBI
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001408534-25-000015
Chunk: 135

Company: First Guaranty Bancshares, Inc.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 8
Chunk 135
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Obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the reliability and accuracy of data used to calculate and estimate the various components of the ACL including:

◦Loan data completeness and accuracy,

◦Grouping of loans by segment,

◦Model inputs utilized,

◦Approval of model assumptions selected, and

◦Qualitative factors have been appropriately identified, are adequately supported, and accurately applied.

•Evaluated and tested the data and inputs utilized within the ACL calculation for completeness and accuracy including mathematical accuracy of the calculation.

•Evaluated the qualitative factors for appropriate identification and application including reasonableness of the basis for adjustment.

•Analyzed the total qualitative factor adjustment applied to each loan segment, in comparison to changes in the Company’s quantitatively driven expected credit losses and loan segments and evaluated the appropriateness of the total qualitative factor adjustments applied in the overall allowance.

Goodwill

As described in Note 8 to the financial statements, First Guaranty’s goodwill totaled $12.9 million as of December 31, 2024. Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. First Guaranty uses significant judgment and assumptions in estimating the fair value of these assets, including comparisons to peers, projections of future cash flows, discount rates, and growth rates. Given the complexity and subjectivity involved in these estimates, auditing the impairment assessment of goodwill and intangible assets was challenging and required a high degree of auditor judgment.

Our audit procedures related to First Guaranty’s impairment assessment of goodwill and intangible assets included the following:

•We reviewed management’s use of peer data by assessing the validity and adequacy of the data.

•We evaluated the reasonableness of management’s forecasts of future cash flows by comparing them to historical performance, industry trends, and economic conditions.

•We assessed the appropriateness of the discount rates and growth rates used by management by comparing them to independent market data and industry benchmarks.

•We tested the completeness and accuracy of the underlying data used in the impairment analysis.

•We reviewed the sensitivity analyses performed by management to evaluate the impact of changes in key assumptions on the impairment conclusions.

•We evaluated the adequacy of the First Guaranty’s disclosures related to goodwill in the financial statements.

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Based on these procedures, we found management’s estimates and assumptions to be reasonable and supported by the available evidence.

We have served as First Guaranty's auditor since 2022