Company: FGBI
Filing Date: 2025-11-17
Form Type: 10-Q
Source: 0001408534-25-000092
Chunk: 1

Company: First Guaranty Bancshares, Inc.
Filing Date: 2025-11-17
Form: 10-Q
Item: Part II, Item 1A
Chunk 1
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Item 1A. Risk Factors

Except as disclosed in the updated risk factors below and elsewhere in this report, there are no material changes during the period covered by this Report to the risk factors previously disclosed in our 2024 Form 10-K.  In particular, please see the discussion under the in Part I Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report.

A portion of our loan portfolio is comprised of commercial and industrial loans secured by accounts receivables, inventory, equipment or other commercial collateral, the deterioration in value of which could increase the potential for future losses.

At September 30, 2025, $227.1 million, or 9.9% of our total loans, was comprised of commercial and industrial loans to businesses collateralized by general business assets including, among other things, accounts receivable, inventory and equipment and generally backed by a personal guaranty of the borrower or principal. These commercial and industrial loans are typically larger in amount than loans to individuals and, therefore, have the potential for larger losses on a single loan basis. Additionally, the repayment of commercial and industrial loans is subject to the ongoing business operations of the borrower. The collateral securing such loans generally includes movable property such as equipment and inventory, which may decline in value more rapidly than we anticipate, or may be difficult to market and sell, exposing us to increased credit risk. Significant adverse changes in the economy or local market conditions in which our commercial lending customers operate could cause rapid declines in loan collectability and the values associated with general business assets, resulting in inadequate collateral coverage that may expose us to credit losses and could adversely affect our business, financial condition and results of operations. 

As discussed further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report, we established a specific reserves of $39.8 million during the third quarter of 2025 for commercial lease exposure to entities related to an auto parts manufacturer that declared Chapter 11 bankruptcy. However, this specific allowance may not be sufficient with respect to our credit exposure to this borrower relationship, and the allowance for commercial and industrial loans generally may not be sufficient to fully address future losses in this portfolio.  

We hold certain intangible assets that could be classified as impaired in the future. If these assets are considered to be either partially or fully impaired in the future, our earnings and the book values of these assets would decrease.

We are required to test goodwill and core deposit intangible assets for impairment on