Allowance for Credit Losses on Loans

9 Months Ended

Sep. 30, 2025

A summary of changes in the allowance for credit losses, by portfolio type, for the nine months ended September 30, 2025 and 2024 are as follows:


	For the Nine Months Ended September 30,
	2025
(in thousands)	Beginning Allowance (12/31/2024)		Charge-offs		Recoveries		Provision		Ending Allowance (9/30/2025)
Real Estate:
Construction & land development	$	3,930	$	(5,794)	$	—	$	5,673	$	3,809
Farmland	50		—		—		137		187
1- 4 family	9,243		(490)		29		3,084		11,866
Multifamily	3,949		(10,430)		—		7,474		993
Non-farm non-residential	11,531		(9,545)		19		18,302		20,307
Total Real Estate	28,703		(26,259)		48		34,670		37,162
Non-Real Estate:
Agricultural	204		(169)		1		170		206
Commercial and industrial	1,994		(1,055)		187		4,470		5,596
Commercial leases	1,719		(774)		—		39,884		40,829
Consumer and other	1,337		(1,104)		426		301		960
Unallocated	854		—		—		106		960
Total Non-Real Estate	6,108		(3,102)		614		44,931		48,551
Total Loans	$	34,811	$	(29,361)	$	662	$	79,601	$	85,713
Unfunded lending commitments	1,210		—		—		(510)		700
Total	$	36,021	$	(29,361)	$	662	$	79,091	$	86,413


	For the Nine Months Ended September 30,
	2024
(in thousands)	Beginning Allowance (12/31/2023)		Charge-offs		Recoveries		Provision		Ending Allowance (9/30/2024)
Real Estate:
Construction & land development	$	5,845	$	(39)	$	1	$	(954)	$	4,853
Farmland	36		(258)		—		272		50
1- 4 family	6,653		(939)		13		1,990		7,717
Multifamily	1,614		—		—		(156)		1,458
Non-farm non-residential	10,596		(5,047)		45		8,065		13,659
Total Real Estate	24,744		(6,283)		59		9,217		27,737
Non-Real Estate:
Agricultural	97		(33)		26		174		264
Commercial and industrial	2,711		(4,521)		157		3,251		1,598
Commercial leases	1,948		—		—		147		2,095
Consumer and other	1,426		(2,837)		474		2,524		1,587
Unallocated	—		—		—		—		—
Total Non-Real Estate	6,182		(7,391)		657		6,096		5,544
Total Loans	$	30,926	$	(13,674)	$	716	$	15,313	$	33,281
Unfunded lending commitments	2,810		—		—		(1,300)		1,510
Total	$	33,736	$	(13,674)	$	716	$	14,013	$	34,791

Negative provisions are caused by changes in the composition and credit quality of the loan portfolio and by recoveries. The result is an allocation of the credit loss reserve from one category to another.

A summary of the allowance along with loans and leases individually and collectively evaluated are as follows:


	As of September 30, 2025
(in thousands)	Allowance Individually Evaluated		Allowance Collectively Evaluated		Total Allowance for Credit Losses		Loans Individually Evaluated		Loans Collectively Evaluated		Total Loans before Unearned Income
Real Estate:
Construction & land development	$	566	$	3,243	$	3,809	$	19,081	$	212,075	$	231,156
Farmland	70		117		187		2,543		29,142		31,685
1- 4 family	857		11,009		11,866		7,867		433,150		441,017
Multifamily	148		845		993		23,973		113,609		137,582
Non-farm non-residential	10,635		9,672		20,307		66,651		936,547		1,003,198
Total Real Estate	12,276		24,886		37,162		120,115		1,724,523		1,844,638
Non-Real Estate:
Agricultural	—		206		206		915		43,822		44,737
Commercial and industrial	3,534		2,062		5,596		8,403		218,674		227,077
Commercial leases	39,739		1,090		40,829		52,921		82,037		134,958
Consumer and other	—		960		960		—		34,763		34,763
Unallocated	—		960		960		—		—		—
Total Non-Real Estate	43,273		5,278		48,551		62,239		379,296		441,535
Total	$	55,549	$	30,164	$	85,713	$	182,354	$	2,103,819	2,286,173
Unearned Income											(6,432)
Total Loans Net of Unearned Income											$	2,279,741

$146.3 million of loans individually evaluated for impairment as of September 30, 2025 were considered collateral dependent loans.


	As of December 31, 2024
(in thousands)	Allowance Individually Evaluated		Allowance Collectively Evaluated		Total Allowance for Credit Losses		Loans Individually Evaluated		Loans Collectively Evaluated		Total Loans before Unearned Income
Real Estate:
Construction & land development	$	403	$	3,527	$	3,930	$	10,724	$	319,324	$	330,048
Farmland	—		50		50		2,973		33,018		35,991
1- 4 family	430		8,813		9,243		3,174		447,197		450,371
Multifamily	2,942		1,007		3,949		27,516		137,605		165,121
Non-farm non-residential	1,229		10,302		11,531		54,201		1,105,641		1,159,842
Total Real Estate	5,004		23,699		28,703		98,588		2,042,785		2,141,373
Non-Real Estate:
Agricultural	129		75		204		2,151		38,571		40,722
Commercial and industrial	3		1,991		1,994		5,194		252,324		257,518
Commercial leases	—		1,719		1,719		3,015		217,185		220,200
Consumer and other	—		1,337		1,337		—		42,267		42,267
Unallocated	—		854		854		—		—		—
Total Non-Real Estate	132		5,976		6,108		10,360		550,347		560,707
Total	$	5,136	$	29,675	$	34,811	$	108,948	$	2,593,132	2,702,080
Unearned Income											(8,300)
Total loans net of unearned income											$	2,693,780

All loans individually evaluated for impairment as of December 31, 2024 were considered collateral dependent loans.

As of September 30, 2025 and December 31, 2024, First Guaranty had loans totaling $114.3 million and $108.5 million, respectively, not accruing interest. First Guaranty had no loans past due 90 days or more and still accruing interest as of September 30, 2025 as compared to $11.5 million as of December 31, 2024. The average outstanding balance of nonaccrual loans for the nine months ended September 30, 2025 was $121.3 million compared to $63.4 million for the year ended December 31, 2024.

The Bank held loans that were individually evaluated for impairment at September 30, 2025 for which the repayment, on the basis of the assessment at the reporting date, is expected to be provided substantially though the operation or sale of the collateral and the borrower is experiencing financial difficulty. The Allowance for Credit Losses for these collateral-dependent loans is primarily based on the fair value of the underlying collateral at the reporting date. The following describes the type of collateral that secure collateral dependent loans:

•Residential real estate loans are primarily secured by first liens on residential real estate.

•Commercial real estate loans are primarily secured by office and industrial buildings, warehouses, retail shopping facilities and various special purpose properties, including hotels and restaurants.

•Construction and land loans are primarily secured by residential and commercial properties, which are under construction and/or redevelopment, and by raw land.

•Commercial loans are primarily secured by accounts receivable, inventory and equipment.

•Agriculture loans are primarily secured by farmland and equipment.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Occasionally, the Bank modifies loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, term extension, an other-than-insignificant payment delay, interest only for a specified period of time, an interest rate reduction, or a combination of such concessions. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. Upon the Bank’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged-off. Reportable modifications to borrowers experiencing financial difficulty (MEFD) during the nine months ended September 30, 2025 consisted of a $17.6 million term extension. The Bank had no unfunded commitments to borrowers whose terms have been modified as a reportable MEFD as of September 30, 2025.

As of September 30, 2025, there have been $1.0 million in loans that were modified with in the previous 12 months for which there has been payment default during the period.