First Guaranty in La. hit with credit-related consent order

First Guaranty Bancshares in Hammond, La., has entered into a consent order with the Federal Deposit Insurance Corp. and the Louisiana Office of Financial Institutions directed toward addressing credit issues.

The $4.1 billion-asset company disclosed the enforcement action in a regulatory filing.

The order stems from an examination conducted in mid-2025 and covers a broad set of issues spanning board oversight, capital levels, classified assets, credit administration, commercial real estate concentration, and dividends. First Guaranty consented to the order without admitting or denying any charges of unsafe or unsound banking practices.

The order caps a rough two years for the company, which has cycled through layoffs, dividend cuts, asset sales, credit losses and a goodwill impairment since hiring Michael Mineer as president and CEO in May 2024, succeeding longtime CEO Alton Lewis.

First Guaranty’s troubles first became visible two months after Mineer’s arrival, when the company cut 15% of its workforce and disclosed that nonaccrual loans had more than doubled to $62.3 million, driven largely by a $36.9 million CRE relationship backed by Midwest properties. The company halved its dividend and sold two branches and part of its headquarters for a $13.2 million gain. By December 2024, the dividend was slashed further, to a penny a share.

The credit issues continued into 2025. In April, the company reported a $6.2 million first-quarter loss after selling two CRE loans that were still performing but showed credit weaknesses. Nonaccrual loans grew to $133.4 million in the quarter. That August, the company amended its second-quarter results to reflect a wider loss of $7.3 million, after its loan-loss provision was revised upward to $16.6 million.

The losses escalated sharply late last year, when First Guaranty reported a $45 million third-quarter loss tied to a $52 million commercial lease exposure to an auto parts manufacturer. That quarter’s results included a $47.9 million provision and a $12.9 million goodwill impairment charge, driven by the stock trading below book value. The company raised capital during the quarter through a private placement of 122,000 shares.

First Guaranty agreed earlier this year to exit Texas by selling five branches, along with $270 million in deposits and $11 million in loans, to Armstrong Bank in Muskogee, Okla. The deal, which includes a 7.65% deposit premium, is expected to close this quarter.

The order requires First Guaranty to maintain a Tier 1 leverage capital ratio of at least 9% and a total risk-based capital ratio of at least 14%. As of June 30, the bank’s Tier 1 leverage ratio was 7.09% — more than two percentage points below the required threshold — and its total risk-based capital ratio was 16.21%, comfortably above the minimum. The company has submitted a capital plan to regulators and believes it is in full compliance with the order apart from the leverage ratio shortfall.

The bank has 120 days from the Aug. 7 effective date to charge off or collect all assets classified “loss,” along with half of the assets classified “doubtful,” from the 2025 exam. Within 60 days, First Guaranty must submit a written reduction plan to regulators covering its remaining “doubtful” and “substandard” assets, with detailed reporting required for any classified credit of $2 million or more.

The order restricts new lending to borrowers whose existing credit was charged off or classified “loss,” and limits additional credit to borrowers classified “doubtful” or “substandard” unless the board signs off in writing on why extending that credit serves the bank’s best interests.

Within 90 days, the board must adopt a plan for identifying, measuring and monitoring the bank’s commercial real estate concentration, correct weaknesses identified in CRE stress testing, and address underwriting and credit administration gaps tied to debt-service-coverage standards, the internal watch list, credit risk grading, and loan-to-value exceptions.

First Guaranty Bank cannot pay dividends to its holding company without prior written consent from its regulators while the order is in effect. The bank must file quarterly progress reports with regulators detailing compliance efforts. The order stays in place until modified, suspended, or terminated by the FDIC and OFI.

The company said its board and management have already been working to address the issues identified in the 2025 exam and will expand those efforts to meet the order’s requirements.