Wednesday, May 25 2022
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with Item 6, "Selected Financial Data"
and our audited consolidated financial statements and the accompanying notes
included elsewhere in this Annual Report on Form 10-K. This discussion and
analysis contains forward-looking statements that are subject to certain risks
and uncertainties and are based on certain assumptions that we believe are
reasonable but may prove to be inaccurate. Certain risks, uncertainties and
other factors, including those set forth under "Forward-Looking Statements,"
"Risk Factors" and elsewhere in this Annual Report on Form 10-K, may cause
actual results to differ materially from those projected results discussed in
the forward-looking statements appearing in this discussion and analysis. We
assume no obligation to update any of these forward-looking statements.

Special note regarding forward-looking statements

Congress passed the Private Securities Litigation Act of 1995 in an effort to
encourage corporations to provide information about a Company's anticipated
future financial performance. This act provides a safe harbor for such
disclosure, which protects us from unwarranted litigation, if actual results are
different from Management expectations. This discussion and analysis contains
forward-looking statements and reflects Management's current views and estimates
of future economic circumstances, industry conditions, company performance and
financial results. The words "may," "should," "expect," "anticipate," "intend,"
"plan," "continue," "believe," "seek," "estimate" and similar expressions are
intended to identify forward-looking statements. These forward-looking
statements are subject to a number of factors and uncertainties, including, but
not limited to, changes in general economic conditions, either nationally or in
our market areas, that are worse than expected; the impact of the COVID-19
pandemic; competition among depository and other financial institutions;
inflation and changes in the interest rate environment that reduce our margins
or reduce the fair value of financial instruments; adverse changes in the
securities markets; changes in laws or government regulations or policies
affecting financial institutions, including changes in regulatory fees and
capital requirements; our ability to enter new markets successfully and
capitalize on growth opportunities; our ability to successfully integrate
acquired entities, if any; changes in consumer spending, borrowing and savings
habits; changes in accounting policies and practices, as may be adopted by the
bank regulatory agencies, the Financial Accounting Standards Board, the
Securities and Exchange Commission and the Public Company Accounting Oversight
Board; changes in our organization, compensation and benefit plans; changes in
our financial condition or results of operations that reduce capital available
to pay dividends; and changes in the financial condition or future prospects of
issuers of securities that we own, which could cause our actual results and
experience to differ from the anticipated results and expectations, expressed in
such forward-looking statements.

Overview

First Guaranty Bancshares is a Louisiana corporation and a financial holding
company headquartered in Hammond, Louisiana. Our wholly-owned subsidiary, First
Guaranty Bank, a Louisiana-chartered commercial bank, provides personalized
commercial banking services primarily to Louisiana and Texas customers through
36 banking facilities primarily located in the MSAs of Hammond, Baton Rouge,
Lafayette, Shreveport-Bossier City, Lake Charles and Alexandria, Louisiana and
Dallas-Fort Worth-Arlington, Waco, Texas and our new Mideast markets in Kentucky
and West Virginia. We emphasize personal relationships and localized decision
making to ensure that products and services are matched to customer needs. We
compete for business principally on the basis of personal service to customers,
customer access to officers and directors and competitive interest rates and
fees.

Total assets were $2.9 billion at December 31, 2021 and $2.5 billion at
December 31, 2020. Total deposits were $2.6 billion at December 31, 2021 and
$2.2 billion at December 31, 2020. Total loans were $2.2 billion at December 31,
2021, an increase of $315.2 million, or 17.1%, compared with $1.8 billion at
December 31, 2020. Total shareholders' equity was $223.9 million and $178.6
million at December 31, 2021 and December 31, 2020, respectively.

Net income was $27.3 million, $20.3 million and $14.2 million for the years
ended December 31, 2021, 2020 and 2019, respectively. We generate most of our
revenues from interest income on loans, interest income on securities, sales of
securities, ATM and debit card fees and service charges, commissions and fees.
We incur interest expense on deposits and other borrowed funds and noninterest
expense such as salaries and employee benefits and occupancy and equipment
expenses. Net interest income is the difference between interest income earned
on interest-earning assets such as loans and securities and interest expense
paid on interest-bearing liabilities such as deposits and borrowings which are
used to fund those assets. Net interest income is our largest source of revenue.
To evaluate net interest income, we measure and monitor: (1) yields on our loans
and other interest-earning assets; (2) the costs of our deposits and other
funding sources; (3) our net interest spread and (4) our net interest margin.
Net interest spread is the difference between rates earned on interest-earning
assets and rates paid on interest-bearing liabilities. Net interest margin is
calculated as net interest income divided by average interest-earning assets.
Because noninterest-bearing sources of funds, such as noninterest-bearing
deposits also fund interest-earning assets, net interest margin includes the
benefit of these noninterest-bearing sources.

Changes in market interest rates and interest rates we earn on interest-earning
assets or pay on interest-bearing liabilities, as well as the volume and types
of interest-earning assets, interest-bearing and noninterest-bearing liabilities
are usually the largest drivers of periodic changes in net interest spread, net
interest margin and net interest income. Fluctuations in market interest rates
are driven by many factors, including governmental monetary policies, inflation,
deflation, macroeconomic developments, changes in unemployment, the money
supply, political and international conditions, conditions in domestic and
foreign financial markets and in 2020 and 2021 the economic and social effects
of the COVID-19 pandemic. Periodic changes in the volume and types of loans in
our loan portfolio are affected by, among other factors, economic and
competitive conditions in Louisiana, Texas and our other out-of-state market
areas. During the extended period of historically low interest rates, we
continue to evaluate our investments in interest-earning assets in relation to
the impact such investments have on our financial condition, results of
operations and shareholders' equity.

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Financial highlights for 2021 and 2020:

•Total assets increased $405.0 million, or 16.4%, to $2.9 billion at
December 31, 2021 when compared with December 31, 2020. Total loans at
December 31, 2021 were $2.2 billion, an increase of $315.2 million, or 17.1%,
compared with December 31, 2020. Total deposits were $2.6 billion at
December 31, 2021, an increase of $430.2 million, or 19.9% compared with
December 31, 2020. Retained earnings were $56.7 million at December 31, 2021, an
increase of $19.5 million compared to $37.1 million at December 31, 2020.
Shareholders' equity was $223.9 million and $178.6 million at December 31, 2021
and December 31, 2020, respectively.

• Net profit for each of the financial years ended December 31, 2021 and 2020 was $27.3 million and $20.3 millionrespectively.

•Earnings per common share were $2.42 for the year ended December 31, 2021 and
$1.90 for the year ended December 31, 2020. Total weighted average common shares
outstanding were 10,716,796 at December 31, 2021 and December 31, 2020.

•First Guaranty participated in the SBA Paycheck Protection Program ("PPP")
under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The
CARES Act authorized the SBA to guarantee loans under a new 7(a) loan program
known as the PPP. As a qualified SBA lender, we were automatically authorized to
originate PPP loans. The SBA will guarantee 100% of the PPP loans made to
eligible borrowers and will forgive such loans. The program has been conducted
in two phases which First Guaranty classifies as Round 1 loans (originated in
2020) and Round 2 loans (originated in 2021). As of December 31, 2021, First
Guaranty had remaining Round 1 PPP loans of $12.7 million with deferred fees of
$0.3 million and Round 2 PPP loans of $22.6 million with deferred fees of $1.1
million remaining. $2.0 million in PPP fees were recognized during 2021 compared
to $2.2 million in PPP fees recognized in 2020.

•The allowance for loan and lease losses was 1.11% of total loans at
December 31, 2021 compared to 1.33% at December 31, 2020. First Guaranty
attributes the decrease in the allowance as a percentage of loans to the
improvement in factors related to the COVID-19 pandemic offset by growth in the
loan portfolio identified risks. First Guaranty had acquisition related loan
discounts that totaled approximately $1.4 million at December 31, 2021. First
Guaranty had $35.4 million at December 31, 2021 of SBA guaranteed PPP loans that
have no related allowance due to the 100% government guarantee in accordance
with regulatory guidance.

• The first warranty had approximately $12.4 million deferred loans
December 31, 2021 due to Hurricane Ida which affected Southeast Louisiana to
August 29, 2021.

•The provision for loan losses totaled $2.1 million for 2021 compared to $14.9
million in 2020. The provision was primarily elevated in 2020 due to COVID-19
related economic conditions and due to growth in the loan portfolio.

• Net interest income for 2021 was $89.6 million compared to $74.7 million for 2020.

•Noninterest income for 2021 was $10.8 million compared to $23.8 million for
2020. Excluding the impact of securities gains, noninterest income for 2021
improved to $10.0 million from $9.0 million for 2020. The increase was primarily
due to higher ATM and debit card fees.

•The net interest margin was 3.44% for 2021 and 3.35% for 2020. First Guaranty
attributed the increase in the net interest margin to an improved mix of loans
compared to securities and cash along with continued reduction in First
Guaranty's cost of funds. Loans as a percentage of average interest earning
assets increased to 77.3% at December 31, 2021 compared to 74.7% at December 31,
2020.

•Investment securities totaled $364.2 million at December 31, 2021, an increase
of $125.6 million when compared to $238.5 million at December 31, 2020. Gains on
the sale of securities were $0.7 million for 2021 as compared $14.8 million for
2020. At December 31, 2021, available for sale securities, at fair value,
totaled $210.6 million, a decrease of $27.9 million when compared to $238.5
million at December 31, 2020. At December 31, 2021, held to maturity securities,
at amortized cost, totaled $153.5 million as compared to $0 at December 31,
2020.

• Total loans net of unearned income were $2.2 billion at December 31, 2021
compared to $1.8 billion at December 31, 2020. Total loans, net of unearned income, are reduced by the provision for loan and lease losses, which totaled
$24.0 million at December 31, 2021 and $24.5 million at December 31, 2020.

• Total impaired loans decreased $0.9 million for $15.0 million at December 31, 2021 compared to $15.9 million at December 31, 2020.

• Unaccrued loans increased $1.1 million for $16.7 million at December 31, 2021
compared to $15.6 million at December 31, 2020.

•First Guaranty is a smaller reporting company and has delayed the adoption of
ASU 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit
Losses on Financial Instruments." First Guaranty uses the incurred loss model
for the calculation of its allowance.

•Return on average assets was 1.01% and 0.87% for the years ended December 31,
2021 and 2020, respectively. Return on average common equity was 14.06% and
11.36% for 2021 and 2020, respectively. Return on average assets is calculated
by dividing net income by average assets. Return on average common equity is
calculated by dividing net income by average common equity.

•Book value per common share was $17.81 as of December 31, 2021 compared to
$16.66 as of December 31, 2020. Tangible book value per common share was $16.13
as of December 31, 2021 compared to $14.92 as of December 31, 2020. The increase
in book value was due primarily to an increase in retained earnings partially
offset by changes in accumulated other comprehensive income ("AOCI"). AOCI is
comprised of unrealized gains and losses on available for sale securities.
                                      -42-
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•First Guaranty's Board of Directors declared cash dividends of $0.64 per common
share in 2021, which was the equivalent of $0.60 per common share after
adjusting for the 10% common stock dividend paid in December 2021. First
Guaranty also declared cash dividends of $0.64 in 2020, which was the equivalent
of $0.58 per common share after adjusting for the 10% common stock dividend paid
in December 2021. First Guaranty has paid 114 consecutive quarterly dividends as
of December 31, 2021.

•On April 27, 2021, First Guaranty issued 34,500 shares of 6.75% Series A
Fixed-Rate Non-Cumulative Perpetual Preferred Stock, par value $1,000 per share,
with a liquidation preference of $1,000 per share through an underwritten public
offering of 1,380,000 depositary shares, each representing a 1/40th ownership
interest in a share of the Series A Preferred Stock. Total gross proceeds from
the preferred stock offering were $34.5 million. The shares are listed on NASDAQ
under the symbol FGBIP. The proceeds were used to redeem $13.3 million in senior
debt and increase the bank subsidiary capital by $20.0 million effective April
30, 2021. First Guaranty paid preferred cash dividends of $1.4 million during
2021.

Recent Developments

As disclosed in previous filings by First Guaranty Bancshares, Inc., for
approximately 15 years First Guaranty Bank, a subsidiary of First Guaranty
Bancshares, Inc. has utilized an "Employee Stock Grant Program" to incentivize
and reward bank employees for performance. Each quarter, the Board of Directors
of First Guaranty Bank allocates a $75,000 payment to an attorney to be used to
purchase, on the open market, shares of stock with First Guaranty Bancshares,
Inc. The attorney receives nominations which come from managers throughout the
Bank for awards to employees which range from clerical through top Management.
An average of just over 100 employees receive awards, in full ownership with no
vesting nor other requirements, each quarter with an average award of
approximately 37 shares per employee awarded.

The total cost of this program per year is approximately $300,000 with total shares granted of approximately 15,000 shares.

In addition, the same process is utilized by First Guaranty Bancshares, Inc. at
the conclusion of each year for the grant of stock bonuses to members of
Management of First Guaranty Bank, selected by the Board of Directors of First
Guaranty Bancshares, Inc. Those awards have averaged approximately $275,000 or
12,500 shares per year.

the SECOND requested information regarding this practice. No process has been instituted; only, a request for information.

                                      -43-
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Critical accounting estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles. United States and with prevailing accounting practices in the banking sector. Certain critical estimates require judgment and estimates that are used in the preparation of the financial statements and accompanying notes.

We have identified the following critical accounting estimate that is critical to understanding our financial condition and results of operations.

Provision for losses on loans and leases.

The allowance for loan and lease losses is established through a provision for
loan losses charged to expense. Loans are charged against the allowance for loan
and lease losses when management believes that the collectability of the
principal is unlikely. The allowance, which is based on evaluation of the
collectability of loans and prior loan loss experience, is an amount that, in
the opinion of management, reflects the risks inherent in the existing loan
portfolio and exists at the reporting date. The evaluations take into
consideration a number of subjective factors including changes in the nature and
volume of the loan portfolio, overall portfolio quality, review of specific
problem loans, current economic conditions that may affect a borrower's ability
to pay, adequacy of loan collateral and other relevant factors.

The following are general credit risk factors that affect our loan portfolio
segments. These factors do not encompass all risks associated with each loan
category. Construction and land development loans have risks associated with
interim construction prior to permanent financing and repayment risks due to the
future sale of developed property. Farmland and agricultural loans have risks
such as weather, government agricultural policies, fuel and fertilizer costs,
and market price volatility. One- to four-family residential, multifamily, and
consumer credits are strongly influenced by employment levels, consumer debt
loads and the general economy. Non-farm non-residential loans include both
owner-occupied real estate and non-owner occupied real estate. Common risks
associated with these properties is the ability to maintain tenant leases and
keep lease income at a level able to service required debt and operating
expenses. Commercial and industrial loans generally have non-real estate secured
collateral which requires closer monitoring than real estate collateral.

Although management uses available information to recognize losses on loans,
because of uncertainties associated with local economic conditions, collateral
values and future cash flows on impaired loans, it is reasonably possible that a
material change could occur in the allowance for loan and lease losses in the
near term. However, the amount of the change that is reasonably possible cannot
be estimated. The evaluation of the adequacy of loan collateral is often based
upon estimates and appraisals. Because of changing economic conditions, the
valuations determined from such estimates and appraisals may also change.
Accordingly, we may ultimately incur losses that vary from management's current
estimates. Adjustments to the allowance for loan and lease losses will be
reported in the period such adjustments become known or can be reasonably
estimated. All loan losses are charged to the allowance for loan and lease
losses when the loss actually occurs or when the collectability of the principal
is unlikely. Recoveries are credited to the allowance at the time of recovery.

Loans acquired in a business combination are recorded at their estimated fair
value on their purchase date with no carryover of the related allowance for loan
and lease losses. Acquired loans are segregated between those with deteriorated
credit quality at acquisition and those deemed as performing. To make this
determination, Management considers such factors as past due status, nonaccrual
status, credit risk ratings, interest rates and collateral position. The fair
value of acquired loans deemed performing is determined by discounting cash
flows, both principal and interest, for each pool at prevailing market interest
rates as well as consideration of inherent potential losses. The difference
between the fair value and principal balances due at acquisition date, the fair
value discount, is accreted into income over the estimated life of each loan
pool. The fair value is estimated using an analysis of expected cash flows to be
received from the loan and may include the use of third party appraisals to
assist in the calculation. Performing acquired loans are subsequently evaluated
for any required allowance at each reporting date.

The allowance consists of specific, general, and unallocated components. The
specific component relates to loans that are classified as doubtful,
substandard, and impaired. For such loans that are also classified as impaired,
an allowance is established when the discounted cash flows (or collateral value
or observable market price) of the impaired loan is lower than the carrying
value of that loan. First Guaranty typically receives appraisals from
independent third parties to facilitate this calculation.

The general component covers non-classified loans and special mention loans and
is based on historical loss experience adjusted for qualitative factors.
Qualitative factors include analysis of levels and trends in delinquencies,
nonaccrual loans, charge-offs and recoveries, loan risk ratings, trends in
volume and terms of loans, changes in lending policy, credit concentrations,
portfolio stress test results, national and local economic trends including the
impact of COVID-19, industry conditions, and other relevant factors. For
example, in 2020 and 2021 economic conditions related to the COVID-19 pandemic
resulted in a higher allocation within this component of the allowance to hotel
loans. First Guaranty's commercial lease originations increased in 2021 which
resulted in an increased allocation within this component of the allowance
primarily related to the trend in increased volume.

An unallocated component is maintained to cover uncertainties that could affect the estimation of probable losses.

The allowance for loan and lease losses is reviewed on a monthly basis. The
monitoring of credit risk also extends to unfunded credit commitments, such as
unused commercial credit lines and letters of credit. A reserve is established
as needed for estimates of probable losses on such commitments.



                                      -44-
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Financial condition

Assets

Our total assets were $2.9 billion at December 31, 2021, an increase of $405.0
million, or 16.4%, from total assets of $2.5 billion at December 31, 2020.
Assets increased primarily due to increases in net loans of $315.7 million and
investment securities of $125.6 million, partially offset by a decrease in cash
and cash equivalents of $37.7 million at December 31, 2021 compared to
December 31, 2020.

Loans

Net loans increased $315.7 million, or 17.4%, to $2.1 billion at December 31,
2021 from $1.8 billion at December 31, 2020. Commercial lease loan balances
increased $141.9 million primarily due to new lease originations. First Guaranty
has continued to expand its commercial lease portfolio which generally have
higher yields than commercial real estate loans but shorter average lives.
Non-farm non-residential loan balances increased $62.3 million primarily due to
new originations. Commercial and industrial loans increased $45.4 million
primarily due to new originations. SBA PPP loans totaled $35.4 million at
December 31, 2021 compared to $92.3 million at December 31, 2020. These totals
are included in commercial and industrial loans. Round 1 SBA PPP loans decreased
from $92.3 million at December 31, 2020 to $12.7 million at December 31, 2021
due to SBA loan forgiveness. Partially offsetting these payoffs were Round 2 SBA
PPP loan originations with total balances net of forgiveness payments of
$22.6 million at December 31, 2021. Construction and land development loans
increased $23.5 million principally due to advances on existing construction
lines and new originations. Multifamily loans increased $19.9 million primarily
due to the conversion of existing construction loans to permanent financing.
One-to four-family loans increased $17.1 million primarily due to new
originations. Farmland loans increased $4.9 million due to increases on
agricultural loan commitments. Consumer and other loans increased $3.5 million
primarily due to new originations. Agricultural loans decreased $1.6 million
primarily due to seasonal activity. First Guaranty had approximately 5.2% of
funded and 2.4% of unfunded commitments in our loan portfolio to businesses
engaged in support or service activities for oil and gas operations. First
Guaranty's hotel and hospitality portfolio totaled $182.8 million at
December 31, 2021. As part of the management of risks in our loan portfolio,
First Guaranty had previously established an internal guidance limit of
approximately $187.0 million for its hotel and hospitality portfolio. First
Guaranty had $257.8 million in loans related to our Texas markets at
December 31, 2021 which was an increase of $12.9 million or 5.3% from $244.9
million at December 31, 2020. First Guaranty continues to have significant loan
growth associated with its Texas branches. We anticipate additional growth
opportunities in Texas as it contains four major cities in Austin, Dallas,
Houston, and San Antonio, plus the continued growth and development of these
areas is exceeding that of other areas of the country. Syndicated loans at
December 31, 2021 were $47.4 million, of which $17.6 million were shared
national credits. Syndicated loans decreased $27.8 million from $75.2 million at
December 31, 2020.

As of December 31, 2021, 66.8% of our loan portfolio was secured by real estate.
The largest portion of our loan portfolio, at 40.9% as of December 31, 2021, was
non-farm non-residential loans secured by real estate. Approximately 31.9% of
the loan portfolio was based on a floating rate tied to the prime rate or LIBOR
as of December 31, 2021. 77.3% of the loan portfolio is scheduled to mature
within five years from December 31, 2021. First Guaranty had $53.6 million in
loans that were priced off of the LIBOR index rate at December 31, 2021. As it
is anticipated that LIBOR will be discontinued after 2021, First Guaranty is
reviewing its loan documents to determine alternative reference rates and does
not anticipate there will be a significant financial statement impact with the
transition.


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Composition of loan portfolio. The table below shows the balance of loans, excluding loans held for sale, outstanding by type of loan at the dates presented, and the percentage of each type of loan in total loans.

                                                                                                                               At December 31,
                                                2021                                      2020                                      2019                                      2018                                      2017
(in thousands except for %)          Amount              Percent               Amount              Percent               Amount              Percent               Amount              Percent               Amount              

Percent

Real Estate:
Construction & land development  $   174,334                  8.1  %       $   150,841                  8.2  %       $   172,247                 11.3  %       $   124,644                 10.1  %       $   112,603                  9.8  %
Farmland                              31,810                  1.5  %            26,880                  1.4  %            22,741                  1.5  %            18,401                  1.5  %            25,691                  2.2  %
1- 4 Family                          288,347                 13.3  %           271,236                 14.7  %           289,635                 18.9  %           172,760                 14.1  %           158,733                 13.8  %
Multifamily                           65,848                  3.0  %            45,932                  2.5  %            23,973                  1.6  %            42,918                  3.5  %            16,840                  1.4  %
Non-farm non-residential             886,407                 40.9  %           824,137                 44.6  %           616,536                 40.3  %           586,263                 47.7  %           530,293                 46.1  %
Total Real Estate                  1,446,746                 66.8  %         1,319,026                 71.4  %         1,125,132                 73.6  %           944,986                 76.9  %           844,160                 73.3  %
Non-Real Estate:
Agricultural                          26,747                  1.2  %            28,335                  1.5  %            26,710                  1.8  %            23,108                  1.9  %            21,514                  1.9  %
Commercial and industrial            398,391                 18.4  %           353,028                 19.1  %           268,256                 17.5  %           200,877                 16.4  %           230,638                 20.0  %
Commercial leases                    246,022                 11.4  %           104,141                  5.6  %            70,125                  4.6  %            25,906                  2.1  %            26,434                  2.3  %
Consumer and other                    48,142                  2.2  %            44,642                  2.4  %            38,743                  2.5  %            33,537                  2.7  %            28,751                  2.5  %
Total Non-Real Estate                719,302                 33.2  %           530,146                 28.6  %           403,834                 26.4  %           283,428                 23.1  %           307,337                 26.7  %
Total Loans Before Unearned
Income                             2,166,048                100.0  %         1,849,172                100.0  %         1,528,966                100.0  %         1,228,414                100.0  %         1,151,497                100.0  %
Less: Unearned income                 (6,689)                                   (5,037)                                   (3,476)                                   (3,146)                                   (2,483)
Total Loans Net of Unearned
Income                           $ 2,159,359                               $ 1,844,135                               $ 1,525,490                               $ 1,225,268                               $ 1,149,014



Loan Portfolio Maturities. The following tables summarize the scheduled
repayments of our loan portfolio at December 31, 2021 and 2020. Demand loans,
loans having no stated repayment schedule or maturity, and overdraft loans are
reported as being due in one year or less. Maturities are based on the final
contractual payment date and do not reflect the effect of prepayments and
scheduled principal amortization.

                                                                                         December 31, 2021
                                                                     More Than One
                                                                         Year              More Than Five
                                                 One Year or         Through Five          Years Through         After Fifteen
(in thousands)                                      Less                 Years             Fifteen Years             Years                Total
Real Estate:
Construction & land development                 $   36,038          $    134,546          $       3,370          $       380          $   174,334
Farmland                                             5,985                13,461                  1,977               10,387               31,810
1- 4 family                                         30,670                64,472                 30,069              163,136              288,347
Multifamily                                         13,159                44,879                  6,618                1,192               65,848
Non-farm non-residential                           107,855               597,919                106,218               74,415              886,407
Total Real Estate                                  193,707               855,277                148,252              249,510            1,446,746
Non-Real Estate:
Agricultural                                        10,467                 6,426                  4,196                5,658               26,747
Commercial and industrial                          120,888               205,725                 68,241                3,537              398,391
Commercial leases                                   30,690               215,332                      -                    -              246,022
Consumer and other                                   8,552                31,608                  3,410                4,572               48,142
Total Non-Real Estate                              170,597               459,091                 75,847               13,767              719,302
Total Loans Before Unearned Income              $  364,304          $  

1,314,368 $224,099 $263,277 $2,166,048
Less: unearned income

                                                                                                                      (6,689)
Total Loans Net of Unearned Income                                                                                                    $ 2,159,359


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                                                                                         December 31, 2020
                                                                     More Than One
                                                                         Year              More Than Five
                                                 One Year or         Through Five          Years Through         After Fifteen
(in thousands)                                      Less                 Years             Fifteen Years             Years                Total
Real Estate:
Construction & land development                 $   23,276          $    111,615          $      13,349          $     2,601          $   150,841
Farmland                                             6,078                12,147                  2,156                6,499               26,880
1- 4 family                                         37,604                65,011                 29,236              139,385              271,236
Multifamily                                          5,030                29,127                 10,276                1,499               45,932
Non-farm non-residential                           105,623               494,690                144,689               79,135              824,137
Total Real Estate                                  177,611               712,590                199,706              229,119            1,319,026
Non-Real Estate:
Agricultural                                        12,356                 5,795                  5,664                4,520               28,335
Commercial and industrial                           40,484               293,984                 14,789                3,771              353,028
Commercial leases                                   29,503                74,638                      -                    -              104,141
Consumer and other                                   8,363                28,677                  2,406                5,196               44,642
Total Non-Real Estate                               90,706               403,094                 22,859               13,487              530,146
Total Loans Before Unearned Income              $  268,317          $  

1,115,684 $222,565 $242,606 $1,849,172
Less: unearned income

                                                                                                                      (5,037)
Total Loans Net of Unearned Income                                                                                                    $ 1,844,135



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The following table sets forth the scheduled repayments of fixed and
adjustable-rate loans at December 31, 2021 that are contractually due after
December 31, 2022.

                                 Due After December 31, 2022
(in thousands)              Fixed         Floating          Total
One to five years           926,640        385,509        1,312,149
Over Five to 15 years       114,976        106,579          221,555
Over 15 years               179,522         78,987          258,509
Subtotal                $ 1,221,138      $ 571,075      $ 1,792,213
Nonaccrual loans                                             16,715
Total                                                   $ 1,808,928



As of December 31, 2021, $349.1 million of floating rate loans were at their
interest rate floor. At December 31, 2020, $305.0 million of floating rate loans
were at the floor rate. Nonaccrual loans have been excluded from these totals.

                                      -48-
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Non-performing assets

Non-performing assets consist of non-performing loans and other real-estate
owned. Non-performing loans (including nonaccruing troubled debt restructurings
described below) are those on which the accrual of interest has stopped or loans
which are contractually 90 days past due on which interest continues to accrue.
Loans are ordinarily placed on nonaccrual status when principal and interest is
delinquent for 90 days or more. However, management may elect to continue the
accrual when the estimated net available value of collateral is sufficient to
cover the principal balance and accrued interest. It is our policy to
discontinue the accrual of interest income on any loan for which we have
reasonable doubt as to the payment of interest or principal. When a loan is
placed on nonaccrual status, unpaid interest credited to income is reversed.
Nonaccrual loans are returned to accrual status when the financial position of
the borrower indicates there is no longer any reasonable doubt as to the payment
of principal or interest. Other real estate owned consists of property acquired
through formal foreclosure, in-substance foreclosure or by deed in lieu of
foreclosure.

The following table presents the main amounts and categories of our non-performing assets as at December 31, 20212020, 2019, 2018 and 2017.

                                      -49-
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                                                                                     December 31,
(in thousands)                                       2021              2020              2019              2018              2017
Nonaccrual loans:
Real Estate:
Construction and land development                 $    530          $    621          $    381          $    311          $    371
Farmland                                               787               857             1,274             1,293                65
1- 4 family                                          2,861             2,227             2,759             2,246             1,953
Multifamily                                              -                 -                 -                 -                 -
Non-farm non-residential                             8,733             7,449             4,646               864             3,758
Total Real Estate                                   12,911            11,154             9,060             4,714             6,147
Non-Real Estate:
Agricultural                                         2,302             3,472             4,800             3,651             1,496
Commercial and industrial                              699               701               327               317             4,826
Commercial leases                                        -                 -                 -                 -                 -
Consumer and other                                     803               249               216                61                81
Total Non-Real Estate                                3,804             4,422             5,343             4,029             6,403
Total nonaccrual loans                              16,715            15,576            14,403             8,743            12,550

Loans 90 days and greater delinquent & still
accruing:
Real Estate:
Construction and land development                      246             1,000                48                 -                 -
Farmland                                                 -                 -                 -                 -                 -
1- 4 family                                            514             4,980               923                26                 -
Multifamily                                            162               366                 -                 -                 -
Non-farm non-residential                               281             4,699             1,603                 -                 -
Total Real Estate                                    1,203            11,045             2,574                26                 -
Non-Real Estate:
Agricultural                                             -                67                 -                 -                41
Commercial and industrial                               23             1,856                15                53               798
Commercial leases                                        -                 -                 -                 -                 -
Consumer and other                                      19               123                50                66                 -
Total Non-Real Estate                                   42             2,046                65               119               839
Total loans 90 days and greater delinquent &
still accruing                                       1,245            13,091             2,639               145               839

Total non-performing loans                        $ 17,960          $ 28,667          $ 17,042          $  8,888          $ 13,389

Other real estate owned and foreclosed assets:
Real Estate:
Construction and land development                        -               311               669               241               304
Farmland                                                 -                 -                 -                 -                 -
1- 4 family                                            817               131               559               120                23
Multifamily                                              -                 -                 -                 -                 -
Non-farm non-residential                             1,255             1,798             3,651               777               954
Total Real Estate                                    2,072             2,240             4,879             1,138             1,281
Non-Real Estate:
Agricultural                                             -                 -                 -                 -                 -
Commercial and industrial                                -                 -                 -                 -                 -
Commercial leases                                        -                 -                 -                 -                 -
Consumer and other                                       -                 -                 -                 -                 -
Total Non-Real estate                                    -                 -                 -                 -                 -
Total other real estate owned and foreclosed
assets                                               2,072             2,240             4,879             1,138             1,281

Total non-performing assets                       $ 20,032          $ 30,907          $ 21,921          $ 10,026          $ 14,670

Non-performing assets to total loans                  0.93  %           1.68  %           1.44  %           0.82  %           1.28  %
Non-performing assets to total assets                 0.70  %           1.25  %           1.04  %           0.55  %           0.84  %
Non-performing loans to total loans                   0.83  %           1.55  %           1.12  %           0.73  %           1.17  %
Nonaccrual loans to total loans                       0.77  %           0.84  %           0.94  %           0.71  %           1.09  %
Allowance for loan and lease losses to nonaccrual
loans                                               143.76  %         157.41  %          75.88  %         123.25  %          73.51  %


                                      -50-
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For the years ended December 31, 2021 and 2020, gross interest income which
would have been recorded had the non-performing loans been current in accordance
with their original terms amounted to $0.8 million and $0.6 million,
respectively. We recognized $0.1 million and $22,000 of interest income on such
loans during the years ended December 31, 2021 and 2020, respectively. For the
years ended December 31, 2021 and 2020, gross interest income which would have
been recorded had the troubled debt restructured loans been current in
accordance with their original terms amounted to $0.2 million and $0.1 million,
respectively. We recognized $0.2 million and $11,000 of interest income on such
loans during the years ended December 31, 2021 and 2020, respectively.

Non-performing assets were $20.0 millioni.e. 0.70%, of the total assets at
December 31, 2021compared to $30.9 millioni.e. 1.25%, of total assets at
December 31, 2020which represents a decrease in non-performing assets of
$10.9 million. The decrease in non-performing assets occurred primarily due to a reduction in 90-day past due loans and other real estate held, offset by an increase in unexpired loans.

Nonaccrual loans increased from $15.6 million at December 31, 2020 to $16.7
million at December 31, 2021. The increase in nonaccrual loans was concentrated
primarily in non-farm non-residential loans. Non-performing assets included $2.6
million in loans with a government guarantee, or 13.2% of non-performing assets.
These are structured as net loss guarantees in which up to 90% of loss exposure
is covered.

At December 31, 2021 loans 90 days and greater delinquent and still accruing
totaled $1.2 million, a decrease of $11.8 million or 90 percent from $13.1
million at December 31, 2020. The decrease in loans 90 days or greater
delinquent and still accruing was concentrated primarily in one-to four-family
residential loans, non-farm non-residential loans, commercial and industrial
loans and construction and land development loans. One-to-four family loans in
the 90 day category included loans acquired from the Union acquisition that
contractually matured but had not been renewed due to operations issues
following the acquisition. First Guaranty initiated a sustained effort that
resulted in satisfactorily renewing the majority of these acquired loans and
returning them to performing status.

Other real estate owned at December 31, 2021 totaled $2.1 million, a decrease of
$0.2 million from $2.2 million at December 31, 2020. The largest piece of
property in other real estate owned is a retail shopping center that totals $1.7
million. First Guaranty has a reserve for other real estate owned losses. This
reserve totaled $0.5 million at December 31, 2021 compared to $0.4 million at
December 31, 2020. Total write downs and or reserves related to other real
estate owned were $0.6 million in 2021 compared to $1.4 million in 2020. These
expenses were included in other non-interest expense.

At December 31, 2021, our largest non-performing assets were comprised of the
following nonaccrual loans, 90 day plus and still accruing loans and other real
estate owned: (1) a non-farm non-residential loan secured by a hotel that
totaled $3.4 million that is classified as a troubled debt restructured loan or
TDR; (2) a non-farm non-residential loan secured by a childcare facility that
totaled $1.8 million; (3) a $1.7 million non-farm non-residential property
included in other real estate owned; (4) a non-farm non-residential loan secured
by a mobile home facility that totaled $1.3 million; (5) a non-farm
non-residential loan secured by a waste treatment facility that totaled $0.9
million; and (6) an agricultural/farmland loan relationship that totaled $0.9
million. The agricultural loan is partially guaranteed by the USDA Farm Service
Agency.


                                      -51-
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Troubled Debt Restructuring. Another category of assets which contribute to our
credit risk is troubled debt restructurings ("TDRs"). A TDR is a loan for which
a concession has been granted to the borrower due to a deterioration of the
borrower's financial condition. Such concessions may include reduction in
interest rates, deferral of interest or principal payments, principal
forgiveness and other actions intended to minimize the economic loss and to
avoid foreclosure or repossession of the collateral. We strive to identify
borrowers in financial difficulty early and work with them to modify to more
affordable terms before such loan reaches nonaccrual status. In evaluating
whether to restructure a loan, management analyzes the long-term financial
condition of the borrower, including guarantor and collateral support, to
determine whether the proposed concessions will increase the likelihood of
repayment of principal and interest. TDRs that are not performing in accordance
with their restructured terms and are either contractually 90 days past due or
placed on nonaccrual status are reported as non-performing loans. Our policy
provides that nonaccrual TDRs are returned to accrual status after a period of
satisfactory and reasonable future payment performance under the terms of the
restructuring. Satisfactory payment performance is generally no less than six
consecutive months of timely payments and demonstrated ability to continue to
repay.

Under section 4013 of the Coronavirus Aid, Relief, and Economic Security Act
("CARES Act"), which was signed into law on March 27, 2020 and subsequently
modified by later legislation, financial institutions have the option to
temporarily suspend certain requirements under U.S. generally accepted
accounting principles related to troubled debt restructurings for a limited
period of time to account for the effects of COVID-19. This provision allows a
financial institution the option to not apply the guidance on accounting for
troubled debt restructurings to loan modifications, such as extensions or
deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i)
January 1, 2022 or (ii) 60 days after the end of the COVID-19 national
emergency. The relief can only be applied to modifications for borrowers that
were not more than 30 days past due as of December 31, 2019. First Guaranty
elected to adopt these provisions of the CARES Act.

The following is a summary of loans restructured as TDRs at December 31, 2021,
2020 and 2019:
                                                          At December 31,
(in thousands)                                      2021         2020        2019
TDRs:
In Compliance with Modified Terms                 $     -      $     -      $  -
Past Due 30 through 89 days and still accruing          -            -      

Past Due 90 days and greater and still accruing         -            -      

Nonaccrual                                          3,382        3,591      

Restructured Loans that subsequently defaulted          -            -         -
Total TDR                                         $ 3,382      $ 3,591      $  -



At December 31, 2021, First Guaranty had one outstanding TDR which was a $3.4
million non-farm non-residential loan secured by commercial real estate that is
on nonaccrual. The restructuring of this loan was related to interest rate and
amortization concessions. The loan is secured by a hotel facility. This loan was
not eligible for a CARES act modification.

                                      -52-
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Classified Assets. Federal regulations provide for the classification of loans
and other assets, such as debt and equity securities considered by the FDIC to
be of lesser quality, as "substandard," "doubtful" or "loss." An asset is
considered "substandard" if it is inadequately protected by the current net
worth and paying capacity of the obligor or of the collateral pledged, if any.
"Substandard" assets include those characterized by the "distinct possibility"
that the insured institution will sustain "some loss" if the deficiencies are
not corrected. Assets classified as "doubtful" have all of the weaknesses
inherent in those classified as "substandard," with the added characteristic
that the weaknesses present make "collection or liquidation in full," on the
basis of currently existing facts, conditions, and values, "highly questionable
and improbable." Assets classified as "loss" are those considered
"uncollectible" and of such little value that their continuance as assets
without the establishment of a specific allowance for loan and lease losses is
not warranted. Assets that do not currently expose the insured institution to
sufficient risk to warrant classification in one of the aforementioned
categories but possess weaknesses are designated as "special mention" by our
management.

When an insured institution classifies problem assets as either substandard or
doubtful, it may establish general allowances in an amount deemed prudent by
management to cover losses that were both probable and reasonable to estimate.
General allowances represent allowances which have been established to cover
accrued losses associated with lending activities that were both probable and
reasonable to estimate, but which, unlike specific allowances, have not been
allocated to particular problem assets. When an insured institution classifies
problem assets as "loss," it is required either to establish a specific
allowance for losses equal to 100% of that portion of the asset so classified or
to charge-off such amount. An institution's determination as to the
classification of its assets and the amount of its valuation allowances is
subject to review by the regulatory authorities, which may require the
establishment of additional general or specific allowances.

In connection with the filing of our periodic regulatory reports and in
accordance with our classification of assets policy, we continuously assess the
quality of our loan portfolio and we regularly review the problem loans in our
loan portfolio to determine whether any loans require classification in
accordance with applicable regulations. Loans are listed on the "watch list"
initially because of emerging financial weaknesses even though the loan is
currently performing as agreed, or delinquency status, or if the loan possesses
weaknesses although currently performing. Management reviews the status of our
loan portfolio delinquencies, by product types, with the full board of directors
on a monthly basis. Individual classified loan relationships are discussed as
warranted. If a loan deteriorates in asset quality, the classification is
changed to "special mention," "substandard," "doubtful" or "loss" depending on
the circumstances and the evaluation. Generally, loans 90 days or more past due
are placed on nonaccrual status and classified "substandard."

We also employ a risk grading system for our loans to help assure that we are
not taking unnecessary and/or unmanageable risk. The primary objective of the
loan risk grading system is to establish a method of assessing credit risk to
further enable management to measure loan portfolio quality and the adequacy of
the allowance for loan and lease losses. Further, we contract with an external
loan review firm to complete a credit risk assessment of the loan portfolio on a
regular basis to help determine the current level and direction of our credit
risk. The external loan review firm communicates the results of their findings
to the Bank's audit committee. Any material issues discovered in an external
loan review are also communicated to us immediately.

The following table sets forth our amounts of classified loans and loans
designated as special mention at December 31, 2021, 2020 and 2019. Classified
assets totaled $53.4 million at December 31, 2021, and included $18.0 million of
non-performing loans.
                                       At December 31,
(in thousands)                2021           2020          2019
Classification of Loans:
Substandard                $  53,353      $ 50,062      $ 53,072
Doubtful                           -             -             -
Total Classified Assets    $  53,353      $ 50,062      $ 53,072
Special Mention            $ 138,718      $ 99,201      $ 24,083



The increase in classified assets at December 31, 2021 as compared to
December 31, 2020 was due to a $3.3 million increase in substandard loans.
Substandard loans at December 31, 2021 consisted of $18.8 million in non-farm
non-residential, $9.8 million in one- to four-family residential, $8.8 million
in commercial and industrial, $7.0 million in multifamily, $4.1 million in
farmland, $2.7 million in agricultural, $1.1 million in construction and land
development, and the remaining $1.0 million comprised of consumer and other
loans. Special mention loans increased by $39.5 million in 2021 primarily due to
the downgrade of loans in the portfolio. The increase in special mention loans
was primarily the result of loan relationships that were downgraded due to
ongoing economic conditions associated with COVID-19 or relationship specific
issues. The increase was concentrated with hotel loans. First Guaranty
anticipates upgrading several loan relationships from special mention to pass
status in the upcoming quarters.
                                      -53-
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Allowance for losses on loans and leases

The allowance for loan and lease losses is maintained to absorb potential losses
in the loan portfolio. The allowance is increased by the provision for loan
losses offset by recoveries of previously charged-off loans and is decreased by
loan charge-offs. The provision is a charge to current expense to provide for
current loan losses and to maintain the allowance commensurate with management's
evaluation of the risks inherent in the loan portfolio. Various factors are
taken into consideration when determining the amount of the provision and the
adequacy of the allowance. These factors include but are not limited to:

• overdue and non-performing assets;

•specific internal analysis of credits requiring particular attention;

•the current level of classified and criticized regulatory assets and the risk factors associated with each;

•changes in underwriting standards or lending procedures and policies;

• charging and recovery practices;

• national and local economic and business conditions, including the COVID-19 pandemic;

•the nature and volume of loans;

• overall portfolio quality, loan concentrations and results of portfolio stress tests;

• the adequacy of loan guarantees;

•the quality of the loan review system and the degree of oversight by our Board of Directors;

•competition and legal and regulatory requirements imposed on borrowers;

•Federal and state regulator loan portfolio reviews and reviews; and

•Review by our in-house loan review department and independent accountants.

The data collected from all sources in determining the adequacy of the allowance
is evaluated on a regular basis by management with regard to current national
and local economic trends, prior loss history, underlying collateral values,
credit concentrations and industry risks. An estimate of potential loss on
specific loans is developed in conjunction with an overall risk evaluation of
the total loan portfolio. This evaluation is inherently subjective as it
requires estimates that are susceptible to significant revision as new
information becomes available.

The allowance consists of specific, general, and unallocated components. The
specific component relates to loans that are classified as doubtful,
substandard, and impaired. For such loans that are also classified as impaired,
an allowance is established when the discounted cash flows (or collateral value
or observable market price) of the impaired loan is lower than the carrying
value of that loan. Also, a specific reserve is allocated for our syndicated
loans, including shared national credits. The general component covers
non-classified loans and special mention loans and is based on historical loss
experience for the past three years adjusted for qualitative factors described
above. An unallocated component is maintained to cover uncertainties that could
affect the estimate of probable losses.

The provision for losses was $24.0 million at December 31, 2021 compared to
$24.5 million at December 31, 2020.

                                      -54-
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The balance in the allowance for loan and lease losses is principally influenced
by the provision for loan losses and by net loan loss experience. Additions to
the allowance are charged to the provision for loan losses. Losses are charged
to the allowance as incurred and recoveries on losses previously charged to the
allowance are credited to the allowance at the time recovery is collected. The
table below reflects the activity in the allowance for loan and lease losses for
the years indicated.
                                                                          At or For the Years Ended December 31,
(dollars in thousands)                                 2021              2020              2019              2018              2017
Balance at beginning of year                        $ 24,518          $ 10,929          $ 10,776          $  9,225          $ 11,114

Charge-offs:
Real Estate:
Construction and land development                        (92)             (265)                -                 -                 -
Farmland                                                   -                 -                 -                 -                 -
1- 4 family                                             (266)             (154)             (552)              (99)              (33)
Multifamily                                              (12)                -                 -                 -                 -
Non-farm non-residential                              (1,020)             (550)           (2,603)             (404)           (1,291)
Total Real Estate                                     (1,390)             (969)           (3,155)             (503)           (1,324)
Non-Real Estate:
Agricultural                                            (149)             (110)              (40)             (300)             (162)
Commercial and industrial loans                          (89)             (265)             (879)             (179)           (3,629)
Commercial leases                                          -                 -                 -                 -              (802)
Consumer and other                                    (1,494)           (1,083)           (1,190)             (907)             (445)
Total Non-Real Estate                                 (1,732)           (1,458)           (2,109)           (1,386)           (5,038)
Total charge-offs                                     (3,122)           (2,427)           (5,264)           (1,889)           (6,362)

Recoveries:
Real Estate:
Construction and land development                          -                 -                 -                 3                43
Farmland                                                  90                 -                 -                 -                 -
1- 4 family                                               44                39                39                90                92
Multifamily                                                -                 -                 -                20                40
Non-farm non-residential                                   7               178                 5                89                85
Total Real Estate                                        141               217                44               202               260
Non-Real Estate:
Agricultural                                              17                70                 -                26               138
Commercial and industrial loans                           96               128               267             1,642                30
Commercial leases                                          4               388                 -                 -                 -
Consumer and other                                       320               336               246               216               223
Total Non-Real Estate                                    437               922               513             1,884               391
Total recoveries                                         578             1,139               557             2,086               651

Net (charge-offs) recoveries                          (2,544)           (1,288)           (4,707)              197            (5,711)
Provision for loan losses                              2,055            14,877             4,860             1,354             3,822

Balance at end of year                              $ 24,029          $ 24,518          $ 10,929          $ 10,776          $  9,225

Ratios:
Net loan charge-offs to average loans                   0.13  %           0.08  %           0.36  %          (0.02) %           0.54  %
Net loan charge-offs to loans at end of year            0.12  %           0.07  %           0.31  %          (0.02) %           0.50  %

Provision for loan losses and loan leases at the end of the year

                                                 1.11  %           1.33  %           0.72  %           0.88  %           0.80  %
Net loan charge-offs to allowance for loan and
lease losses                                           10.59  %           5.25  %          43.07  %          (1.83) %          61.91  %
Net loan charge-offs to provision charged to
expense                                               123.80  %           8.66  %          96.85  %         (14.55) %         149.42  %



                                      -55-
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A provision for loan losses of $2.1 million was made during the year ended
December 31, 2021 as compared to $14.9 million for 2020. The provisions made in
2021 were taken to provide for current loan losses and to maintain the allowance
proportionate to risks inherent in the loan portfolio. First Guaranty's incurred
loan loss calculation method incorporates risk factors in the loan portfolio
such as historical loss rates along with qualitative and quantitative factors.
The composition of the loan portfolio affects the final allowance calculation.
First Guaranty attributes the primary decrease in the provision was due to
economic improvement in 2021 as compared to the COVID-19 uncertainty and
economic conditions present in 2020.

First Guaranty's qualitative and quantitative factors accounted for the changes
in economic conditions driven by the COVID-19 pandemic in both 2020 and 2021.
The key factors included the following: industry specific conditions, loan
growth, changes in specific concentrations, changes in loan risk ratings,
lending policy, and national and local economic trends. First Guaranty continued
to update its analysis of these factors throughout 2020 and 2021.

Loan portfolio factors in 2021 that primarily impacted the provision allocation included the following:

•The loan portfolio risks that changed and affected the allocation of the
allowance were due to changes in historical loss rates, adjustments of certain
qualitative factors to take into account the current estimated impact of
COVID-19 and related economic conditions on borrowers' ability to repay loans
and for allocations to impaired loans within their respective categories. First
Guaranty adjusted allocations within its qualitative and quantitative factors to
account for changes in potential COVID-19 related losses. Loan portfolio risks
associated with COVID-19 declined in 2021 compared to 2020.

•Construction and land development loans increased during 2021 due to advances
on existing construction lines of credit and new loan originations. Several
loans previously in this category moved to permanent financing and are now
included in the multifamily loan category as of December 31, 2021. The provision
decrease related to this portfolio was due to changes in the qualitative
analysis of the portfolio related to COVID-19 and improving economic conditions.

• One to four family residential loans increased in 2021. The decrease in the provision related to this portfolio is due to changes in the qualitative analysis of the portfolio related to COVID-19 and improving economic conditions.

• Multi-family loans increased in 2021. The provision related to this portfolio remained in line with the related 2020 provision, as improving economic conditions reduced portfolio risk even though the portfolio increased by
$19.9 million during 2021.

•Non-farm non-residential loans increased during 2021. The provision decrease
related to this portfolio was due to changes in the qualitative analysis of the
portfolio related to COVID-19 and historical loss rates. First Guaranty
continues to maintain a significant allowance for hotel loans based on
qualitative factors primarily related to COVID-19 and related credit ratings for
hotel loans. The associated allowance for hotels did decline in 2021 compared to
2020 due to improved economic conditions.

•Commercial and industrial loans increased during 2021. The provision decrease
related to this portfolio was due to the changes in historical loss rates and
changes in the qualitative analysis of the portfolio related to COVID-19 and
improving economic conditions.

•Commercial leases increased during 2021. The increase in the related loan loss
allowance balance was due primarily to the increased balances associated with
commercial leases. Commercial leases grew during 2021 from $104.1 million at
December 31, 2020 to $246.0 million at December 31, 2021.

• First Guaranty continues to monitor acquired loans from the Union acquisition on November 7, 2019. Discounts on loans acquired from the Union were approximately $1.4 million at December 31, 2021.

First Guaranty charged off $3.1 million in loan balances during the year ended
December 31, 2021 as compared to $2.4 million for 2020. Recoveries totaled $0.6
million for the year ended December 31, 2021 and $1.1 million during 2020. The
charged-off loan balances were concentrated in two loan relationships which
totaled $1.0 million or 31.0% of the total charged off amount during the year
ended December 31, 2021. The details of the $1.0 million in charged off loans
were as follows:

•First Guaranty charged off $0.6 million on a non-farm non-residential loan
secured by a waste treatment facility during the fourth quarter of 2021. This
loan had a remaining principal balance of $0.9 million at December 31, 2021.

•First Guaranty charged off $0.4 million on a non-farm non-residential loan
secured by a mobile home facility during the fourth quarter of 2021. This loan
had a remaining principal balance of $1.3 million at December 31, 2021.

• Small loans and overdraft accounts accounted for the remainder $2.1 million allocations for 2021.

                                      -56-
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Allocation of Allowance for Loan and Lease Losses. The following tables set
forth the allowance for loan and lease losses allocated by loan category and the
percent of loans in each category to total loans at the dates indicated. The
allowance for loan and lease losses allocated to each category is not
necessarily indicative of future losses in any particular category and does not
restrict the use of the allowance for losses in other categories.

                                                                                                 At December 31,
                                                                   2021                                                                  2020
                                                               Percent of                                                            Percent of
                                                                Allowance                                                             Allowance
                                                                to Total                                                              to Total
                                       Allowance for            Allowance           Percent of Loans         Allowance for            Allowance           Percent of Loans
                                      Loan and Lease          for Loan and          in Each Category        Loan and Lease          for Loan and          in Each Category
(dollars in thousands)                    Losses              Lease Losses           to Total Loans             Losses              Lease Losses           to Total Loans
Real Estate:
Construction and land development     $        769                     3.2  %                  8.1  %       $      1,029                     4.2  %                  8.2  %
Farmland                                       478                     2.0  %                  1.5  %                462                     1.9  %                  1.4  %
1- 4 family                                  1,921                     8.0  %                 13.3  %              2,510                    10.2  %                 14.7  %
Multifamily                                    940                     3.9  %                  3.0  %                978                     4.0  %                  2.5  %
Non-farm non-residential                    12,730                    53.0  %                 40.9  %             15,064                    61.5  %                 44.6  %

Non-Real Estate:
Agricultural                                   183                     0.8  %                  1.2  %                181                     0.7  %                  1.5  %
Commercial and industrial                    2,363                     9.8  %                 18.4  %              2,802                    11.4  %                 19.1  %
Commercial leases                            2,486                    10.3  %                 11.4  %                583                     2.4  %                  5.6  %
Consumer and other                           1,371                     5.7  %                  2.2  %                907                     3.7  %                  2.4  %
Unallocated                                    788                     3.3  %                    -                     2                       -  %                    -

Total Allowance                       $     24,029                   100.0  %                100.0  %       $     24,518                   100.0  %                100.0  %



                                                                                                 At December 31,
                                                                   2019                                                                  2018
                                                               Percent of                                                            Percent of
                                                                Allowance                                                             Allowance
                                                                to Total                                                              to Total
                                       Allowance for            Allowance           Percent of Loans         Allowance for            Allowance           Percent of Loans
                                      Loan and Lease          for Loan and          in Each Category        Loan and Lease          for Loan and          in Each Category
(dollars in thousands)                    Losses              Lease Losses           to Total Loans             Losses              Lease Losses           to Total Loans
Real Estate:
Construction and land development     $        423                     3.9  %                 11.3  %       $        581                     5.4  %                 10.1  %
Farmland                                        50                     0.4  %                  1.5  %                 41                     0.4  %                  1.5  %
1- 4 family                                  1,027                     9.4  %                 18.9  %                911                     8.5  %                 14.1  %
Multifamily                                  1,038                     9.5  %                  1.6  %              1,318                    12.2  %                  3.5  %
Non-farm non-residential                     5,277                    48.3  %                 40.3  %              4,771                    44.3  %                 47.7  %

Non-Real Estate:
Agricultural                                    95                     0.9  %                  1.8  %                339                     3.1  %                  1.9  %
Commercial and industrial                    1,909                    17.5  %                 17.5  %              1,909                    17.7  %                 16.4  %
Commercial leases                              568                     5.1  %                  4.6  %                262                     2.4  %                  2.1  %
Consumer and other                             542                     5.0  %                  2.5  %                629                     5.9  %                  2.7  %
Unallocated                                      -                       -  %                    -                    15                     0.1  %                    -

Total Allowance                       $     10,929                   100.0  %                100.0  %       $     10,776                   100.0  %                100.0  %



                                      -57-
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                                                                                              At December 31,
                                                                                                   2017
                                                                                                   Percent of
                                                                                                    Allowance
                                                                                                    to Total
                                                                                                    Allowance           Percent of Loans
                                                                       Allowance for              for Loan and          in Each Category
(dollars in thousands)                                             Loan and Lease Losses          Lease Losses           to Total Loans
Real Estate:
Construction and land development                                 $           628                          6.8  %                  9.8  %
Farmland                                                                        5                          0.1  %                  2.2  %
1- 4 family                                                                 1,078                         11.7  %                 13.8  %
Multifamily                                                                   994                         10.8  %                  1.4  %
Non-farm non-residential                                                    2,811                         30.4  %                 46.1  %

Non-Real Estate:
Agricultural                                                                  187                          2.0  %                  1.9  %
Commercial and industrial                                                   2,377                         25.8  %                 20.0  %
Commercial leases                                                             805                          8.7  %                  2.3  %
Consumer and other                                                            320                          3.5  %                  2.5  %
Unallocated                                                                    20                          0.2  %                    -

Total Allowance                                                   $         9,225                        100.0  %                100.0  %



The following table presents net charge-offs during the period to average loans
outstanding:

                                                              December 31, 2021                                                         December 31, 2020
                                                                                      Net Charge-offs                                                            Net Charge-offs
                                                                                      During Period to                                                           During Period to
                                           Net                Average Loans            Average Loans                  Net                Average Loans            Average Loans
(in thousands except for %)            Charge-offs            Outstanding1              Outstanding               Charge-offs            Outstanding1              Outstanding
Real Estate:
Construction & land development      $         (92)         $      168,269                       (0.1) %       $         (265)         $      139,516                       (0.2) %
Farmland                                        90                  28,596                        0.3  %                    -                  25,536                          -  %
1- 4 Family                                   (222)                281,835                       (0.1) %                 (115)                278,561                          -  %
Multifamily                                    (12)                 95,936                          -  %                    -                  35,293                          -  %
Non-farm non-residential                    (1,013)                845,428                       (0.1) %                 (372)                727,965                       (0.1) %

Non-Real Estate:
Agricultural                                  (132)                 30,888                       (0.4) %                  (40)                 30,791                       (0.1) %
Commercial and industrial                        7                 357,746                          -  %                 (137)                349,138                          -  %
Commercial leases                                4                 220,747                          -  %                  388                  80,268                        0.5  %
Consumer and other                          (1,174)                 43,957                       (2.7) %                 (747)                 42,288                       (1.8) %

1Average loans outstanding was calculated using total loans for the last four quarters.

                                      -58-
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Investment security

Investment securities at December 31, 2021 totaled $364.2 million, an increase
of $125.6 million, or 52.7%, compared to $238.5 million at December 31, 2020. We
purchase securities for our investment portfolio to provide a source of
liquidity, to provide an appropriate return on funds invested, to manage
interest rate risk and meet pledging requirements for public funds and
borrowings.

The securities portfolio consisted principally of U.S. Government and Government
agency securities, agency mortgage-backed securities, corporate debt securities
and municipal bonds. U.S. government agencies consist of FHLB, Federal Farm
Credit Bank ("FFCB"), Freddie Mac and Fannie Mae obligations. Mortgage-backed
securities that we purchase are issued by Freddie Mac and Fannie Mae. Management
monitors the securities portfolio for both credit and interest rate risk. We
generally limit the purchase of corporate securities to individual issuers to
manage concentration and credit risk. Corporate securities generally have a
maturity of 10 years or less. U.S. Government securities consist of U.S.
Treasury bills that have maturities of less than 30 days. Government agency
securities generally have maturities of 15 years or less. Agency mortgage-backed
securities have stated final maturities of 15 to 20 years.

At December 31, 2021, the U.S. Government and Government agency securities and
municipal bonds qualified as securities available to collateralize public funds.
Securities pledged as collateral totaled $234.9 million at December 31, 2021 and
$184.0 million at December 31, 2020. Our public funds deposits have a seasonal
increase due to tax collections at the end of the year and the first quarter. We
typically collateralize the seasonal public fund increases with short term
instruments such as U.S. Treasuries or other agency backed securities.

The following table shows the amortized cost and fair values ​​of our securities portfolio as of the dates indicated.

                                                                                              At December 31,
                                                       2021                                         2020                                         2019
(in thousands)                          Amortized Cost          Fair Value           Amortized Cost          Fair Value           Amortized Cost          Fair Value
Available for sale:
U.S. Treasuries                       $             -          $        -          $         3,000          $    3,000          $             -          $        -
U.S. Government Agencies                      116,733             116,110                  169,986             169,658                   16,380              16,393
Corporate debt securities                      79,344              78,225                   36,153              36,489                   94,561              95,369
Municipal bonds                                15,543              15,699                   27,381              28,162                   30,297              32,153
Collateralized mortgage obligations                 -                   -                        -                   -                   16,400              16,397
Mortgage-backed securities                        576                 586                    1,208               1,239                  179,546             179,625

Total securities available for sale $212,196 $210,620

       $       237,728          $  238,548          $       337,184          $  339,937

Held to maturity:
U.S. Government Agencies                      153,536             150,585                        -                   -                   18,175              18,143
Municipal bonds                                     -                   -                        -                   -                    5,107               5,289
Mortgage-backed securities                          -                   -                        -                   -                   63,297              63,385

Total securities held to maturity $153,536 $150,585

       $             -          $        -          $        86,579          $   86,817


Our portfolio of securities available for sale totals $210.6 million at
December 31, 2021a decrease of $27.9 millioni.e. 11.7%, compared to $238.5 million at December 31, 2020. The decrease is mainly due to the sale of securities, called bonds, and the transfer of AFS securities to the HTM portfolio in the first quarter of 2021.

Our held to maturity securities portfolio had an amortized cost of $153.5
million at December 31, 2021, compared to $0 at December 31, 2020. The held to
maturity portfolio was terminated in the first quarter of 2002 due to economic
conditions associated with COVID-19.



                                      -59-
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The following tables show the stated maturities and weighted average yields of our investment securities as at December 31, 2021 and 2020.

                                                                                                                     At December 31, 2021
                                                                                                 More than One Year                          More than Five Years
                                                  One Year or Less                               through Five Years                            through Ten Years                            More than Ten Years
                                                                  Weighted               Carrying              Weighted               Carrying               Weighted               Carrying               Weighted
(in thousands except for %)           Carrying Value            Average Yield             Value              Average Yield              Value              Average Yield              Value              Average Yield
Available for sale:
U.S. Treasuries                      $            -                         -  %       $       -                         -  %       $        -                         -  %       $        -                         -  %
U.S. Government Agencies                          -                         -  %               -                         -  %                                                        116,110                       2.3  %
Corporate and other debt securities               -                         -  %             348                       5.7  %           77,877                       2.9  %                -                         -  %
Municipal bonds                                 643                       3.3  %           3,411                       3.2  %            3,513                       3.9  %            8,132                       3.6  %
Mortgage-backed securities                        -                         -  %               2                       0.8  %                6                       1.4  %              578                       1.4  %
Total available for sale securities  $          643                       3.3  %       $   3,761                       3.5  %       $   81,396                       3.0  %       $  124,820                       2.4  %

Held to maturity:
U.S. Government Agencies             $            -                         -  %       $       -                         -  %       $   19,445                       1.6  %       $  134,091                       2.3  %
Total held to maturity securities    $            -                         -  %       $       -                         -  %       $   19,445                       1.6  %       $  134,091                       2.3  %



                                                                                                                  At December 31, 2020
                                                                                           More than One Year                          More than Five Years
                                               One Year or Less                            through Five Years                            through Ten Years                            More than Ten Years
                                      Carrying              Weighted       
       Carrying              Weighted               Carrying               Weighted               Carrying               Weighted
(in thousands except for %)             Value             Average Yield             Value              Average Yield              Value              Average Yield              Value              Average Yield
Available for sale:
U.S. Treasuries                      $  3,000                         -  %       $       -                         -  %       $        -                         -  %       $        -                         -  %
U.S. Government Agencies                    -                         -  %               -                         -  %           29,958                       1.2  %          139,700                       2.0  %
Corporate and other debt securities     5,633                       3.5  %           2,038                       4.3  %           27,762                       4.9  %            1,056                       5.5  %
Municipal bonds                         1,037                       4.1  %           4,956                       3.9  %           10,692                       3.9  %           11,477                       3.2  %
Collateralized mortgage obligations         -                       2.0  %
Mortgage-backed Securities                  -                         -  %               3                       0.9  %                3                       2.0  %            1,233                       1.0  %
Total available for sale securities  $  9,670                       2.5  %       $   6,997                       4.0  %       $   68,415                       3.1  %       $  153,466                       2.1  %



At December 31, 2021, $0.6 million, or 0.2%, of the securities portfolio was
scheduled to mature in less than one year. Securities, not including
mortgage-backed securities and collateralized mortgage obligations, with
contractual maturity dates over 10 years totaled $258.3 million, or 70.9%, of
the total portfolio at December 31, 2021. We closely monitor the investment
portfolio's yield, duration, and maturity to ensure a satisfactory return. The
average maturity of the securities portfolio is affected by call options that
may be exercised by the issuer of the securities and are influenced by market
interest rates. Prepayments of mortgages that collateralize mortgage-backed
securities also affect the maturity of the securities portfolio.

First Guaranty, in furtherance of the strategy adopted in March 2020, initiated
a plan to manage for economic uncertainty caused by the COVID-19 pandemic by
converting unrealized gains in the securities portfolio to realized gains in the
fourth quarter of 2020. First Guaranty sold mortgage-backed securities and
corporate securities in October 2020. First Guaranty generated $12.2 million in
pre-tax gains in the fourth quarter of 2020. First Guaranty has proceeded to
reinvest the proceeds in securities and loans and subsequently reduced FHLB
borrowings by $50.0 million in February 2021.

AT December 31, 2021the following table identifies the issuers, as well as the aggregate amortized cost and aggregate fair value of the securities of those issuers that exceeded 10% of our total equity:

                                 At December 31, 2021
(in thousands)              Amortized Cost       Fair Value
Federal Home Loan Bank     $        33,333      $   33,071
Freddie Mac                         95,230          93,401
Federal Farm Credit Bank           142,279         140,807
Total                      $       270,842      $  267,279



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Deposits

Managing the mix and pricing the maturities of deposit liabilities is an
important factor affecting our ability to maximize our net interest margin. The
strategies used to manage interest-bearing deposit liabilities are designed to
adjust as the interest rate environment changes. We regularly assess our funding
needs, deposit pricing and interest rate outlooks. From December 31, 2020 to
December 31, 2021, total deposits increased $430.2 million, or 19.9%, to $2.6
billion. Noninterest-bearing demand deposits increased $121.2 million, or 29.4%
to $532.6 million at December 31, 2021. The increase in noninterest-bearing
demand deposits was due to growth of compensating balances associated with new
loan originations, economic conditions associated with the CARES Act, proceeds
from the SBA PPP program, and additional stimulus payments made due to pandemic
relief to First Guaranty's consumer and business customers. Interest-bearing
demand deposits increased $415.2 million, or 48.3%, to $1,275.5 million at
December 31, 2021. The increase in interest-bearing demand deposits was
primarily concentrated in public funds interest-bearing demand deposits.
Included in the increase in interest-bearing demand deposits were public funds
time deposits that converted into interest-bearing deposits that were primarily
collateralized by reciprocal deposit insurance. Savings deposits increased $32.8
million, or 19.4%, to $201.7 million at December 31, 2021, primarily related to
increases in individual savings deposits. Time deposits decreased $139.0
million, or 19.2%, to $586.7 million at December 31, 2021, primarily due to the
transition of several public funds customers from time deposits to
interest-bearing deposits.

As we seek to strengthen our net interest margin and improve our earnings,
attracting non-interest-bearing or lower cost deposits will be a primary
emphasis. Management will continue to evaluate and update our product mix and
related technology in its efforts to attract additional customers. We currently
offer a number of deposit products that are competitively priced and designed to
attract and retain customers with primary emphasis on noninterest-bearing
deposits and other lower cost deposits. In the year 2022, First Guaranty has
approximately $236.5 million in non-public funds time deposits that are
scheduled to mature and represent an opportunity for repricing to more favorable
market terms. This includes approximately $89.5 million in one year time
deposits at an average rate of 0.56%, $41.1 million in two year time deposits at
an average rate of 1.22%, and approximately $77.1 million in greater than two
year time deposits at an average rate of 2.61% that are scheduled to mature in
the year 2022. First Guaranty has over $200 million in time deposits with
average rates in excess of 3.00% that are scheduled to mature during 2022
through 2024 with the majority of the maturities in 2023 and 2024. First
Guaranty expects to renew the majority of these time deposits at lower market
rates.

The following table shows the distribution of deposit accounts, by type of account, for the dates indicated.

                                                                                                                                For the Years Ended December 31,
Total Deposits                                                       2021                                                                     2020                                                                     2019
                                                                                          Weighted                                                                 Weighted                                                                 Weighted
(in thousands except for %)             Average Balance            Percent              Average Rate             Average Balance            Percent              Average Rate             Average Balance            Percent              Average Rate
Noninterest-bearing Demand            $        477,802                19.8  %                       -  %       $        393,734                19.2  %                       -  %       $        262,379                15.7  %                       -  %
Interest-bearing Demand                      1,082,922                45.0  %                     0.7  %                722,433                35.3  %                     0.8  %                592,113                35.4  %                     1.8  %
Savings                                        191,967                 8.0  %                     0.1  %                163,332                 8.0  %                     0.2  %                115,682                 6.9  %                     0.4  %
Time                                           655,025                27.2  %                     2.0  %                767,075                37.5  %                     2.2  %                703,685                42.0  %                     2.4  %
Total Deposits                        $      2,407,716               100.0  %                     0.8  %       $      2,046,574               100.0  %                     1.1  %       $      1,673,859               100.0  %                     1.7  %



                                                                                                                                For the Years Ended December 31,
Individual and Business Deposits                                     2021                                                                     2020                                                                     2019
                                                                                          Weighted                                                                 Weighted                                                                 Weighted
(in thousands except for %)             Average Balance            Percent              Average Rate             Average Balance            Percent              Average Rate             Average Balance            Percent              Average Rate
Noninterest-bearing Demand            $        471,371                29.7  %                       -  %       $        382,940                27.5  %                       -  %       $        256,099                23.7  %                       -  %
Interest-bearing Demand                        390,481                24.6  %                     1.0  %                280,587                20.1  %                     1.0  %                241,290                22.3  %                     1.4  %
Savings                                        154,560                 9.8  %                     0.1  %                127,804                 9.2  %                     0.1  %                 86,972                 8.0  %                     0.1  %
Time                                           569,924                35.9  %                     2.2  %                600,887                43.2  %                     2.5  %                498,521                46.0  %                     2.6  %
Total Individual and Business
Deposits                              $      1,586,336               100.0  %                     1.0  %       $      1,392,218               100.0  %                     1.3  %       $      1,082,882               100.0  %                     1.5  %



                                                                                                                   For the Years Ended December 31,
Public Fund Deposits                                           2021                                                              2020                                                              2019
                                       Average                                   Weighted                Average                                   Weighted                Average                                   Weighted
(in thousands except for %)            Balance             Percent             Average Rate              Balance             Percent             Average Rate              Balance             Percent             Average Rate
Noninterest-bearing Demand          $    6,431                 0.8  %                      -  %       $   10,794                 1.7  %                      -  %       $    6,280                 1.1  %                      -  %
Interest-bearing Demand                692,441                84.3  %                    0.5  %          441,846                67.5  %                    0.7  %          350,823                59.3  %                    2.0  %
Savings                                 37,407                 4.5  %                    0.2  %           35,528                 5.4  %                    0.4  %           28,710                 4.9  %                    1.6  %
Time                                    85,101                10.4  %                    0.8  %          166,188                25.4  %                    1.1  %          205,164                34.7  %                    2.1  %
Total Public Fund Deposits          $  821,380               100.0  %                    0.5  %       $  654,356               100.0  %                    0.8  %       $  590,977               100.0  %                    1.9  %



                                      -61-
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At December 31, 2021, public funds deposits totaled $957.9 million compared to
$715.3 million at December 31, 2020. Public funds time deposits totaled $31.4
million at December 31, 2021 compared to $158.9 million at December 31, 2020.
The decline in public funds time deposits was the result of certain deposits
moving into demand or money market deposits from time deposits. Public funds
deposits increased due to new balances from existing customers along with First
Guaranty's expansion of its public funds deposits program in the Texas market.
We have developed a program for the retention and management of public funds
deposits. Since the end of 2012, we have maintained public funds deposits in
excess of $400.0 million. These deposits are from public entities such as school
districts, hospital districts, sheriff departments and municipalities. The
majority of these funds are under fiscal agency agreements with terms of three
years or less. Deposits under fiscal agency agreements are generally stable but
public entities may maintain the ability to negotiate term deposits on a
specific basis including with other financial institutions. These deposits
generally have stable balances as we maintain both operating accounts and time
deposits for these entities. There is a seasonal component to public deposit
levels associated with annual tax collections. Public funds will increase at the
end of the year and during the first quarter. In addition to seasonal
fluctuations, there are monthly fluctuations associated with internal payroll
and short-term tax collection accounts for our public funds deposit accounts.
Public funds deposit accounts are collateralized by FHLB letters of credit, by
expanded reciprocal deposit insurance programs, by Louisiana municipal bonds and
by eligible government and government agency securities such as those issued by
the FHLB, FFCB, Fannie Mae, and Freddie Mac. First Guaranty continues to grow
the proportion of its public funds portfolio that is collateralized by
reciprocal deposit insurance as an alternative to pledging securities or
utilizing FHLB letters of credit. First Guaranty initiated this strategy to more
efficiently invest these deposits in higher yielding loans to improve the net
interest margin and earnings. Total public funds collateralized by reciprocal
deposit insurance programs increased to $496.4 million at December 31, 2021
compared to $217.7 million at December 31, 2020.

The following table presents public funds as a percentage of total deposits.

                                                                                   At December 31,
(in thousands except for %)                                         2021                 2020                 2019
Public Funds:
Noninterest-bearing Demand                                     $     5,919          $     5,109          $     9,944
Interest-bearing Demand                                            882,156              514,416              424,732
Savings                                                             38,432               36,862               29,570
Time                                                                31,365              158,925              146,420
Total Public Funds                                             $   957,872          $   715,312          $   610,666
Total Deposits                                                 $ 2,596,492          $ 2,166,318          $ 1,853,013
Total Public Funds as a percent of Total Deposits                     36.9  %              33.0  %              33.0  %



At December 31, 2021, the aggregate amount of outstanding certificates of
deposit in amounts greater than or equal to $250,000 was approximately $159.1
million. At December 31, 2021, approximately $80.3 million of our certificates
of deposit greater than or equal to $250,000 had a remaining term greater than
one year.

The following table presents the maturity of the total certificates of deposit greater than or equal to $250,000 at December 31, 2021.

(in thousands)                                                             December 31, 2021
Due in one year or less                                                  $  

78,804

Due after one year through three years                                      

73,409

Due after three years                                                       

6,864

Total certificates of deposit greater than or equal to $250,000 $

159,077



The total amount of our uninsured deposits (deposits in excess of $250,000, as
calculated in accordance with FDIC regulations) were estimated at $667.5 million
at December 31, 2021.

The following table shows the maturity of certificates of deposit greater than $250,000 at December 31, 2021.

(in thousands)                                           December 31, 2021
Three months or less                                    $           22,525
Three to six months                                                 16,434
Six months to one year                                              30,605
One to three years                                                  57,580
More than three years                                                6,683

Total certificates of deposit greater than $250,000 $133,827

                                      -62-
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Loans

First Guaranty maintains borrowing relationships with other financial
institutions as well as the Federal Home Loan Bank on a short and long-term
basis to meet liquidity needs. First Guaranty had $6.4 million in short-term
borrowings outstanding at December 31, 2021 compared to $56.1 million
outstanding at December 31, 2020. The short-term borrowings at December 31, 2021
were comprised of repurchase agreements of $6.4 million. The advances
outstanding at December 31, 2020 were comprised of a short-term advance that was
originated in response to the COVID-19 pandemic that totaled $50.0 million and a
long-term advance that totaled $3.4 million. First Guaranty paid off the
short-term advance acquired in response to the COVID-19 pandemic during the
first quarter of 2021. First Guaranty participated in the Federal Reserve
Paycheck Protection Program Liquidity Facility ("PPPLF") in the second quarter
of 2021. These borrowings were paid off during the third quarter of 2021. First
Guaranty has a long term FHLB advance that was acquired from the Union
transaction that totaled $3.2 million at December 31, 2021 compared to $3.4
million at December 31, 2020. First Guaranty had available lines of credit of
$26.5 million, with no outstanding balance at December 31, 2021.

AT December 31, 2021we have had $250.7 million in outstanding FHLB letters of credit obtained primarily to secure public deposits. The decline in the use of FHLB letters of credit is due to First Guaranty using reciprocal deposit insurance programs as an alternative security solution to FHLB letters of credit.

The following table presents information regarding the balances and interest rates on our short-term borrowings on the dates and for the years indicated.

                                                                      At or For the Years Ended December 31,
(in thousands except for %)                                          2021                2020              2019
Balance at end of year                                         $      6,439           $ 56,121          $ 19,919
Maximum month-end outstanding                                  $     56,369           $ 57,048          $ 19,919
Average daily outstanding                                      $     10,458           $ 48,277          $  3,320
Weighted average rate during the year                                  1.40   %           0.95  %           2.00  %
Weighted average rate at the end of the year                           2.23   %           0.89  %           2.00  %



First Guaranty had senior long-term debt totaling $25.2 million at December 31,
2021 and $42.4 million at December 31, 2020. First Guaranty paid off $13.3
million in senior long-term debt using proceeds from its preferred stock capital
offering during the second quarter of 2021.

First Guaranty also held subordinated subordinated debentures totaling $14.8 million at
December 31, 2021 and December 31, 2020.

Equity

Total shareholders' equity increased to $223.9 million at December 31, 2021 from
$178.6 million at December 31, 2020. The increase in shareholders' equity was
principally the result of an increase of $33.1 million in preferred stock and an
increase of $19.5 million in retained earnings, partially offset by a decrease
of $7.3 million in accumulated other comprehensive income. The $33.1 million
increase in preferred stock was the result of the issuance of 34,500 shares of
non-cumulative perpetual preferred stock on April 27, 2021. The $19.5 million
increase in retained earnings was due to net income of $27.3 million during the
year ended December 31, 2021, partially offset by $6.4 million in cash dividends
paid on shares of our common stock and $1.4 million in cash dividends paid on
shares of our preferred stock. The decrease in accumulated other comprehensive
income was primarily attributed to the increase in unrealized losses on
available for sale securities during the year ended December 31, 2021.

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Operating results

Performance Summary

Year ended December 31, 2021 compared with year ended December 31, 2020. Net
income for the year ended December 31, 2021 was $27.3 million, an increase of
$7.0 million, or 34.3%, as compared to $20.3 million for the year ended
December 31, 2020. The increase in net income of $7.0 million for the year ended
December 31, 2021 was the result of several factors. First Guaranty experienced
an increase in interest income associated with loans, a decrease in interest
expense and a decrease in the provision for loan losses. This was partially
offset by a decrease in interest income associated with securities, a decrease
in noninterest income and an increase in noninterest expense. Loan interest
income increased due to the growth in First Guaranty's loan portfolio, including
loan fees recognized as an adjustment to yield from the origination of the SBA
guaranteed PPP loans. Interest expense declined due to declines in market
interest rates and First Guaranty's plan to reduce interest expense by
increasing core deposits. Interest expense declined in 2021 even after factoring
in an increase in deposit balances associated with SBA PPP loans and stimulus
payments, and additional borrowings associated with our COVID-19 contingency
plans. First Guaranty attributes the primary decrease in the provision to
economic improvement in 2021 as compared to the COVID-19 uncertainty and
economic conditions present in 2020. Factors that partially offset the increase
in net income included decreased securities interest income due to the decrease
in average balance of the investment portfolio. Noninterest income decreased
primarily due to lower securities gains. Noninterest expense increased primarily
due to increased personnel expenses, higher occupancy and equipment expenses,
software expense, marketing and public relations expenses, legal fees, ATM fees,
taxes and higher regulatory assessments due to increased deposit balances.
Earnings per common share for the years ended December 31, 2021 was $2.42 per
common share, an increase of 27.4% or $0.52 per common share from $1.90 per
common share for the year ended December 31, 2020 (as adjusted for the 10% stock
dividend in December 2021). Earnings per share was affected by the increase in
earnings.

Year ended December 31, 2020 compared with year ended December 31, 2019. Net
income for the year ended December 31, 2020 was $20.3 million, an increase of
$6.1 million, or 42.7%, as compared to $14.2 million for the year ended December
31, 2019. The increase in net income of $6.1 million for the year ended December
31, 2020 was the result of several factors. First Guaranty experienced an
increase in interest income associated with loans, increased noninterest income
due to increased securities sales and lower interest expense. This was partially
offset by an increase in the provision for loan losses and increased noninterest
expense. Loan interest income increased due to the growth in First Guaranty's
loan portfolio, including the loans acquired in the fourth quarter of 2019 in
the Union acquisition and loan fees recognized as an adjustment to yield from
the origination of the SBA guaranteed PPP loans. Noninterest income increased
due to larger securities gains on sales for the year ended December 31, 2020
compared to losses on securities sales for the year ended December 31, 2019.
Interest expense declined due to declines in market interest rates and First
Guaranty's strategy to reduce interest expense. Interest expense declined during
2020 even after factoring in the additional deposit balances acquired from the
Union acquisition, an increase in deposit balances associated with SBA PPP loans
and stimulus payments, and additional borrowings associated with our COVID-19
contingency plans. Factors that partially offset income include increased
noninterest expense primarily associated with the Union acquisition including
one-time merger related expenses of $0.5 million paid in 2020 for the data
conversion. The provision for loan losses increased to provide for current loan
losses and to maintain the allowance proportionate to risks inherent in the loan
portfolio, including risks emerging from the COVID-19 pandemic and portfolio
growth. Earnings per common share for the years ended December 31, 2020 was
$1.90 per common share, an increase of 41.8% or $0.56 per common share from
$1.34 per common share for the year ended December 31, 2019 (as adjusted for the
10% stock dividend in December 2021). Earnings per share was affected by the
increase in earnings.


                                      -64-
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Net interest income

Our operating results depend primarily on our net interest income, which is the
difference between interest income earned on interest-earning assets, including
loans and securities, and interest expense incurred on interest-bearing
liabilities, including deposits and other borrowed funds. Interest rate
fluctuations, as well as changes in the amount and type of interest-earning
assets and interest-bearing liabilities, combine to affect net interest income.
First Guaranty's assets and liabilities are generally most affected by changes
in the Federal Funds rate, LIBOR rate, short term Treasury rates such as one
month and three month Treasury bills, and longer term Treasury rates such as the
U.S. ten year Treasury rate. Our net interest income is affected by changes in
the amount and mix of interest-earning assets and interest-bearing liabilities.
There may also be a time lag in the effect of interest rate changes on assets
and liabilities. It is also affected by changes in yields earned on
interest-earning assets and rates paid on interest-bearing deposits and other
borrowed funds.
A financial institution's asset and liability structure is substantially
different from that of a non-financial company, in that virtually all assets and
liabilities are monetary in nature. Accordingly, changes in interest rates may
have a significant impact on a financial institution's performance. The impact
of interest rate changes depends on the sensitivity to the change of our
interest-earning assets and interest-bearing liabilities. The effects of the
changing interest rate environment in recent periods and our interest
sensitivity position is discussed below.

Year ended December 31, 2021 compared with year ended December 31, 2020. Net
interest income for the years ended December 31, 2021 and 2020 was $89.6 million
and $74.7 million, respectively. The increase in net interest income for
the year ended December 31, 2021 as compared to the prior year was primarily due
to an increase in the average balance of our total interest-earning assets, and
a decrease in the average rate of our total interest-bearing liabilities,
partially offset by a decrease in the average yield of our total
interest-earning assets and an increase in the average balance of our total
interest-bearing liabilities. For the year ended December 31, 2021, the average
balance of our total interest-earning assets increased by $379.4 million to $2.6
billion due to increased cash and due average balances, and strong growth in
commercial leases and our other loan portfolios. The average yield of our
interest-earning assets decreased by 23 basis points to 4.29% from 4.52% for the
year ended December 31, 2020 due to the general decline in market interest rates
that affect the pricing of our assets and due to the increased lower yielding
average cash balances on the balance sheet. For the year ended December 31,
2021, the average balance of our total interest-bearing liabilities increased by
$249.3 million to $2.0 billion due to the growth in low cost deposits and the
average rate of our total interest-bearing liabilities decreased by 37 basis
points to 1.11% from 1.48% for the year ended December 31, 2020 due to the
decrease in market rates. As a result, our net interest rate spread increased 14
basis points to 3.18% for the year ended December 31, 2021 from 3.04% for the
year ended December 31, 2020. Our net interest margin increased nine basis
points to 3.44% for the year ended December 31, 2021 from 3.35% for the year
ended December 31, 2020.

Year ended December 31, 2020 compared with year ended December 31, 2019. Net
interest income for the years ended December 31, 2020 and 2019 was $74.7 million
and $61.7 million, respectively. The increase in net interest income for the
year ended December 31, 2020 as compared to the prior year was primarily due to
an increase in the average balance of our total interest-earning assets and a
decrease in the average rate of our total interest-bearing liabilities,
partially offset by a decrease in the average yield of our total
interest-earning assets and by an increase in the average balance of our total
interest-bearing liabilities. For the year ended December 31, 2020, the average
balance of our total interest-earning assets increased by $417.3 million to $2.2
billion due to the assets acquired from the Union acquisition, COVID-19 related
lending activities, including SBA PPP loans and loan growth. The average yield
of our interest-earning assets decreased by 54 basis points to 4.52% from 5.06%
for the year ended December 31, 2019 due to the general decline in market
interest rates that affect the pricing of our assets and due to the increased
lower yielding average cash balances on the balance sheet. For the year ended
December 31, 2020, the average balance of our total interest-bearing liabilities
increased by $310.9 million to $1.8 billion as our average deposits and average
borrowings increased due to COVID-19 related contingency planning and government
relief programs, and the average rate of our total interest-bearing liabilities
decreased by 58 basis points to 1.48% from 2.06% for the year ended December 31,
2019 due to the decrease in market rates. As a result, our net interest rate
spread increased four basis points to 3.04% for the year ended December 31, 2020
from 3.00% for the year ended December 31, 2019. Our net interest margin
decreased six basis points to 3.35% for the year ended December 31, 2020 from
3.41% for the year ended December 31, 2019.

                                      -65-
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interest income

Year ended December 31, 2021 compared with year ended December 31, 2020.
Interest income increased $11.2 million, or 11.2%, to $111.9 million for the
year ended December 31, 2021 as compared to the prior year. First Guaranty's
loan portfolio expanded during 2021 due to growth associated with our loan
originations, including commercial leases. These factors contributed to the
increase in interest income as the average balance of our total interest-earning
assets, primarily associated with loans, increased, partially offset by a
decrease in the average yield of interest-earning assets, due to the decline in
market interest rates. The average balance of our interest-earning assets
increased $379.4 million to $2.6 billion for the year ended December 31, 2021 as
compared to the prior year. The average yield of interest-earning assets
decreased by 23 basis points to 4.29% for the year ended December 31, 2021
compared to 4.52% for the year ended December 31, 2020.

Interest income on securities decreased $1.2 million to $8.2 million for the
year ended December 31, 2021 as compared to the prior year primarily as a result
of a decrease in the average balance of securities. The average balance of
securities decreased $48.4 million to $332.6 million for the year ended
December 31, 2021 from $381.0 million for the year ended December 31, 2020
primarily due to a decrease in the average balance of our mortgage-backed
securities and corporate securities portfolios compared to the prior year. The
average yield on securities decreased by one basis point to 2.48% for the year
ended December 31, 2021 from 2.49% for the year ended December 31, 2020 due to
the decrease in market interest rates.

Interest income on loans increased $12.5 million, or 13.8%, to $103.4 million
for the year ended December 31, 2021 as a result of an increase in the average
balance of loans. The average balance of loans (excluding loans held for sale)
increased by $351.2 million to $2.0 billion for the year ended December 31, 2021
from $1.7 billion for the year ended December 31, 2020 as a result of new loan
originations. The average yield on loans (excluding loans held for sale)
decreased by 33 basis points to 5.13% for the year ended December 31, 2021 from
5.46% for the year ended December 31, 2020 due to the decrease in market
interest rates and the impact of SBA PPP loans which have a 1.00% interest rate.

Year ended December 31, 2020 compared with year ended December 31, 2019.
Interest income increased $9.0 million, or 9.9%, to $100.7 million for the year
ended December 31, 2020 as compared to the prior year. First Guaranty's loan
portfolio expanded during 2020 due to growth associated with the SBA PPP lending
program and our other loan originations such as commercial leases and non-farm
non-residential loans. These factors contributed to the increase in interest
income as the average balance of our total interest-earning assets, both loans
and securities, including assets from the Union acquisition increased, partially
offset by a decrease in the average yield of interest-earning assets due to the
decline in market interest rates. The average balance of our interest-earning
assets increased $417.3 million to $2.2 billion for the year ended December 31,
2020 as compared to the prior year. The average yield of interest-earning assets
decreased by 54 basis points to 4.52% for the year ended December 31, 2020
compared to 5.06% for the year ended December 31, 2019.

Interest income on securities decreased $0.3 million to $9.5 million for the
year ended December 31, 2020 as compared to the prior year primarily as a result
of a decrease in the average yield on securities. The average balance of
securities increased $31.7 million to $381.0 million for the year ended December
31, 2020 from $349.2 million for the year ended December 31, 2019 due to an
increase in balances, particularly corporate securities, as part of First
Guaranty's strategy initiated at the end of the first quarter in 2020 to provide
earnings and liquidity during the COVID-19 pandemic. The average yield on
securities decreased by 32 basis points to 2.49% for the year ended December 31,
2020 from 2.81% for the year ended December 31, 2019 due to the decrease in
market interest rates.

Interest income on loans increased $11.9 million, or 15.1%, to $90.8 million for
the year ended December 31, 2020 as a result of an increase in the average
balance of loans. The average balance of loans (excluding loans held for sale)
increased by $347.4 million to $1.7 billion for the year ended December 31, 2020
from $1.3 billion for the year ended December 31, 2019 as a result of new loan
originations, primarily SBA PPP loans, commercial leases, non-farm
non-residential loans, and acquired loans from the Union acquisition. The
average yield on loans (excluding loans held for sale) decreased by 53 basis
points to 5.46% for the year ended December 31, 2020 from 5.99% for the year
ended December 31, 2019 due to the decrease in market interest rates and the
impact of SBA PPP loans which have a 1.0% interest rate.

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Interest charges

Year ended December 31, 2021 compared with year ended December 31, 2020.
Interest expense decreased $3.7 million, or 14.3%, to $22.3 million for the year
ended December 31, 2021 from $26.0 million for the year ended December 31, 2020
due primarily to a decrease in market interest rates partially offset by an
increase in the average balance of interest-bearing liabilities. The average
rate of interest-bearing demand deposits decreased by 17 basis points during the
year ended December 31, 2021 to 0.67% as compared to 0.84% for the prior
year. The decrease in the average rate on interest-bearing demand deposits was
due to those deposits, primarily public funds accounts and brokered money market
deposits, whose rates are contractually tied to national index rates such as the
U.S. Federal Funds rate or short-term U.S. Treasury rates that declined during
the current period. The average rate of time deposits decreased 23 basis points
during the year ended December 31, 2021 to 1.97% as compared to 2.20% for the
prior year. The decrease in the average rate of time deposits was due to a
significant decline in market interest rates primarily associated with the
economic conditions from the COVID-19 pandemic. Partially offsetting the
decrease in interest expense was an increase in the average balance of
interest-bearing liabilities, which increased $249.3 million during the year
ended December 31, 2021 to $2.0 billion as compared to the prior year as a
result of a $360.5 million increase in the average balance of interest-bearing
demand deposits, a $28.6 million increase in the average balance of savings
deposits, which were partially offset by a $112.1 million decrease in the
average balance of time deposits and a $27.7 million decrease in the average
balance of borrowings.

Year ended December 31, 2020 compared with year ended December 31, 2019.
Interest expense decreased $3.9 million, or 13.2%, to $26.0 million for the year
ended December 31, 2020 from $30.0 million for the year ended December 31, 2019
due primarily to a decrease in market interest rates partially offset by an
increase in the average balance of interest-bearing liabilities. The average
rate of interest-bearing demand deposits decreased by 92 basis points during the
year ended December 31, 2020 to 0.84% as compared to 1.76% for the prior year.
The decrease in the average rate on interest-bearing demand deposits was due to
those deposits, primarily public funds NOW and DDA accounts and brokered money
market deposits, whose rates are contractually tied to national index rates such
as the U.S. Federal Funds rate or short-term U.S. Treasury rates that declined
sharply beginning in the first quarter of 2020. The average rate of time
deposits decreased 24 basis points during the year ended December 31, 2020 to
2.20% as compared to 2.44% for the prior year. The decrease in the average rate
of time deposits was due to First Guaranty's strategy to reduce deposit costs by
expanding non-interest bearing and lower cost interest bearing deposits that has
provided an alternative to higher cost time deposits and has helped First
Guaranty maintain liquidity while lowering rates on time deposits. Partially
offsetting the decrease in interest expense was an increase in the average
balance of interest-bearing liabilities, which increased $310.9 million during
the year ended December 31, 2020 to $1.8 billion as compared to the prior year
as a result of a $130.3 million increase in the average balance of
interest-bearing demand deposits, a $69.5 million increase in the average
balance of borrowings, a $63.4 million increase in the average balance of time
deposits and a $47.7 million increase in the average balance of savings
deposits.

Average Balances and Yields. The following table sets forth average balance
sheet balances, average yields and costs, and certain other information for the
years indicated. No tax-equivalent yield adjustments were made, as the effect
thereof was not material. All average balances are daily average balances.
Nonaccrual loans were included in the computation of average balances, but have
been reflected in the table as loans carrying a zero yield. Loans, net of
unearned income, include loans held for sale. The yields set forth below include
the effect of deferred fees, discounts and premiums that are amortized or
accreted to interest income or expense.

The net interest income yield shown below is calculated by dividing net interest income by average interest earning assets and is a measure of the efficiency of income from balance sheet activities. It is affected by changes in the difference between interest on interest-bearing assets and interest-bearing liabilities and the percentage of interest-bearing assets financed by interest-bearing liabilities.

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                                                                  December 31, 2021                                                   December 31, 2020                                                   December 31, 2019
(in thousands except for %)                   Average Balance          Interest            Yield/Rate             Average Balance          Interest            Yield/Rate             Average Balance          Interest            Yield/Rate

Assets

Interest-bearing assets: Interest-bearing deposits with banks(1) $258,916 $316

                    0.12  %       $        182,339          $    404                    0.22  %       $        144,298          $  2,956                    2.05  %
Securities (including FHLB stock)                    332,566             8,248                    2.48  %                380,991             9,471                    2.49  %                349,247             9,800                    2.81  %
Federal funds sold                                     1,052                 -                       -  %                    678                 1                    0.08  %                    592                 1                    0.25  %
Loans held for sale                                       16                 -                       -  %                    377                21                    5.56  %                    324                24                    7.41  %
Loans, net of unearned income (6)                  2,014,095           103,353                    5.13  %              1,662,875            90,787                    5.46  %              1,315,524            78,862                    5.99  %
Total interest-earning assets                      2,606,645           111,917                    4.29  %              2,227,260           100,684                    4.52  %              1,809,985            91,643                    5.06  %

Noninterest-earning assets:
Cash and due from banks                               15,077                                                              12,955                                                              11,951
Premises and equipment, net                           59,739                                                              58,411                                                              45,037
Other assets                                          26,551                                                              49,859                                                              15,256
Total Assets                                $      2,708,012                                                    $      2,348,485                                                    $      1,882,229

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Demand deposits                             $      1,082,922             7,237                    0.67  %       $        722,433             6,089                    0.84  %       $        592,113            10,447                    1.76  %
Savings deposits                                     191,967               204                    0.11  %                163,332               268                    0.16  %                115,682               527                    0.46  %
Time deposits                                        655,025            12,893                    1.97  %                767,075            16,908                    2.20  %                703,685            17,141                    2.44  %
Borrowings                                            82,565             1,965                    2.38  %                110,292             2,752                    2.50  %                 40,766             1,851                    4.54  %
Total interest-bearing liabilities                 2,012,479            22,299                    1.11  %              1,763,132            26,017                    1.48  %              1,452,246            29,966          

2.06%

Noninterest-bearing liabilities:
Demand deposits                                      477,802                                                             393,734                                                             262,379
Other                                                 10,619                                                              12,714                                                               9,204
Total Liabilities                                  2,500,900                                                           2,169,580                                                           1,723,829

Shareholders' Equity                                 207,112                                                             178,905                                                             158,400
Total Liabilities and Shareholders' Equity  $      2,708,012                                                    $      2,348,485                                                    $      1,882,229
Net interest income                                                   $ 89,618                                                            $ 74,667                                                            $ 61,677

Net interest rate spread(2)                                                                       3.18  %                                                             3.04  %                                                             3.00  %
Net interest-earning assets(3)              $        594,166                                                    $        464,128                                                    $        357,739
Net interest margin(4)(5)                                                                         3.44  %                                                             3.35  %                                                             3.41  %

Average interest-earning assets to
interest-bearing liabilities                                                                    129.52  %                                                           126.32  %                                                           124.63  %

(1) Includes Federal Reserve balances reported in cash and due from banks on the Consolidated Balance Sheets.

(2) The net interest rate spread represents the difference between the return on average interest-bearing assets and the cost of average interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4)Net interest margin represents net interest income divided by average total interest-earning assets.

(5)The tax adjusted net interest margin was 3.44%, 3.36% and 3.42% for the years
ended December 31, 2021, 2020 and 2019. A 21% tax rate was used to calculate the
effect on securities income from tax exempt securities for the years ended
December 31, 2021, 2020 and 2019.

(6)Includes loan fees of $7.2 million, $6.3 million and $3.5 million for the
years ended December 31, 2021, 2020 and 2019. PPP loan fee income of $2.0
million and $2.2 million was recognized for the years ended December 31, 2021
and 2020, respectively.
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Volume/rate analysis.

The following table presents the dollar amount of changes in interest income and
interest expense for major components of interest-earning assets and
interest-bearing liabilities for the years indicated. The table distinguishes
between: (1) changes attributable to volume (changes in volume multiplied by the
prior year's rate); (2) changes attributable to rate (change in rate multiplied
by the prior year's volume) and (3) total increase (decrease) (the sum of the
previous columns). Changes attributable to both volume and rate are allocated
ratably between the volume and rate categories.

                                       For the Years Ended December 31, 2021 vs. 2020          For the Years Ended December 31, 2020 vs. 2019
                                                 Increase (Decrease) Due To                              Increase (Decrease) Due To
                                                                            Increase/                                               Increase/
(in thousands except for %)              Volume             Rate             Decrease            Volume             Rate             Decrease

Interest earned on: Interest-bearing deposits with banks $133 ($221) $ (88) $621 ($3,173) ($2,552)
Securities (including FHLB shares) (1,201)

              (22)            (1,223)               846            (1,175)              (329)
Federal funds sold                            -                (1)                (1)                 -                 -                  -
Loans held for sale                         (10)              (11)               (21)                 4                (7)                (3)
Loans, net of unearned income            18,278            (5,712)            12,566             19,433            (7,508)            11,925
Total interest income                    17,200            (5,967)            11,233             20,904           (11,863)             9,041

Interest paid on:
Demand deposits                           2,594            (1,446)             1,148              1,943            (6,301)            (4,358)
Savings deposits                             42              (106)               (64)               163              (422)              (259)
Time deposits                            (2,317)           (1,698)            (4,015)             1,473            (1,706)              (233)
Borrowings                                 (664)             (123)              (787)             2,032            (1,131)               901
Total interest expense                     (345)           (3,373)            (3,718)             5,611            (9,560)            (3,949)

Change in net interest income $17,545 ($2,594) $14,951 $15,293 $(2,303) $12,990

Allowance for loan losses

A provision for loan losses is a charge to income in an amount that management
believes is necessary to maintain an adequate allowance for loan and lease
losses. The provision is based on management's regular evaluation of current
economic conditions in our specific markets as well as regionally and
nationally, changes in the character and size of the loan portfolio, underlying
collateral values securing loans, and other factors which deserve recognition in
estimating loan losses. This evaluation is inherently subjective as it requires
estimates that are susceptible to significant revision as more information
becomes available or as future events change.

We recorded a $2.1 million provision for loan losses for the year ended
December 31, 2021 compared to $14.9 million for 2020. The allowance for loan
losses at December 31, 2021 was $24.0 million or 1.11% of total loans, compared
to $24.5 million or 1.33% of total loans at December 31, 2020. The decrease in
the provision was attributable to economic improvement in 2021 as compared to
the COVID-19 uncertainty and economic conditions present in 2020. Total
charge-offs were $3.1 million for year ended December 31, 2021 and $2.4 million
for 2020. We believe that the allowance is adequate to cover potential losses in
the loan portfolio given the current economic conditions that are significantly
influenced by the COVID-19 pandemic, and current expected net charge-offs and
non-performing asset levels. We expect economic uncertainty due to the ongoing
COVID-19 pandemic to continue which may result in additional increases to the
allowance for loan losses in future periods.

For the year ended December 31, 2020, the provision for loan losses was $14.9
million compared to $4.9 million for 2019. The allowance for loan losses at
December 31, 2020 was $24.5 million or 1.33% of total loans, compared to $10.9
million or 0.72% of total loans at December 31, 2019. The increase in the
provision was attributable to the increase in the loan portfolio, the effects of
the COVID-19 pandemic and charge-offs not previously provided for. Total
charge-offs were $2.4 million for year ended December 31, 2020 and $5.3 million
for 2019.


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Non-interest income

Our primary sources of recurring noninterest income are customer service fees,
ATM and debit card fees, loan fees, gains on the sale of loans and available for
sale securities and other service fees. Noninterest income does not include loan
origination fees which are recognized over the life of the related loan as an
adjustment to yield using the interest method.

Noninterest income totaled $10.8 million for the year ended December 31, 2021, a
decrease of $13.0 million from $23.8 million for the year ended December 31,
2020. The decrease was primarily due to decreased gains on the sale of
securities. Net securities gains were $0.7 million for the year ended
December 31, 2021 as compared to net securities gains of $14.8 million for 2020.
The gains on securities sales occurred as First Guaranty sold investment
securities in order to fund loan growth and convert unrealized gains into
realized earnings as previously noted as part of First Guaranty's plan to manage
for economic uncertainty. Service charges, commissions and fees totaled $2.7
million for the year ended December 31, 2021 as compared to $2.6 million for
2020. ATM and debit card fees totaled $3.6 million for the year ended
December 31, 2021 and $3.0 million for 2020. The increase in these fees can be
attributed changes in customer behavior associated with the COVID-19 pandemic as
customers used their debit cards as an alternative to cash. Net gains on the
sale of loans were $0.9 million for the year ended December 31, 2021 and $1.1
million for 2020. Other noninterest income totaled $2.8 million and $2.3 million
for the years ended December 31, 2021 and 2020, respectively.

Noninterest income totaled $23.8 million for the year ended December 31, 2020,
an increase of $15.5 million from $8.3 million for the year ended December 31,
2019. The increase was primarily due to gains on the sale of securities. Net
securities gains were $14.8 million for the year ended December 31, 2020 as
compared to net securities losses of $0.2 million for 2019. The gains on
securities sales occurred as First Guaranty sold investment securities in order
to fund loan growth and convert unrealized gains into realized earnings as
previously noted as part of First Guaranty's plan to manage for economic
uncertainty. Service charges, commissions and fees totaled $2.6 million for the
year ended December 31, 2020 as compared to $2.8 million for 2019. The decline
in these fees for 2020 compared to 2019 was the result of waivers initially
provided for during the beginning of the COVID-19 pandemic. ATM and debit card
fees totaled $3.0 million for the year ended December 31, 2020 and $2.3 million
for 2019. The increase in these fees can be attributed to growth from the Union
acquisition and to changes in customer behavior associated with the COVID-19
pandemic as customers used their debit cards as an alternative to cash. Net
gains on the sale of loans were $1.1 million for the year ended December 31,
2020 and $1.4 million for 2019. Other noninterest income totaled $2.3 million
and $2.0 million for the years ended December 31, 2020 and 2019, respectively.

Non-interest expenses

Noninterest expense includes salaries and employee benefits, occupancy and
equipment expense and other types of expenses. Noninterest expense totaled $63.9
million for the year ended December 31, 2021 and $58.0 million for the year
ended December 31, 2020. Salaries and benefits expense totaled $32.2 million for
the year ended December 31, 2021 and $29.6 million for the year ended
December 31, 2020. The increase in salaries and benefits expense was primarily
due to the increase in personnel expense from new hires. Occupancy and equipment
expense increased to $8.7 million for the year ended December 31, 2021 from $7.7
million for the year ended December 31, 2020 due to the new facilities put into
service during 2021. Other noninterest expense totaled $23.0 million for the
year ended December 31, 2021 and $20.7 million for 2020. The following are
notable changes occurred within noninterest expense. Marketing and public
relations expense increased $0.7 million during 2021 compared to 2020 as these
expenses were lower during 2020 primarily due to the impacts of COVID-19. Tax
expense increased primarily due to higher capital taxes in 2021. Software
expense and amortization increased $0.7 million in 2021 compared to 2021 due to
the continued development of First Guaranty's loan and deposit platforms. First
Guaranty's regulatory assessment increased by $0.2 million in 2021 compared to
2020 due to the growth in deposits. Data processing expense declined in 2021
compared to 2020 as First Guaranty did not have data conversion expenses in 2021
related to the Union merger.

Noninterest expense totaled $58.0 million for the year ended December 31, 2020
and $47.2 million for the year ended December 31, 2019. Salaries and benefits
expense totaled $29.6 million for the year ended December 31, 2020 and $25.0
million for the year ended December 31, 2019. The increase in salaries and
benefits expense was primarily due to the increase in personnel expense from the
Union acquisition, new hires and expenses associated with COVID-19. Occupancy
and equipment expense increased to $7.7 million for the year ended December 31,
2020 from $6.1 million for the year ended December 31, 2019 due to the new
offices acquired in the Union acquisition. Other noninterest expense totaled
$20.7 million for the year ended December 31, 2020 and $16.1 million for 2019.
The following are notable changes that occurred within noninterest expense.
Marketing and public relations expense declined $0.4 million during 2020
primarily due to the impacts of COVID-19. Software expense and amortization
increased $1.0 million in 2020 compared to 2019 due to the Union acquisition and
the continued development of First Guaranty's loan and deposit platforms. The
amortization of core deposits increased $0.3 million due to the Union
acquisition. Net costs from other real estate owned and repossessions increased
by $1.2 million as First Guaranty established a reserve for other real estate
expense and wrote down other real estate properties. First Guaranty's regulatory
assessment increased by $1.0 million in 2020 compared to 2019 due to the Union
acquisition and the substantial growth in deposits associated with COVID-19.


                                      -70-
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The following table presents, for the years indicated, the major categories of
other noninterest expense:

(in thousands)                                     December 31, 2021           December 31, 2020           December 31, 2019
Other noninterest expense:
Legal and professional fees                      $            3,375          $            2,919          $            2,648
Data processing                                               1,794                       2,465                       1,972
ATM fees                                                      1,760                       1,332                       1,217
Marketing and public relations                                1,711                       1,046                       1,456
Taxes - sales, capital, and franchise                         1,755                       1,251                       1,094
Operating supplies                                              853                         921                         674
Software expense and amortization                             3,071                       2,354                       1,308
Travel and lodging                                              826                         726                         908
Telephone                                                       398                         256                         193
Amortization of core deposits                                   764                         712                         390
Donations                                                       564                         393                         603
Net costs from other real estate and
repossessions                                                   801                       1,653                         422
Regulatory assessment                                         1,945                       1,716                         683
Other                                                         3,391                       2,980                       2,536
Total other expense                              $           23,008          $           20,724          $           16,104



Income Taxes

The amount of income tax expense is influenced by the amount of pre-tax income,
the amount of tax-exempt income and the amount of other non-deductible expenses.
The provision for income taxes for the years ended December 31, 2021, 2020 and
2019 was $7.2 million, $5.2 million and $3.7 million, respectively. The
provision for income taxes in 2021 increased as compared to 2020 due to the
increase in income before income taxes. First Guaranty's statutory tax rate was
21.0% for the years ended December 31, 2021, 2020 and 2019.

Impact of inflation

Our consolidated financial statements and related notes included elsewhere in
this Annual Report on Form 10-K have been prepared in accordance with GAAP.
These require the measurement of financial position and operating results in
terms of historical dollars, without considering changes in the relative value
of money over time due to inflation or recession.

Unlike many industrial companies, substantially all of our assets and
liabilities are monetary in nature. As a result, interest rates have a more
significant impact on our performance than the effects of general levels of
inflation. Interest rates may not necessarily move in the same direction or in
the same magnitude as the prices of goods and services. However, other operating
expenses do reflect general levels of inflation.

                                      -71-
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Cash and capital resources

Liquidity

Liquidity refers to the ability or flexibility to manage future cash flows to
meet the needs of depositors and borrowers and fund operations. Maintaining
appropriate levels of liquidity allows us to have sufficient funds available to
meet customer demand for loans, withdrawal of deposit balances and maturities of
deposits and other liabilities. Liquid assets include cash and due from banks,
interest-earning demand deposits with banks, federal funds sold and available
for sale investment securities.

First Guaranty's cash and cash equivalents totaled $261.9 million at
December 31, 2021 compared to $299.6 million at December 31, 2020. Loans
maturing within one year or less at December 31, 2021 totaled $357.1 million
compared to $265.9 million at December 31, 2020. At December 31, 2021, time
deposits maturing within one year or less totaled $267.0 compared to $355.1
million at December 31, 2020. Time deposits maturing after one year through
three years totaled $269.7 million at December 31, 2021 compared to $234.1
million at December 31, 2020. Time deposits maturing after three years totaled
$50.0 million at December 31, 2021 compared to $136.5 million at December 31,
2020. First Guaranty's held to maturity ("HTM") investment securities portfolio
at December 31, 2021 was $153.5 million or 42.2% of the investment portfolio
compared to $0 at December 31, 2020. First Guaranty's available for sale ("AFS")
portfolio was $210.6 million, or 57.8% of the investment portfolio at
December 31, 2021 compared to $238.5 million, or 100.0% at December 31, 2020.
The majority of the AFS portfolio was comprised of U.S. Treasuries, U.S.
Government Agencies, mortgage-backed securities, municipal bonds and investment
grade corporate bonds. We believe these securities are readily marketable and
enhance our liquidity.

We maintained a net borrowing capacity at the FHLB totaling $456.3 million and
$161.2 million at December 31, 2021 and December 31, 2020, respectively with
$3.2 million and $53.4 million in FHLB advances outstanding at December 31, 2021
and December 31, 2020, respectively. The advances outstanding at December 31,
2020 were comprised of a short-term advance that was originated in response to
the COVID-19 pandemic that totaled $50.0 million and a long-term advance that
totaled $3.4 million. First Guaranty paid off the short-term advance acquired in
response to the COVID-19 pandemic during the first quarter of 2021. In the
second quarter of 2021, First Guaranty increased liquidity by utilizing a $49.4
million advance under the Federal Reserve PPPLF. First Guaranty redeemed the
PPPLF advance during the third quarter of 2021 as the additional liquidity was
not required. At December 31, 2021, First Guaranty maintained the $3.2 million
long-term FHLB advance acquired from the Union acquisition. The change in
borrowing capacity with the Federal Home Loan Bank was due to changes in the
value that First Guaranty receives on pledged collateral and due to First
Guaranty's usage of the line. First Guaranty has increasingly transitioned
public funds deposits into reciprocal deposit programs for collateralization as
an alternative to FHLB letters of credit. At December 31, 2021, we had
outstanding letters of credit from the FHLB in the amount of $250.7 million that
were primarily used to collateralize public funds deposits. We also maintain
federal funds lines of credit at various correspondent banks with borrowing
capacity of $100.5 million and two revolving lines of credit totaling $26.5
million secured by a pledge of the Bank's common stock, with no outstanding
balance at December 31, 2021. We also have a discount window line with the
Federal Reserve Bank that totaled $14.2 million at December 31, 2021. First
Guaranty had loans eligible to be pledged under the Federal Reserve's PPP
lending facility that totaled $35.4 million at December 31, 2021. First Guaranty
did not have any advances under this facility at December 31, 2021. Management
believes there is sufficient liquidity to satisfy current operating needs.

Capital resources

Our capital position is reflected in total equity, subject to certain adjustments for regulatory purposes. In addition, our capital base allows us to take advantage of business opportunities while maintaining the level of resources we deem appropriate to deal with the business risks inherent in day-to-day operations.

Total shareholders' equity increased to $223.9 million at December 31, 2021 from
$178.6 million at December 31, 2020. The increase in shareholders' equity was
principally the result of an increase of $33.1 million in preferred stock and an
increase of $19.5 million in retained earnings, partially offset by a decrease
of $7.3 million in accumulated other comprehensive income. The $33.1 million
increase in preferred stock was the result of the issuance of 34,500 shares of
non-cumulative perpetual preferred stock on April 27, 2021. The $19.5 million
increase in retained earnings was due to net income of $27.3 million during the
year ended December 31, 2021, partially offset by $6.4 million in cash dividends
paid on our common stock and $1.4 million in cash dividends paid on shares of
our preferred stock. The decrease in accumulated other comprehensive income was
primarily attributed to the increase in unrealized losses on available for sale
securities during the year ended December 31, 2021.


                                      -72-
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capital management

We manage our capital to comply with our internal planning targets and
regulatory capital standards administered by the Federal Reserve and the FDIC.
We review capital levels on a monthly basis. We evaluate a number of capital
ratios, including Tier 1 capital to total adjusted assets (the leverage ratio)
and Tier 1 capital to risk-weighted assets. At December 31, 2021, First Guaranty
Bank was classified as well-capitalized. First Guaranty Bank's capital
conservation buffer was 3.22% at December 31, 2021.

The following table presents First Guaranty Bank's capital ratios as of the
indicated dates.

                                                                                    At December 31,           "Well Capitalized            At December 31,
                                            "Well Capitalized  Minimums"                 2021                     Minimums"                     2020
Tier 1 Leverage Ratio                                               5.00  %                   8.71  %                      5.00  %                   8.58  %
Tier 1 Risk-based Capital Ratio                                     8.00  %                  10.22  %                      8.00  %                  10.97  %
Total Risk-based Capital Ratio                                     10.00  %                  11.22  %                     10.00  %                  12.22  %
Common Equity Tier One Capital                                      6.50  %                  10.22  %                      6.50  %                  10.97  %


Off-balance sheet commitments

We are a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of our customers and to
reduce our own exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit and standby and commercial
letters of credit. Those instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in our
consolidated balance sheets. The contract or notional amounts of those
instruments reflect the extent of the involvement in particular classes of
financial instruments.

The exposure to credit loss in the event of nonperformance by the other party to
the financial instrument for commitments to extend credit and standby and
commercial letters of credit is represented by the contractual notional amount
of those instruments. The same credit policies are used in making commitments
and conditional obligations as we do for on-balance sheet instruments. Unless
otherwise noted, collateral or other security is not required to support
financial instruments with credit risk.

The notional amounts of financial instruments presenting an off-balance sheet risk at
December 31, 20212020 and 2019 are as follows:

Contract Amount
                                                   December 31,         December 31,         December 31,
(in thousands)                                         2021                 2020                 2019
Commitments to Extend Credit                      $   198,444          $   154,047          $   117,826
Unfunded Commitments under lines of credit        $   250,231          $   169,151          $   148,127
Commercial and Standby letters of credit          $    13,787          $    11,728          $    11,258



Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since commitments may expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements. Each customer's creditworthiness is evaluated on a case-by-case
basis. The amount of collateral obtained, if deemed necessary upon extension of
credit, is based on our credit evaluation of the counterpart. Collateral
requirements vary but may include accounts receivable, inventory, property,
plant and equipment, residential real estate and commercial properties.

Unfunded commitments under lines of credit are contractually obligated by us as
long as the borrower is in compliance with the terms of the loan relationship.
Unfunded lines of credit are typically operating lines of credit that adjust on
a regular basis as a customer requires funding. There may be seasonal variations
to the usage of these lines. At December 31, 2021, the largest concentrations of
unfunded commitments were lines of credit associated with construction and land
development loans and commercial and industrial loans.

Commercial and standby letters of credit are conditional commitments to
guarantee the performance of a customer to a third party. These guarantees are
primarily issued to support public and private borrowing arrangements, including
commercial paper, bond financing and similar transactions. The majority of these
guarantees are short-term (one year or less); however, some guarantees extend
for up to three years. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
Collateral requirements are the same as on-balance sheet instruments and
commitments to extend credit.

No losses were incurred on commitments during the years ended
December 31, 20212020 and 2019.

                                      -73-

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