[8-K] First Guaranty Bancshares, Inc. 6.75% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock Reports Material Event

Rhea-AI Filing Summary

Material Definitive Agreement: On June 16, 2025, First Guaranty Bancshares, Inc. ("First Guaranty") executed an Exchange Agreement with director and significant shareholder Edgar Ray Smith, III. Under the agreement, Mr. Smith will exchange his $15,000,000 Floating Rate Subordinated Note due June 21, 2032 for 1,981,506 newly issued common shares (the "Exchange Shares").

Economic effect: Upon closing—targeted for on or about June 30, 2025—the subordinated note will be cancelled and interest will cease to accrue, eliminating future interest expense and removing the obligation from the balance sheet. In return, First Guaranty will expand its share count by the number of Exchange Shares, which will be fully paid and non-assessable once issued.

Conditions & Termination: Completion requires customary regulatory consents, absence of injunctions or "Burdensome Conditions," and accurate representations by both parties. Either party may terminate if the exchange is not consummated by July 31, 2025, subject to mutual consultation on any extension.

Strategic implications: Converting $15 million of subordinated debt into equity may strengthen regulatory capital ratios and improve leverage metrics, while an insider-led exchange signals confidence in the franchise. However, the issuance of nearly 2.0 million new shares dilutes current shareholders and could pressure per-share performance metrics.

The Exchange Agreement is filed as Exhibit 10.1 to this Form 8-K.

Positive

• Eliminates $15 million subordinated debt and associated future interest expense once the exchange closes.
• Insider participation signals confidence, as a director opts to hold common equity instead of debt.
• Potentially enhances regulatory capital ratios by replacing liability with common equity.

Negative

• Issuance of 1,981,506 new shares dilutes existing shareholders, potentially pressuring EPS and ownership percentages.
• Transaction depends on regulatory approvals and closing conditions; failure to close by July 31, 2025 would void the benefits.
• Related-party nature of the deal invites governance scrutiny regarding pricing and fairness.

Insights

Banking Capital Structure Analyst

First Guaranty strengthens capital by converting $15M debt to equity, eliminating interest costs while increasing insider ownership.

This 8-K reveals a significant balance sheet restructuring as First Guaranty converts $15 million of subordinated debt into equity through an exchange with director and significant shareholder Edgar Ray Smith, III. The company will issue 1,981,506 new common shares in exchange for retiring the Floating Rate Subordinated Note due 2032, effectively valuing shares at approximately $7.57 each.

This transaction represents a meaningful deleveraging event that strengthens First Guaranty's capital position in several ways. First, it improves regulatory capital quality by converting Tier 2 capital (subordinated debt) to Common Equity Tier 1 (CET1) capital, which regulators consider the highest quality capital form. Second, it eliminates future interest payments associated with the note, which will enhance the bank's net interest margin and recurring earnings.

The transaction provides clear evidence of insider confidence, as Mr. Smith is willing to exchange a debt instrument with guaranteed returns for equity with variable returns. However, existing shareholders will experience dilution from the newly issued shares, though this is offset by the improved capital structure and interest expense reduction.

From a regulatory perspective, this move bolsters First Guaranty's capital ratios without requiring cash outlay, providing enhanced financial flexibility and potentially creating additional lending capacity. The expected completion date of June 30, 2025 indicates this is a near-term priority for management's capital allocation strategy.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 16, 2025

FIRST GUARANTY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Louisiana			001-37621			26-0513559
(State or other jurisdiction			(Commission File Number)			(I.R.S. Employer
incorporation or organization)						Identification Number)
400 East Thomas Street
Hammond, Louisiana						70401
(Address of principal executive offices)						(Zip Code)
(985) 345-7685
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 

Emerging growth company ☐ 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1 par value

FGBI

The Nasdaq Stock Market LLC

Depositary Shares (each representing a 1/40th interest in a share of 6.75% Series A Fixed-Rate Non-Cumulative perpetual preferred stock)

FGBIP

The Nasdaq Stock Market LLC

Item 1.01 Entry into a Material Definitive Agreement

On June 16, 2025, First Guaranty Bancshares, Inc. (“First Guaranty” or the “Company”) entered into the Exchange Agreement (the “Agreement”) with Edgar Ray Smith, III, a director and significant shareholder of First Guaranty. The Agreement provides for the exchange of that certain Floating Rate Subordinated Note due June 21, 2032, in the principal amount of $15,000,000, currently held by Mr. Smith (the “Subordinated Note”) for 1,981,506 shares of newly issued common stock of the Company (the “Exchange Shares”).

Pursuant to the Agreement, the First Guaranty will issue the Exchange Shares to Mr. Smith in exchange for the Subordinated Note and the payment of interest thereon (the “Exchange”). Following the Exchange, interest will cease to accrue on the Subordinated Note, and the Subordinated Note will no longer be deemed outstanding and all of Mr. Smith’s rights with respect to the Subordinated Note will cease and terminate. Once issued and delivered pursuant to the Agreement, the Exchange Shares will be fully paid and non-assessable. First Guaranty expects to consummate the Exchange on or about June 30, 2025.

The Agreement contains customary representations and warranties made by each of First Guaranty and Mr. Smith. Completion of the Exchange is subject to certain conditions, among others, (i) the absence of any injunction, order or legal restraint prohibiting the consummation of the Exchange, (ii) the receipt of all consents, approvals, registrations and waivers required to consummate the Exchange, and (iii) the absence of any Burdensome Conditions (as defined in the Agreement) since the date of the Agreement. The obligation of each party to consummate the Exchange is also conditioned upon the other party’s representations and warranties being true and correct to the extent provided in the Exchange Agreement and the other party having performed in all material respects all obligations under the Agreement.

The Agreement contains certain termination rights for both First Guaranty and Mr. Smith, including, among others, if the Exchange is not consummated on or before July 31, 2025, subject to consultation by the parties to determine whether to extend the term of the Agreement.

The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

Item 9.01

Financial Statements and Exhibits

(d)

Exhibits

Exhibit No.

Description

10.1

Exchange Agreement, dated as of June 16, 2025, by and between First Guaranty Bancshares, Inc. and Edgar Ray Smith, III

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 

						FIRST GUARANTY BANCSHARES, INC.
						(Registrant)
Date: June 18, 2025
						By:			/s/Eric J. Dosch
									Eric J. Dosch
									Chief Financial Officer

FAQ

What instrument is First Guaranty Bancshares (FGBI) exchanging under the June 16, 2025 agreement?

The company will swap a $15 million Floating Rate Subordinated Note due 2032 held by director Edgar Ray Smith, III.

How many new shares will FGBI issue to complete the exchange?

First Guaranty will issue 1,981,506 newly created common shares to Mr. Smith.

When is the exchange expected to close?

The company targets closing on or about June 30, 2025, with a termination date of July 31, 2025 if not completed.

What happens to the subordinated note after the exchange is consummated?

Interest stops accruing and the note will be deemed cancelled and no longer outstanding once shares are issued.

Can the exchange agreement be terminated before completion?

Yes, either party may terminate if closing conditions are unmet or if the deal is not finalized by July 31, 2025.