[8-K] First Guaranty Bancshares, Inc. 6.75% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock Reports Material Event
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
First Guaranty Bancshares, Inc. (Nasdaq: FGBI/FGBIP) filed an 8-K disclosing the issuance of 2,201,448 new common shares on 30 June 2025 under four separate, unregistered transactions executed in reliance on Section 4(2)/Reg D.
- Private placement: 131,460 shares sold at $8.10, generating roughly $1.1 million of gross proceeds for general corporate purposes. No underwriting fees were paid.
- Exchange Agreement: 1,981,506 shares issued to director and large shareholder Edgar Ray Smith III in exchange for the full $15 million principal (plus accrued interest) of a 2032 floating-rate subordinated note, eliminating that liability from the balance sheet.
- Promissory Note Amendment: 36,060 shares issued to Smith & Tate Investment, L.L.C. in settlement of current interest due on an October 2023 promissory note.
- Subordinated Note Amendment: 52,422 shares issued to the same entity in lieu of cash interest on a 2034 subordinated note.
The three note-related transactions convert debt and interest obligations into equity, improving regulatory capital and cash flow but diluting existing shareholders. All recipients are accredited investors; no registration rights or underwriting discounts were involved. Exhibit references for each agreement/amendment are provided under Item 9.01.
Positive
- $15 million subordinated debt removed from balance sheet, enhancing capital ratios and cutting future interest expense.
- Raised $1.1 million in fresh equity without underwriting costs, modestly boosting liquidity.
- Interest paid in stock preserves cash during a high-rate cycle, aiding short-term funding flexibility.
Negative
- Issuance of 2.2 million new shares creates meaningful shareholder dilution, likely reducing EPS and book value.
- Large equity grant to a related party director heightens governance and concentration risk.
- Stock-settled interest may indicate liquidity pressures or limited access to cheaper funding sources.
Insights
TL;DR: $15 m debt exchanged for shares; small capital raise; dilution offsets leverage relief.
The conversion of a $15 million subordinated note into equity materially strengthens Tier 1 capital and reduces future interest expense, a credit-positive move for a community bank operating in a higher-rate environment. The accompanying $1.1 million raise, though modest, adds incremental liquidity at no cost. However, issuing 2.2 million shares—likely ~10-12 % of the public float—dilutes EPS and book value. Because the note holder is a sitting director, governance optics warrant monitoring, yet the use of fair market pricing softens conflict-of-interest concerns. Net, leverage reduction outweighs dilution in the near term, so impact skews slightly positive.
TL;DR: Insider-led equity swap improves balance sheet but raises dilution and related-party risk.
Replacing cash interest with share issuances signals possible liquidity preservation needs. While Regulation D exempts registration, repeated reliance on private placements limits market transparency and could cap future capital options. The large share grant to a board member centralises ownership further and may complicate minority shareholder influence. Yet the absence of underwriting fees and clear disclosure help mitigate compliance risk. Overall governance impact is neutral to slightly negative, contingent on ongoing board oversight.
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 30, 2025
(Exact name of registrant as specified in its charter)
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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):
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).
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Securities registered pursuant to Section 12(b) of the Act:
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Item 3.02 Unregistered Sales of Equity Securities
On June 30, 2025, First Guaranty Bancshares, Inc. (“First Guaranty” or the “Company”) issued an aggregate of 2,201,448 shares of its common stock pursuant to: (1) a private placement, (2) the terms of that certain Exchange Agreement, dated as of June 16, 2025, between the Company and Edgar Ray Smith, III (the “Exchange Agreement”), (3) that certain First Amendment to the Promissory Note, dated as of June 4, 2025, by and between First Guaranty Bancshares, Inc. and Smith & Tate Investment, L.L.C. (the “Promissory Note Amendment”), and (4) that certain First Amendment to the First Guaranty Bancshares, Inc. Floating Rate Subordinated Note due March 28, 2034, dated as of June 4, 2025, by and between First Guaranty Bancshares, Inc. and Smith & Tate Investment, L.L.C. (the “Subordinated Note Amendment”).
Private Placement
First Guaranty sold 131,460 shares of its common stock in a private placement at a price of $8.10 per share. There were no underwriting discounts or commissions paid in connection with the private placement of shares. The offer and sale of the common stock was made in reliance upon an exemption from the registration provisions of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(2) and/or Regulation D thereunder. All participants in the private placement were “accredited investors” as defined in Rule 501(a) of Regulation D. The proceeds from the private placement will be used for general corporate purposes.
Exchange Agreement
Pursuant to the Exchange Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K, First Guaranty issued 1,981,506 shares of common stock in exchange for that certain Floating Rate Subordinated Note due June 21, 2032 (the “2032 Note”), in the principal amount of $15,000,000, currently held by Edgar Ray Smith, III, a director and significant shareholder of First Guaranty. The shares were issued in exchange for the 2032 Note and the payment of interest thereon (the “Exchange”). There were no underwriting discounts or commissions paid in connection with the Exchange. The issuance of shares pursuant to the Exchange was made in reliance upon an exemption from the registration provisions of the Securities Act pursuant to Section 4(2) and/or Regulation D thereunder. Mr. Smith is an “accredited investor” as defined in Rule 501(a) of Regulation D.
Promissory Note Amendment
Pursuant to the Promissory Note Amendment, which is attached as Exhibit 10.2 to this Current Report on Form 8-K, First Guaranty issued 36,060 shares of common stock to Smith & Tate Investment, L.L.C. as payment of interest on that certain Promissory Note, dated as of October 5, 2023, by and between First Guaranty and Smith & Tate, as successor to Burke & Herbert Bank & Trust Company, as successor to Summit Community Bank, Inc (the “Promissory Note”). Smith & Tate Investment, L.L.C. is a company controlled by Edgar Ray Smith, III.
The terms of the Promissory Note Amendment provide for, among other things, a modified interest payment period beginning on the June 30, 2025, interest payment date and ending on the March 30, 2026, interest payment date during which the payment will be made, at First Guaranty’s option, either (a) in cash, as provided in the Promissory Note or (b) in shares of common stock of First Guaranty. The number of shares of common stock issued by First Guaranty as the payment of interest on the Promissory Note was equal to (i) the cash payment due as of the interest payment date based on the then-applicable interest rate as provided in the Promissory Note, divided by (ii) the consolidated closing bid price per share of First Guaranty common stock on the trading day immediately preceding the interest payment date.
There were no underwriting discounts or commissions paid in connection with the issuance of shares of common stock pursuant to the Promissory Note Amendment. The issuance of shares was made in reliance upon an exemption from the registration provisions of the Securities Act pursuant to Section 4(2) and/or Regulation D thereunder. Smith & Tate Investment, L.L.C. is an “accredited investor” as defined in Rule 501(a) of Regulation D.
Subordinated Note Amendment
Pursuant to the Subordinated Note Amendment, which is attached as Exhibit 10.3 to this Current Report on Form 8-K, First Guaranty issued 52,422 shares of common stock to Smith & Tate Investment, L.L.C. as payment of interest on that certain First Guaranty Bancshares, Inc. Floating Rate Subordinated Note due March 28, 2034 (the “2034 Note”) As noted above, Smith & Tate Investment, L.L.C. is a company controlled by Edgar Ray Smith, III.
The terms of the Subordinated Note Amendment provide for, among other things, a modified interest payment period beginning on the June 30, 2025, interest payment date and ending on the March 30, 2026, interest payment date during which the payment will be made, at First Guaranty’s option, either (a) in cash, as provided in the 2034 Note or (b) in shares of common stock of First Guaranty. The number of shares of common stock issued by First Guaranty as the payment of interest on the Promissory Note was equal to (i) the cash payment due as of the interest payment date based on the then-applicable interest rate as provided in the Promissory Note, divided by (ii) the consolidated closing bid price per share of First Guaranty common stock on the trading day immediately preceding the interest payment date.
There were no underwriting discounts or commissions paid in connection with the issuance of shares of common stock pursuant to the Subordinated Note Amendment. The issuance of shares was made in reliance upon an exemption from the registration provisions of the Securities Act pursuant to Section 4(2) and/or Regulation D thereunder. Smith & Tate Investment, L.L.C. is an “accredited investor” as defined in Rule 501(a) of Regulation D.
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 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by First Guaranty Bancshares, Inc. on June 18, 2025). | ||||
10.2 | First Amendment to the Promissory Note, dated as of June 4, 2025, by and between First Guaranty Bancshares, Inc. and Smith & Tate Investments, L.L.C. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by First Guaranty Bancshares, Inc. on June 9, 2025). | ||||
10.3 | First Amendment to the First Guaranty Bancshares, Inc. Floating Rate Subordinated Note due March 28, 2034, dated as of June 4, 2025, by and between First Guaranty Bancshares, Inc. and Smith & Tate Investment, L.L.C. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by First Guaranty Bancshares, Inc. on June 9, 2025). | ||||
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: July 7, 2025 | |||||||||||
| By: | /s/Eric J. Dosch | ||||||||||
| Eric J. Dosch | |||||||||||
| Chief Financial Officer | |||||||||||
FAQ
How many shares did First Guaranty Bancshares (FGBI) issue on 30 June 2025?
The company issued 2,201,448 common shares across four unregistered transactions.
What price was paid in the private placement for FGBI stock?
Accredited investors purchased 131,460 shares at $8.10 per share.
How much debt was eliminated through the exchange with director Edgar Ray Smith III?
The exchange retired a $15 million floating-rate subordinated note due 2032 plus accrued interest.
Will the newly issued shares of FGBI be registered with the SEC?
No. All shares were issued under Section 4(2)/Regulation D exemptions and are unregistered securities.
Why did First Guaranty Bancshares pay interest with stock instead of cash?
Under amendments to two notes, the company elected to pay interest in shares to preserve cash and improve capital flexibility through March 2026.
First Gty Bancsh