Hammond, Louisiana-based First Guaranty Bank has agreed to operate under a consent order concerning the credit quality of its borrowers, the lender said Friday in a filing with the Securities and Exchange Commission.
The Federal Deposit Insurance Corp. and Louisiana Office of Financial Institutions are restricting the $3.9 billion-asset bank from extending additional credit to borrowers whose credit remains uncollected and was charged off or classified as a “loss” during a September 2025 exam by regulators.
The regulators are also restricting First Guaranty from extending additional credit to borrowers whose credit remains uncollected and was classified as “doubtful” or “substandard” during the exam, unless the bank’s board signs a written statement detailing reasons why failure to extend credit would be detrimental.
Under the order, which took effect Friday, First Guaranty must maintain a Tier 1 leverage capital ratio of 9% or more and a total risk-based capital ratio of at least 14%.
Within 120 days, the bank must eliminate from its books – by charge-off or collection – assets or portions of assets classified during the September 2025 exam as a “loss” and 50% of assets labeled “doubtful.”
Ahead of that, though – within 60 days – First Guaranty must submit a written plan to regulators detailing how it will reduce remaining assets classified as “doubtful” and “substandard,” including specific information for each asset with a balance of $2 million or more, according to Friday’s order.
In the intermediate term – within 90 days – First Guaranty’s board must submit to regulators a written plan identifying, measuring and monitoring the bank’s commercial real estate concentration.
Also within 90 days, the board must implement measures to correct weaknesses found in CRE stress testing, as well as measures to correct certain loan underwriting and credit administration weaknesses identified in the September 2025 exam.
The bank is restricted from paying any dividend to its holding company while under the order without the regulators’ prior written consent. First Guaranty must also submit quarterly progress reports to the FDIC and OFI.
First Guaranty, in Friday’s filing, said it has submitted a capital plan to the regulators and, apart from the Tier 1 leverage ratio requirement, “the Bank currently believes that it is in full compliance with the Consent Order.”
The bank noted its Tier 1 leverage capital ratio was 7.09% as of June 30, and its total risk-based capital ratio was 16.21%.
Among the moves that could boost First Guaranty’s Tier 1 figures, the bank announced Thursday it had completed the sale of five branches to Muskogee, Oklahoma-based Armstrong Bank. When the sale was proposed in March, First Guaranty estimated the transaction would boost Tier 1 leverage capital by about 100 basis points.
First Guaranty’s real estate-related nonperforming assets decreased to $38.3 million as of June 30, from $88.6 million, according to second-quarter results disclosed July 28.
The bank reported no doubtful loan relationships as of June 30 but cited $276.6 million in substandard loan relationships, according to the earnings report.
Overall, the bank reported $3.4 million in profit in the second quarter, a turnaround from a $7.3 million loss a year earlier.
