First Guaranty Bancshares, Inc. (FGBI) stock intrinsic value fair value estimate & owner earnings analysis

First Guaranty Bancshares is the holding company for First Guaranty Bank, a Hammond, Louisiana bank with about $4.1 billion of assets and 30 branches across Louisiana, North Central Texas, Kentucky and West Virginia. It earns money on the spread between what it charges on loans and securities and what it pays on deposits, plus modest fees. Why the numbers look the way they do. 2025 was a bad year: a net loss of $56.0 million, driven by an $81.7 million credit provision (of which $43.4 million related to one commercial lease relationship, with total charge-offs of $77.2 million) and a $12.9 million goodwill write-down. Non-performing assets were $95.5 million (2.3% of assets), down from $120.4 million a year earlier, but still well above the bank's own history. The bank reported and remediated a control weakness in loan oversight during 2025, and its new auditor flagged the company's ability to stay adequately capitalized as an area of special audit attention, though it found no substantial doubt. Regulatory capital was still above 'well capitalized' at year-end, but the parent's leverage ratio (5.9%) is thin and the company has been paying part of its debt interest in shares and raising small amounts of equity privately, which dilutes owners. The first half of 2026 was profitable again ($6.2 million net income, roughly $0.31 per share), but the second-quarter 10-Q was not in our document set, so we lean on the annual report for the valuation. How we measured earnings. For a bank we start from operating cash flow, strip out swings in other assets and liabilities, and subtract the cost of new premises. Unlike a normal business, we also subtract the annual provision for credit losses: cash flow adds it back as 'non-cash', but for a lender it is the ordinary cost of loans going bad, so leaving it out would flatter every year. Preferred stock dividends of about $2.3 million a year are then deducted because they rank ahead of common owners. Stock-based pay is negligible and the goodwill write-down is a sunk acquisition cost, so both are left out of ongoing cost. Over 2016-2025 this owner-earnings measure ranged from about -$41 million (2025) to +$32 million (2022); the median year was about $7.6 million, or roughly $5.3 million to common owners after preferred dividends. That ten-year window covers two credit-stress episodes (2020 and 2024-25) and the balance-sheet doubling since 2019, so we treated it as a full cycle and did not exclude 2025. About $0.32 per current share (16.5 million shares) is our normal level; the recent quarters of modest profit are consistent with that or better, but we did not raise the level on three quarters of evidence. Base case, about $5.3 per share. Owner earnings to common holders of about $5.3 million a year, with no growth, valued at our fixed 6% rate. Latest-year owner earnings fell sharply (2025 versus 2024), so we assume no growth at all in year one; the step from a 2025 loss to a normal year is a return to earnings the bank has already produced, not growth. We credit no loan growth, margin recovery or acquisitions: net interest margin actually slipped to 2.28% in 2025 and nothing signed or under way secures an improvement. What persists after year ten is the 90-year deposit franchise across about 30 branches; we assume it keeps producing this level but not more. Bear case, about $2.0 per share. Credit costs absorb essentially all earnings for three more years (2023 and 2024 owner earnings were only about $1 million even before the 2025 blow-up; non-performing assets include $35 million of foreclosed property whose sale values are uncertain), followed by a permanently weaker level of about 60% of normal as deposit costs tied to Treasury-indexed public funds keep margins tight. Share count rises about 10% from continued private placements and interest paid in stock. The bank owes more than it can quickly repay on a stressed basis only if losses run far beyond this, which we do not build in. Bull case, about $14.5 per share. Non-performing assets keep shrinking as they did in 2025 (property already sold in January 2026), provisions return to the $2-4 million a year seen in 2021-2023, and owner earnings return to about $17 million a year before preferred dividends, well under the $28-32 million achieved in 2021-2022 on a smaller balance sheet. This is roughly one times the current common book value of about $12 per share. Margin-of-safety price. The margin-of-safety price is set with a very large margin (about half of the base value, close to the bear case) because of the thin capital ratios, ongoing dilution, unresolved problem assets and the size of the recent loss. Price alone is not enough: it applies only while the problem assets and provisions keep falling. What could make this wrong: the $51 million working-capital outflow in 2025 was not fully explained in the filing text we searched; if it reverses or was truly one-off, historic owner earnings are understated. Conversely, a second large loss on the remaining problem loans, or a formal regulatory capital requirement, would push value toward or below the bear case.