First Guaranty Bancshares in Louisiana has trimmed its workforce by 15% as part of a business strategy revamp that involves cutting costs, slowing down growth and using more automation.
The $3.6 billion-asset company, which appointed a new chief executive in early June, eliminated 71 positions, it announced in a press release that included second-quarter earnings results. The change in business strategy, including the layoffs, is expected to reduce noninterest expenses by approximately $12 million pretax on an annual basis, the company said in the release.
First Guaranty also said it expects to cut its dividend in half to 8 cents per common share for the third and fourth quarters of this year. It had been paying 16 cents per share in prior quarters. The company did not say what types of positions were cut or when those cuts took place.
The layoffs at First Guaranty, which operates in Louisiana, Kentucky, Texas and West Virginia, are among the first changes rolled out by new CEO Michael Mineer and come after a tough 2023, when the company
Amid last spring’s bank failures, the company also suffered a steep decline in stock price. In May 2023,
Mineer, who joined First Guaranty in 2021 as an area president, succeeded Alton Lewis as CEO in June, following Lewis’ retirement announcement in May. Mineer is the former president and CEO of Citizens Deposit Bank in Kentucky, and was also an executive at Premier Financial Bancorp in West Virginia, First Guaranty said in a separate press release about his appointment.
Part of Mineer’s immediate agenda is to focus on expense reductions. Last year, First Guaranty’s total noninterest expenses were $79.7 million, an increase of 12.3% year over year and partly due to an uptick in legal and other fees related to the termination of the Lone Star deal.
Three weeks after Mineer took the helm, First Guaranty sold three properties in Louisiana — two stand-alone branches and part of First Guaranty’s headquarters building that includes a branch — as
The buyer of the properties is FGB Partners LLC, an entity that’s owned by three members of the bank’s board, including its chairman, First Guaranty said at the time in another press release. The bank said it will pay a combined $1 million per year in rent for all three properties.
In the latest press release, First Guaranty said it is now focused on “slowing the trajectory of the bank’s asset growth, further increasing the capital position and working with leaner staff while utilizing automation and technological advances.” It said it will “continue other noninterest expense reductions previously undertaken earlier in the year,” but it did not say what those reductions are.
In the press release announcing his appointment, Mineer laid out his plans, including “fine-tuning” the bank’s capital-to-risk profile and improving efficiency, in order to increase shareholder value.
“Our focus will be to build on the strengths of the organization while simultaneously embracing new technological solutions designed to drive efficiencies into our business model,” he said at the time. “These efficiencies will decrease our cost and increase our speed to deliver financial products to our customer base and add revenue to our bottom line.”
For the second quarter, net income totaled $7.2 million, up from $2.7 million in the year-ago period. Earnings per share were 53 cents, more than double analysts’ expectations.
Net interest income totaled $21.2 million, which was about flat year over year. Meanwhile, noninterest income was $15.5 million, up from $2.8 million in the prior-year quarter,
The increase is largely due to the net gain on the sale of assets, including the bank branches.
On the credit front, the company’s provision for loan losses rose to $6.2 million, up from $500,000 in the year-ago quarter, it reported. Nonaccrual loans jumped to $62.3 million as of June 30, up from $23.9 million at the same time last year, largely because of five commercial real estate loans worth a combined $36.9 million, all with a single borrower, First Guaranty said.