EX-99.1 2 a6269522ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

First Security Group Announces First Quarter Results

CHATTANOOGA, Tenn.--(BUSINESS WIRE)--April 29, 2010--First Security Group, Inc. (NASDAQ: FSGI), today reported a net loss available to common shareholders of $1.6 million, or $0.10 per diluted share, for the first quarter of 2010. This compares to a net loss available to common shareholders of $3.1 million, or $0.20 per diluted share, in the fourth quarter of 2009. During the first quarter, First Security recorded a $4.4 million provision for loan and lease losses.

  • Strategic Initiatives: First Security continues to implement initiatives to improve asset quality, return to profitability and better position the Company for greater opportunities in the future.
  • Capital: First Security is committed to maintaining strong capital levels; current capital levels place FSGBank in the top 70th percentile of peer institutions, based on the December 31, 2009 Uniform Bank Performance report for all commercial banks between $1 billion and $3 billion in total assets.
  • Deposit Growth: First Security’s savings and transaction deposits, which include savings accounts, money market accounts, interest-bearing and non-interest bearing checking accounts, grew by $14.3 million on a linked quarter basis; these in-market customer deposits totaled $405.5 million at March 31, 2010.
  • Expense Control: First Security continues to closely manage controllable expenses during these challenging economic conditions. Salaries and benefits, the largest component of noninterest expense, declined by 7.6 percent on a year-over-year basis.

“Over the past six months, our management team has successfully executed and completed many strategic initiatives. We have fortified the balance sheet with liquid assets, strengthened our credit underwriting processes, reduced balance sheet risks and controlled our overhead expenses. These initiatives will position us to return to profitability and growth as the economy improves,” said Rodger B. Holley, Chairman, CEO and President of First Security. “Given the difficult economic conditions, increasing unemployment and related credit costs over the last twelve to eighteen months, it made sense for us to take a close look at the Bank’s credit risk management. While we are implementing a centralized approach to lending, we remain committed to providing superior customer service and maintaining local knowledge of our markets through our experienced bankers and lenders.”

The strategic initiatives associated with restructuring and expanding the credit administration department are largely complete with the addition of Phil Beaudette on April 26, 2010. Mr. Beaudette brings extensive experience in special assets and commercial credit administration and serves as First Security’s Chief Credit Officer. In addition to filling this position, First Security has successfully hired two senior credit officers and two experienced special asset officers who have been instrumental in reengineering its credit processes, including centralization of loan underwriting, documentation preparation and collections. First Security believes the enhancements to its credit processes will improve consistency, increase quality and provide higher levels of operational efficiencies.

First Security continues to assess its capital levels and is maintaining the flexibility to raise additional capital as appropriate. While the capital stress test performed during the fourth quarter projected minimal capital would be needed under a “more adverse” scenario, First Security believes that banks with higher capital levels will be better positioned to take advantage of opportunities as the economy improves. The tangible equity to tangible assets ratio as of March 31, 2010 was 10.11 percent. Stockholders’ equity at the end of the first quarter of 2010 was $140.0 million, and common stockholders’ equity was $108.6 million.

In the area of liquidity, First Security continued to strengthen its balance sheet and decrease its loan to deposit ratio. As of March 31, 2010, the loan to deposit ratio was 75.4 percent, compared to 80.5 percent as of December 31, 2009 and 93.1 percent as of March 31, 2009. In the first quarter of 2010, both customer and brokered deposits increased while loan balances declined. The excess liquidity created is available to fund future contractual obligations and prudent investments, including loans to credit-worthy borrowers.

For the first quarter of 2010, net interest income totaled $9.7 million, a decline of 8.5 percent on a linked quarter basis and a decline of 5.5 percent from the first quarter of 2009. These declines are primarily attributed to a smaller loan portfolio, as loan reductions continue to outpace loan originations, and the issuance of additional brokered deposits. Combining these changes with the associated increase in interest-bearing liquid assets caused the first quarter 2010 net interest margin to decline 50 basis points compared to the fourth quarter 2009 margin.

Non-interest income for the first quarter of 2010 totaled $2.3 million, a decline of $147 thousand, or 6.0 percent, from the same quarter of 2009. Point of sale fees associated with the Bank’s debit cards increased by 14.4 percent to $286 thousand from the first quarter of 2009, and trust fee income increased by 13.5 percent to $185 thousand over the same period.

Consistent with First Security’s focus on controlling costs, non-interest expense in the first quarter of 2010, declined to $9.9 million, a 14.3 percent reduction from the fourth quarter of 2009. Salaries and benefits expense of $4.9 million remained relatively flat, with a 0.1 percent increase on a linked quarter basis and a decline of 7.6 percent year-over-year. The number of full-time equivalent employees declined to 345 as of March 31, 2010, from 361 a year ago and 347 at the end of the fourth quarter of 2009.

During the first quarter of 2010, additions to nonaccrual loans and leases continued to outpace reductions as the lingering effects of the economic recession continue to impact First Security’s borrowers. During the quarter, gross additions totaled $16.7 million and gross reductions totaled $11.9 million. As of March 31, 2010, approximately 51 percent of the first quarter nonaccrual additions and approximately 49 percent of all nonaccrual loans were current with respect to contractual principal and/or interest payments. From December 31, 2009, non-accrual loans and leases increased $4.9 million to $50.3 million at the end of the first quarter of 2010; the majority of the increase consists of $1.6 million in commercial leases, $1.3 million in residential real estate, $837 thousand commercial and industrial (C&I) loans, and $747 thousand in commercial real estate. The largest categories of nonaccrual loans and leases included C&I loans with $16.2 million, construction and development (C&D) with $14.0 million and residential real estate with $7.4 million. During the same time period, other real estate owned increased $2.9 million to $18.9 million; and repossessed assets declined $415 thousand to $3.5 million. Additional detail on asset quality is provided following the financial highlights.

As of March 31, 2010, the allowance for loan and lease losses to total loans was $26.1 million, or 2.88 percent of total loans, compared to $26.5 million, or 2.78 percent of total loans, as of December 31, 2009, and $20.0 million, or 2.02 percent of total loans, as of March 31, 2009. Net charge-offs totaled $4.8 million, or 2.04 percent of average loans during the first quarter of 2010.

Management continues its strategic focus of reducing certain balance sheet risks while simultaneously working to support the economic growth in the region by meeting the loan needs of credit worthy businesses and consumers. On a year-over-year basis, First Security reports a marked decline in loan demand, which management believes is directly tied to the economic recession. During the first quarter of 2010, loan balances declined by $46.5 million, or 4.9 percent (19.5 percent annualized) on a linked quarter basis. Most loan categories declined, with the reduction concentrated in C&D loans, which declined by $27.5 million, or 18.0 percent, to $125.6 million. As of March 31, 2010, FSGBank successfully reduced its concentration exposure in land acquisition, development, and construction loans to approximately 94 percent of total risk-based capital, below the regulatory guidance of 100 percent.

First Security’s loan portfolio consists of in-market loans originated throughout its branch network. The loan portfolio is well diversified with 30.8 percent in 1-4 family residential, 28.2 percent in CRE, 15.3 percent in C&I and 13.8 percent in C&D. Additional detail on the loan portfolio is provided following the financial highlights.

At March 31, 2010, total deposits were $1.2 billion, an increase of $135.3 million, or 12.7 percent, on a year-over-year basis. Compared to the fourth quarter of 2009, total deposits increased by $19.0 million, or 1.6 percent (6.4 percent annualized). Core deposits, which includes non-interest bearing demand deposit accounts, interest-bearing demand deposit accounts, savings and money markets and certificates of deposit of less than $100 thousand, increased to $644.9 million at the end of the first quarter of 2010, an increase of $18.3 million from the same period in 2009. On a year-over-year basis, non-interest bearing demand deposit accounts increased by 4.9 percent to $156.7 million, interest bearing demand deposit accounts increased by 10.6 percent to $70.7 million, and savings and money market accounts increased by 5.0 percent to $178.0 million.

“From the onset of the economic downturn, our strong capital level has allowed us to aggressively manage the resolution of problem assets,” Mr. Holley concluded. “Combining our commitment to capital with the proactive measures taken though our strategic initiatives, First Security will be in a position of strength as the economy transitions from recession to recovery.”

Webcast and Conference Call Information

First Security’s executive management team will host a conference call and simultaneous webcast on Thursday, April 29, 2010, at 3:00 PM Eastern Daylight Time to discuss first quarter results. The webcast can be accessed live on First Security’s website, www.FSGBank.com on the Corporate Information/Investor Relations page. A replay will be available approximately two hours after the live conference call ends, and will be archived on First Security’s website for one month.

About First Security Group, Inc.

First Security Group, Inc. is a bank holding company headquartered in Chattanooga, Tennessee, with $1.4 billion in assets. Founded in 1999, First Security’s community bank subsidiary, FSGBank, N.A. has 39 full-service banking offices along the interstate corridors of eastern and middle Tennessee and northern Georgia. In Dalton, Georgia, FSGBank operates under the name of Dalton Whitfield Bank; along the Interstate 40 corridor in Tennessee, FSGBank operates under the name of Jackson Bank & Trust. FSGBank provides retail and commercial banking services, trust and investment management, mortgage banking, financial planning, internet banking (www.FSGBank.com) and equipment leasing.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America (GAAP). First Security’s management uses these “non-GAAP” measures in its analysis of First Security’s performance. Non-GAAP measures typically adjust GAAP performance measures to exclude the effects of charges, expenses and gains related to the consummation of mergers and acquisitions, and costs related to the integration of merged entities. These non- GAAP measures may also exclude other significant gains, losses or expenses that are unusual in nature and not expected to recur. Since these items and their impact on First Security’s performance are difficult to predict, management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of First Security’s core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward-Looking Statements

This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1993) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by First Security with the Securities and Exchange Commission. First Security undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Public companies, from time to time, become aware of rumors concerning their business. Investors are cautioned that in this age of instant communication and internet access, it may be important to avoid relying on rumors and unsubstantiated information. First Security complies with Federal and State law applicable to disclosure of information. Investors may be at significant risk in relying on unsubstantiated information from other sources.

     
 
 
 
 
 

First Security Group, Inc. and Subsidiary

Consolidated Balance Sheets
March 31, December 31, March 31,
(in thousands, except share data)   2010   2009   2009
(unaudited) (unaudited)
 
ASSETS
Cash & Due from Banks $ 17,974 $ 23,220 $ 19,174

Federal Funds Sold and Securities Purchased under Agreements to Resell

  -     -     -  
Cash and Cash Equivalents   17,974     23,220     19,174  
Interest-Bearing Deposits in Banks   210,961     152,616     25,462  
Securities Available-for-Sale   145,568     143,045     142,146  
Loans Held for Sale 2,138 1,225 4,028
Loans   903,374     950,793     988,619  
Total Loans 905,512 952,018 992,647
Less: Allowance for Loan and Lease Losses   26,101     26,492     20,028  
  879,411     925,526     972,619  
Premises and Equipment, net   32,717     33,157     33,686  
Goodwill   -     -     27,156  
Intangible Assets   1,800     1,918     2,269  
Other Assets   80,539     74,352     51,873  
TOTAL ASSETS $ 1,368,970   $ 1,353,834   $ 1,274,385  
 
LIABILITIES
Deposits
Noninterest-Bearing Demand $ 156,736 $ 151,174 $ 149,372
Interest-Bearing Demand 70,729 62,429 63,953
Savings and Money Market Accounts 177,998 177,543 169,497
Certificates of Deposit of less than $100 thousand 239,446 244,312 243,746
Certificates of Deposit of $100 thousand or more 203,340 207,465 199,912
Brokered Deposits   353,396     339,750     239,915  
Total Deposits 1,201,645 1,182,673 1,066,395

Federal Funds Purchased and Securities Sold under Agreements to Repurchase

18,371 17,911 21,226
Security Deposits 1,188 1,376 1,771
Other Borrowings 90 94 106
Other Liabilities   7,671     10,181     9,905  
Total Liabilities   1,228,965     1,212,235     1,099,403  
STOCKHOLDERS' EQUITY

Preferred Stock - no par value 10,000,000 authorized; 33,000 issued as of March 31, 2010, December 31, 2009 and March 31, 2009

31,431 31,339 31,071

Common Stock - $.01 par value 50,000,000 shares authorized; 16,418,327 issued as of March 31, 2010 and December 31, 2009; 16,419,883 issued as of March 31, 2009

114 114 114
Paid-In Surplus 111,852 111,964 111,912
Common Stock Warrants 2,006 2,006 2,006
Unallocated ESOP Shares (5,907 ) (6,193 ) (6,767 )
(Accumulated Deficit) Retained Earnings (5,442 ) (3,823 ) 30,326
Accumulated Other Comprehensive Income   5,951     6,192     6,320  
Total Stockholders' Equity   140,005     141,599     174,982  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,368,970   $ 1,353,834   $ 1,274,385  
   
 
 
 
 
 
First Security Group, Inc. and Subsidiary
Consolidated Statements of Income
 
Three Months Ended
March 31,
(in thousands except per share amounts)   2010   2009

(unaudited)

(unaudited)

INTEREST INCOME
Loans, including fees $ 13,450 $ 14,873
Debt Securities - taxable 1,090 1,184
Debt Securities - non-taxable 378 404
Other   123     14  
Total Interest Income   15,041     16,475  
 
INTEREST EXPENSE

Interest-Bearing Demand Deposits

45 51
Savings Deposits and Money Market Accounts 408 472
Certificates of Deposit of less than $100 thousand 1,343 2,049
Certificates of Deposit of $100 thousand or more 1,194 1,760
Brokered Deposits 2,254 1,765
Other   122     141  
Total Interest Expense   5,366     6,238  
 
NET INTEREST INCOME 9,675 10,237
Provision for Loan and Lease Losses   4,375     4,993  

NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES

5,300 5,244
 
NON-INTEREST INCOME
Service Charges on Deposit Accounts 1,000 1,147

Gain on Sales of Available-for-Sale Securities, net

57 -
Other   1,247     1,304  
Total Non-interest Income   2,304     2,451  
 
NON-INTEREST EXPENSE
Salaries and Employee Benefits 4,948 5,357
Expense on Premises and Fixed Assets, net of rental income 1,383 1,520
Other   3,541     2,583  
Total Non-interest Expense   9,872     9,460  
 
LOSS BEFORE INCOME TAX PROVISION (2,268 ) (1,765 )
Income Tax Benefit   (1,154 )   (913 )
NET LOSS   (1,114 )   (852 )
Preferred Stock Dividends 413 371
Accretion on Preferred Stock Discount   92     77  
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ (1,619 ) $ (1,300 )
 
 
NET LOSS PER SHARE:
Net Loss Per Share - basic $ (0.10 ) $ (0.08 )
Net Loss Per Share - diluted $ (0.10 ) $ (0.08 )
Dividends Declared Per Common Share $ - $ 0.05
 
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC 15,649 15,573
DILUTED 15,649 15,573
 
 
 
 
 
 
First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
(unaudited)
             
 
(in thousands, except per share amounts and full-time equivalent employees)
 
 

1st Quarter

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Year-to-Date

Year-to-Date

2010

2009

2009

2009

2009

March 31, 2010

March 31, 2009

 
Earnings:
Net interest income $ 9,675 $ 10,572 $ 10,900 $ 10,500 $ 10,237 $ 9,675 $ 10,237
Provision for loan and lease losses $ 4,375 $ 4,846 $ 9,280 $ 6,196 $ 4,993 $ 4,375 $ 4,993
Non-interest income $ 2,304 $ 2,503 $ 2,737 $ 2,644 $ 2,451 $ 2,304 $ 2,451
Non-interest expense $ 9,872 $ 11,516 $ 37,363 $ 9,892 $ 9,460 $ 9,872 $ 9,460
Dividends and accretion on preferred stock $ 505 $ 504 $ 502 $ 500 $ 448 $ 505 $ 448
Net (loss) income available to common stockholders $ (1,619 ) $ (3,135 ) $ (28,631 ) $ (1,908 ) $ (1,300 ) $ (1,619 ) $ (1,300 )
 
Earnings - Normalized
Non-interest expense, excluding goodwill impairment $ 9,872 $ 11,516 $ 10,207 $ 9,892 $ 9,460 $ 9,872 $ 9,460
Net (loss) income available to common stockholders, excluding goodwill impairment $ (1,619 ) $ (3,135 ) $ (3,869 ) $ (1,908 ) $ (1,300 ) $ (1,619 ) $ (1,300 )
 
Per Share Data:
Net (loss) income available to common stockholders, basic $ (0.10 ) $ (0.20 ) $ (1.84 ) $ (0.12 ) $ (0.08 ) $ (0.10 ) $ (0.08 )
Net (loss) income available to common stockholders, diluted $ (0.10 ) $ (0.20 ) $ (1.84 ) $ (0.12 ) $ (0.08 ) $ (0.10 ) $ (0.08 )
Cash dividends declared on common shares $ - $ 0.01 $ 0.01 $ 0.01 $ 0.05 $ - $ 0.05
Book value per common share $ 6.61 $ 6.72 $ 6.94 $ 8.61 $ 8.76 $ 6.61 $ 8.76
Tangible book value per common share $ 6.50 $ 6.60 $ 6.82 $ 6.82 $ 6.97 $ 6.50 $ 6.97
 
Per Share Data - Normalized:
Net (loss) income, excluding goodwill impairment, basic $ (0.10 ) $ (0.20 ) $ (0.25 ) $ (0.12 ) $ (0.08 ) $ (0.10 ) $ (0.08 )
Net (loss) income, excluding goodwill impairment, diluted $ (0.10 ) $ (0.20 ) $ (0.25 ) $ (0.12 ) $ (0.08 ) $ (0.10 ) $ (0.08 )
 
Performance Ratios:
Return on average assets -0.48 % -1.00 % -9.30 % -0.61 % -0.40 % -0.48 % -0.40 %
Return on average common equity -5.85 % -10.90 % -80.88 % -5.28 % -3.57 % -5.85 % -3.57 %
Return on average tangible assets -0.48 % -1.00 % -9.52 % -0.62 % -0.41 % -0.48 % -0.41 %
Return on average tangible common equity -5.95 % -11.09 % -101.66 % -6.63 % -4.48 % -5.95 % -4.48 %
Net interest margin, taxable equivalent 3.17 % 3.67 % 3.96 % 3.77 % 3.63 % 3.17 % 3.63 %
Efficiency ratio 82.41 % 88.08 % 273.98 % 75.26 % 74.56 % 82.41 % 74.56 %
Non-interest income to net interest income and non-interest income 19.23 % 19.14 % 20.07 % 20.12 % 19.32 % 19.23 % 19.32 %
 
Performance Ratios - Normalized:
Return on average assets, excluding goodwill impairment -0.48 % -1.00 % -1.26 % -0.61 % -0.40 % -0.48 % -0.40 %
Return on average common equity, excluding goodwill impairment -5.85 % -10.90 % -10.93 % -5.28 % -3.57 % -5.85 % -3.57 %
Return on average tangible assets, excluding goodwill impairment -0.48 % -1.00 % -1.29 % -0.62 % -0.41 % -0.48 % -0.41 %
Return on average tangible common equity, excluding goodwill impairment -5.95 % -11.09 % -13.74 % -6.63 % -4.48 % -5.95 % -4.48 %
 
Capital & Liquidity:
Total equity to total assets 10.23 % 10.46 % 12.07 % 13.93 % 13.73 % 10.23 % 13.73 %
Tangible equity to tangible assets 10.11 % 10.33 % 11.92 % 11.84 % 11.69 % 10.11 % 11.69 %
Tangible common equity to tangible assets 7.81 % 8.01 % 9.32 % 9.26 % 9.20 % 7.81 % 9.20 %
Total loans to total deposits 75.36 % 80.50 % 94.60 % 93.75 % 93.08 % 75.36 % 93.08 %
 
Asset Quality:
Net charge-offs $ 4,760 $ 4,034 $ 2,862 $ 6,944 $ 2,344 $ 4,760 $ 2,344
Net loans charged-off to average loans, annualized 2.04 % 1.68 % 1.18 % 2.82 % 0.94 % 2.04 % 0.94 %
Non-accrual loans $ 50,305 $ 45,454 $ 31,463 $ 26,782 $ 26,706 $ 50,305 $ 26,706
Other real estate owned $ 18,933 $ 16,017 $ 14,206 $ 12,930 $ 11,309 $ 18,933 $ 11,309
Repossessed assets $ 3,466 $ 3,881 $ 2,050 $ 1,473 $ 1,864 $ 3,466 $ 1,864
Non-performing assets (NPA) $ 72,704 $ 65,352 $ 47,719 $ 41,185 $ 39,879 $ 72,704 $ 39,879
NPA to total assets 5.31 % 4.83 % 3.97 % 3.33 % 3.13 % 5.31 % 3.13 %
Loans 90 days past due $ 3,993 $ 4,524 $ 3,377 $ 3,373 $ 5,413 $ 3,993 $ 5,413
NPA + loans 90 days past due to total assets 5.60 % 5.16 % 4.25 % 3.60 % 3.55 % 5.60 % 3.55 %
Non-performing loans (NPL) $ 54,298 $ 49,978 $ 34,840 $ 30,155 $ 32,119 $ 54,298 $ 32,119
NPL to total loans 6.00 % 5.25 % 3.61 % 3.11 % 3.24 % 6.00 % 3.24 %
Allowance for loan and lease losses to total loans 2.88 % 2.78 % 2.66 % 1.99 % 2.02 % 2.88 % 2.02 %
Allowance for loan and lease losses to NPL 48.07 % 53.01 % 73.73 % 63.92 % 62.36 % 48.07 % 62.36 %
 
Period End Balances:
Loans $ 905,512 $ 952,018 $ 964,295 $ 968,493 $ 992,647 $ 905,512 $ 992,647
Intangible assets $ 1,800 $ 1,918 $ 2,012 $ 29,295 $ 29,425 $ 1,800 $ 29,425
Assets $ 1,368,970 $ 1,353,834 $ 1,202,908 $ 1,238,393 $ 1,274,385 $ 1,368,970 $ 1,274,385
Deposits $ 1,201,645 $ 1,182,673 $ 1,019,287 $ 1,033,046 $ 1,066,395 $ 1,201,645 $ 1,066,395
Common stockholders' equity $ 108,574 $ 110,260 $ 113,941 $ 141,305 $ 143,911 $ 108,574 $ 143,911
Total stockholders' equity $ 140,005 $ 141,599 $ 145,189 $ 172,463 $ 174,982 $ 140,005 $ 174,982
Common stock market capitalization $ 35,463 $ 39,075 $ 63,209 $ 62,388 $ 55,335 $ 35,463 $ 55,335
Full-time equivalent employees 345 347 348 353 361 345 361
Common shares outstanding 16,418 16,418 16,418 16,418 16,420 16,418 16,420
 
Average Balances:
Loans $ 931,566 $ 960,744 $ 966,677 $ 984,210 $ 999,954 $ 931,566 $ 999,954
Intangible assets $ 1,864 $ 1,955 $ 28,941 $ 29,365 $ 29,498 $ 1,864 $ 29,498
Earning assets $ 1,266,707 $ 1,168,774 $ 1,115,542 $ 1,142,338 $ 1,168,135 $ 1,266,707 $ 1,168,135
Assets $ 1,362,204 $ 1,258,592 $ 1,231,926 $ 1,258,363 $ 1,286,371 $ 1,362,204 $ 1,286,371
Deposits $ 1,189,482 $ 1,081,372 $ 1,024,105 $ 1,047,865 $ 1,075,316 $ 1,189,482 $ 1,075,316
Common stockholders' equity $ 110,782 $ 115,012 $ 141,600 $ 144,476 $ 145,588 $ 110,782 $ 145,588
Total stockholders' equity $ 142,152 $ 146,280 $ 172,779 $ 175,568 $ 172,815 $ 142,152 $ 172,815
Common shares outstanding, basic - wtd 15,649 15,582 15,543 15,503 15,573 15,649 15,573
Common shares outstanding, diluted - wtd 15,649 15,584 15,543 15,503 15,573 15,649 15,573
             
 
 
 
 
 
Non-GAAP Reconciliation Table
 
 
(in thousands, except per share data)
 

1st Quarter

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Year-to-Date

Year-to-Date

2010

2009

2009

2009

2009

March 31, 2010

March 31, 2009

 
Return on average assets -0.48 % -1.00 % -9.30 % -0.61 % -0.40 % -0.48 % -0.40 %
Effect of intangible assets   -     -     -0.22 %   -0.01 %   -0.01 %   -     -0.01 %
Return on average tangible assets   -0.48 %   -1.00 %   -9.52 %   -0.62 %   -0.41 %   -0.48 %   -0.41 %
 
Return on average assets -0.48 % -1.00 % -9.30 % -0.61 % -0.40 % -0.48 % -0.40 %
Effect of goodwill impairment   -     -     8.04 %   -     -     -     -  
Return on average assets, excluding goodwill impairment -0.48 % -1.00 % -1.26 % -0.61 % -0.40 % -0.48 % -0.40 %
Effect of average intangible assets   -     -     -0.03 %   -0.01 %   -0.01 %   -     -0.01 %
Return on average tangible assets, excluding goodwill impairment   -0.48 %   -1.00 %   -1.29 %   -0.62 %   -0.41 %   -0.48 %   -0.41 %
 
Return on average common equity -5.85 % -10.90 % -80.88 % -5.28 % -3.57 % -5.85 % -3.57 %
Effect of goodwill impairment   -     -     69.95 %   -     -     -     -  
Return on average common equity, excluding goodwill impairment -5.85 % -10.90 % -10.93 % -5.28 % -3.57 % -5.85 % -3.57 %
Effect on average intangible assets   -0.10 %   -0.19 %   -2.81 %   -1.35 %   -0.91 %   -0.10 %   -0.91 %
Return on average tangible common equity, excluding goodwill impairment   -5.95 %   -11.09 %   -13.74 %   -6.63 %   -4.48 %   -5.95 %   -4.48 %
 
Total equity to total assets 10.23 % 10.46 % 12.07 % 13.93 % 13.73 % 10.23 % 13.73 %
Effect of intangible assets   -0.12 %   -0.13 %   -0.15 %   -2.09 %   -2.04 %   -0.12 %   -2.04 %
Tangible equity to tangible assets 10.11 % 10.33 % 11.92 % 11.84 % 11.69 % 10.11 % 11.69 %
Effect of preferred stock   -2.30 %   -2.32 %   -2.60 %   -2.58 %   -2.49 %   -2.30 %   -  
Tangible common equity to tangible assets   7.81 %   8.01 %   9.32 %   9.26 %   9.20 %   7.81 %   9.20 %
 
Non-interest expense $ 9,872 $ 11,516 $ 37,363 $ 9,892 $ 9,460 $ 9,872 $ 9,460
Impairment of goodwill   -     -     (27,156 )   -     -     -     -  
Non-interest expense, excluding goodwill impairment $ 9,872   $ 11,516   $ 10,207   $ 9,892   $ 9,460   $ 9,872   $ 9,460  
 
Net (loss) income available to common stockholders $ (1,619 ) $ (3,135 ) $ (28,631 ) $ (1,908 ) $ (1,300 ) $ (1,619 ) $ (1,300 )
Effect of goodwill impairment, net of $2,394 tax effect   -     -     24,762     -     -     -     -  
Net (loss) income available to common stockholders, excluding goodwill impairment $ (1,619 ) $ (3,135 ) $ (3,869 ) $ (1,908 ) $ (1,300 ) $ (1,619 ) $ (1,300 )
 
Total stockholders' equity $ 140,005 $ 141,599 $ 145,189 $ 172,463 $ 174,982 $ 140,005 $ 174,982
Effect of preferred stock   (31,431 )   (31,339 )   (31,248 )   (31,158 )   (31,071 )   (31,431 )   (31,071 )
Common stockholders' equity $ 108,574   $ 110,260   $ 113,941   $ 141,305   $ 143,911   $ 108,574   $ 143,911  
 
Average assets $ 1,362,204 $ 1,258,592 $ 1,231,926 $ 1,258,363 $ 1,286,371 $ 1,362,204 $ 1,286,371
Effect of average intangible assets   (1,864 )   (1,955 )   (28,941 )   (29,365 )   (29,498 )   (1,864 )   (29,498 )
Average tangible assets $ 1,360,340   $ 1,256,637   $ 1,202,985   $ 1,228,998   $ 1,256,873   $ 1,360,340   $ 1,256,873  
 
Average total stockholders' equity $ 142,152 $ 146,280 $ 172,779 $ 175,568 $ 172,815 $ 142,152 $ 172,815
Effect of average preferred stock   (31,370 )   (31,268 )   (31,179 )   (31,092 )   (27,227 )   (31,370 )   (27,227 )
Average common stockholders' equity 110,782 115,012 141,600 144,476 145,588 110,782 145,588
Effect of average intangible assets   (1,864 )   (1,955 )   (28,941 )   (29,365 )   (29,498 )   (1,864 )   (29,498 )
Average tangible common stockholders' equity $ 108,918   $ 113,057   $ 112,659   $ 115,111   $ 116,090   $ 108,918   $ 116,090  
 

Per Share Data

Book value per common share $ 6.61 $ 6.72 $ 6.94 $ 8.61 $ 8.76 $ 6.61 $ 8.76
Effect of intangible assets   (0.11 )   (0.12 )   (0.12 )   (1.79 )   (1.79 )   (0.11 )   (1.79 )
Tangible book value per common share $ 6.50   $ 6.60   $ 6.82   $ 6.82   $ 6.97   $ 6.50   $ 6.97  
 
Net (loss) income available to common stockholders, basic $ (0.10 ) $ (0.20 ) $ (1.84 ) $ (0.12 ) $ (0.08 ) $ (0.10 ) $ (0.08 )
Effect of goodwill impairment, net of tax   -     -     1.59     -     -     -     -  
Net (loss) income, excluding goodwill impairment, basic $ (0.10 ) $ (0.20 ) $ (0.25 ) $ (0.12 ) $ (0.08 ) $ (0.10 ) $ (0.08 )
 
Net (loss) income available to common stockholders, diluted $ (0.10 ) $ (0.20 ) $ (1.84 ) $ (0.12 ) $ (0.08 ) $ (0.10 ) $ (0.08 )
Effect of goodwill impairment, net of tax   -     -     1.59     -     -     -     -  
Net (loss) income, excluding goodwill impairment, diluted $ (0.10 ) $ (0.20 ) $ (0.25 ) $ (0.12 ) $ (0.08 ) $ (0.10 ) $ (0.08 )
 
 
 
 
Supplemental Data (in thousands)
 
Allowance for loan and lease losses $ 26,101 $ 26,492 $ 25,686 $ 19,275 $ 20,028 $ 26,101 $ 20,028
Net interest income, tax equivalent $ 9,892 $ 10,804 $ 11,126 $ 10,729 $ 10,469 $ 9,892 $ 10,469
Impairment of goodwill $ - $ - $ 27,156 $ - $ - $ - $ -
Amortization of intangibles $ 118 $ 94 $ 127 $ 129 $ 135 $ 118 $ 135
(Gain)/Loss on sales of available-for-sale securities, net $ (57 ) $ - $ - $ - $ - $ (57 ) $ -
Gain on sales of foreclosed and repossessed property, leased equipment, premises and equipment and loans $ (60 ) $ (138 ) $ (70 ) $ (146 ) $ (70 ) $ (60 ) $ (70 )
Losses on sales of foreclosed and repossessed property and premises and equipment $ 292 $ 313 $ 149 $ 82 $ 59 $ 292 $ 59
Write-downs on foreclosed and repossessed property and other assets $ 6 $ 198 $ 120 $ 205 $ 182 $ 6 $ 182
Mortgage loan and related fees $ 149 $ 199 $ 385 $ 199 $ 242 $ 149 $ 242
 

Loans by Type

Loans secured by real estate-
Residential 1-4 family $ 278,695 $ 281,354 $ 284,811 $ 288,836 $ 294,314 $ 278,695 $ 294,314
Commercial 255,174 259,819 233,692 225,790 223,759 255,174 223,759
Construction 125,603 153,144 176,570 183,623 190,581 125,603 190,581
Multi-family and Farmland   41,314     37,960     37,461     33,847     36,541     41,314     36,541  
Total loans secured by real estate   700,786     732,277     732,534     732,096     745,195     700,786     745,195  
Commercial loans 138,156 146,016 148,473 150,472 162,534 138,156 162,534
Consumer installment loans 45,564 48,927 51,866 54,261 53,406 45,564 53,406
Leases, net of unearned income 17,405 19,730 24,679 26,784 29,117 17,405 29,117
Other   3,601     5,068     6,743     4,880     2,395     3,601     2,395  
Total loans $ 905,512   $ 952,018   $ 964,295   $ 968,493   $ 992,647   $ 905,512   $ 992,647  
                   
 
 
 
 
 
Supplemental Data (continued)
Asset Quality Information
 
 

1st Quarter

1st Quarter

4th Quarter

4th Quarter

3rd Quarter

3rd Quarter

2nd Quarter

2nd Quarter

1st Quarter

1st Quarter

2010

 

2010

2009

 

2009

2009

 

2009

2009

 

2009

2009

 

2009

(in thousands) (units) (in thousands) (units) (in thousands) (units) (in thousands) (units) (in thousands) (units)
Non-Accrual Loans and Leases - Activity
Beginning Balance $ 45,454 187 $ 31,463 106 $ 26,782 91 $ 26,706 70 $ 18,453 57
Additions 16,701 20,378 11,837 9,643 12,589
Reductions   (11,850 )       (6,387 )       (7,156 )       (9,567 )       (4,336 )    
Ending Balance $ 50,305     203 $ 45,454     187 $ 31,463     106 $ 26,782     91 $ 26,706     70
 
Non-Accrual Loans and Leases - Classification
Construction/Development Loans $ 13,950 33 $ 13,706 36 $ 10,583 15 $ 8,706 9 $ 9,040 12
Residential Real Estate Loans 7,392 53 6,059 52 3,758 32 3,713 30 2,179 18
Commercial Real Estate Loans 6,903 26 6,156 26 2,162 11 4,595 16 3,575 12
Commercial & Industrial Loans 16,234 39 15,397 38 8,432 25 3,160 15 6,904 20
Commercial Leases 3,943 37 2,389 20 5,064 21 5,126 16 3,523 4
Consumer and Other Loans   1,883     15   1,747     15   1,464     2   1,482     5   1,485     4
Total $ 50,305     203 $ 45,454     187 $ 31,463     106 $ 26,782     91 $ 26,706     70
 
 
Other Real Estate Owned - Activity
Beginning Balance $ 16,017 85 $ 14,206 68 $ 12,930 61 $ 11,309 49 $ 7,145 51
Additions 3,866 4,415 5,599 4,522 5,111
Reductions   (950 )       (2,604 )       (4,323 )       (2,901 )       (947 )    
Ending Balance $ 18,933     109 $ 16,017     85 $ 14,206     68 $ 12,930     61 $ 11,309     49
 
Other Real Estate Owned - Classification
Construction/Development Loans $ 7,725 50 $ 6,243 37 $ 6,339 31 $ 7,187 38 $ 5,484 30
Residential Real Estate Loans 5,638 41 5,132 34 3,688 25 2,657 14 2,598 14
Commercial Real Estate Loans   5,570     18   4,642     14   4,179     12   3,086     9   3,227     5
Total $ 18,933     109 $ 16,017     85 $ 14,206     68 $ 12,930     61 $ 11,309     49
 
 
Loans 90 Days Past Due - Classification
Construction/Development Loans $ 1,018 3 $ 30 1 $ 532 3 $ 94 4 $ 481 7
Residential Real Estate Loans 820 8 653 6 1,145 19 795 12 765 13
Commercial Real Estate Loans 845 3 239 2 108 2 41 1 2,898 8
Commercial & Industrial Loans 615 4 12 1 67 4 59 6 673 12
Commercial Leases 564 10 3,522 47 1,307 36 2,308 24 478 13
Consumer and Other Loans   131     17   68     16   218     19   76     10   118     20
Total $ 3,993     45 $ 4,524     73 $ 3,377     83 $ 3,373     57 $ 5,413     73
 
 
Repossessed Assets - Activity
Beginning Balance $ 3,881 188 $ 2,050 163 $ 1,473 56 $ 1,864 63 $ 1,680 56
Additions 1,383 3,588 1,978 810 1,318
Reductions   (1,798 )       (1,757 )       (1,401 )       (1,201 )       (1,134 )    
Ending Balance $ 3,466     214 $ 3,881     188 $ 2,050     163 $ 1,473     56 $ 1,864     63
 
 
 

CONTACT:
First Security Group, Inc.
Rodger B. Holley, Chairman, CEO and President, 423-308-2080
rholley@FSGBank.com
or
William L. (Chip) Lusk, Jr., EVP & CFO, 423-308-2070
clusk@FSGBank.com