FSG Bank Had $1.4 Million Loss For 3rd Quarter

Thursday, November 14, 2013

First Security Group, Inc. (NASDAQ: FSGI), parent company of FSG Bank, on Thursday reported a net loss allocated to common shareholders of $1.4 million, or $0.02 per basic and diluted share, for the third quarter of 2013 as compared to a loss of $9.4 million, or $5.79 per basic and diluted share, for the same period in 2012. 

For the nine months ended September 30, 2013, First Security reported net income available to common shareholders of $12 million, or $0.

30 per basic and diluted share, as compared to a $23.5 million loss, of $14.54 per basic and diluted share, for the same period in 2012.

“The third quarter represents the first full quarter after the April recapitalization,” said Michael Kramer, First Security’s President and Chief Executive Officer. “While we are pleased with our continued improvement in our deposit mix and associated cost, it is essential that we achieve significant improvement in loan and revenue growth.”

For the third quarter of 2013, net interest income improved by $679 thousand, or 12.4%, to $6.2 million compared to $5.5 million for the linked second quarter of 2013. Total interest income contributed an additional $386 thousand during the third quarter as First Security reduced cash and invested in higher yielding investment securities. Total interest expense declined by $293 thousand through reductions in the costs of deposits as well as reductions in total deposits.

During the third quarter, First Security continued to improve its deposit mix by increasing pure deposits, defined as transaction-based accounts, while reducing higher cost customer CDs as well as reducing brokered CDs as they matured with available cash. During the third quarter, average pure deposits increased by $22.4 million, or 5.2% (20.7% annualized) to $454.4 million while customer CDs and brokered CDs decreased by $61.0 million, or 11.6% (46.3% annualized). As of September 30, 2013, pure deposits totaled 50.0% of total deposits as compared to 39.6% as of September 30, 2012. The changes in deposit mix resulted in the average rate paid on customer deposits improving from 0.64% to 0.57% and the overall cost of deposits improving from 0.96% to 0.86% comparing the second and third quarters of 2013.

With continued asset quality improvement and minimal charge-offs, First Security recorded a $1.6 million negative provision to the allowance for loan and lease losses for the quarter and a $1.8 million negative provision for the year. First Security realized net recoveries of $32 thousand during the third quarter of 2013 and $1.3 million in net charge-offs for the year to date period. Nonaccrual loans declined by $1.8 million to $6.8 million as of September 30, 2013 compared to $8.6 million as of June 30, 2013. Nonperforming loans to total loans improved to 1.37% as of September 30, 2013 as compared to 1.65% as of June 30, 2013. Based on the continued improvement in asset quality and minimal charge-offs, the negative provision was appropriate to reduce the allowance to total loans from 2.27% as of June 30, 2013 to 2.00% as of September 30, 2013.

Non-interest income remained consistent quarter-over-quarter at $2.5 million. Non-interest expense decreased by $1.5 million to $11.4 million for the third quarter of 2013 as compared to the second quarter of 2013. During the third quarter, First Security announced the pending consolidations of two branches to be completed by December 31, 2013 as well as an overall 10% reduction in full-time equivalent employees. The associated cost savings with the reduced workforce is approximately $2.2 million in salary and benefits annually with full realization to begin in the first quarter of 2014. Various other cost saving are anticipated to further reduce non-expense expense for 2014.

“Over the last several quarters, we have seen significant pricing and credit concessions from the competition that has inhibited our ability to grow loans with the quality and yields that we seek,” said John Haddock, First Security’s EVP and Chief Financial Officer. “At the same time, we have been evaluating certain niche lending initiatives and have begun to implement four distinct initiatives to offset the impact of these competitive pressures.”

First Security has announced the implementation of four niche lending opportunities. First, Tri-Net Direct is a new division focused on national net lease lending and includes three full-time employees. Tri-Net will originate construction of preleased “build to suit” projects and provide interim and long term financing to professional developers and private investors for commercial real estate on long term lease to tenants that are investment grade or have investment grade attributes. Second, First Security has partnered with a third-party that originates small balance, unsecured consumer loans, primarily associated with home improvement projects. Third, First Security has built an asset-based lending unit to serve as a community bank alternative for asset-based lending within our markets that should generate above average return on a risk-adjusted basis. The fourth initiative is a dedicated team focused on originating and selling government guaranteed loans, including SBA and USDA loan products.

“Our ability to supplement the lending activities of our traditional bankers with the niche lending initiatives should significantly enhance our ability to achieve our desired loan growth while providing value added services to our customers,” said CEO Kramer. “The return to core profitability is predominantly associated with our ability to increase loans and change our mix of earning assets.”


New And Used Vehicle Sales Increase In July

New vehicle sales in Hamilton County increased to 1,190 in July and used vehicle sales increased to 3,641, according to figures from the County Clerk's office.  That compares to 1,162 new vehicles sold and 3,488 used vehicles sold in July of last year.  Totals for July included 485 new cars and 705 new trucks sold. They included 1,871 used cars and 1,770 used trucks sold. (click for more)

GDOL To Host A Recruitment Next Week In Fort Oglethorpe To Fill 500 Jobs With Convergys

The Georgia Department of Labor will help Convergys hire 500 customer service and sales representatives at a recruitment Tuesday, Aug. 11, in Fort Oglethorpe. The recruitment will be from 10 a.m.-2 p.m. in the council meeting room at Fort Oglethorpe City Hall located at 500 City Hall Dr. Convergys is a company that provides customer management solutions for companies internationally. ... (click for more)

Truck Driver Who Caused Wreck That Killed 6 People At Ooltewah Indicted On 13 Charges; Report Says He Drove Excessive Hours

The Chattanooga Police Department has issued a capias for the arrest of Benjamin Brewer, 39, concerning the multiple fatality traffic crash that occurred on I-75 northbound on June 25. Brewer was indicted on Monday on 13 counts.  They include six counts of vehicular homicide by impairment, a B-felony; four counts for reckless aggravated assault, a D-felony; one count for DUI ... (click for more)

Rawls Says Schools Could Have Better Spent $16,000 Than For Motivational Speech; County To Explore Performance Guaranteed Utility Contract

Bradley County Commissioner Dan Rawls said three school systems could have better spent $16,000 than for a motivational speaker to fire teachers up at the start of a new school year. He said the payment to Ron Clark, former National Teacher of the Year and the founder of the Ron Clark Academy in Atlanta, could have gone for school supplies and other needs. Bradley County ... (click for more)

Why Is The City Diverting Federal Transportation Funds From Real Need?

The city of Chattanooga and CBL, owner of Hamilton Place Mall, would have the mass of taxpayers believe that improving mall access from the interstate is not impacting us financially.   Namely, CBL has committed to fund the city’s match of $8 million, so they will receive $32 million in Federal Transportation Funds that are allocated annually to local jurisdictions through ... (click for more)

Roy Exum: A Hero Is Coming Home

In late September, a very special funeral will be held in Bearden, Tenn., when 1 st Lt. Alexander “Sandy” Bonnyman Jr., will finally come home to lie in peace with his family. Sandy’s been dead for 72 years now, ever since he was killed in combat on the Tarawa Atoll in the Gilbert Islands on Nov. 22, 1943. He and a number of other Marine heroes were buried back then in a shallow ... (click for more)