First Security (FSGI) 8-K First Security Group 8-K 09-16-2003

Second Quarter 2003 Performance Report  Page 1

First Security Group, Inc.	Contact: William L. (Chip) Lusk, Jr.
August 15, 2003	Secretary, CFO & EVP
	(423) 308-2070

 

In the second quarter of 2003, First Security Group (FSG) earned $571 thousand versus $779 thousand for the sameperiod in 2002. The following table summarizes components of income and expense for the past six quarters.

	First		Second		Third		Fourth		First		Second
	Quarter		Quarter		Quarter		Quarter		Quarter		Quarter
	2002		2002		2002		2002		2003		2003
	(in thousands, except per share data)
Interest income	$	5,787	$	6,024	$	6,753	$	7,057	$	6,795	$	8,091
Interest expense		2,052		1,970		2,184		2,211		2,072		2,492
Net interest income		3,735		4,054		4,569		4,846		4,723		5,599
Provision for loan losses		110		139		561		1,138		752		381
Net interest income after
provision for loan losses		3,625		3,915		4,008		3,708		3,971		5,218
Noninterest income		847		903		908		1,161		1,120		1,406
Noninterest expense		3,169		3,565		3,832		4,349		4,604		5,643
Income before income
tax provision		1,303		1,253		1,084		520		487		981
Income tax provision		497		474		441		146		151		410
Net income	$	806	$	779	$	643	$	374	$	336	$	571
Net income per share
basic	$	0.13	$	0.11	$	0.07	$	0.04	$	0.04	$	0.05
diluted	$	0.13	$	0.11	$	0.07	$	0.04	$	0.04	$	0.05

The following graph depicts FSG's growth in loans, deposits, and assets from inception to date.

 

Second Quarter 2003 Performance Report  Page 2

The following table shows the average balance sheets for the second quarter of 2002 and 2003, as well as relatedinterest income, interest expense, yields earned on assets and rates paid on liabilities.

Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30
(all dollar amounts in thousands)
	2002								2003
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate			Balance			Expense		Rate
Assets
Earning assets:
Loans, net of unearned income	$	293,272		$	5,455		7.46	%	$	431,316		$	7,381		6.86	%
Investment securities		41,693			492		4.73	%		70,795			667		3.78	%
Other earning assets		19,769			93		1.89	%		48,513			158		1.31	%
Total earning assets		354,734			6,040		6.83	%		550,624			8,206		5.98	%
Allowance for loan losses		(3,912	)							(6,815	)
Intangible asset		6,192								12,736
Cash&due from		12,747								18,457
Premises & equipment		9,885								18,470
Other assets		3,391								6,690
TOTAL ASSETS	$	383,037							$	600,162
Liabilities and Shareholders' Equity
Interest bearing liabilities:
NOW accounts	$	22,790			64		1.13	%	$	37,262			32		0.34	%
Money market accounts		62,243			335		2.16	%		93,647			333		1.43	%
Savings deposits		10,115			33		1.31	%		22,677			45		0.80	%
Time deposits < $100		96,758			837		3.47	%		155,458			1,172		3.02	%
Time deposits > $100		63,768			593		3.73	%		100,365			780		3.12	%
Federal funds purchased		-			-		-			-			-		-
Repurchase agreements		11,717			43		1 .47	%		13,529			35		1.04	%
Other borrowings		6,000			65		4.35	%		9,164			95		4.16	%
Total interest bearing liabilities		273,391			1,970		2.89	%		432,102			2,492		2.31	%
Net interest spread				$	4,070		3.94	%				$	5,714		3.67	%
Noninterest bearing demand deposits		57,968								82,490
Accrued expenses and other liabilities		3,018								3,713
Shareholders' equity		48,424								81,208
Other comprehensive income		236								649
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY	$	383,037							$	600,162
Impact of non-interest bearing
sources and other changes in
balance sheet composition							0.66	%							0.50	%
Net interest margin/yield on earning assets							4.60	%							4.17	%

Second Quarter 2003 Performance Report  Page 3

The following table shows the average balance sheets for the six months ended June 30, 2002 and 2003, as well asrelated interest income, interest expense, yields earned on assets and rates paid on liabilities.

Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30
Fully tax-equivalent basis
(all dollar amounts in thousands)
				2002								2003
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate			Balance			Expense		Rate
Assets
Earning assets:
Loans, net of unearned income	$	292,276		$	10,784		7.44	%	$	393,314		$	13,556		6.95	%
Investment securities		39,583			943		4.80	%		63,699			1,219		3.86	%
Other earning assets		11,857			105		1.79	%		42,645			278		1.31	%
Total earning assets		343,716			11,832		6.94	%		499,658			15,053		6.08	%
Allowance for loan losses		(3,896	)							(6,111	)
Intangible asset		6,192								10,635
Cash & due from		11,925								16,015
Premises & equipment		9,855								16,049
Other assets		3,331								5,576
TOTAL ASSETS	$	371,123							$	541,822
LiabilitiesandShareholders' Equity
Interest bearing liabilities:
NOW accounts	$	23,029			113		0.99	%	$	32,444			65		0.40	%
Money market accounts		58,515			625		2.15	%		87,676			676		1.55	%
Savings deposits		9,739			63		1.30	%		20,436			86		0.85	%
Time deposits < $100		96,582			1,746		3.65	%		139,294			2,086		3.02	%
Time deposits > $100		63,600			1,237		3.92	%		89,439			1,418		3.20	%
Federal funds purchased		2,746			26		1.91	%		-			-		-
Repurchase agreements		11,085			89		1.62	%		12,943			70		1.09	%
Other borrowings		5,594			123		4.43	%		7,674			161		4.23	%
Total interest bearing liabilities		270,890			4,022		2.99	%		389,906			4,562		2.36	%
Net interest spread				$	7,810		3.95	%				$	10,491		3.72	%
Noninterest bearing demand deposits		52,951								76,532
Accrued expenses and other liabilities		2,900								3,088
Shareholders' equity		44,109								74,655
Other comprehensive income		273								641
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY	$	371,123							$	544,822
Impact of non-interest bearing
sources and other changes in
balance sheet composition							0.63	%							0.52	%
Net interest margin/yield on earning assets							4.58	%							4.24	%