First Security (FSGI) 8-K/A First Security Group Announces First Quarter Profits

First Security Group, Inc. and Subsidiary

Consolidated Financial Highlights

(unaudited)

	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	2015			2014			2014			2014			2014
	(in thousands, except per share amounts and full-time equivalent employees)
Earnings:
Net interest income	$	8,332		$	7,944		$	8,487		$	7,545		$	6,925
Provision (credit) for loan and lease losses	$	707		$	(221	)	$	11		$	(270	)	$	(972	)
Non-interest income1	$	4,481		$	3,788		$	2,805		$	3,030		$	2,635
Non-interest expense1	$	11,421		$	10,900		$	10,222		$	10,101		$	10,445
Income tax provision	$	145		$	131		$	132		$	131		$	132
Net income (loss)	$	540		$	922		$	927		$	613		$	(45	)
Per Share Data:
Net income (loss), basic	$	0.01		$	0.01		$	0.01		$	0.01		$	(0.00	)
Net income (loss), diluted	$	0.01		$	0.01		$	0.01		$	0.01		$	(0.00	)
Book value per common share	$	1.36		$	1.35		$	1.32		$	1.30		$	1.27
Performance Ratios:
Return on average assets	0.20		%	0.36		%	0.36		%	0.24		%	(0.02		)%
Return on average common equity	2.38		%	4.13		%	4.23		%	2.86		%	(0.21		)%
Efficiency ratio	89.14		%	92.91		%	90.52		%	95.52		%	109.26		%
Non-interest income to net interest income and non-interest income	34.97		%	32.29		%	24.84		%	28.65		%	27.56		%
Capital:
Total equity to total assets	8.56		%	8.41		%	8.56		%	8.55		%	8.63		%
Liquidity, Yields and Rates:
Interest-bearing cash - average balance	$	11,211		$	9,757		$	8,436		$	8,997		$	13,653
Investment securities - average balance	215,693			225,253			230,297			247,459			272,563
Loans - average balance	758,215			718,917			702,271			673,175			604,298
Average Earning Assets	$	985,119		$	953,927		$	941,004		$	929,631		$	890,514
Pure deposits2 - average balance	$	537,543		$	525,691		$	493,707		$	455,407		$	446,820
Core deposits3 - average balance	687,403			680,008			654,893			622,636			624,365
Customer deposits4 - average balance	805,054			802,837			783,996			757,704			773,336
Brokered deposits - average balance	109,734			83,490			85,369			84,021			70,204
Total deposits - average balance	$	914,788		$	886,327		$	869,365		$	841,725		$	843,540
Total loans to total deposits	79.53		%	73.28		%	75.85		%	76.01		%	71.85		%
Yield on earning assets	3.89		%	3.79		%	4.14		%	3.86		%	3.85		%
Rate on customer deposits (including impact of non-interest bearing DDAs)	0.36		%	0.37		%	0.37		%	0.37		%	0.41		%
Cost of deposits	0.46		%	0.49		%	0.55		%	0.59		%	0.65		%
Rate on interest-bearing funding	0.53		%	0.58		%	0.66		%	0.68		%	0.78		%
Net interest margin, taxable equivalent	3.45		%	3.32		%	3.60		%	3.30		%	3.21		%

	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	2015			2014			2014			2014			2014
	(in thousands, except per share amounts and full-time equivalent employees)
Non-Interest Income:
Service charges on deposits	$	674		$	793		$	778		$	769		$	741
POS fees	422			426			436			439			401
BOLI	210			235			234			235			351
Mortgage banking income	212			357			462			279			180
Trust	265			245			233			235			200
Net gains on sales of loans	1,060			886			254			450			22
Interest rate swap gains	1,240			629			138			132			105
Other	390			217			260			244			264
Net gains on securities available-for-sale	8			—			10			247			371
Total Non-Interest Income	$	4,481		$	3,788		$	2,805		$	3,030		$	2,635
Non-Interest Expense:
Salaries and benefits	$	5,420		$	5,576		$	5,153		$	5,225		$	5,274
Occupancy	798			732			814			776			820
Furniture and fixtures	665			580			565			520			557
Professional fees	605			888			658			690			599
FDIC insurance assessments	242			336			336			336			311
Write-downs on OREO and repossessions	143			59			289			76			309
Losses (Gains) on OREO, repossessions and fixed assets, net	3			(369		)	(113		)	(15		)	10
Non-performing asset expenses, net	107			193			204			184			221
Data processing	533			618			577			506			588
Communications	116			120			129			147			150
Debit card fees	244			307			244			232			258
Intangible asset amortization	50			50			49			49			48
Printing and supplies	136			147			144			150			207
Advertising	153			147			140			135			134
Insurance	295			296			295			303			325
Interest rate swap loss	1,240			629			138			138			105
Other	671			591			600			649			529
Total Non-Interest Expense	$	11,421		$	10,900		$	10,222		$	10,101		$	10,445
Asset Quality:
Net charge-offs (recoveries)	$	561		$	(221	)	$	664		$	(470	)	$	228
Net loan charge-offs (recoveries) to average loans, annualized	0.30		%	(0.03		)%	0.19		%	(0.14		)%	0.15		%
Non-accrual loans	$	4,150		$	4,348		$	4,000		$	4,891		$	6,027
Other real estate owned and repossessed assets, net	$	4,207		$	4,519		$	5,960		$	7,725		$	7,075
Loans 90 days past due	$	347		$	100		$	1,951		$	1,083		$	854
Non-performing assets (NPA)	$	8,704		$	8,967		$	11,911		$	13,699		$	13,956
NPA to total assets	0.82		%	0.84		%	1.16		%	1.35		%	1.42		%
Non-performing loans (NPL)	$	4,497		$	4,448		$	5,951		$	5,974		$	6,881
NPL to total loans	0.61		%	0.67		%	0.89		%	0.91		%	1.14		%
Allowance for loan and lease losses to total loans	1.18		%	1.29		%	1.29		%	1.43		%	1.52		%
Allowance for loan and lease losses to NPL	192.35		%	192.22		%	144.51		%	157.35		%	133.70		%

	1st Quarter		4th Quarter		3rd Quarter		2nd Quarter		1st Quarter
	2015		2014		2014		2014		2014
	(in thousands, except per share amounts and full-time equivalent employees)
Period End Balances:
Loans, excluding HFS	$	734,478	$	663,622	$	666,728	$	659,539	$	604,859
Allowance for loan and lease losses	$	8,650	$	8,550	$	8,600	$	9,400	$	9,200
Loans held-for-sale	$	23,347	$	72,242	$	46,904	$	28,547	$	35,503
Intangible assets	$	84	$	134	$	184	$	233	$	282
Assets	$	1,059,278	$	1,070,244	$	1,027,882	$	1,012,685	$	980,505
Deposits	$	923,552	$	905,613	$	879,029	$	867,709	$	841,832
Total shareholders' equity	$	90,726	$	89,980	$	87,963	$	86,566	$	84,654
Common stock market capitalization	$	160,332	$	151,027	$	132,315	$	144,594	$	138,601
Full-time equivalent employees	262		268		264		264		275
Common shares outstanding	66,805		66,826		66,826		66,633		66,635
Average Balances:
Loans, including HFS	$	758,215	$	718,917	$	702,271	$	673,175	$	604,298
Intangible assets	$	116	$	166	$	217	$	265	$	313
Earning assets	$	985,119	$	953,927	$	941,004	$	929,631	$	890,514
Assets	$	1,069,751	$	1,033,327	$	1,017,631	$	1,006,143	$	967,624
Deposits	$	914,788	$	886,327	$	869,365	$	841,725	$	843,540
Total shareholders' equity	$	90,923	$	89,205	$	87,656	$	85,613	$	84,340
Common shares outstanding, basic - wtd	65,932		65,915		65,869		65,731		65,726
Common shares outstanding, diluted - wtd	65,932		65,950		65,874		65,737		65,726
1 Certain amounts were reclassified between non-interest income and non-interest expense to conform with the current presentation.
2 Pure deposits are all transaction-based accounts, including non-interest bearing DDAs, interest bearing DDAs, money market accounts and savings accounts.
3 Core deposits are Pure deposits plus customer certificates of deposits less than $100,000.
4 Customer deposits are total deposits less brokered deposits.