First Security (FSGI) 8-K First Security Group Announces Earnings

Exhibit 99.1

First Security Group Announces Earnings

Bank Continues Focus on Capital Position and Cost Control

CHATTANOOGA, Tenn.--(BUSINESS WIRE)--July 23, 2009--First Security Group, Inc. (Nasdaq: FSGI), today reported financial results for the second quarter of 2009 with a net loss available to common stockholders of $1.9 million. The net loss for the quarter was largely due to a $6.2 million provision for loan and lease losses.

“While the economic conditions and subsequent credit costs are of concern to us and many others in the industry, we remain focused on ensuring the safety and soundness of FSGBank and our responsibility to our customers and stockholders,” said Rodger B. Holley, Chairman, Chief Executive Officer and President of First Security. “During the first half of 2009, we executed strategies to do just that. We increased our allowance for loan and lease losses, we reduced balance sheet risk and maintained excess liquidity, and we raised $33 million in TARP capital finishing the second quarter with strong tangible equity, approximately $75 million above the ‘well capitalized’ regulatory requirement. With these actions and our strong core earnings, we are focused on positioning for growth when the economy begins to recover.”

Highlights of the quarter’s performance include:

• Capital: First Security’s tangible capital ratio improved to 11.84 percent at June 30, 2009, from 11.69 percent at March 31, 2009, firmly above the threshold for well-capitalized bank holding companies.
• Expense Control: For the three months ended June 30, 2009, First Security’s total non-interest expense increased by $432 thousand compared to the linked quarter. Excluding the special FDIC assessment charge of $560 thousand, non-interest expense declined by 1.4 percent through careful management of staffing levels and administrative costs.
• Net Interest Margin: First Security’s net interest margin improved 14 basis points to 3.77 percent in the second quarter compared to 3.63 percent in the linked quarter, comparing favorably to peer banks.
• Asset Quality: From March 31, 2009 to June 30, 2009, First Security’s total non-performing assets plus delinquencies improved slightly as loans 90 days past due declined by $2.0 million, or 37.7 percent.

“In the second quarter, our work to reduce our problem assets generated a 1.6 percent reduction in nonperforming assets plus 90 day delinquent loans – the first quarter-over-quarter decrease since the second quarter of 2007,” Holley stated. “While we are hopeful that the improvement reflects stability in the credit cycle, we believe that it may be too early to determine if the tide has turned.”

Net interest income increased 2.6 percent to $10.5 million for the second quarter of 2009, compared to $10.2 million for the first quarter of 2009. First Security’s net interest margin improved 14 basis points to 3.77 percent through a combination of reduced dependency on brokered deposits and certificate of deposits repricing at lower, current market rates. Net interest income declined from comparable periods in 2008 due to the Federal Reserve’s interest rate reductions.

Non-interest income improved on a linked quarter basis by $193 thousand, or 7.9 percent, to $2.6 million primarily due to gains on sales of assets, including other real estate owned. Comparing the second quarter of 2009 to the prior year period, non-interest income declined by $352 thousand, or 11.7 percent, due to lower deposit fees and declining mortgage income. On a year-to-date basis, non-interest income declined by $855 thousand, or 14.4 percent, from the 2008 period for similar reasons.

Consistent with First Security’s focus on controlling costs, non-interest expense in the second quarter and first half of 2009 was $9.9 million and $19.4 million, respectively, a decline of $371 thousand, or 3.6 percent, and $975 thousand, or 4.8 percent, respectively, compared to the same periods in 2008. First Security incurred $560 thousand in the second quarter of 2009 for the industry-wide FDIC special assessment. Excluding this charge, non-interest expense declined from the first quarter of 2009 by $128 thousand, or 1.4 percent. The reductions for all periods were primarily due to lower salary and benefits, as well as containment of certain administrative costs. The number of full-time equivalent employees declined to 353 as of June 30, 2009, from 361 at March 31, 2009 and 369 at June 30, 2008.

Non-performing assets plus delinquent loans improved in the second quarter of 2009 compared to the linked quarter as non-accrual loans stabilized and past due loans declined. As shown in the Supplemental Data section of the Financial Highlights, additions to non-accrual loans declined in the second quarter while OREO sales increased. To date, First Security has not used bulk or auction sales for its foreclosed properties, but has instead implemented a new internal program to sell real estate that has achieved a recovery rate of approximately 90 percent. As a percentage of total assets, non-performing assets plus delinquent loans increased slightly due to a decline in the asset base.

First Security’s continued aggressive approach toward problem loans resulted in $6.9 million in net charge-offs during the second quarter of 2009. The increase primarily relates to two relationships that account for $4.4 million of the charge-offs. As of June 30, 2009, the allowance for loan and lease losses to total loans was 1.99 percent, consistent with the first quarter of 2009.

First Security’s active efforts to reduce certain credit exposures and their related balance sheet risk, as well as the effects of the economic recession, have resulted in declining loan balances. Year-to-date, loans contracted by $43.1 million, or 4.3 percent (8.5 percent annualized). The largest declines were in construction and land development (C&D) loans of $11.0 million, or 5.6 percent (11.3 percent annualized), commercial real estate (CRE) loans of $8.8 million, or 3.8 percent (7.5 percent annualized), and 1-4 family residential loans of $7.6 million, or 2.6 percent (5.1 percent annualized).

As of June 30, 2009, First Security’s loan portfolio remains well balanced and within the regions where it has branches. As noted in the Financial Highlights, the composition of the loan portfolio includes 29.8 percent in 1-4 family residential, 23.3 percent in CRE, 19.0 percent in C&D, 15.5 percent in commercial and industrial and 12.4 percent in all other categories.

At June 30, 2009, total deposits were $1.0 billion, a decline of 4.0 percent (8.0 percent annualized), compared to the year-end 2008. The decline was primarily related to management’s strategy to reduce higher cost brokered deposits. Core deposits, which include non-interest bearing demand deposit accounts, interest-bearing demand deposit accounts, savings and money markets and certificates of deposits of less than $100 thousand, increased $8.6 million, or 1.4 percent (2.8 percent annualized), to 60.1 percent of total deposits from 56.9 percent at year-end 2008.

First Security maintained capital levels exceeding those for well-capitalized banks and bank holding companies under applicable regulatory guidelines. The tangible equity to tangible assets ratio and tangible common equity to tangible assets ratio as of June 30, 2009 were 11.84 percent and 9.26 percent, respectively. Stockholders’ equity at the end of the second quarter of 2009 was $172.5 million, and common stockholders’ equity was $141.3 million.

“Our community banking business model – which is based on relationship-focused customer service and diversified product offerings – has served our clients in east Tennessee and north Georgia well since our founding ten years ago,” Holley concluded. “This model generated our underlying revenue growth during the quarter, producing $3.3 million in core earnings before taxes, provision for loan losses and TARP expenses – and would have been $3.8 million without the special FDIC assessment. With two consecutive quarters of core earnings growth and our continued emphasis on asset quality, we are positioning the bank to take advantage of future opportunities for growth and expansion.”

Web Cast and Conference Call Information

First Security's executive management team will host a conference call and simultaneous web cast on Thursday, July 23, 2009 at 3:00 PM Eastern Daylight Time to discuss second quarter results. The web cast 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 $1.2 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 through its wholly-owned subsidiaries, Kenesaw Leasing and J & S 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 1995) 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
	June 30,			December 31,			June 30,
(in thousands, except share data)	2009			2008			2008
	(unaudited)						(unaudited)
ASSETS
Cash & Due from Banks	$	20,908		$	23,222		$	28,151
Federal Funds Sold and Securities Purchased under Agreements to Resell		-			-			-
Cash and Cash Equivalents		20,908			23,222			28,151
Interest-Bearing Deposits in Banks		12,354			918			4,153
Securities Available-for-Sale		137,494			139,305			130,405
Loans Held for Sale		3,806			1,609			6,007
Loans		964,687			1,009,975			1,000,698
Total Loans		968,493			1,011,584			1,006,705
Less: Allowance for Loan and Lease Losses		19,275			17,385			11,855
		949,218			994,199			994,850
Premises and Equipment, net		33,948			33,808			34,854
Goodwill		27,156			27,156			27,156
Intangible Assets		2,139			2,404			2,766
Other Assets		55,176			55,215			48,417
TOTAL ASSETS	$	1,238,393		$	1,276,227		$	1,270,752
LIABILITIES
Deposits
Noninterest-Bearing Demand	$	153,345		$	150,047		$	170,351
Interest-Bearing Demand		63,720			61,402			64,432
Savings and Money Market Accounts		157,560			151,259			143,747
Certificates of Deposit of less than $100 thousand		246,652			249,978			249,317
Certificates of Deposit of $100 thousand or more		204,133			206,502			207,260
Brokered Deposits		207,636			257,098			115,354
Total Deposits		1,033,046			1,076,286			950,461
Federal Funds Purchased and Securities Sold under Agreements to Repurchase		20,538			40,036			65,470
Security Deposits		1,558			2,078			2,225
Other Borrowings		102			2,777			92,785
Other Liabilities		10,686			10,806			12,857
Total Liabilities		1,065,930			1,131,983			1,123,798
STOCKHOLDERS' EQUITY
Preferred Stock - no par value 10,000,000 authorized; 33,000 issued as of June 30, 2009; none issued as of December 31, 2008 and June 30, 2008		31,158			-			-
Common Stock - $.01 par value 50,000,000 shares authorized; 16,418,327 issued as of June 30, 2009; 16,419,883 issued as of December 31, 2008; 16,419,883 issued as of June 30, 2008		114			114			114
Paid-In Surplus		111,933			111,777			111,892
Common Stock Warrants		2,006			-			-
Unallocated ESOP Shares		(6,602	)		(5,944	)		(3,656	)
Retained Earnings		28,262			32,387			36,485
Accumulated Other Comprehensive Income		5,592			5,910			2,119
Total Stockholders' Equity		172,463			144,244			146,954
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,238,393		$	1,276,227		$	1,270,752

First Security Group, Inc. and Subsidiary
Consolidated Income Statements
	Three Months Ended					Year-to-Date
	June 30,					June 30,
(in thousands except per share amounts)	2009			2008		2009			2008
	(unaudited)			(unaudited)		(unaudited)			(unaudited)
INTEREST INCOME
Loans, including fees	$	14,524		$	17,508	$	29,397		$	36,111
Debt Securities - taxable		1,154			1,126		2,338			2,261
Debt Securities - non-taxable		400			391		804			789
Other		21			21		35			32
Total Interest Income		16,099			19,046		32,574			39,193
INTEREST EXPENSE
Interest-Bearing Demand Deposits		50			94		101			193
Savings Deposits and Money Market Accounts		399			568		871			1,206
Certificates of Deposit of less than $100 thousand		1,900			2,640		3,949			5,677
Certificates of Deposit of $100 thousand or more		1,644			2,322		3,404			5,036
Brokered Deposits		1,488			1,091		3,253			1,827
Other		118			915		259			2,323
Total Interest Expense		5,599			7,630		11,837			16,262
NET INTEREST INCOME		10,500			11,416		20,737			22,931
Provision for Loan and Lease Losses		6,196			1,953		11,189			3,131
NET INTEREST INCOME AFTER PROVISION
FOR LOAN AND LEASE LOSSES		4,304			9,463		9,548			19,800
NON-INTEREST INCOME
Service Charges on Deposit Accounts		1,170			1,337		2,317			2,612
Other		1,474			1,659		2,778			3,338
Total Non-interest Income		2,644			2,996		5,095			5,950
NON-INTEREST EXPENSE
Salaries and Employee Benefits		5,043			5,767		10,400			11,524
Expense on Premises and Fixed Assets, net of rental income		1,512			1,703		3,032			3,387
Other		3,337			2,793		5,920			5,416
Total Non-interest Expense		9,892			10,263		19,352			20,327
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) PROVISION		(2,944	)		2,196		(4,709	)		5,423
Income Tax (Benefit) Provision		(1,536	)		592		(2,449	)		1,576
NET (LOSS) INCOME		(1,408	)		1,604		(2,260	)		3,847
Preferred Stock Dividends		413			-		784			-
Accretion on Preferred Stock Discount		87			-		164			-
NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	(1,908	)	$	1,604	$	(3,208	)	$	3,847
NET (LOSS) INCOME PER COMMON SHARE:
Net (Loss) Income Per Common Share - basic	$	(0.12	)	$	0.10	$	(0.21	)	$	0.24
Net (Loss) Income Per Common Share - diluted	$	(0.12	)	$	0.10	$	(0.21	)	$	0.24
Dividends Declared Per Common Share	$	0.01		$	0.05	$	0.06		$	0.10
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC		15,503			16,052		15,537			16,098
DILUTED		15,503			16,237		15,537			16,285

First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
(unaudited)
	(in thousands, except per share amounts and full-time equivalent employees)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			Year-to-Date			Year-to-Date
	2009			2009			2008			2008			2008			June 30, 2009			June 30, 2008
Earnings:
Net interest income	$	10,500		$	10,237		$	10,600		$	11,696		$	11,416		$	20,737		$	22,931
Provision for loan and lease losses	$	6,196		$	4,993		$	8,662		$	3,960		$	1,953		$	11,189		$	3,131
Non-interest income	$	2,644		$	2,451		$	2,675		$	3,057		$	2,996		$	5,095		$	5,950
Non-interest expense	$	9,892		$	9,460		$	10,350		$	9,705		$	10,263		$	19,352		$	20,327
Dividends and accretion on preferred stock	$	500		$	448		$	-		$	-		$	-		$	948		$	-
Net (loss) income available to common stockholders	$	(1,908	)	$	(1,300	)	$	(3,312	)	$	826		$	1,604		$	(3,208	)	$	3,847
Per Share Data:
Net (loss) income available to common stockholders, basic	$	(0.12	)	$	(0.08	)	$	(0.21	)	$	0.05		$	0.10		$	(0.21	)	$	0.24
Net (loss) income available to common stockholders, diluted	$	(0.12	)	$	(0.08	)	$	(0.21	)	$	0.05		$	0.10		$	(0.21	)	$	0.24
Cash dividends declared on common shares	$	0.01		$	0.05		$	0.05		$	0.05		$	0.05		$	0.06		$	0.10
Book value per common share	$	8.61		$	8.76		$	8.78		$	9.05		$	8.95		$	8.61		$	8.95
Tangible book value per common share	$	6.82		$	6.97		$	6.98		$	7.23		$	7.13		$	6.82		$	7.13
Performance Ratios:
Return on average assets		-0.61	%		-0.40	%		-1.04	%		0.26	%		0.51	%		-0.50	%		0.62	%
Return on average common equity		-5.28	%		-3.57	%		-8.98	%		2.22	%		4.30	%		-4.42	%		5.16	%
Return on average tangible assets		-0.62	%		-0.41	%		-1.06	%		0.27	%		0.52	%		-0.52	%		0.64	%
Return on average tangible common equity		-6.63	%		-4.48	%		-11.24	%		2.78	%		5.38	%		-5.55	%		6.46	%
Net interest margin, taxable equivalent		3.77	%		3.63	%		3.74	%		4.13	%		4.12	%		3.70	%		4.21	%
Efficiency ratio		75.26	%		74.56	%		77.97	%		65.78	%		71.21	%		74.91	%		70.38	%
Core efficiency ratio (1)		71.64	%		70.69	%		68.98	%		63.16	%		68.61	%		71.17	%		67.90	%
Non-interest income to net interest income and non-interest income		20.12	%		19.32	%		20.15	%		20.72	%		20.79	%		19.72	%		20.60	%
Capital & Liquidity:
Total equity to total assets		13.93	%		13.73	%		11.30	%		11.59	%		11.56	%		13.93	%		11.56	%
Tangible equity to tangible assets		11.84	%		11.69	%		9.20	%		9.49	%		9.43	%		11.84	%		9.43	%
Tangible common equity to tangible assets		9.26	%		9.20	%		9.20	%		9.49	%		9.43	%		9.26	%		9.43	%
Total loans to total deposits		93.75	%		93.08	%		93.99	%		104.19	%		105.92	%		93.75	%		105.92	%
Asset Quality:
Net charge-offs	$	6,944		$	2,344		$	4,606		$	2,474		$	1,405		$	9,288		$	2,220
Net loans charged-off to average loans, annualized		2.82	%		0.94	%		1.82	%		0.98	%		0.56	%		1.87	%		0.45	%
Non-accrual loans	$	26,782		$	26,706		$	18,453		$	8,773		$	6,845		$	26,782		$	6,845
Other real estate owned	$	12,930		$	11,309		$	7,145		$	5,561		$	4,605		$	12,930		$	4,605
Repossessed assets	$	1,473		$	1,864		$	1,680		$	1,293		$	1,539		$	1,473		$	1,539
Non-performing assets (NPA)	$	41,185		$	39,879		$	27,278		$	15,627		$	12,989		$	41,185		$	12,989
NPA to total assets		3.33	%		3.13	%		2.14	%		1.22	%		1.02	%		3.33	%		1.02	%
Loans 90 days past due	$	3,373		$	5,413		$	2,706		$	2,250		$	785		$	3,373		$	785
NPA + loans 90 days past due to total assets		3.60	%		3.55	%		2.35	%		1.39	%		1.08	%		3.60	%		1.08	%
Allowance for loan and lease losses to total loans		1.99	%		2.02	%		1.72	%		1.31	%		1.18	%		1.99	%		1.18	%
Allowance for loan and lease losses to NPA		46.80	%		50.22	%		63.73	%		85.33	%		91.27	%		46.80	%		91.27	%
Period End Balances:
Loans	$	968,493		$	992,647		$	1,011,584		$	1,017,467		$	1,006,705		$	968,493		$	1,006,705
Intangible assets	$	29,295		$	29,425		$	29,560		$	29,748		$	29,922		$	29,295		$	29,922
Assets	$	1,238,393		$	1,274,385		$	1,276,227		$	1,282,013		$	1,270,752		$	1,238,393		$	1,270,752
Deposits	$	1,033,046		$	1,066,395		$	1,076,286		$	976,520		$	950,461		$	1,033,046		$	950,461
Common stockholders' equity	$	141,305		$	143,911		$	144,244		$	148,531		$	146,954		$	141,305		$	146,954
Total stockholders' equity	$	172,463		$	174,982		$	144,244		$	148,531		$	146,954		$	172,463		$	146,954
Common stock market capitalization	$	62,388		$	55,335		$	75,860		$	120,194		$	91,624		$	62,388		$	91,624
Full-time equivalent employees		353			361			361			365			369			353			369
Common shares outstanding		16,418			16,420			16,420			16,420			16,420			16,418			16,420
Average Balances:
Loans	$	984,210		$	999,954		$	1,011,727		$	1,011,609		$	999,859		$	992,039		$	982,931
Intangible assets	$	29,365		$	29,498		$	29,677		$	29,830		$	30,034		$	29,431		$	30,145
Earning assets	$	1,142,338		$	1,168,135		$	1,150,799		$	1,146,650		$	1,135,027		$	1,155,161		$	1,117,098
Assets	$	1,258,363		$	1,286,371		$	1,274,674		$	1,275,353		$	1,259,203		$	1,272,289		$	1,241,771
Deposits	$	1,047,865		$	1,075,316		$	1,046,970		$	950,473		$	935,899		$	1,061,514		$	914,830
Common stockholders' equity	$	144,476		$	145,588		$	147,499		$	148,824		$	149,316		$	145,029		$	149,158
Total stockholders' equity	$	175,568		$	172,815		$	147,499		$	148,824		$	149,316		$	174,199		$	149,158
Common shares outstanding, basic - wtd		15,503			15,573			15,817			16,065			16,052			15,537			16,098
Common shares outstanding, diluted - wtd		15,503			15,573			15,859			16,159			16,237			15,537			16,285
(1) In accordance with SNL Financial practice, the core efficiency ratio is calculated on a fully tax equivalent basis excluding certain non-cash items, such as amortization of intangibles, gains or losses on investment securities and gains, losses and write-downs on foreclosed and repossessed properties.

Non-GAAP Reconciliation Table
	(in thousands, except per share data)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			Year-to-Date			Year-to-Date
	2009			2009			2008			2008			2008			June 30, 2009			June 30, 2008
Return on average assets		-0.61	%		-0.40	%		-1.04	%		0.26	%		0.51	%		-0.50	%		0.62	%
Effect of intangible assets		-0.01	%		-0.01	%		-0.02	%		0.01	%		0.01	%		-0.02	%		0.02	%
Return on average tangible assets		-0.62	%		-0.41	%		-1.06	%		0.27	%		0.52	%		-0.52	%		0.64	%
Return on average common equity		-5.28	%		-3.57	%		-8.98	%		2.22	%		4.30	%		-4.42	%		5.16	%
Effect of intangible assets		-1.35	%		-0.91	%		-2.26	%		0.56	%		1.08	%		-1.13	%		1.30	%
Return on average common tangible equity		-6.63	%		-4.48	%		-11.24	%		2.78	%		5.38	%		-5.55	%		6.46	%
Total equity to total assets		13.93	%		13.73	%		11.30	%		11.59	%		11.56	%		13.93	%		11.56	%
Effect of intangible assets		-2.09	%		-2.04	%		-2.10	%		-2.10	%		-2.13	%		-2.09	%		-2.13	%
Tangible equity to tangible assets		11.84	%		11.69	%		9.20	%		9.49	%		9.43	%		11.84	%		9.43	%
Efficiency ratio		75.26	%		74.56	%		77.97	%		65.78	%		71.21	%		74.91	%		70.38	%
Effect of non-cash items		-2.36	%		-2.57	%		-7.74	%		-1.62	%		-1.49	%		-2.46	%		-1.37	%
Effect of net interest income, tax equivalent adjustment		-1.26	%		-1.30	%		-1.25	%		-1.00	%		-1.11	%		-1.28	%		-1.11	%
Core efficiency ratio		71.64	%		70.69	%		68.98	%		63.16	%		68.61	%		71.17	%		67.90	%
Total stockholders' equity	$	172,463		$	174,982		$	144,244		$	148,531		$	146,954		$	172,463		$	146,954
Effect of preferred stock		(31,158	)		(31,071	)		-			-			-			(31,158	)		-
Common stockholders' equity	$	141,305		$	143,911		$	144,244		$	148,531		$	146,954		$	141,305		$	146,954
Average total stockholders' equity	$	175,568		$	172,815		$	147,499		$	148,824		$	149,316		$	174,199		$	149,158
Effect of average preferred stock		(31,092	)		(27,227	)		-			-			-			(29,170	)		-
Average common stockholders' equity	$	144,476		$	145,588		$	147,499		$	148,824		$	149,316		$	145,029		$	149,158
Book value per common share	$	8.61		$	8.76		$	8.78		$	9.05		$	8.95		$	8.61		$	8.95
Effect of intangible assets		(1.79	)		(1.79	)		(1.80	)		(1.82	)		(1.82	)		(1.79	)		(1.82	)
Tangible book value per common share	$	6.82		$	6.97		$	6.98		$	7.23		$	7.13		$	6.82		$	7.13
Supplemental Data	(in thousands)
Allowance for loan and lease losses	$	19,275		$	20,028		$	17,385		$	13,335		$	11,855		$	19,275		$	11,855
Net interest income, tax equivalent	$	10,729		$	10,469		$	10,841		$	11,924		$	11,646		$	21,198		$	23,395
Amortization and impairment of intangibles	$	129		$	135		$	188		$	175		$	209		$	264		$	434
(Gain)/Loss on sales of available-for-sale securities, net	$	-		$	-		$	-		$	(146	)	$	-		$	-		$	-
Gain on sales of foreclosed and repossessed property, leased equipment, premises and equipment and loans	$	(146	)	$	(70	)	$	(72	)	$	(169	)	$	(213	)	$	(216	)	$	(310	)
Losses on sales of foreclosed and repossessed property and premises and equipment	$	82		$	59		$	149		$	158		$	28		$	141		$	42
Write-downs on foreclosed and repossessed property and other assets	$	205		$	182		$	740		$	109		$	126		$	387		$	135
Mortgage loan and related fees	$	199		$	242		$	172		$	335		$	413		$	441		$	936
Loans by Type
Loans secured by real estate-
Residential 1-4 family	$	288,836		$	294,314		$	296,454		$	284,256		$	276,296		$	288,836		$	276,296
Commercial		225,790			223,759			234,630			230,134			225,363			225,790			225,363
Construction		183,623			190,581			194,603			206,453			210,194			183,623			210,194
Multi-family and Farmland		33,847			36,541			34,273			33,114			28,282			33,847			28,282
Total loans secured by real estate		732,096			745,195			759,960			753,957			740,135			732,096			740,135
Commercial loans		150,472			162,534			157,906			166,024			169,837			150,472			169,837
Consumer installment loans		54,261			53,406			58,296			604			565			54,261			565
Leases, net of unearned income		26,784			29,117			30,873			33,663			35,655			26,784			35,655
Other		4,880			2,395			4,549			63,219			60,513			4,880			60,513
Total loans	$	968,493		$	992,647		$	1,011,584		$	1,017,467		$	1,006,705		$	968,493		$	1,006,705

Supplemental Data (continued)
Asset Quality Information
	2nd Quarter			2nd Quarter	1st Quarter			1st Quarter	Year-to-Date			Year-to-Date
	2009			2009	2009			2009	2009			2009
	(in thousands)			(units)	(in thousands)			(units)	(in thousands)			(units)
Non-Accrual Loans and Leases - Activity
Beginning Balance	$	26,706		70	$	18,453		57	$	18,453		57
Additions		9,643				12,589				22,232
Reductions		(9,567	)			(4,336	)			(13,903	)
Ending Balance	$	26,782		91	$	26,706		70	$	26,782		91
Non-Accrual Loans and Leases - Classification
Construction/Development Loans	$	8,706		9	$	9,040		12	$	8,706		9
Residential Real Estate Loans		3,713		30		2,179		18		3,713		30
Commercial Real Estate Loans		4,595		16		3,575		12		4,595		16
Commercial & Industrial Loans		3,160		15		6,904		20		3,160		15
Commercial Leases		5,126		16		3,523		4		5,126		16
Consumer and Other Loans		1,482		5		1,485		4		1,482		5
Total	$	26,782		91	$	26,706		70	$	26,782		91
Other Real Estate Owned - Activity
Beginning Balance	$	11,309		49	$	7,145		51	$	7,145		51
Additions		4,522				5,111				9,633
Reductions		(2,901	)			(947	)			(3,848	)
Ending Balance	$	12,930		61	$	11,309		49	$	12,930		61
Other Real Estate Owned - Classification
Construction/Development Loans	$	7,187		38	$	5,484		30	$	7,187		38
Residential Real Estate Loans		2,657		14		2,598		14		2,657		14
Commercial Real Estate Loans		3,086		9		3,227		5		3,086		9
Total	$	12,930		61	$	11,309		49	$	12,930		61
Loans 90 Days Past Due - Classification
Construction/Development Loans	$	94		4	$	481		7	$	94		4
Residential Real Estate Loans		795		12		765		13		795		12
Commercial Real Estate Loans		41		1		2,898		8		41		1
Commercial & Industrial Loans		59		6		673		12		59		6
Commercial Leases		2,308		24		478		13		2,308		24
Consumer and Other Loans		76		10		118		20		76		10
Total	$	3,373		57	$	5,413		73	$	3,373		57
Repossessed Assets - Activity
Beginning Balance	$	1,864		63	$	1,680		56	$	1,680		56
Additions		810				1,318				2,128
Reductions		(1,201	)			(1,134	)			(2,335	)
Ending Balance	$	1,473		56	$	1,864		63	$	1,473		56

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