First Security (FSGI) 8-K First Security Group Announces Fourth Quarter Results

Exhibit 99.1

First Security Group Announces Fourth Quarter Results

CHATTANOOGA, Tenn.--(BUSINESS WIRE)--January 27, 2011--First Security Group, Inc. (NASDAQ: FSGI), today reported a net loss available to common shareholders of $11.8 million, or $0.75 per diluted share for the quarter ending December 31, 2010, and a net loss of $46.4 million, or $2.95 per diluted share for the year. For 2010, First Security recorded $33.6 million in provision for loan and lease losses and established a $24.6 million valuation allowance for deferred taxes.

“All of us in senior management appreciate the support of shareholders and customers and the dedication of our employees. Knowing their level of commitment makes the most recent operating results all the more disappointing,” said Rodger B. Holley, Chairman and Chief Executive Officer of First Security. “Continued procedural improvements, led by our new President and Chief Operating Officer Gene Coffman, are underway. Mr. Coffman is managing the bank on a day-to-day basis and will continue spearheading our change initiatives.”

To better position First Security for short-term stability and long-term success, several important management changes have taken place over the past year. In addition to the hiring of the president and chief operating officer, an experienced chief credit officer joined the Bank in the second quarter of 2010 to oversee credit administration. The positions of chief risk officer, retail banking president and commercial banking president were also created and filled during 2010.

These organizational changes provide centralized oversight and control. Market executives were also appointed to maintain local knowledge and uphold the Bank’s commitment to superior customer service. Operationally, loan underwriting, collections and loan document areas have been centralized. Additionally, the marketing and sales of foreclosed residential and commercial properties has been outsourced to selective local and regional real estate firms. These changes ensure consistency, increase effectiveness and provide higher levels of operational efficiencies.

Fourth Quarter Overview

For the fourth quarter of 2010, net interest income totaled $7.9 million, a decline of 2.8 percent on a linked quarter basis and a decline of 25.2 percent from the fourth quarter of 2009. On a year-over-year basis, net interest income declined by 17.8 percent to $34.7 million in 2010. Lower net interest income is primarily attributed to decreased interest income from reductions in the loan portfolio and increased interest costs associated with higher levels of brokered deposits, partially offset by reductions in interest expense on customer deposits.

Non-interest income for the fourth quarter of 2010 totaled $2.2 million, 6.9 percent lower than the third quarter of 2010, and 10.6 percent lower than the fourth quarter of 2009. On a linked quarter basis, most of the $167 thousand decline was due to reduced mortgage loan and related fee income. For 2010, non-interest income was $9.5 million, compared to $10.3 million in 2009. This decline was primarily due to $730 thousand less in total deposit fees and a $171 thousand reduction in gains on sales of assets.

Non-interest expense in the fourth quarter of 2010 declined to $11.1 million, from $12.5 million in the third quarter of 2010, and $12.1 million in the fourth quarter of 2009. Full-time equivalent employees declined to 311 as of December 31, 2010, from 325 at the end of the third quarter and 347 a year ago. Accordingly, salary and benefit expense declined by 6.2% on a linked quarter basis and 6.5% for the year. Expenses associated with nonperforming assets, including write-downs, losses and holding costs, totaled $1.6 million in the fourth quarter of 2010 and $6.3 million for the year.

In the fourth quarter of 2010, the provision for loan and lease losses declined to $7.2 million, from $18.4 million in the third quarter of 2010. The provision of $33.6 million for 2010 was 32.3% higher than the provision for 2009.

Economic uncertainty, higher unemployment rates and reduced consumer spending have created financial challenges for many owner-managed businesses and individuals. As of December 31, 2010, the allowance for loan and lease losses was $24.0 million or 3.30 percent of total loans, compared to $25.3 million, or 3.26 percent of total loans, as of September 30, 2010. Net charge-offs totaled $8.5 million, or 4.49 percent of average loans on an annualized basis during the fourth quarter of 2010.

From September 30, 2010, non-accrual loans and leases declined $1.0 million to $54.1 million at the end of the fourth quarter of 2010; the largest categories were construction and development (C&D) with $25.6 million, commercial real estate (CRE) loans with $10.0 million, and residential real estate with $8.9 million. During the same time period, other real estate owned increased $1.5 million to $24.4 million; and repossessed assets declined $466 thousand to $763 thousand. Additional detail on asset quality is available in the supplemental data following the financial highlights.

During the fourth quarter of 2010, loan balances declined by $50.3 million, or 6.5 percent (25.9 percent annualized) on a linked quarter basis. Most categories declined, and the reduction was concentrated in C&D loans, which declined by 17.3 percent (69.3 percent annualized) to $84.2 million, and CRE loans, which declined by 4.5 percent (17.9 percent annualized) to $226.4 million.

First Security’s loan portfolio consists of in-market loans originated throughout its branch network. The loan portfolio is well diversified with 34.7 percent in 1-4 family residential, 31.1 percent in CRE, 11.6 percent in C&D and 11.4 percent in commercial and industrial. Additional detail on the loan portfolio is available in the supplemental data following the financial highlights.

At December 31, 2010, deposits totaled $1.0 billion, a decline of $134.0 million, or 11.3 percent on a year over year basis. The majority of the decline was in the certificates of deposits with jumbo CDs declining $54.3 million and retail CDs declining $38.6 million over the last year. Noninterest bearing and interest bearing demand deposit accounts were stable.

First Security continues to consider a variety of strategic alternatives intended to achieve and maintain elevated capital ratios. Stockholders’ equity at the end of the fourth quarter of 2010 was $93.4 million, and common stockholders’ equity was $61.7 million. As of December 31, 2010, FSGBank was below the elevated capital ratios required by the Office of the Comptroller of the Currency, but continued to maintain capital ratios above the thresholds established for well-capitalized institutions under federal regulatory guidelines. In the area of liquidity, First Security maintains an elevated level of cash to fund prudent loans and future contractual obligations.

“The organizational changes made in 2010 have positioned us to return our focus to the business of banking,” said Ralph E. “Gene” Coffman, Jr., President and Chief Operating Officer. “While our special assets department continues to work to reduce nonperforming assets, our lenders are focused on meeting the needs of our credit worthy customers here in east Tennessee and north Georgia. We are committed to redoubling our efforts to implement our core strategies of addressing and improving asset quality, being the community bank of choice and returning to profitability.”

Webcast and Conference Call Information

First Security’s executive management team will host a conference call and simultaneous webcast on Thursday, January 27, 2011, at 3:00 PM Eastern Standard Time to discuss fourth 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 $1.2 billion in assets. Founded in 1999, First Security’s community bank subsidiary, FSGBank, N.A. has 37 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 and internet banking services (www.FSGBank.com).

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.

Note Regarding Forward Looking Statements

Some of our statements contained in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” “will,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared.

These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to the following: deterioration in the financial condition of borrowers; changes in loan underwriting, credit review or loss reserve policies; the failure of assumptions underlying the establishment of reserves for possible loan losses; changes in political and economic conditions; changes in financial market conditions; fluctuations in markets for equity, fixed-income, commercial paper and other securities, which could affect availability, market liquidity levels, and pricing; governmental monetary and fiscal policies, as well as legislative and regulatory changes; First Security’s participation or lack of participation in governmental programs; First Security’s lack of participation in a “stress test” under the Federal Reserve’s Supervisory Capital Assessment Program; the effects of competition from other commercial banks, thrifts, and other financial institutions; and the effect of any mergers, acquisitions or other transactions, to which we or our subsidiary may from time to time be a party.

Many of these risks are beyond our ability to control or predict, and you are cautioned not to put undue reliance on such forward-looking statements. First Security does not intend to update or reissue any forward-looking statements contained in this release as a result of new information or other circumstances that may become known to First Security.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this Note. Our actual results may differ significantly from those we discuss in these forward-looking statements.

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
	December 31,			December 31,
(in thousands, except share data)	2010			2009
	(unaudited)
ASSETS
Cash & Due from Banks	$	8,298		$	23,220
Federal Funds Sold and Securities Purchased under Agreements to Resell		-			-
Cash and Cash Equivalents		8,298			23,220
Interest-Bearing Deposits in Banks		200,621			152,616
Securities Available-for-Sale		154,165			143,045
Loans Held for Sale		2,556			1,225
Loans		724,535			950,793
Total Loans		727,091			952,018
Less: Allowance for Loan and Lease Losses		24,000			26,492
		703,091			925,526
Premises and Equipment, net		30,814			33,157
Goodwill		-			-
Intangible Assets		1,461			1,918
Other Assets		70,098			73,917
TOTAL ASSETS	$	1,168,548		$	1,353,399
LIABILITIES
Deposits
Noninterest-Bearing Demand	$	149,323		$	151,174
Interest-Bearing Demand		63,838			62,429
Savings and Money Market Accounts		161,873			177,543
Certificates of Deposit of less than $100 thousand		205,675			244,312
Certificates of Deposit of $100 thousand or more		153,138			207,465
Brokered Deposits		314,876			339,750
Total Deposits		1,048,723			1,182,673
Federal Funds Purchased and Securities Sold under Agreements to Repurchase		15,933			17,911
Security Deposits		732			1,376
Other Borrowings		77			94
Other Liabilities		9,709			10,181
Total Liabilities		1,075,174			1,212,235
STOCKHOLDERS' EQUITY
Preferred Stock - no par value 10,000,000 authorized; 33,000 issued as of December 31, 2010 and December 31, 2009		31,718			31,339
Common Stock - $.01 par value 150,000,000 shares authorized as of December 31, 2010; 50,000,000 shares authorized as of December 31, 2009; 16,418,327 issued as of December 31, 2010 and December 31, 2009		114			114
Paid-In Surplus		111,344			111,964
Common Stock Warrants		2,006			2,006
Unallocated ESOP Shares		(5,218	)		(6,193	)
Accumulated Deficit		(50,629	)		(4,258	)
Accumulated Other Comprehensive Income		4,039			6,192
Total Stockholders' Equity		93,374			141,164
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,168,548		$	1,353,399

First Security Group, Inc. and Subsidiary
Consolidated Statements of Income
	Three Months Ended						Year-to-Date
	December 31,						December 31,
(in thousands except per share amounts)	2010			2009			2010			2009
	(unaudited)			(unaudited)			(unaudited)
INTEREST INCOME
Loans, including fees	$	11,028		$	13,913		$	49,118		$	57,772
Debt Securities - taxable		860			1,120			3,870			4,555
Debt Securities - non-taxable		349			408			1,411			1,608
Other		146			34			517			72
Total Interest Income		12,383			15,475			54,916			64,007
INTEREST EXPENSE
Interest Bearing Demand Deposits		44			44			186			190
Savings Deposits and Money Market Accounts		312			413			1,417			1,668
Certificates of Deposit of less than $100 thousand		951			1,496			4,673			7,183
Certificates of Deposit of $100 thousand or more		788			1,331			4,049			6,265
Brokered Deposits		2,260			1,492			9,429			5,970
Other		118			127			481			522
Total Interest Expense		4,473			4,903			20,235			21,798
NET INTEREST INCOME		7,910			10,572			34,681			42,209
Provision for Loan and Lease Losses		7,189			4,935			33,613			25,404
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES		721			5,637			1,068			16,805
NON-INTEREST INCOME
Service Charges on Deposit Accounts		913			1,141			3,912			4,642
Gain on Sales of Available-for-Sale Securities, net		-			-			57			-
Other		1,324			1,362			5,534			5,693
Total Non-interest Income		2,237			2,503			9,503			10,335
NON-INTEREST EXPENSE
Salaries and Employee Benefits		4,488			4,943			18,926			20,246
Expense on Premises and Fixed Assets, net of rental income		1,338			1,366			5,525			5,891
Impairment of Goodwill		-			-			-			27,156
Other		5,244			5,823			20,783			15,554
Total Non-interest Expense		11,070			12,132			45,234			68,847
LOSS BEFORE INCOME TAX PROVISION		(8,112	)		(3,992	)		(34,663	)		(41,707	)
Income Tax Expense (Benefit)		3,218			(926	)		9,679			(8,252	)
NET LOSS		(11,330	)		(3,066	)		(44,342	)		(33,455	)
Preferred Stock Dividends		412			413			1,650			1,609
Accretion on Preferred Stock Discount		98			91			379			345
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS	$	(11,840	)	$	(3,570	)	$	(46,371	)	$	(35,409	)
NET LOSS PER SHARE:
Net Loss Per Share - basic	$	(0.75	)	$	(0.23	)	$	(2.95	)	$	(2.28	)
Net Loss Per Share - diluted	$	(0.75	)	$	(0.23	)	$	(2.95	)	$	(2.28	)
Dividends Declared Per Common Share	$	-		$	0.01		$	-		$	0.08
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC		15,808			15,582			15,740			15,550
DILUTED		15,808			15,584			15,740			15,550

First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
(unaudited)
	(in thousands, except per share amounts and full-time equivalent employees)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			Year-to-Date			Year-to-Date
	2010			2010			2010			2010			2009			December 31, 2010			December 31, 2009
Earnings:
Net interest income	$	7,910		$	8,135		$	8,961		$	9,675		$	10,572		$	34,681		$	42,209
Provision for loan and lease losses	$	7,189		$	18,415		$	3,634		$	4,375		$	4,935		$	33,613		$	25,404
Non-interest income	$	2,237		$	2,404		$	2,558		$	2,304		$	2,503		$	9,503		$	10,335
Non-interest expense	$	11,070		$	12,512		$	11,780		$	9,872		$	12,132		$	45,234		$	68,847
Dividends and accretion on preferred stock	$	510		$	508		$	506		$	505		$	504		$	2,029		$	1,954
Net loss available to common stockholders	$	(11,840	)	$	(30,280	)	$	(2,632	)	$	(1,619	)	$	(3,570	)	$	(46,371	)	$	(35,409	)
Earnings - Normalized
Non-interest expense, excluding goodwill impairment	$	11,070		$	12,512		$	11,780		$	9,872		$	12,132		$	45,234		$	41,691
Net loss available to common stockholders, excluding goodwill impairment	$	(11,840	)	$	(30,280	)	$	(2,632	)	$	(1,619	)	$	(3,570	)	$	(46,371	)	$	(10,647	)
Per Share Data:
Net loss available to common stockholders, basic	$	(0.75	)	$	(1.92	)	$	(0.17	)	$	(0.10	)	$	(0.23	)	$	(2.95	)	$	(2.28	)
Net loss available to common stockholders, diluted	$	(0.75	)	$	(1.92	)	$	(0.17	)	$	(0.10	)	$	(0.23	)	$	(2.95	)	$	(2.28	)
Cash dividends declared on common shares	$	-		$	-		$	-		$	-		$	0.01		$	-		$	0.08
Book value per common share	$	3.76		$	4.58		$	6.41		$	6.59		$	6.69		$	3.76		$	6.69
Tangible book value per common share	$	3.67		$	4.49		$	6.31		$	6.48		$	6.57		$	3.67		$	6.57
Per Share Data - Normalized:
Net loss, excluding goodwill impairment, basic	$	(0.75	)	$	(1.92	)	$	(0.17	)	$	(0.10	)	$	(0.23	)	$	(2.95	)	$	(0.68	)
Net loss, excluding goodwill impairment, diluted	$	(0.75	)	$	(1.92	)	$	(0.17	)	$	(0.10	)	$	(0.23	)	$	(2.95	)	$	(0.68	)
Performance Ratios:
Return on average assets		-3.91	%		-9.26	%		-0.78	%		-0.48	%		-1.13	%		-3.55	%		-2.81	%
Return on average common equity		-63.93	%		-115.65	%		-9.80	%		-5.87	%		-12.42	%		-46.81	%		-25.92	%
Return on average tangible assets		-3.92	%		-9.27	%		-0.78	%		-0.48	%		-1.14	%		-3.55	%		-2.86	%
Return on average tangible common equity		-65.27	%		-117.48	%		-9.96	%		-5.97	%		-12.63	%		-47.62	%		-31.00	%
Net interest margin, taxable equivalent		2.87	%		2.72	%		2.93	%		3.17	%		3.67	%		2.92	%		3.75	%
Efficiency ratio		109.10	%		118.72	%		102.27	%		82.41	%		92.79	%		102.38	%		131.03	%
Non-interest income to net interest income and non-interest income		22.05	%		22.81	%		22.21	%		19.23	%		19.14	%		21.51	%		19.67	%
Performance Ratios - Normalized:
Return on average assets, excluding goodwill impairment		-3.91	%		-9.26	%		-0.78	%		-0.48	%		-1.13	%		-3.55	%		-0.85	%
Return on average common equity, excluding goodwill impairment		-63.93	%		-115.65	%		-9.80	%		-5.87	%		-12.42	%		-46.81	%		-7.79	%
Return on average tangible assets, excluding goodwill impairment		-3.92	%		-9.27	%		-0.78	%		-0.48	%		-1.14	%		-3.55	%		-0.86	%
Return on average tangible common equity, excluding goodwill impairment		-65.27	%		-117.48	%		-9.96	%		-5.97	%		-12.63	%		-47.62	%		-9.32	%
Capital & Liquidity:
Total equity to total assets		7.99	%		8.57	%		10.26	%		10.20	%		10.43	%		7.99	%		10.43	%
Tangible equity to tangible assets		7.88	%		8.46	%		10.14	%		10.08	%		10.30	%		7.88	%		10.30	%
Tangible common equity to tangible assets		5.16	%		5.92	%		7.78	%		7.78	%		7.98	%		5.16	%		7.98	%
Total loans to total deposits		69.33	%		69.90	%		73.00	%		75.36	%		80.50	%		69.33	%		80.50	%
Asset Quality:
Net charge-offs	$	8,503		$	19,918		$	2,900		$	4,760		$	4,123		$	36,081		$	16,273
Net loans charged-off to average loans, annualized		4.49	%		9.67	%		1.33	%		2.04	%		1.72	%		4.27	%		1.66	%
Non-accrual loans	$	54,082		$	55,083		$	58,339		$	50,305		$	45,454		$	54,082		$	45,454
Other real estate owned	$	24,399		$	22,888		$	17,795		$	18,228		$	15,312		$	24,399		$	15,312
Repossessed assets	$	763		$	1,229		$	1,921		$	3,466		$	3,881		$	763		$	3,881
Non-performing assets (NPA)	$	79,244		$	79,200		$	78,055		$	71,999		$	64,647		$	79,244		$	64,647
NPA to total assets		6.78	%		6.35	%		5.85	%		5.26	%		4.78	%		6.78	%		4.78	%
Loans 90 days past due	$	4,838		$	6,025		$	342		$	3,993		$	4,524		$	4,838		$	4,524
NPA + loans 90 days past due to total assets		7.20	%		6.84	%		5.88	%		5.55	%		5.11	%		7.20	%		5.11	%
Non-performing loans (NPL)	$	58,920		$	61,108		$	58,681		$	54,298		$	49,978		$	58,920		$	49,978
NPL to total loans		8.10	%		7.86	%		6.89	%		6.00	%		5.25	%		8.10	%		5.25	%
Allowance for loan and lease losses to total loans		3.30	%		3.26	%		3.15	%		2.88	%		2.78	%		3.30	%		2.78	%
Allowance for loan and lease losses to NPL		40.73	%		41.43	%		45.72	%		48.07	%		53.01	%		40.73	%		53.01	%
Period End Balances:
Loans	$	727,091		$	777,418		$	851,352		$	905,512		$	952,018		$	727,091		$	952,018
Allowance for loan and lease losses	$	24,000		$	25,320		$	26,830		$	26,101		$	26,492		$	24,000		$	26,492
Intangible assets	$	1,461		$	1,570		$	1,685		$	1,800		$	1,918		$	1,461		$	1,918
Assets	$	1,168,548		$	1,246,391		$	1,333,140		$	1,368,535		$	1,353,399		$	1,168,548		$	1,353,399
Deposits	$	1,048,723		$	1,112,204		$	1,166,251		$	1,201,645		$	1,182,673		$	1,048,723		$	1,182,673
Common stockholders' equity	$	61,657		$	75,226		$	105,226		$	108,139		$	109,825		$	61,657		$	109,825
Total stockholders' equity	$	93,374		$	106,846		$	136,751		$	139,570		$	141,164		$	93,374		$	141,164
Common stock market capitalization	$	14,776		$	18,388		$	31,523		$	35,463		$	39,075		$	14,776		$	39,075
Full-time equivalent employees		311			325			333			345			347			311			347
Common shares outstanding		16,418			16,418			16,418			16,418			16,418			16,418			16,418
Average Balances:
Loans	$	757,204		$	823,753		$	873,418		$	931,566		$	960,744		$	845,945		$	977,758
Intangible assets	$	1,521		$	1,634		$	1,748		$	1,864		$	1,955		$	1,691		$	22,382
Earning assets	$	1,122,078		$	1,212,994		$	1,252,396		$	1,266,707		$	1,168,589		$	1,213,145		$	1,150,337
Assets	$	1,210,362		$	1,308,616		$	1,348,219		$	1,361,769		$	1,258,587		$	1,306,831		$	1,258,662
Deposits	$	1,077,407		$	1,144,201		$	1,181,077		$	1,189,482		$	1,081,372		$	1,147,724		$	1,057,090
Common stockholders' equity	$	74,080		$	104,731		$	107,448		$	110,347		$	115,007		$	99,067		$	136,598
Total stockholders' equity	$	105,734		$	136,288		$	138,911		$	141,717		$	146,275		$	130,579		$	166,803
Common shares outstanding, basic - wtd		15,808			15,785			15,715			15,649			15,582			15,740			15,550
Common shares outstanding, diluted - wtd		15,808			15,785			15,715			15,649			15,584			15,740			15,550

Non-GAAP Reconciliation Table
	(in thousands, except per share data)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			Year-to-Date			Year-to-Date
	2010			2010			2010			2010			2009			December 31, 2010			December 31, 2009
Return on average assets		-3.91	%		-9.26	%		-0.78	%		-0.48	%		-1.13	%		-3.55	%		-2.81	%
Effect of intangible assets		-0.01	%		-0.01	%		-			-			-0.01	%		-			-0.05	%
Return on average tangible assets		-3.92	%		-9.27	%		-0.78	%		-0.48	%		-1.14	%		-3.55	%		-2.86	%
Return on average assets		-3.91	%		-9.26	%		-0.78	%		-0.48	%		-1.13	%		-3.55	%		-2.81	%
Effect of goodwill impairment		-			-			-			-			-			-			1.96	%
Return on average assets, excluding goodwill impairment		-3.91	%		-9.26	%		-0.78	%		-0.48	%		-1.13	%		-3.55	%		-0.85	%
Effect of average intangible assets		-0.01	%		-0.01	%		-			-			-0.01	%		-			-0.01	%
Return on average tangible assets, excluding goodwill impairment		-3.92	%		-9.27	%		-0.78	%		-0.48	%		-1.14	%		-3.55	%		-0.86	%
Return on average common equity		-63.93	%		-115.65	%		-9.80	%		-5.87	%		-12.42	%		-46.81	%		-25.92	%
Effect of goodwill impairment		-			-			-			-			-			-			18.13	%
Return on average common equity, excluding goodwill impairment		-63.93	%		-115.65	%		-9.80	%		-5.87	%		-12.42	%		-46.81	%		-7.79	%
Effect on average intangible assets		-1.34	%		-1.83	%		-0.16	%		-0.10	%		-0.21	%		-0.81	%		-1.53	%
Return on average tangible common equity, excluding goodwill impairment		-65.27	%		-117.48	%		-9.96	%		-5.97	%		-12.63	%		-47.62	%		-9.32	%
Total equity to total assets		7.99	%		8.57	%		10.26	%		10.20	%		10.43	%		7.99	%		10.43	%
Effect of intangible assets		-0.11	%		-0.11	%		-0.12	%		-0.12	%		-0.13	%		-0.11	%		-0.13	%
Tangible equity to tangible assets		7.88	%		8.46	%		10.14	%		10.08	%		10.30	%		7.88	%		10.30	%
Effect of preferred stock		-2.72	%		-2.54	%		-2.36	%		-2.30	%		-2.32	%		-2.72	%		-2.32	%
Tangible common equity to tangible assets		5.16	%		5.92	%		7.78	%		7.78	%		7.98	%		5.16	%		7.98	%
Non-interest expense	$	11,070		$	12,512		$	11,780		$	9,872		$	12,132		$	45,234		$	68,847
Impairment of goodwill		-			-			-			-			-			-			(27,156	)
Non-interest expense, excluding goodwill impairment	$	11,070		$	12,512		$	11,780		$	9,872		$	12,132		$	45,234		$	41,691
Net loss available to common stockholders	$	(11,840	)	$	(30,280	)	$	(2,632	)	$	(1,619	)	$	(3,570	)	$	(46,371	)	$	(35,409	)
Effect of goodwill impairment, net of $2,394 tax effect		-			-			-			-			-			-			24,762
Net loss available to common stockholders, excluding goodwill impairment	$	(11,840	)	$	(30,280	)	$	(2,632	)	$	(1,619	)	$	(3,570	)	$	(46,371	)	$	(10,647	)
Total stockholders' equity	$	93,374		$	106,846		$	136,751		$	139,570		$	141,164		$	93,374		$	141,164
Effect of preferred stock		(31,717	)		(31,620	)		(31,525	)		(31,431	)		(31,339	)		(31,717	)		(31,339	)
Common stockholders' equity	$	61,657		$	75,226		$	105,226		$	108,139		$	109,825		$	61,657		$	109,825
Average assets	$	1,210,362		$	1,308,616		$	1,348,219		$	1,361,769		$	1,258,587		$	1,306,831		$	1,258,662
Effect of average intangible assets		(1,521	)		(1,634	)		(1,748	)		(1,864	)		(1,955	)		(1,691	)		(22,382	)
Average tangible assets	$	1,208,841		$	1,306,982		$	1,346,471		$	1,359,905		$	1,256,632		$	1,305,140		$	1,236,280
Average total stockholders' equity	$	105,734		$	136,288		$	138,911		$	141,717		$	146,275		$	130,579		$	166,803
Effect of average preferred stock		(31,654	)		(31,557	)		(31,463	)		(31,370	)		(31,268	)		(31,512	)		(30,205	)
Average common stockholders' equity		74,080			104,731			107,448			110,347			115,007			99,067			136,598
Effect of average intangible assets		(1,521	)		(1,634	)		(1,748	)		(1,864	)		(1,955	)		(1,691	)		(22,382	)
Average tangible common stockholders' equity	$	72,559		$	103,097		$	105,700		$	108,483		$	113,052		$	97,376		$	114,216
Per Share Data
Book value per common share	$	3.76		$	4.58		$	6.41		$	6.59		$	6.69		$	3.76		$	6.69
Effect of intangible assets		(0.09	)		(0.09	)		(0.10	)		(0.11	)		(0.12	)		(0.09	)		(0.12	)
Tangible book value per common share	$	3.67		$	4.49		$	6.31		$	6.48		$	6.57		$	3.67		$	6.57
Net loss available to common stockholders, basic	$	(0.75	)	$	(1.92	)	$	(0.17	)	$	(0.10	)	$	(0.23	)	$	(2.95	)	$	(2.28	)
Effect of goodwill impairment, net of tax		-			-			-			-			-			-			1.60
Net loss, excluding goodwill impairment, basic	$	(0.75	)	$	(1.92	)	$	(0.17	)	$	(0.10	)	$	(0.23	)	$	(2.95	)	$	(0.68	)
Net loss available to common stockholders, diluted	$	(0.75	)	$	(1.92	)	$	(0.17	)	$	(0.10	)	$	(0.23	)	$	(2.95	)	$	(2.28	)
Effect of goodwill impairment, net of tax		-			-			-			-			-			-			1.60
Net loss, excluding goodwill impairment, diluted	$	(0.75	)	$	(1.92	)	$	(0.17	)	$	(0.10	)	$	(0.23	)	$	(2.95	)	$	(0.68	)
Supplemental Data	(in thousands)
Net interest income, tax equivalent	$	8,107		$	8,326		$	9,162		$	9,892		$	10,804		$	35,484		$	43,128
Impairment of goodwill	$	-		$	-		$	-		$	-		$	-		$	-		$	27,156
Amortization of intangibles	$	108		$	116		$	115		$	118		$	94		$	457		$	485
Gain on sales of available-for-sale securities, net	$	-		$	-		$	-		$	(57	)	$	-		$	(57	)	$	-
Gains on sales of foreclosed and repossessed property, leased equipment, premises and equipment and loans	$	(40	)	$	(49	)	$	(104	)	$	(60	)	$	(138	)	$	(253	)	$	(424	)
Losses on sales of foreclosed and repossessed property and premises and equipment	$	399		$	88		$	383		$	292		$	313		$	1,162		$	603
Write-downs on foreclosed and repossessed property and other assets	$	824		$	1,575		$	1,134		$	6		$	814		$	3,539		$	1,321
Mortgage loan and related fees	$	205		$	319		$	236		$	149		$	199		$	909		$	1,025
Loans by Type
Loans secured by real estate-
Residential 1-4 family	$	252,026		$	258,579		$	273,030		$	278,695		$	281,354		$	252,026		$	281,354
Commercial		226,357			236,991			247,009			255,174			259,819			226,357			259,819
Construction		84,232			101,870			113,877			125,603			153,144			84,232			153,144
Multi-family and Farmland		36,393			37,816			40,550			41,314			37,960			36,393			37,960
Total loans secured by real estate		599,008			635,256			674,466			700,786			732,277			599,008			732,277
Commercial loans		82,807			91,637			117,279			138,156			146,016			82,807			146,016
Consumer installment loans		33,860			37,884			42,262			45,564			48,927			33,860			48,927
Leases, net of unearned income		7,916			10,139			13,006			17,405			19,730			7,916			19,730
Other		3,500			2,502			4,339			3,601			5,068			3,500			5,068
Total loans	$	727,091		$	777,418		$	851,352		$	905,512		$	952,018		$	727,091		$	952,018

Supplemental Data (continued)
Asset Quality Information
	4th Quarter			4th Quarter	3rd Quarter			3rd Quarter	2nd Quarter			2nd Quarter	1st Quarter			1st Quarter	4th Quarter			4th Quarter
	2010			2010	2010			2010	2010			2010	2010			2010	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	$	55,083		259	$	58,339		259	$	50,305		203	$	45,454		187	$	31,463		106
Additions		12,686				26,583				15,525				16,701				20,378
Reductions		(13,687	)			(29,839	)			(7,491	)			(11,850	)			(6,387	)
Ending Balance	$	54,082		273	$	55,083		259	$	58,339		259	$	50,305		203	$	45,454		187
Non-Accrual Loans and Leases - Classification
Construction/Development Loans	$	25,586		56	$	30,225		60	$	18,120		46	$	13,950		33	$	13,706		36
Residential Real Estate Loans		8,906		84		7,113		58		8,910		62		7,392		53		6,059		52
Commercial Real Estate Loans		10,007		30		7,327		25		7,050		30		6,903		26		6,156		26
Commercial & Industrial Loans		4,228		26		4,886		31		17,501		46		16,234		39		15,397		38
Commercial Leases		3,459		59		3,541		59		4,690		58		3,943		37		2,389		20
Consumer and Other Loans		1,896		18		1,991		26		2,068		17		1,883		15		1,747		15
Total	$	54,082		273	$	55,083		259	$	58,339		259	$	50,305		203	$	45,454		187
Other Real Estate Owned - Activity
Beginning Balance	$	22,888		142	$	17,795		123	$	18,228		109	$	15,312		85	$	14,206		68
Additions		3,100				7,096				6,274				3,866				4,415
Reductions		(1,589	)			(2,003	)			(6,707	)			(950	)			(3,309	)
Ending Balance	$	24,399		150	$	22,888		142	$	17,795		123	$	18,228		109	$	15,312		85
Other Real Estate Owned - Classification
Construction/Development Loans	$	10,821		67	$	10,510		64	$	8,103		58	$	7,505		50	$	6,023		37
Residential Real Estate Loans		8,266		63		7,789		60		5,186		46		5,153		41		4,647		34
Commercial Real Estate Loans		5,312		20		4,589		18		4,506		19		5,570		18		4,642		14
Total	$	24,399		150	$	22,888		142	$	17,795		123	$	18,228		109	$	15,312		85
Loans 90 Days Past Due - Classification
Construction/Development Loans	$	3		1	$	507		4	$	-		-	$	1,018		3	$	30		1
Residential Real Estate Loans		403		8		1,881		3		134		2		820		8		653		6
Commercial Real Estate Loans		3,256		5		1,024		1		-		-		845		3		239		2
Commercial & Industrial Loans		409		7		2,237		13		194		6		615		4		12		1
Commercial Leases		82		6		308		4		-		-		564		10		3,522		47
Consumer and Other Loans		685		17		68		10		14		3		131		17		68		16
Total	$	4,838		44	$	6,025		35	$	342		11	$	3,993		45	$	4,524		73
Repossessed Assets - Activity
Beginning Balance	$	1,229		29	$	1,921		57	$	3,466		214	$	3,881		188	$	2,050		163
Additions		636				727				709				1,383				3,588
Reductions		(1,102	)			(1,419	)			(2,254	)			(1,798	)			(1,757	)
Ending Balance	$	763		54	$	1,229		29	$	1,921		57	$	3,466		214	$	3,881		188

CONTACT:
At First Security:
William L. (Chip) Lusk, Jr., CFO, 423-266-2000
clusk@FSGBank.com
or
Media Contact:
Melissa P. Kelly, 931-636-0909
principal@mpkandassociates.com