FSG Bank hires Kramer to engineer a recovery

By Dave Flessner

Friday, January 1, 1904

photo Michael Kramer is the new president of FSG Bank.

First Security Group Inc. has hired a 20-year banker from Ohio to lead Chattanooga's biggest independent bank back to profitability.

Michael Kramer, who has spent the past decade helping turn around community banks, became the third CEO for FSG Bank this year on Tuesday when he took the top job at the $1.1 billion-asset lender. Kramer, 53, said he hopes to stay in Chattanooga and build FSG back to a strong community bank.

Name: Michael KramerJob: CEO of First Security GroupAge: 53Education: Graduate of Grove City College in Pennsylvania where he taught entrepreneurship as an adjunct professorCareer: Chief operating officer and chief technology officer at Evansville, Indiana-based Integra Bank Corp., from 1999 to 2004; president and CEO of Ohio Legacy Corp., for five years; and most recently managing director of Ridley Capital Group, a private equity banking firm.Personal: He and his wife, Meg, have been active on community boards, including the Canton Symphony Orchestra, Main Street Wooster, North Coast Young Life, Wooster Arts Jazz Festival and The BioHio Research and Development Center Board.

"I'd really like to settle here and build a long-term relationship with Chattanooga," he said during an interview on his first day as FSG president. "I'm looking forward to being involved with the community and having my grandchildren visit and hopefully retiring here."

Kramer succeeds Ralph E. "Gene" Coffman Jr., who was chairman and interim CEO since April when Roger Holley resigned as head FSG after helping establish the bank in 1999.

The executive shakeup followed two years of losses totaling nearly $82 million. First Security lost another $16.1 million in the first nine months of 2011 and must still repay $31 million of federal loans through the Troubled Asset Relief Program.

Although FSG is operating under a consent order from bank regulators, Kramer said FSG remains well capitalized and enjoys a healthy franchise with branches in Chattanooga, Knoxville, Cookeville and Dalton.

"I think the opportunity is really good to fix the asset quality problems, which were largely a result of the downturn in the real estate market," he said. "We hope to double down on the bank's historic strategy of focusing on small business, owner operators and professionals."

FSG closed five branches this year but continues to operate 31 offices in Tennessee and Georgia.

Kramer said the bank needs to raise more capital over time, "but how and when to do that is still being evaluated." FSG's stock sunk to an all-time low Thursday, but the bank's stock tripled in value in the next two trading sessions and closed Tuesday at $3.10 per share, down 56 cents in Tuesday's trading.

"Clearly, I think the stock was undervalued," Kramer said.

Kramer was recruited to FSG when the bank talked last year with his former company, Ridley Capital, which specializes in equity and merchant banking. Kramer was previously president and CEO of Ohio Legacy Corp. in Wooster, Ohio where he led a board and management reorganization, which led to the bank being recapitalized by Excel Bancorp.

"Mike has the relevant experience, dynamic leadership style, and financial acumen to help this organization prosper and grow," said First Security Group and FSGBank Lead Director Carol H. Jackson. "We are delighted to welcome him aboard after an extensive national CEO search."

Kramer will also serve as a director of FSGBank, subject to regulatory approval.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.