published Wednesday, December 5th, 2012

Chattanooga's FSG Bank gets more time to shore up stock, finances

Chattanooga's biggest independent bank has been granted another six months to boost its company value to maintain its stock listing on the Nasdaq Exchange.

FSG President Michael Kramer said Tuesday he expects the bank will gain new investors in the near future to help shore up FSG's finances and restore the bank's fiscal health.

"The results of our recapitalization plan would far excess the (Nasdaq) Global Select's minimum listing standards," Kramer said in a statement. "We continue to make progress and believe that we will be back in compliance by March 25."

First Security Group, the parent company of FSG Bank, said Tuesday the hearings panel of the Nasdaq Stock Market agreed to continue trading First Security stock until March 25, 2013, subject to certain conditions. Previously, Nasdaq had threatened to delist FSG's stock if the company's market value didn't remain above $5 million and its shares didn't stay above $1 in price.

FSG stock fell by 4 cents a share in trading Tuesday to close at $2.50 per share. The total market capitalization of First Security is $4.1 million.

FSG has lost $130 million since the recession began in 2008 and is now operating under heightened regulatory oversight as an "uncercapitalized" bank, according to FSG and regulator filings.

In its most recent quarterly report, First Security reported a loss of another $8.9 million in the three months ended Sept. 30, up from the $6.5 million loss in the same period a year earlier.

FSG disclosed last month that the Office of the Comptroller of the Currency may take further enforcement action against the bank, "requiring that FSG Bank develop a plan to sell, merge or liquidate."

But the bank said plans for new capital from more investors "will ultimately result in full compliance" with regulatory standards "and position the bank for long-term growth and profitability."

FSG said it has been in talks with multiple potential investors since December 2011.

To help preserve tax loss carryforwards from its recent losses, the bank's board recently adopted a tax benefits preservation plan "designed to preserve the value of certain of the company's deferred tax assets primarily associated with net operating loss carryforwards (NOLs).

FSG is Chattanooga's biggest locally owned bank with assets of more than $1 billion.

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

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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