FSG Bank President and CEO Michael Kramer recently sat down for an interview with the Chattanooga Times Free Press and shared some updates that FSG Bank is offering to better serve its clients.
1. We've seen a lot of positive reports about FSG Bank in the press recently. What has been going on?
Probably the biggest news occurred in March when the Office of the Comptroller of the Currency (the OCC) provided written notification of the termination of the Consent Order with FSG Bank. This followed the successful recapitalization of the bank last year, when we raised $97 million in new capital.
2. What is a consent order?
A Consent Order (CO) is a formal enforcement action that bank regulators use to ensure banks with certain significant issues and/or risks take the necessary actions to correct those items.
3. What did the Consent Order require FSG Bank to do?
Every facet of the bank was evaluated and changed as appropriate. The Consent Order provided 13 articles that addressed different issues that required improvement. Among key areas of concern: (1) ensuring competent management, (2) increasing capital levels, (3) implementing significant changes to credit administration and (4) reducing the significant levels of non-performing assets. The lifting of the Consent Order is evidence that FSG Bank has addressed all areas of concern and that the OCC is now satisfied with our progress to remove the Consent Order.
4. With the Consent Order lifted, how does that affect FSG Bank? >
The lifting of the Consent Order removes significant operational and financial constraints
while enhancing our ability to execute our strategic plan. We can now direct more of our time and energy toward returning to core profitability and building long-term shareholder value. It also means that FSG Bank is now considered "well-capitalized" under the FDIC's prompt corrective action provisions. This designation provides FSG Bank with opportunities for enhanced operational efficiencies, including its liquidity management, mortgage operations and in its SBA lending operations.
5. What does "well-capitalized" mean?
The FDIC has established certain minimum levels of capital that banks are required to have to be considered "safe and sound" institutions. Since the $97 million recapitalization in April 2013, our capital levels have exceeded the "well-capitalized" thresholds, but we were still only adequate" because of the Consent Order. With the termination of the CO, we have been upgraded to "well-capitalized."
6. How were you able to accomplish that?
Since 2012, our board and management team's primary goal was to effect the transformation of
FSG Bank into a premier community bank in East Tennessee. Accomplishing this goal required three distinct tasks: raising capital, resolving the asset quality problems and satisfying the bank's Consent Order. The OCC's announcement establishes FSG Bank management's successful execution of all three tasks.
7. How will this change FSG?
For our customers, this will allow FSG Bank to offer a broader product/service mix, but for the most part, no significant changes will occur from the customer experience standpoint. From an operational standpoint, the termination of the Consent Order is very significant. It enables us to interact with our various business partners on an even playing field with other banks and opens up new doors of opportunity. We can now manage our liquidity better through a wider array of sources. <br/.
8. What's next for FSG Bank?
Having raised the capital, resolved the asset quality problems and now having been released from the regulatory constraints, the bank has one remaining corporate goal: to return to profitability. Sustainable profitability is our final goal in this turnaround and it will hinge on how well we meet the needs of our clients and new business prospects.We're not interested in conducting "transactions." What we are interested in is getting closer to our customers. We want to know and understand their business intimately - know their "back story" so we can recognize their challenges and offer solutions. This will help us identify the opportunities within each relationship.
9. FSG Bank has a new look these days.
That's true. We have a new logo and fresh new colors. Our new logo with its blue and green theme evokes the mountains and rivers that geographically define our markets. We're excited about rolling this new look across our entire footprint. In addition to new signage we are refreshing our branches with the new colors and a new feel to reflect that we are a new FSG Bank. We're still the same people you know and trust. We're focusing on helping businesses be as successful as possible, because when business owners and their employees thrive, our communities thrive.
10. The FSG Bank Super Bowl commercial was a big hit in the community. Is that really you in the commercial?
(Watch it at youtube.com/watch?v=sdAhaOSQ3AM) (laughing) Yes, it is. We had a lot of fun making the commercial and have received a lot of great feedback on "booyah!" but the underlying message is sincere: I am accessible. My team is accessible. We make loan decisions right here on Broad Street in Chattanooga, Tenn. - not in another city or state.
11. Where is FSG Bank headquartered?
We are headquartered in Chattanooga and our footprint extends from Dalton, Ga., to Knoxville along the I-75 corridor, and from Cookeville to Jefferson City along the I-40 corridor. Chattanooga is our corporate headquarters but all of our locations are our "hometowns." "Getting closer" means looking, acting and being local in all we do.
"We're still the same people you know and trust. We're focusing on helping businesses be as successful as possible, because when business owners and their employees thrive, our communities thrive."
- Michael Kramer,
FSG Bank president and CEO