First Security Group, holding company for FSGBank, today completed a multiyear process to recapitalize the bank with $91.1 million in new cash.
Existing shareholders at the $1.1 billion bank saw their stakes diluted as part of the deal, but the long-term value of the Chattanooga-based institution should increase.
The bank used the money to pay back $33 million to the U.S. Treasury, which bailed out FSGBank through its Troubled Asset Relief Program, or TARP, at the height of the financial crisis.
Initiated in late 2011, the process to bring new funds into the bank has been a long road, but will ultimately allow it to battle back from the wounds it suffered during the real estate crisis.
In total, FSGBank issued about 60.7 million shares of common stock at $1.50 per share.
"We extend our appreciation to our new shareholders in having the confidence to invest in our markets, our company and most importantly, our people," said Michael Kramer, president and chief executive officer of First Security. "With the recapitalization complete, our full attention can be directed to further improving and growing our banking franchise."
With the additional cash from new investors, the bank will have better capital ratios, and can grow its balance sheet, which will lead to more profitabililty and compliance with most of regulators' demands.
"When building our management team, we focused on their individual and collective abillities to develop and communicate a successful business strategy to new investors and then to implement that strategy," said Larry Mauldin, chairman of the company's board. "They have exceeded our expectations on the capital raise and now we can continue our efforts to grow FSGBank and serve our communities."
Contact staff writer Ellis Smith at esmith@timesfree press.com or 423-757-6315.