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First Security Group Inc. (FSGI) filed Quarterly Report for the period ended 2011-09-30.
First Security Group Inc. has a market cap of $3.7 million; its shares were traded at around $2.24 .
This is the annual revenues and earnings per share of FSGI over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of FSGI.
Highlight of Business Operations:
Our market area has also benefited from a relatively stable housing market. According to the National Association of REALTORS, the median sales prices of existing single-family homes declined 6.0% and 5.5% for the Chattanooga and Knoxville MSAs, respectively, from 2008 to 2010 compared to 12.0% decline for the nation and a 9.3% decline for the census region identified as the South. The median sales prices of existing single-family homes decreased 8.1% and 0.4% for Chattanooga and Knoxville, respectively, from the second quarter of 2010 to the second quarter of 2011 compared to a 2.8% and 2.7% decline for the nation and South, respectively. While residential real estate values may continue to decline, we are hopeful that housing prices will begin to stabilize.Interest income for the third quarter of 2011 was $10.3 million, a 21.7% decrease compared to the same period in 2010. Average earning assets decreased $186.4 million, or 15.4%, in the third quarter of 2011 compared to the same period in 2010. Average loans declined in the third quarter of 2011 by $195.4 million, offset by a $4.7 million increase in investment securities and a $4.4 million increase in other earning assets. The change in mix and volume of earning assets reduced interest income by $2.8 million, comparing the third quarter of 2011 to the same period in 2010. For other earning assets, we maintained an elevated balance at the Federal Reserve Bank of Atlanta, which averaged over approximately $238 million for the third quarter of 2011. The yield on this account is approximately 25 basis points. The purpose of maintaining an elevated balance in liquid assets is to reduce liquidity risk, which we describe more fully below in the Liquidity section, resulting from deteriorating asset quality and the Consent Order. We anticipate average loans to stabilize over the next six to twelve months. We anticipate average earning assets to decline as brokered deposits mature and/or are called, and are funded with existing cash reserves.
The tax equivalent yield on earning assets decreased by 32 basis points for the three month period and 30 basis points for the nine month period ended September 30, 2011, compared to the same periods in 2010. Comparing the third quarter of 2011 to 2010, the yield on loans declined by 4 basis points to 5.70%. We anticipate the yield on loans to remain consistent or improve over the balance of 2011 as we have instituted higher loan pricing floors on new and renewing loans. During the first quarter of 2010, we conducted a bond swap by selling approximately $14.8 million of investment securities with an average tax-equivalent yield of 5.20% and replacing with $14.6 million of bonds with an average tax-equivalent yield of 3.17%. The transactions eliminated the credit risk associated with our private-label CMO securities, as well as certain municipal securities. We anticipate the yield on investment securities for the fourth quarter of 2011 will be consistent with the yield for third quarter 2011 and lower than the comparable 2010 periods. We are maintaining an asset-sensitive balance sheet and will benefit from an eventual increase in the federal funds rate. As of September 30, 2011, approximately 38% of our loan portfolio is either variable or adjustable rate. The variable rate loans reprice simultaneously with
Other income for the third quarter of 2011 was $373 thousand compared to $371 thousand for the same period in 2010. For the nine months ended September 30, 2011, other income decreased $151 thousand to $1.2 million compared to $1.2 million for the same period in 2010. The components of other income primarily consist of ATM fee income, gains on sales of other real estate owned (OREO) and repossessions, underwriting revenue, and safe deposit box fee income.
Other real estate increased $2.2 million from December 31, 2010 to September 30, 2011, as additions continued to outpace dispositions. During the first three quarters of 2011, we sold 59 properties with total proceeds of $6.7 million, resulting in an 85% realization rate as compared to appraised value. Based on our sales analysis, we estimated and recorded a valuation allowance of $800 thousand related to other real estate owned as of September 30, 2011 to lower the carrying value of the OREO portfolio to approximately 85% of appraised value. As previously mentioned, we have outsourced the marketing and sales process of our OREO properties to market-leading real estate firms. We anticipate increased sales volume during 2011 as a result of this outsourcing. Additionally, we are taking a more aggressive sales approach to dispose of our current properties, which may lead to a lower realization rate.
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