Profile: First Security Group, Inc. (FSGI.O)

First Security Group, Inc. (First Security), incorporated in 1999, is a bank holding company. The Company operates 38 full service banking offices and two loan and lease production offices through its wholly owned bank subsidiary, FSGBank. The Company serves the banking and financial needs of various communities in eastern and middle Tennessee and northern Georgia. Through the Bank, the Company offers a range of lending services, which are primarily secured by single and multi-family real estate, residential construction and owner-occupied commercial buildings. In addition, First Security makes loans to small and medium-sized businesses, as well as to consumers for a variety of purposes. The Company's principal source of funds for loans and investing in securities is core deposits. It offers a range of deposit services, including checking, savings, money market accounts and certificates of deposit. First Security obtains most of its deposits from individuals and businesses in its market areas.

FSGBank operates 38 full-service banking-offices and two loan and lease production offices along the Interstate corridors of eastern and middle Tennessee and northern Georgia. In Dalton, Georgia, FSGBank operates under the name of Dalton Whitfield Bank, while FSGBank operates under the name of Jackson Bank & Trust along the Interstate 40 corridor. FSGBank also provides trust and investment management, mortgage banking, financial planning and electronic banking services, such as Internet banking (www.FSGBank.com), online bill payment, cash management, ACH originations, and remote deposit capture, as well as equipment leasing through its wholly owned subsidiaries, Kenesaw Leasing and J&S Leasing.

Lending Activities

The Company originates loans primarily secured by single and multi-family real estate, residential construction and owner-occupied commercial buildings. In addition, it makes loans to small and medium-sized commercial businesses, as well as to consumers for a variety of purposes. During the year ended December 31, 2008, First Security had total loans of approximately $1,011.6 million. First Security’s commercial lease portfolio includes leases made by its leasing companies, Kenesaw Leasing and J&S Leasing. Kenesaw Leasing leases new and used equipment, fixtures and furnishings to owner-managed businesses, while J&S Leasing leases forklifts, heavy equipment and other machinery to owner-managed businesses primarily in the trucking and construction industries.

The Company's commercial loan portfolio includes loans to smaller business ventures, credit lines for working capital and short-term seasonal or inventory financing, as well as letters of credit that are generally secured by collateral other than real estate. First Security makes a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans. The Company also makes construction and development loans to residential and, to a lesser extent, commercial contractors and developers located within the Company's market areas. First Security makes commercial mortgage loans to finance the purchase of real property, as well as loans to smaller business ventures, credit lines for working capital and short-term seasonal or inventory financing, including letters of credit that are also secured by real estate.

Investment Activities

The Company invests primarily in obligations of the United States or obligations guaranteed as to principal and interest by the United States, other taxable securities and in certain obligations of states and municipalities. The Company also invests excess funds in federal funds with its correspondent banks. All of its investments are classified as available-for-sale. Securities in First Security's portfolio totaled $139.3 million at December 31, 2008. Its securities portfolio consists of tax-exempt municipal securities, federal agency bonds, federal agency issued Real Estate Mortgage Investment Conduits (REMICs), federal agency issued pools and asset-backed securities and collateralized mortgage obligations (CMOs).

Sources of Funds

First Security's principal source of funds for loans and investing in securities is core deposits. The Company offers a range of deposit services, including checking, savings, money market accounts and certificates of deposit. First Security has total deposits of approximately $953.1 million. The Company obtains most of its deposits from individuals and businesses in its market areas. Secondary sources of funding include advances from the Federal Home Loan Bank, subordinated debt and other borrowings.