First Security Group leaders said Monday the banking company is not in imminent danger of closing or being shut down by any regulatory agency.
Despite a statement in its most recent quarterly report that company losses in the past two years "raise possible doubt as to its ability to continue as a going concern," leaders say a turnaround is in progress.
"I'm confident we have the leadership to go beyond and return this thing to a profitable status," said Gene Coffman Jr., recently named president and chief operating officer of the Chattanooga-based company. "It's going to take us some time to get the ship right. We're not satisfied with the results we've had. It's not business as usual at FSG, and we're making changes."
Coffman said that since customers heard news last week about doubts concerning the company, FSGBank has "lost some customers because of fear."
"But we spent a lot of time, all of us, with many of our customers and shareholders," he said. "Once we were able to talk to them and they had a better understanding, they're sticking with us. They entrust the safety of their funds with FSG."
Some of those changes include increasing the size of the company's board of directors, adding bankers and taking a close look at the bank's overall footprint, he said.
Coffman said a plan to close the FSGBank location at 817 Broad St. on Feb. 25 has no connection to the company's third-quarter financial results, but rather is a way of controlling overhead expenses and protecting shareholder value.
Safety deposit boxes and a night depository are being installed at the bank's 531 Broad St. location to make the transition seamless, he said.
Part of the company's strategic plan includes analyzing branches for their profitability and growth potential, but Coffman could not say if any others might close.
Last month the company posted a $35 million net loss available to common stockholders for the nine months ending Sept. 30. That followed a $31.8 million net loss for the same period in 2009.
However, Chip Lusk, chief financial officer, said over the last two years more than $40 million of those losses were non-cash, one-time items. He said when taking that into account and comparing that against the $100 million in capital available as of Sept. 30, the picture doesn't look as bad.
He said although the company is 0.1 percentage point below the 13 percent Tier-1 capital ratio required by a consent order issued in April by the Office of the Comptroller of the Currency, it is still "almost $24 million above the 10 percent [ratio for total capital] required as being well capitalized."
Coffman said the company is looking at all avenues to improve its capital position, and he thinks there is still significant economic potential for a community bank to thrive in Chattanooga.
"I would have never relocated from the Midwest to Chattanooga if I thought in six months we were going to close," Coffman said.
The company's shares closed Monday at 55 cents, down 14.06 percent.
Contact staff writer Brittany Cofer at bcofer@times freepress.com or 423-757-6476. Follow her on Twitter at twitter.com/brittanycofer.
Brittany Cofer is a business reporter who has been with the Chattanooga Times Free Press since January 2010. She previously worked as a general assignment Metro reporter. In the Business department, she covers banking, retail, tourism, consumer issues and green issues. Brittany is from Conyers, Ga., and spent two years at Kennesaw State University in Kennesaw, Ga., before transferring to the University of Georgia. She graduated from the university’s Grady College of Journalism in December ...