• A 10-for-1, reverse stock split is being proposed to help FSG boost its per share price to keep its listing on the Nasdaq Exchange
• New executives hired or promoted this spring are being paid far less than their predecessors
• Crowe Horwath LLP is replacing Joseph Decosimo and Co. PLLC as bank auditors
• Ralph Cof-fman Jr., the new FSG CEO, is nominated also to serve as bank chairman.
Source: Proxy statement for Sept. 13 annual shareholders meeting for First Security Group
With its stock falling Thursday to an all-time low, First Security Group is asking its shareholders to approve a reverse stock split to boost the company's share price enough to maintain its listing on the Nasdaq Exchange.
FSG shareholders will vote at an annual meeting Sept. 13 whether to trade 10 shares of their existing stock for one new share in Chattanooga's biggest independent bank.
The reduction in outstanding stock from 16 million share to 1.6 million shares, combined with ongoing changes in management, auditors and bank operations, are intended to boost FSG's stock price and financial standing.
In the previous two years, FSG lost nearly $82 million and its stock sunk Thursday to an all-time low of 39 cents per share, down 3 cents on the day. FSG's stock traded above $11 per share five years ago.
To maintain its trading on the Nasdaq global select market, FSG must maintain a stock price of at least $1 a share. In April, Nasdaq put the bank on warning that it could lose its listing unless the stock price rose above $1 per share by this fall.
"We believe that the reverse stock split, if implemented, will make our common stock more attractive to a broader range of institutional and other investors," FSG Chief Financial Officer John Haddock said in a notice of the proposed change released Thursday.
Shareholders also will be asked next month to endorse a $250,000-a-year salary for Ralph Coffman Jr., the 59-year-old banker hired to replace FSG founder Rodger Holley, who resigned abruptly in April. Coffman will be paid a salary 30 percent below Holley's and Coffman's total compensation will be less than a third of what the bank gave Holley.
Under the salary continuation agreement the board previously granted to Holley, the former FSG CEO is eligible for more than $2 million for his accumulated pension benefits, FSG said in a regulatory filing Thursday.
But bank regulators must still approve the severance package for Holley, however, because First Security has yet to repay the $33 million the bank got in federal loans in 2009 under the Troubled Asset Relief Program.