published Wednesday, December 7th, 2011

FSG Bank hires Kramer to engineer a recovery

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    Michael Kramer is the new president of FSG Bank.
    Photo by Jake Daniels.
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First Security Group Inc. has hired a 20-year banker from Ohio to lead Chattanooga's biggest independent bank back to profitability.

Michael Kramer, who has spent the past decade helping turn around community banks, became the third CEO for FSG Bank this year on Tuesday when he took the top job at the $1.1 billion-asset lender. Kramer, 53, said he hopes to stay in Chattanooga and build FSG back to a strong community bank.

Name: Michael Kramer

Job: CEO of First Security Group

Age: 53

Education: Graduate of Grove City College in Pennsylvania where he taught entrepreneurship as an adjunct professor

Career: Chief operating officer and chief technology officer at Evansville, Indiana-based Integra Bank Corp., from 1999 to 2004; president and CEO of Ohio Legacy Corp., for five years; and most recently managing director of Ridley Capital Group, a private equity banking firm.

Personal: He and his wife, Meg, have been active on community boards, including the Canton Symphony Orchestra, Main Street Wooster, North Coast Young Life, Wooster Arts Jazz Festival and The BioHio Research and Development Center Board.

"I'd really like to settle here and build a long-term relationship with Chattanooga," he said during an interview on his first day as FSG president. "I'm looking forward to being involved with the community and having my grandchildren visit and hopefully retiring here."

Kramer succeeds Ralph E. "Gene" Coffman Jr., who was chairman and interim CEO since April when Roger Holley resigned as head FSG after helping establish the bank in 1999.

The executive shakeup followed two years of losses totaling nearly $82 million. First Security lost another $16.1 million in the first nine months of 2011 and must still repay $31 million of federal loans through the Troubled Asset Relief Program.

Although FSG is operating under a consent order from bank regulators, Kramer said FSG remains well capitalized and enjoys a healthy franchise with branches in Chattanooga, Knoxville, Cookeville and Dalton.

"I think the opportunity is really good to fix the asset quality problems, which were largely a result of the downturn in the real estate market," he said. "We hope to double down on the bank's historic strategy of focusing on small business, owner operators and professionals."

FSG closed five branches this year but continues to operate 31 offices in Tennessee and Georgia.

Kramer said the bank needs to raise more capital over time, "but how and when to do that is still being evaluated." FSG's stock sunk to an all-time low Thursday, but the bank's stock tripled in value in the next two trading sessions and closed Tuesday at $3.10 per share, down 56 cents in Tuesday's trading.

"Clearly, I think the stock was undervalued," Kramer said.

Kramer was recruited to FSG when the bank talked last year with his former company, Ridley Capital, which specializes in equity and merchant banking. Kramer was previously president and CEO of Ohio Legacy Corp. in Wooster, Ohio where he led a board and management reorganization, which led to the bank being recapitalized by Excel Bancorp.

"Mike has the relevant experience, dynamic leadership style, and financial acumen to help this organization prosper and grow," said First Security Group and FSGBank Lead Director Carol H. Jackson. "We are delighted to welcome him aboard after an extensive national CEO search."

Kramer will also serve as a director of FSGBank, subject to regulatory approval.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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silwyf said...

Efforts to save the failing bank seem to be futile. Bringing out of town northern bankers into the south is not well thought out. The customer base of the southern banks want southern local bankers to run their local bank. An excellent choice would have been either Kenny Dyer or Bob Stimson who were some of the local bankers who started FSG but had their CEO to deal with so they left for greener pastures. With this in mind, the only way for this bank to survive is to open up the credit for their customer base which their regulators will NOT allow. They are dead in the water and floating long enough for more investor's monies to sink to the bottom.

March 21, 2012 at 9:43 a.m.
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