First Security Group, Inc. Completes Strategic Recapitalization

  First Security Group, Inc. Completes Strategic Recapitalization

  Recapitalization Includes New Capital, TARP CPP Restructuring and Sale of
                             Non-Performing Loans

Business Wire

CHATTANOOGA, Tenn. -- April 12, 2013

First Security Group, Inc. (NASDAQ: FSGI) (the “Company” or “First Security”),
the bank holding company for FSGBank, N.A. (“FSGBank”), announced today that
it completed its previously announced recapitalization (the
“Recapitalization”), including the restructuring of its TARP CPP preferred
stock. On April 11, 2013, the Company issued approximately 9.9 million shares
of the Company’s common stock to the U.S. Treasury (the “Treasury”) for full
satisfaction of the Treasury’s TARP CPP investment in the Company. The
Treasury immediately sold the common stock to institutional and other
accredited investors previously identified by the Company at $1.50 per share.
On April 12, 2013, the Company issued an additional approximately 50.8 million
shares of common stock at $1.50 per share to institutional and other
accredited investors. In aggregate, investors purchased 60,735,000 shares for
$91.1 million. The Recapitalization was previously announced on February 26,

“We extend our appreciation to our new shareholders in having the confidence
to invest in our markets, our Company and most importantly, our people,” said
Michael Kramer, President and Chief Executive Officer of First Security. “With
the Recapitalization complete, our full attention can be directed to further
improving and growing our banking franchise.”

On April 12, 2013, the Company downstreamed approximately $65 million in
capital to FSGBank in order to improve FSGBank’s regulatory capital ratios and
to support future balance sheet growth. The combined effects of the additional
capital and the previously announced and completed loan sale are expected to
result in an improved risk profile, enhanced profitability and compliance with
most, but not all, aspects of the regulatory orders of the Company and

“When building our management team, we focused on their individual and
collective abilities to develop and communicate a successful business strategy
to new investors and then to implement that strategy,” said Larry Mauldin,
Chairman of the Board of the Company. “They have exceeded our expectations on
the capital raise and now we can continue our efforts to grow FSGBank and
serve our communities.”

Sandler O’Neill + Partners, L.P. and Raymond James Financial, Inc. acted as
financial advisors and placement agents for First Security Group, Inc. in
connection with the offering. Bryan Cave LLP acted as legal counsel to First
Security Group, Inc. in connection with the Recapitalization. Sandler O’Neill
Mortgage Finance, L.P., an affiliate of Sandler O’Neill + Partners, L.P.,
acted as exclusive financial advisor to First Security Group, Inc. in
connection with the loan sale.

About First Security Group, Inc.

Founded in 1999, First Security’s community bank subsidiary, FSGBank, has 30
full-service banking 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; along the Interstate 40 corridor in
Tennessee, FSGBank operates under the name of Jackson Bank & Trust. FSGBank
provides retail and commercial banking services, trust and investment
management, mortgage banking, financial planning and Internet banking services

Note Regarding Forward Looking Statements

Some of our statements contained in this release are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements relate to future events or our future
financial performance and include statements about the Company’s future growth
and market position and the execution of its business plans. When we use words
like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,”
“continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,”
“would,” “will,” and similar expressions, you should consider them as
identifying forward-looking statements, although we may use other phrasing.
These forward-looking statements involve risks and uncertainties and are based
on our beliefs and assumptions, and on the information available to us at the
time that these disclosures were prepared.

These forward-looking statements involve risks and uncertainties and may not
be realized due to a variety of factors. There can be no assurance that the
actual results, performance or achievements of the Company will not differ
materially from those expressed or implied by forward-looking statements. For
details on the factors that could affect expectations, see the cautionary
language included under the headings “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in
the Company’s Annual Report on Form 10-K for the year ended December 31, 2011
and the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2012, and other filings with the SEC.

Many of these risks are beyond our ability to control or predict, and you are
cautioned not to put undue reliance on such forward-looking statements. First
Security does not intend to update or reissue any forward-looking statements
contained in this release as a result of new information or other
circumstances that may become known to First Security, and undertakes no
obligation to provide any such updates.

All written or oral forward-looking statements attributable to us are
expressly qualified in their entirety by this Note. Our actual results and
condition may differ significantly from those we discuss in these
forward-looking statements.


First Security Group, Inc.
John R. Haddock, CFO, 423-308-2075
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