INVESTOR RELATIONS

 

First Quarter Report

May 20, 2010

 

Dear Shareholders,

Continuing our trend of annual dividend increases, we are pleased to announce an increase of nearly 14% in your dividend to 12.5 cents per share payable to shareholders of record as of April 28, 2010. This represents the sixth consecutive year that we have increased the dividend rate. Your dividend check is enclosed, or was directly deposited into your account per your request.

The first quarter 2010 Financial Report for First Security, Inc is enclosed. Net income for the current quarter was $.50 per share compared to $.22 per share for the same period in 2009, a nearly 127% increase. A majority of the increase in net income was primarily attributed to the significant increase in loans from March 31, 2009 to March 31, 2010. This solid increase in loans was also the main driver that led to a 38% increase in net interest income. Noninterest expense increased as a result of the higher personnel expenses and strategic expenses related to the Company’s pending acquisition of eight Integra Bank branches.

Nonperforming loans to total loans declined during the first quarter, ending the quarter at 1.10%. Our loan portfolio is performing very well in comparison to most other banks in our peer group. We are very proud of our credit culture, remaining true to our core lending principle of providing loans to those who are credit worthy.

Enclosed is a Shareholder Letter Supplement which includes various graphs relative to our performance during 2009 and the first quarter of 2010 as compared to prior years. These graphs show our Company as “Charting a Path of Continued Success.” A summary of the Shareholder Letter Supplement follows:

• Page 1: A depiction of the Company’s branch network after the branch acquisition;
• Graphs 1-4: Historic asset, loan, deposit and net income performance;
• Graphs 5-8: Loan quality; and
• Graphs 9-12: Growth comparison of First Security versus peer banks.

Although we are a relatively young and small bank compared to some of our competitors, we have experienced significant growth over the past few years able to expand at the expense of our competitors. We believe that this growth is a direct result of our strategy, which we have implemented in recent years. We have a strong management team, with the capacity and experience to assimilate considerably more growth while maintaining a first class bank that will serve our customers, employees and shareholders well.

We recently announced an agreement to acquire eight branches of Integra Bank, which are located in the Bowling Green Kentucky and South Central Indiana markets. This transaction will enable us to expand our business into one of the fastest growing regions in Kentucky. It will also give us a footprint in Southern Indiana, which fits with our strategy to expand our branch network in Indiana. Between our significant growth over the past few years, the substantial expansion from our pending acquisition of the eight Integra bank branches, and our plans to continue to pursue a strong path into the future through organic growth and selective strategic acquisitions, we are seeking to raise additional capital.

To support the pending branch acquisition as well as future growth, we began a capital raise effort on May 3, 2010. We hope that you will participate in this offering of common stock and convertible subordinated debentures. The offering allows for accredited investors to purchase our common stock at $28.00 per share and receive convertible subordinated debentures that pay holders an attractive interest rate of 7% with the option of the investor to convert the debenture into common stock at $33.00 per share if you choose to do so. We have held a series of potential investor meetings receiving good feedback relative to the performance of our company and the strategic direction of First Security, Inc. Our vision is to be a top performing community bank that seeks out opportunities to grow strategically and profitably. If you are interested in hearing more about the investment opportunity with First Security, Inc., please fill out the enclosed card and return it in the postage prepaid envelope. We will promptly follow up with you.

We think you will agree that this is an exciting time to be a First Security, Inc. shareholder as we work tirelessly to share our story and increase shareholder value for many years to come. We remain committed to our mission statement:

“We are a high quality, growth-oriented community bank relying on unparalleled customer service to distinguish ourselves in the markets we serve. Our success benefits our shareholders, employees and communities.”

We encourage you to bank with us at every opportunity. We are confident you will enjoy the high quality, personal service you will receive.

 

M. Lynn CooperJames "Tab" Quisenberry
President and CEOChairman of the Board