First Security Group Incorporated
Robbins Arroyo LLP: Acquisition of First Security Group, Inc. (FSGI) by Atlantic Capital Bancshares May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of First Security Group, Inc. (NASDAQ: FSGI) by Atlantic Capital Bancshares. On March 25, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Atlantic Capital Bancshares will acquire First Security Group. Under the terms of the agreement, First Security Group shareholders will receive cash or Atlantic Capital common stock equivalent to $2.35 for each share of First Security Group common stock.
Is the Proposed Acquisition Best for First Security Group and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at First Security Group is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $2.35 merger consideration represents a premium of only 0.86% based on First Security Group’s closing price on March 19, 2015. This premium is significantly below the average one-week premium of nearly 36.3% for comparable transactions within the past five years. Further, the $2.35 merger consideration is below the target price of $2.50 that has been set by an analyst at Raymond James since April 16, 2014. In addition, First Security Group has traded as high as $7.45 on May 7, 2013.
On February 3, 2015, First Security Group reported strong quarterly earnings for its fourth quarter 2014. Specifically, the company reported net income of $922 thousand for the quarter, a $1.6 million improvement from the fourth quarter of 2013. First Security Group also reported that its loans held-for-investment totaled $663.6 million at year-end, an increase of $80.5 million, or 13.8%, from 2013. Pure deposits as of December 31, 2014, increased by $83.7 million, or 18.8%, to $529.7 million compared to $446.0 million as of December 31, 2013. Additionally, First Security Group has beat consensus analyst estimates for net income in every quarter for the past year, and sales for three out of the last four quarters.
In commenting on these results, First Security Group President and Chief Executive Officer Michael Kramer remarked, “The primary goals of 2014 were returning to core profitability, net loan production of $50 million per quarter, and funding the resulting asset growth with pure deposits. We achieved each of these goals. Total loans, including held-for-sale, increased by $153 million during 2014, and when combined with our loan sale transactions, we exceeded our $200 million net production goal. We also achieved the desired growth in pure deposits and earned $2.4 million in net income.”
In light of these facts, Robbins Arroyo LLP is examining First Security Group’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
First Security Group shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
First Security Group shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.