Heritage Financial Group, Inc. (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced higher earnings for the first quarter ended March 31, 2011, compared with the year-earlier quarter.
The Company's net income for the first quarter of 2011 totaled $1.2 million or $0.15 per diluted share versus $798,000 or $0.09 per diluted share in the first quarter of 2010, as adjusted to reflect the exchange ratio. The Company's results for the first quarter ended March 31, 2011, included a pre-tax bargain purchase gain of $2.3 million related to the acquisition of Citizens Bank of Effingham (Citizens) in an FDIC-assisted transaction on February 18, 2011. Excluding the bargain purchase gain net of tax, the Company incurred a net loss of $186,000 or $0.02 per diluted share for the first quarter of 2011 (see reconciliation of net income and net income per diluted share to these non-GAAP amounts later in this release).
Several additional items affected the Company's first quarter performance, including a shift from gains to losses on sales and write-downs of other real estate owned (OREO). In the current-year period, those losses and write-downs totaled $402,000 versus gains of $231,000 in the year-earlier period. The Company also incurred conversion costs of approximately $283,000 in the first quarter of 2011 related to the Citizens transaction, as well as approximately $107,000 in outside professional fees related to expansion and integration efforts, with no comparable amounts for such expenses in the same quarter last year.
Commenting on the results, Leonard Dorminey, President and Chief Executive Officer of Heritage Financial Group, Inc., said, "During the first quarter of 2011, we continued to expand our brand and branch footprint, seizing another attractive opportunity to deploy our capital and position the Company for future growth. In February, we completed our second FDIC-assisted transaction, acquiring Citizens Bank of Effingham, a full-service bank based in Springfield, Georgia. In this whole-bank purchase, we assumed approximately $206 million in deposits, acquired $139 million in loans, and purchased virtually all of its remaining assets. We also entered into a loss-share agreement with the FDIC that will reimburse us for 80% of the losses on Citizens' covered loans and other real estate owned.