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Heritage Financial Group, Inc. Reports First Quarter Net Income Of $1.2 Million Or $0.15 Per Diluted Share

Stock quotes in this article: HBOS

Heritage Financial Group, Inc. is the holding company for HeritageBank of the South, a community-oriented bank serving primarily South Georgia and North Central Florida through 20 full-service branch locations and five mortgage production offices. As of March 31, 2011, the Company reported total assets of approximately $952 million and total stockholders' equity of approximately $121 million. For more information about the Company, visit HeritageBank of the South on the Web at www.eheritagebank.com and see Investor Relations under About Us.

Except for historical information contained herein, the matters included in this news release and other information in the Company's filings with the Securities and Exchange Commission may contain certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995 and include this statement for purposes of these safe harbor provisions. Further information concerning the Company and its business, including additional factors that could materially affect our financial results, is included in our other filings with the SEC.

   

HERITAGE FINANCIAL GROUP, INC.

Unaudited Reconciliation of Net Income to Adjusted Net Income

(In thousands, except per share amounts)

 
First Quarter Ended

March 31,

  2011       2010
Total noninterest income $ 4,841 $ 1,812
Bargain purchase gain   (2,334 )   --
Adjusted noninterest income $ 2,507   $ 1,812
 
Net income as reported $ 1,215 $ 798
Bargain purchase gain, net of tax   (1,401 )   --
Adjusted net income (loss) $ (186 ) $ 798
 
Diluted earnings per share 1 $ 0.15 $ 0.09
Bargain purchase gain, net of tax   (0.17 )   --
Adjusted diluted earnings (loss) per share 1 $ (0.02 ) $ 0.09
 

Net Income (Loss) and Diluted Earnings (Loss) Per Share are presented in accordance with Generally Accepted Accounting Principles (GAAP). Adjusted Noninterest Income, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share are non-GAAP financial measures. The Company believes that these non-GAAP measures aid in understanding and comparing current-year and prior-year results, both of which include unusual items of different natures. These non-GAAP measures should be viewed in addition to, and not as a substitute for, the Company's reported results.

       

HERITAGE FINANCIAL GROUP, INC.

Reconciliation of Stockholders' Equity and Total Assets to Tangible Common Equity

and Tangible Assets, Including Calculation of Tangible Common Equity Ratio (Unaudited)

(Dollars in thousands)

 
March 31,

2011

Dec. 31,

2010

March 31,

2010

Total stockholders' equity $ 121,331 $ 119,340 $ 61,615
Less intangible assets   4,713     2,912     1,540  
Tangible common equity $ 116,618   $ 116,428   $ 60,075  
 
Total assets $ 951,918 $ 755,436 $ 574,363
Less intangible assets   4,713     2,912     1,540  
Tangible assets $ 947,205   $ 752,524   $ 572,823  
 
Total stockholders' equity to total assets 12.8 % 15.8 % 10.7 %
Tangible common equity to tangible assets 12.3 % 15.5 % 10.5 %

Total Stockholders' Equity and Total Assets are presented in accordance with Generally Accepted Accounting Principles (GAAP). Tangible Common Equity and Tangible Assets are non-GAAP financial measures. The Company provides these balances and resulting Tangible Common Equity Ratio, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.

 

HERITAGE FINANCIAL GROUP, INC.

Unaudited Financial Highlights

(In thousands, except per share amounts)

 

First Quarter Ended

March 31,

  2011     2010
Interest income $ 8,624 $ 6,447
Interest expense   2,591   2,037
Net interest income 6,033 4,410
Provision for loan losses   600   500
Net interest income after provision for loan losses 5,433 3,910
Noninterest income 4,841 1,812
Noninterest expense   8,398   4,705
Income before income taxes 1,876 1,017
Income tax expense   661   219
Net income $ 1,215 $ 798
Net income per share:
Basic* $ 0.15 $ 0.09
Diluted* $ 0.15 $ 0.09
Weighted average shares outstanding:
Basic   8,186   8,445
Diluted   8,187   8,445
Dividends declared per share* $ 0.03 $ 0.11
 
March 31,

2011

Dec. 31,

2010

March 31,

2010

Total assets $ 951,918 $ 755,436 $ 574,363
Cash and cash equivalents 64,580 28,803 24,414
Interest-bearing deposits in banks 21,800 10,911 26,988
Securities available for sale 220,803 238,377 115,552
Loans 496,067 418,997 342,495
Allowance for loan losses 6,138 8,101 5,816
Total deposits 731,088 534,243 428,403
Federal Home Loan Bank advances 60,000 62,500 42,500
Stockholders' equity 121,331 119,340 61,615
 

* Prior-period share and per share data have been adjusted throughout this press release to reflect the 0.8377:1 conversion ratio used in conjunction with the completion of the Company's second-step offering on November 30, 2010.

 
 
Heritage Financial Group, Inc.
First Quarter 2011 Earnings Release Supplement
(Dollars in thousands)
    For the three months Ended
March 31,
  2011         2010  
Income Statement Data

Interest income

Loans $ 7,145 $ 5,320
Loans held for sale 8 -
Securities - taxable 1,207 776
Securities - nontaxable 211 298
Federal funds sold 13 9
Interest bearing deposits in banks   40   44  
Total interest income   8,624   6,447  

Interest expense

Deposits 1,848 1,524
Other borrowings   743   513  
Total interest expense   2,591   2,037  
Net interest income 6,033 4,410
Provision for loan losses   600   500  
Net interest income after provision for loan losses   5,433   3,910  

Non-interest income

Service charges on deposit accounts 1,051 824
Other service charges, fees & commissions 660 403
Brokerage fees 354 222
Mortgage origination fees 268 38
Bank owned life insurance 145 152
Gain on sale of securities - 152
Bargain purchase gain 2,334 -
Other   29   21  
Total non-interest income   4,841   1,812  

Non-interest expense

Salaries and employee benefits 4,328 2,565
Equipment 351 255
Occupancy 445 306
Advertising & marketing 164 120
Legal & accounting 210 149
Consulting & other professional fees 179 71
Director fees & retirement 227 139
Telecommunications 145 69
Supplies 95 58
Data processing fees 518 481

(Gain) loss on sale and write-downs of other real estate owned

402 (231 )
Foreclosed asset expenses 170 171
FDIC insurance and other regulatory fees 293 170
Other operating   871   382  
Total non-interest expense   8,398   4,705  
Income before taxes 1,876 1,017
Applicable income tax   661   219  
Net income $ 1,215 $ 798  
 
Weighted average shares - basic 8,186 8,445
Weighted average shares - diluted 8,187 8,445
 
Basic earnings per share $ 0.15 $ 0.09
Diluted earnings per share 0.15 0.09
Cash dividend declared per share 0.03 0.11
 
Heritage Financial Group, Inc.
First Quarter 2011 Earnings Release Supplement
(Dollars in thousands)
    For the three months Ended
March 31,
  2011           2010  
Balance Sheet Data (at period end)
Total loans $ 496,067 $ 342,495
Loans held for sale 2,642 -
Covered Loans 62,372 -
Allowance for loan losses 6,138 5,816
Total foreclosed assets 10,577 3,568
Covered other real estate owned 7,361 -
FDIC Loss-Share Receivable 58,174 -
Intangible assets 4,713 1,540
Total assets 951,918 574,363
Non-interest bearing deposits 63,134 28,375
Interest bearing deposits 667,954 400,028
Federal home loan bank advances 60,000 42,500

Federal funds purchased and securities sold under agreement to repurchase

31,509 32,778
Stockholders' equity 121,331 61,615
 
Total shares outstanding 8,713 9,595
Less treasury shares   -     884  
Net shares outstanding   8,713     8,711  
 
Shares held by Heritage, MHC - 6,592
Unearned ESOP shares 479 194
 
Book value per share $ 14.74 $ 7.23
Tangible book value per share (non-GAAP) 14.16 7.05
Market value per share 12.73 14.42
 
 
For the three months Ended
March 31,
  2011     2010  
Average Balance Sheet Data
Average interest bearing deposits in banks $ 16,150 $ 33,419
Average federal funds sold 24,111 14,002
Average investment securities 228,530 118,294
Average loans 456,851 336,801
Average mortgage loans held for sale 737 -
Average FDIC Loss-Share Receivable 58,174 -
Average earning assets 725,642 502,516
Average assets 858,398 569,898
Average noninterest bearing deposits 52,414 29,171
Average interest bearing deposits 586,129 395,033
Average total deposits 638,543 424,204

Average federal funds purchased and securities sold under agreement to repurchase

31,568 33,048
Average Federal Home Loan Bank advances 61,749 42,500
Average interest bearing liabilities 679,446 470,581
Average stockholders' equity 120,248 61,145
 
Performance Ratios
Annualized return on average assets 0.57 % 0.56 %
Annualized return on average equity 4.04 % 5.22 %
Net interest margin 3.42 % 3.68 %
Net interest spread 3.32 % 3.57 %
Efficiency ratio 77.23 % 75.62 %
 
Capital Ratios
Average stockholders' equity to average assets 14.0 % 10.7 %
Tangible equity to tangible assets (non-GAAP) 12.3 % 10.5 %
Tier 1 leverage ratio 13.4 % 10.2 %
Tier 1 risk-based capital ratio 23.3 % 15.4 %
Total risk-based capital ratio 24.5 % 16.6 %
 
Other Information
Full-time equivalent employees 273 139
Number of full-service offices 20 10
Mortgage loan production offices 2 -
 
Heritage Financial Group, Inc.
First Quarter 2011 Earnings Release Supplement
(Dollars in thousands)
    Five Quarter Comparison
3/31/10   6/30/10   9/30/10   12/31/10   3/31/11
Income Statement Data

Interest income

Loans $ 5,320 $ 5,763 $ 6,136 $ 6,584 $ 7,145
Loans held for sale - - 6 4 8
Securities - taxable 776 790 1,006 923 1,207
Securities - nontaxable 298 239 212 211 211
Federal funds sold 9 18 11 7 13
Interest bearing deposits in banks 44 45 25 15 40
Total interest income 6,447 6,855 7,396 7,740 8,624

Interest expense

Deposits 1,524 1,512 1,631 1,092 1,848
Other borrowings 513 647 659 695 743
Total interest expense 2,037 2,159 2,290 1,787 2,591
Net interest income 4,410 4,696 5,106 5,953 6,033
Provision for loan losses 500 650 950 3,400 600
Net interest income after provision for loan losses 3,910 4,046 4,156 2,553 5,433

Non-interest income

Service charges on deposit accounts 824 982 1,112 1,194 1,051
Other service charges, fees & commissions 403 466 643 553 660
Brokerage fees 222 257 253 337 354
Mortgage origination fees 38 71 227 270 268
Bank owned life insurance 152 154 153 151 145
Life insurance proceeds - - - 916 -
Gain on sale of securities 152 8 71 63 -
Bargain purchase gain - - - 2,722 2,334
Other 21 17 19 32 29
Total non-interest income 1,812 1,955 2,478 6,238 4,841

Non-interest expense

Salaries and employee benefits 2,565 2,974 3,446 3,691 4,328
Equipment 255 252 304 320 351
Occupancy 306 329 424 452 445
Advertising & marketing 120 124 166 183 164
Legal & accounting 149 179 112 176 210
Consulting & other professional fees 71 66 71 156 179
Director fees & retirement 139 139 142 144 227
Telecommunications 69 103 132 213 145
Supplies 58 96 98 99 95
Data processing fees 481 511 604 594 518

(Gain) loss on sale and write-downs of other real estate owned

(231) (112) - 326 402
Foreclosed asset expenses 171 427 181 234 170
FDIC insurance and other regulatory fees 170 228 283 242 293
Impairment loss on premises held for sale - - - - -
Impairment loss on intangible assets - - 1,000 - -
Other operating 382 710 816 710 871
Total non-interest expense 4,705 6,026 7,779 7,540 8,398
Income (loss) before taxes 1,017 (25) (1,145) 1,251 1,876
Applicable income tax (benefit) 219 (153) (702) 329 661
Net income (loss) $ 798 $ 128 $ (443) $ 922 $ 1,215
 
Weighted average shares - basic 8,445 8,469 8,493 8,485 8,186
Weighted average shares - diluted 8,445 8,471 8,495 8,486 8,187
 
Basic earnings (loss) per share $ 0.09 $ 0.02 $ (0.05) $ 0.11 $ 0.15
Diluted earnings (loss) per share 0.09 0.02 (0.05) 0.11 0.15
Cash dividend declared per share 0.11 0.11 0.11 0.11 0.03
 
Heritage Financial Group, Inc.
First Quarter 2011 Earnings Release Supplement
(Dollars in thousands)
    Five Quarter Comparison
  3/31/10       6/30/10       9/30/10       12/31/10       3/31/11  
Balance Sheet Data (at period end)
Total loans $ 342,495 $ 388,737 $ 413,980 $ 418,997 $ 496,067
Loans held for sale - 448 700 225 2,642
Covered Loans - - - - 62,372
Allowance for loan losses 5,816 6,027 6,534 8,101 6,138
Total foreclosed assets 3,568 3,019 2,787 3,689 10,577
Covered other real estate owned - - - - 7,361
FDIC Loss-Share Receivable - - - - 58,174
Intangible assets 1,540 2,604 1,489 2,912 4,713
Total assets 574,363 661,876 683,324 755,436 951,918
Non-interest bearing deposits 28,375 46,221 48,014 44,769 63,134
Interest bearing deposits 400,028 469,491 487,378 489,474 667,954
Federal home loan bank advances 42,500 42,500 42,500 62,500 60,000

Federal funds purchased and securities sold under agreement to repurchase

32,778 33,954 35,092 32,421 31,509
Stockholders' equity 61,615 62,359 63,085 119,340 121,331
 
Total shares outstanding 9,595 9,595 9,595 8,711 8,713

Less treasury shares

  884     885     885     -     -  
Net shares outstanding   8,711     8,710     8,710     8,711     8,713  
 
Unearned ESOP shares 194 184 175 492 479
 
Book value per share $ 7.23 $ 7.31 $ 7.39 $ 14.52 $ 14.74
Tangible book value per share (non-GAAP) 7.05 7.01 7.22 14.17 14.16
Market value per share 14.42 12.92 10.05 12.42 12.73
 
 
Five Quarter Comparison
  3/31/10     6/30/10     9/30/10     12/31/10     3/31/11  
Average Balance Sheet Data
Average interest bearing deposits in banks $ 33,419 $ 37,193 $ 31,130 $ 10,910 $ 16,150
Average federal funds sold 14,002 20,693 19,569 11,181 24,111
Average investment securities 117,578 115,370 129,841 179,682 228,530
Average loans 336,801 350,438 366,091 419,572 456,851
Average FDIC Loss-Share Receivable - - - - 58,174
Average earning assets 501,800 523,694 546,631 621,345 725,642
Average assets 569,898 593,696 621,386 712,689 858,398
Average noninterest bearing deposits 29,171 33,957 38,724 49,612 52,414
Average interest bearing deposits 395,033 413,008 435,600 491,903 586,129
Average total deposits 424,204 446,965 474,324 541,515 638,543

Average federal funds purchased and securities sold under agreement to repurchase

33,048 33,273 33,718 35,234 31,568
Average Federal Home Loan Bank advances 42,500 42,500 42,500 44,435 61,749
Average interest bearing liabilities 470,581 488,781 511,818 571,572 679,446
Average stockholders' equity 61,145 61,699 62,126 83,154 120,248
 
Performance Ratios
Annualized return on average assets 0.56 % 0.62 % -0.29 % 0.52 % 0.57 %
Annualized return on average equity 5.22 % 6.00 % -2.85 % 4.44 % 4.04 %
Net interest margin 3.68 % 3.61 % 3.57 % 3.88 % 3.42 %
Net interest spread 3.57 % 3.50 % 3.46 % 3.78 % 3.32 %
Efficiency ratio 75.62 % 83.36 % 102.57 % 61.85 % 77.23 %
 
Capital Ratios
Average stockholders' equity to average assets 10.7 % 10.4 % 10.0 % 11.7 % 14.0 %
Tangible equity to tangible assets (non-GAAP) 10.5 % 9.2 % 9.0 % 15.5 % 12.3 %
Tier 1 leverage ratio 9.3 % 9.3 % 8.7 % 16.1 % 13.4 %
Tier 1 risk-based capital ratio 14.0 % 14.0 % 13.4 % 25.1 % 23.3 %
Total risk-based capital ratio 15.3 % 15.3 % 14.7 % 26.4 % 24.5 %
 
Other Information
Full-time equivalent employees 139 194 206 217 273
Number of full-service offices 10 16 16 16 20
Mortgage loan production offices - - - - 2
 
Heritage Financial Group, Inc.
First Quarter 2011 Earnings Release Supplement
(Dollars in thousands)
     
For the three months Ended
March 31,
3/31/11 3/31/10
Loans by Type
Construction and land loans $ 27,580 $ 22,274
Farmland loans 13,707 12,766
Permanent 1 - 4 129,371 87,301
Permanent 1 - 4 - junior liens and revolving 25,642 24,513
Multifamily 12,110 10,242
Nonresidential 119,325 80,935
Commercial business loans 52,662 44,382
Consumer and other loans 25,046 34,689
405,443 317,102
Loans acquired through FDIC assisted acquisitions:
Non Covered Loans 28,252 25,393
Covered Loans 62,372 -
496,067 342,495
 
 
Asset Quality Data (excluding Loans acquired through FDIC assisted acquisitions):
Allowance for loan losses to total loans 1.51% 1.83%
Allowance for loan losses to average loans 1.59% 1.87%
Allowance for loan losses to non-performing loans 55.30% 89.23%
Accruing past due loans $ 1,350 $ 1,810
Nonaccrual loans 11,100 6,518
Loans - 90 days past due & still accruing - -
Total non-performing loans 11,100 6,518
OREO and repossessed assets 3,215 3,567
Total non-performing assets 14,315 10,085
Non-performing loans to total loans 2.74% 2.06%
Non-performing assets to total assets 1.66% 1.84%
Net charge-offs to average loans (annualized) 2.80% 0.62%
Net charge-offs $ 2,563 $ 744
 
Heritage Financial Group, Inc.
First Quarter 2011 Earnings Release Supplement
(Dollars in thousands)
           
Five Quarter Comparison
  3/31/10     6/30/10     9/30/10     12/31/10     3/31/11  
Loans by Type
Construction and land loans $ 22,274 $ 23,637 $ 24,263 $ 17,547 $ 27,580
Farmland loans 12,766 14,702 14,658 19,314 13,707
Permanent 1 - 4 87,301 110,325 123,275 131,293 129,371
Permanent 1 - 4 - junior liens and revolving 24,513 27,178 26,922 26,091 25,642
Multifamily 10,242 12,601 13,737 13,598 12,110
Nonresidential 80,935 98,353 108,440 110,079 119,325
Commercial business loans 44,382 46,603 50,230 52,589 52,662
Consumer and other loans   34,689     32,684     31,168     27,115     25,046  
  317,102     366,083     392,693     397,626     405,443  
 
Loans acquired through FDIC assisted acquisitions:
Non Covered 25,393 22,654 21,287 21,371 28,252
Covered Loans   -     -     -     -     62,372  
  342,495     388,737     413,980     418,997     496,067  
 
 
Asset Quality Data (excluding Loans acquired through FDIC assisted acquisitions):
Allowance for loan losses to total loans 1.83 % 1.65 % 1.66 % 2.04 % 1.51 %
Allowance for loan losses to average loans 1.87 % 1.77 % 1.74 % 2.03 % 1.59 %
Allowance for loan losses to non-performing loans 89.23 % 80.21 % 53.56 % 81.47 % 55.30 %
Accruing past due loans $ 1,810 $ 2,498 $ 899 $ 2,254 $ 1,350
Nonaccrual loans 6,518 7,514 12,199 9,944 11,100
Loans - 90 days past due & still accruing - - - - -
Total non-performing loans 6,518 7,514 12,199 9,944 11,100
OREO and repossessed assets 3,567 3,019 2,787 3,689 3,215
Total non-performing assets 10,085 10,533 14,986 13,633 14,315
Non-performing loans to total loans 2.06 % 2.05 % 3.11 % 2.50 % 2.74 %
Non-performing assets to total assets 1.84 % 1.65 % 2.26 % 1.86 % 1.66 %
Net charge-offs to average loans (annualized) 0.62 % 0.51 % 0.47 % 1.84 % 2.80 %
Net charge-offs $ 744 $ 439 $ 443 $ 1,833 $ 2,563
 

Note:

Certain prior-period amounts have been reclassified to conform with current presentation.
 
Prior period share and per share data have been adjusted for the 0.8377:1 conversion ratio in conjunction with the completion of the second step stock offering on November 30, 2010.
 
Loans acquired through FDIC assisted acquisitions include loans acquired in the acquisition of The Tattnall Bank in December of 2009 and the acquisition of Citizens Bank of Effingham in February 2011. The acquisition of The Tattnall Bank did not involve a loss-share agreement with the FDIC. The acquisition of Citizens Bank of Effingham involved a loss-share agreement in which the FDIC will, for a specified number of years, reimburse the Bank for 80% of all losses and related expenses on covered assets.




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