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Heritage Financial Group, Inc. Reports First Quarter Net Income Of $1.0 Million Or $0.12 Per Diluted Share

In the first quarter of 2012, the Company continued to achieve loan growth, with its loan portfolio increasing $15.2 million organically on a linked-quarter basis and advancing $44.2 million overall compared with the year-earlier quarter. For the first quarter ended 2012, the Company's loan portfolio, including loans acquired through FDIC-assisted acquisitions, totaled $562.5 million, which increased $1.9 million on a linked-quarter basis as a result of organic loan growth of $15.2 million. This increase was partially offset by loan pay-downs in the FDIC-assisted portfolios. Total deposits stood at $868.7 million at the end of the first quarter of 2012, down 2% or $15.5 million from $884.2 million for the fourth quarter of 2011, driven primarily by planned runoff of time deposits.

Accounting for FDIC-Assisted Loans

The Company performs ongoing assessments of the estimated cash flows of its acquired FDIC-assisted loan portfolios. The fair value of the FDIC-assisted loan portfolios consisted of $95.5 million in covered and $17.4 million in non-covered loans for the first quarter ended 2012 compared with $107.5 million in covered and $18.7 million in non-covered loans for the fourth quarter ended 2011. The principal balance of the FDIC-assisted loan portfolios totaled $209.8 million for the first quarter ended 2012 compared with $228.4 million as of the fourth quarter ended 2011. The details of the accounting for the FDIC-assisted loan portfolios for the first quarter of 2012 are as follows:

  • Covered loans acquired in FDIC-assisted acquisitions decreased $12.0 million to $95.5 million;
  • Non-covered loans acquired in FDIC-assisted acquisitions decreased $1.3 million to $17.4 million;
  • The FDIC loss-share receivable associated with covered loans acquired in FDIC-assisted acquisitions decreased $1.0 million to $82.9 million;
  • The accretion for the FDIC loss-share receivable turned negative $498,000;
  • The non-accretable discount decreased $5.4 million to $84.1 million; and
  • The accretable discount decreased $100,000 to $12.7 million.

For the first quarter ended 2012, net charge-offs for both the covered and non-covered loans were fully provided by the associated loan discounts and expected reimbursement from the FDIC and did not affect the Company's loan loss reserve. The FDIC loss-share receivable associated with covered FDIC-assisted loans decreased $1.0 million from $83.9 million for the prior quarter to $82.9 million primarily, driven by negative accretion of $843,000 affecting the loss-share receivable asset that was associated with the improvement in expected cash flows of the loss-share performing portfolios.

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