Heritage Financial Group, Inc. (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced a preliminary earnings outlook for the first quarter ended March 31, 2014. The Company offers this preliminary information to provide certain context for the proposed acquisition announced earlier this morning. The Company plans to announce complete unaudited quarterly information on Thursday, April 24, 2014, after market close.
As has been the case over the past year, the change in loan discount accretion related to FDIC-acquired loans has created significant volatility in the Company's earnings. Over the past four quarters, the loan discount accretion related to FDIC-acquired loans varied on a sequential basis as much as $2.6 million. Because of that volatility and due to the occurrence of other unusual items from time to time, such as gains on acquisitions, the Company desires to highlight some of these variations to aid investor understanding of comparable-period results.
Net income for the first quarter ended March 31, 2014, is expected to total $1.3 million or $0.18 per diluted share, down 61% from $3.4 million or $0.45 per diluted share for the linked quarter and down 66% from $3.9 million or $0.52 per diluted share for the year-earlier quarter. Total shares outstanding at the end of the first quarter of 2014 is expected to be 7,834,517, and basic and diluted weighted average shares outstanding for the first quarter of 2014 are expected to be 7,422,044 and 7,581,731 shares, respectively. Book value and tangible book value (a non-GAAP measure) at the end of the first quarter of 2014 are expected to be $17.03 and $16.40 per share, respectively.
The expected decline in net income on a linked-quarter basis reflects primarily a $2.4 million decline in loan discount accretion from FDIC-acquired loans, coupled with steady negative accretion of the FDIC loss-share receivable, an increase of $282,000 in FDIC loss-share clawback expenses and a $783,000 decline in mortgage banking fees, reflecting increased loan production that was more than offset in a pricing decline as loans were sold in the secondary market.