Heritage Financial Group, Inc. (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced unaudited financial results for the quarter ended June 30, 2014. Key aspects of the Company's results for the second quarter of 2014 include:
- Net income of $1.8 million or $0.23 per diluted share, up 32% from $1.3 million or $0.18 per diluted share for the linked quarter, but down 33% from $2.7 million or $0.36 per diluted share for the year-earlier quarter;
- Excluding special items for each quarter, net income of $2.4 million or $0.31 per diluted share, up 33% from $1.8 million or $0.24 per diluted share for the linked quarter, but down 17% from $2.9 million or $0.39 per diluted share for the year-earlier quarter (see non-GAAP reconciliation);
- Loan growth, excluding loans acquired through FDIC-assisted acquisitions, of $42.2 million or 6% on a linked-quarter basis and $106.7 million or 17% compared with the year-earlier quarter;
- A decline in nonperforming loans, excluding FDIC-acquired loans, of 24% on a linked-quarter basis and 43% compared with the year-earlier quarter;
- An increase in the provision for loan losses, excluding FDIC-acquired loans, to $510,000, up from $65,000 for the linked quarter and down 20% compared with $640,000 for the year-earlier quarter;
- Mortgage originations increased to $249.9 million for the quarter, up $114.4 million or 84% from the linked quarter and up $133.2 million or 114% from the year-earlier quarter; and
- FDIC-acquired portfolios experienced improvement in cash flows, which resulted in $12.7 million of non-accretable discount transferred to the accretable discount and also resulted in an increase in the FDIC clawback expenses to $882,000.
Commenting on the results, Leonard Dorminey, President and Chief Executive Officer, said, "We are pleased to report ongoing improvements in our operating results. Our core loan portfolio continued to grow in the second quarter, reflecting overall expansion along with continued organic growth, while at the same time credit quality metrics demonstrated further improvements in portfolio risks. Cash flows from our FDIC-acquired portfolios also have continued to improve, which have increased our interest income, but likewise resulted in a large increase in our clawback liability during the quarter. Additionally, our mortgage expansion efforts continue to cement as a solid platform for future growth, evidenced by a substantial increase in originations during the second quarter and a significantly larger pipeline of loans in process at quarter's end." Dorminey noted that HeritageBank Mortgage turned solidly profitable in the second quarter of 2014 as the Company begins to benefit from the investment it has made in these operations over the past two years.