Heritage Financial Group (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced that, subsequent to the issuance of preliminary results for the fourth quarter and year ended December 31, 2009, the Company determined the need for an additional $2.0 million in loan loss provision related to the disposition of a single nonperforming loan, based on a recently received appraisal on the collateral property and the execution of an agreement to sell the property.

The Company's results for the fourth quarter and year ended December 31, 2009, are in the process of being revised. Accordingly, the Company's previously issued results for such periods should no longer be relied upon.

This particular loan is a $5.0 million loan originated in 2006 by the Bank's Albany office on raw land in Atlanta, Georgia, and is the largest single nonperforming loan in the Company's portfolio. At December 31, 2009, the Company previously had established a specific reserve of $1.7 million against this loan, leaving a net carrying loan value of approximately $3.3 million that matched the estimated value of the property at that time. This specific reserve was included in previously announced preliminary results.

On March 2, 2010, the Company foreclosed on this property and began the process of reassessing its value and marketing the property for sale. Based on the deteriorating economy in the Atlanta market, including the significant amount of commercial and construction real estate for sale, the Company accepted a cash offer and executed an agreement to sell this property for $1.9 million on March 30, 2010. Accordingly, the Company intends to charge-off $3.1 million on this loan and to increase its provision expense for the fourth quarter and year ended December 31, 2009, by $2.0 million over that previously reported. This amount reduces the net loan carrying value to the sale price and includes an additional $600,000 to replenish the Company's allowance for loan losses, which is derived in part by the level of loan charge-offs – now elevated further by the partial charge-off on this loan.