Heritage Financial Group (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced that it will revise its accounting treatment and fair value measurements related to the FDIC-assisted acquisition of The Tattnall Bank. This revision will affect the accounting for expenses which have been or will be incurred in connection with the work-out of loans in the acquired loan portfolio. This revision will not alter previously reported balance sheets or results of operations for the periods ended and as of December 31, 2009 and March 31, 2010. Unlike many FDIC-assisted transactions, The Tattnall Bank acquisition did not involve a loss-share agreement, but instead provided for a purchase discount of $15.0 million paid by the FDIC. Approximately $12.2 million of that purchase discount originally was used to reduce the value of portfolio loans and other real estate owned included in the transaction to a fair value determined by the Company, and approximately $2.3 million was used to establish a contingent liability for anticipated expenses to be incurred in the future in connection with the work-out of certain loans in the portfolio. The Company now has determined that the amount allocated to the contingent liability should be reflected as a further reduction to the fair value of the acquired loan portfolio, eliminating the contingent liability. The Company has also determined that work-out expenses on loans should be recorded in operations as incurred, rather than offsetting those expenses against a contingent liability. With the elimination of this contingent liability, actual expenses incurred will be reported as part of operations. In the second quarter of 2010, approximately $280,000 of loan work-out costs were expensed. On August 9, 2010, the Company's announced financial results for the second quarter were based on the prior treatment of charging these work-out expenses to the contingent liability. As a result, when the Company files its Form 10-Q for the second quarter of 2010 later today, these expenses will be reported as current period expenses and included in noninterest expense, and previously reported net income of $297,000 or $0.03 per diluted share will be reduced to $129,000 or $0.01 per diluted share for the second quarter of 2010. For the first six months of 2010, previously reported net income of $1.1 million or $0.11 per diluted share will be reduced to $926,000 or $0.09 per diluted share. Accordingly, the Company's previously issued results for the second quarter and first six months of 2010 on August 9, 2010, and the Form 8-K filed that day regarding results of operations for the second quarter and first six months of 2010, should no longer be relied upon.