Heritage Financial Group, Inc. Reports Fourth Quarter Net Income Of $922,000 Or $0.11 Per Diluted Share

Heritage Financial Group, Inc. (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced improved financial results for the fourth quarter and year ended December 31, 2010.

The Company's net income for the fourth quarter totaled $922,000 or $0.11 per diluted share compared with the prior year's fourth quarter net loss of $1.7 million or $0.21 per diluted share. For the year ended December 31, 2010, the Company's net income increased to $1.4 million or $0.17 per diluted share compared with a net loss of $1.7 million or $0.20 per diluted share in the year-earlier period.

Several special items were included in the Company's results for the fourth quarter and year ended December 31, 2010 and 2009, which obscured the Company's underlying performance. In the fourth quarter of 2010, the Company recorded a $2.7 million bargain purchase gain based on the fair market valuation report on its December 2009 acquisition of The Tattnall Bank, which was completed by an independent third party valuation firm. In addition, the Company received approximately $0.9 million of life insurance proceeds on a former key employee. Results for 2010 also included a $1.0 million pre-tax charge taken in the third quarter to write-off an intangible asset related to the elimination of restrictions on interstate banking in the Dodd-Frank Wall Street Reform and Consumer Protection Act. Additionally, in the fourth quarter of 2009 the Company recorded an impairment loss of $0.5 million on premise held for sale. Excluding these special items, the net loss for the fourth quarter of 2010 was $1.6 million or $0.19 per diluted share compared with a net loss for 2009 of $2.0 million or $0.24 per diluted share for the year-earlier quarter, and the net loss for 2010 was $434,000 or $0.06 per diluted share compared with a net loss for 2009 of $2.0 million or $0.23 per diluted share (see reconciliation of net income and net income per diluted share to these non-GAAP amounts later in this release).

Other financial highlights of the fourth quarter included significant growth in total loans and deposits as the Company continued to capitalize on its entry into new markets with the acquisition of eight branch locations since December 2009 in South Georgia and North Central Florida as well as with the Company's de novo entry into the Valdosta, Georgia, market. This expansion has provided the Company with opportunities for follow-on organic growth in these new markets, particularly Statesboro and Valdosta, enabling the Company to increase its loan portfolio to $419.0 million at December 31, 2010, up 25% from $334.1 million at December 31, 2009. Likewise, the Company has enjoyed significant deposit growth during the past year, with deposits increasing 25% to $534.2 million at December 31, 2010, from $426.6 million at December 31, 2009. Also, in the fourth quarter of 2010, the Company completed its conversion to a fully public stock holding company with a successful second-step offering, which increased total stockholders' equity to $119.3 million at December 31, 2010, versus $60.8 million at the end of 2009.

Commenting on the results, Leonard Dorminey, President and Chief Executive Officer of Heritage Financial Group, said, "The past year has been a remarkable period of growth for our company, one marked by accelerated and successful expansion into many attractive and strategically important growth markets. In little more than a year, we have significantly expanded our footprint, more than doubled our banking locations, and have firmly positioned HeritageBank of the South to serve a growing customer base. More importantly, because of our solid reputation, we have been able to attract talented and experienced bankers with strong local ties to these new markets to lead our expansion efforts. At the same time, we have continued to expand the services we offer, most notably with the recent opening of new mortgage production offices in Valdosta and McDonough, Georgia, and a retail brokerage operation in Statesboro, Georgia, further enhancing our capabilities as a full-service financial services provider.

"Of course, the Company's solid capital base has positioned us favorably to take advantage of these opportunities," Dorminey continued. "Our firm capital position during the past year also enabled us to maintain and increase our cash dividends to stockholders at a time when many financial institutions in capital preservation mode were reducing or eliminating dividends. Now, strengthened further by the completion of our second-step offering, we remain watchful for emerging growth opportunities created by a shifting banking landscape, and we look forward to building our presence across our markets with unmatched service, extraordinary bankers, and uncommon financial strength."

In November 2010, the Company completed the conversion of Heritage MHC to full stock form and through the related offering Heritage Financial Group, Inc. became the successor company to Heritage Financial Group and the parent holding company for HeritageBank of the South. In the conversion and offering, the Company sold 6,591,756 shares of common stock at $10.00 per share, including 327,677 shares purchased by the Bank's Employee Stock Ownership Plan, for gross proceeds of approximately $65.9 million. Already significantly above the level required to be considered "well-capitalized" under regulatory standards, the Company's capital at the end of the fourth quarter was strengthened further by the capital raise. The Company's total risk-based capital ratio at December 31, 2010, was 26.4%, significantly exceeding the required minimum of 10% to be considered a well-capitalized institution. The ratio of tangible common equity to total tangible assets was 15.5% as of December 31, 2010 (see reconciliation of GAAP and non-GAAP capital measures later in this release).

In consideration of its expanded stockholder base and to better align the payment of cash dividends with the Board of Directors' quarterly performance review, the Company will adopt a new schedule for quarterly dividend payments in 2011. Accordingly, the Company expects to declare its next cash dividend in February 2011 and quarterly thereafter, subject to regulatory approval and the Board's customary review of operations, investment opportunities and other pertinent considerations.

Net interest income for the fourth quarter increased 52% to $6.0 million from $3.9 million in the year-earlier quarter, primarily reflecting a higher level of interest-earning assets as reduced funding costs offset lower loan yields. The Company's net interest margin increased 16 basis points to 3.88% in the fourth quarter of 2010 from 3.72% in the year-earlier period and increased 31 basis points on a linked-quarter basis from 3.57% in the third quarter of 2010. Net interest income for 2010 increased 38% to $20.2 million from $14.6 million for the year-earlier period, again primarily reflecting a higher level of interest-earning assets. The Company's net interest margin was 3.66% for 2010, an increase of 17 basis points from 3.49% in the comparable period last year.

Total nonperforming loans and nonperforming assets were $9.9 million and $13.8 million, respectively, at December 31, 2010, down from $12.2 million and $15.0 million, respectively, at September 30, 2010, but up from $8.5 million and $10.3 million, respectively, at December 31, 2009. Nonperforming loans to total loans declined during the fourth quarter versus the third quarter of 2010, falling to 2.37% as of December 31, 2010, versus 2.95% as of September 30, 2010, and 2.53% at December 31, 2009. The decline in the levels of nonperforming loans and assets at December 31, 2010, primarily reflected migration of loans to foreclosure status and increased charge-off activity as the Company continued to aggressively confront credit quality issues in its loan portfolio. Net charge-offs to average outstanding loans in the total portfolio, on an annualized basis, were 1.75% for the fourth quarter of 2010 versus 0.45% for the third quarter of 2010 and 7.42% in the year-earlier period, with the latter reflecting additional provisioning and write-off related to a single nonperforming loan on raw land in Atlanta, Georgia. The Company continues to reduce its exposure to acquisition, construction and development loans, which were 6% of its core portfolio at December 31, 2010, from 9% at the end of the fourth quarter of 2009. Management believes that nonperforming assets and net charge-offs will likely remain at elevated levels, at least in the near term, because of the continued weakness in the economy.

On a linked-quarter basis, the Company increased its provision for loan losses to $3.4 million for the fourth quarter of 2010 from $1.0 million in the third quarter of 2010, reflecting increased charge-offs during the fourth quarter of 2010 as well as general growth of the loan portfolio. The fourth quarter provision was down from $3.7 million in the year-earlier quarter, the majority of which resulted of an additional $2.0 million loan loss provision related to the disposition of a single nonperforming loan. For 2010, the provision for loan losses was $5.5 million versus $7.5 million for 2009. At December 31, 2010, the allowance for loan losses represented 1.93% of total loans outstanding versus 1.58% of total loans outstanding at September 30, 2010, and 1.81% of total loans outstanding at December 31, 2009.

Noninterest income for the fourth quarter of 2010, excluding the aforementioned bargain purchase gain and the receipt of life insurance proceeds, increased 40% to $2.6 million from $1.9 million in the prior-year quarter. This increase reflected higher service charges, fees and commissions, brokerage fees and mortgage origination fees associated with both organic growth and the acquisition of eight branch offices since December 2009. Noninterest income for 2010, excluding special items, increased 14% to $8.8 million from $7.8 million in the year-earlier period, as higher service charges, fees and commissions, brokerage fees and mortgage origination fees were offset partially by lower gains on the sale of securities in 2010.

Noninterest expense for the fourth quarter of 2010, excluding special items, increased 69% to $7.5 million from $4.5 million in the fourth quarter of 2009 and primarily reflected the addition of personnel and occupancy expenses associated with eight acquired branch offices since December 2009, as well as those related to the opening of a de novo branch in Valdosta. Noninterest expense for 2010, excluding special items, rose 41% to $25.0 million compared with $17.8 million for the year-earlier period. The Company's efficiency ratio was 61.85% and 79.79%, respectively, for the fourth quarter and year ended December 31, 2010, versus 85.93% and 81.59%, respectively, for the year-earlier periods.

Heritage Financial Group, Inc. is the holding company for HeritageBank of the South, a community-oriented bank serving primarily South Georgia and North Central Florida through 16 full-service branch locations and two mortgage production offices. As of December 31, 2010, the Company reported total assets of approximately $755.4 million and total stockholders' equity of approximately $119.4 million. For more information about the Company, visit HeritageBank of the South on the Web at www.eheritagebank.com and see Investor Relations under About Us.

Except for historical information contained herein, the matters included in this news release and other information in the Company's filings with the Securities and Exchange Commission may contain certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995 and include this statement for purposes of these safe harbor provisions. Further information concerning the Company and its business, including additional factors that could materially affect our financial results, is included in our other filings with the SEC.
     

HERITAGE FINANCIAL GROUP

Unaudited Reconciliation of Net Income to Adjusted Net Income

(In thousands, except per share amounts)
 
Fourth Quarter Ended

December 31,
Year Ended

December 31,
  2010       2009     2010       2009  
Total noninterest income $ 6,238 $ 1,858 $ 12,484 $ 7,788
Bargain purchase gain (2,722 ) -- (2,722 ) --
Life insurance proceeds   (916 )   --     (916 )   --  
Adjusted noninterest income $ 2,600   $ 1,858   $ 8,846   $ 7,788  
 
Total noninterest expense $ 7,540 $ 4,967 $ 26,050 $ 18,271
Impairment of intangible asset

(Florida bank charter)
-- -- (1,000 ) --
Impairment loss on premise held for sale   --     (502 )   --     (502 )
Adjusted noninterest expense $ 7,540   $ 4,465   $ 25,050   $ 17,769  
 
Net income (loss) as reported $ 922 $ (1,735 ) $ 1,406 $ (1,652 )
Bargain purchase gain, net of tax (1,633 ) -- (1,633 ) --
Life insurance proceeds, net of tax (916 ) -- (916 ) --
Impairment of intangible asset, net of tax -- -- 709 --
Impairment loss on premise held for sale,net of tax   --     (301 )   --     (301 )
Adjusted loss $ (1,627 ) $ (2,038 ) $ (434 ) $ (1,953 )
 

Diluted earnings (loss) per share
$ 0.11 $ (0.21 ) $ 0.17 $ (0.20 )
Bargain purchase gain, net of tax (0.19 ) -- (0.19 ) --
Life insurance proceeds, net of tax (0.11 ) -- (0.11 ) --
Impairment of intangible asset, net of tax -- -- 0.07 --
Impairment loss on premise held for sale,net of tax   --     (0.03 )   --     (0.03 )
Adjusted loss per diluted share $ (0.19 ) $ (0.24 ) $ (0.06 ) $ (0.23 )

Net Income and Diluted Earnings Per Share are presented in accordance with Generally Accepted Accounting Principles (GAAP). Adjusted Noninterest Income, Adjusted Noninterest Expense, Adjusted Net Income and Adjusted Diluted Earnings Per Share are non-GAAP financial measures. The Company believes that these non-GAAP measures aid in understanding and comparing current-year and prior-year results, both of which include unusual items of different natures. These non-GAAP measures should be viewed in addition to, and not as a substitute for, the Company's reported results.
       

Reconciliation of Stockholders' Equity and Total Assets to Tangible Common Equity

and Tangible Assets, Including Calculation of Tangible Common Equity Ratio (Unaudited)

(Dollars in thousands)
 

Dec. 31,

2010
Sept. 30,

2010
Dec. 31,

2009
Total stockholders' equity $ 119,340 $ 63,085 $ 60,817
Less intangible assets   2,912     1,489     1,571  
Tangible common equity $ 116,428   $ 61,596   $ 59,246  
 
Total assets $ 755,436 $ 683,324 $ 571,948
Less intangible assets   2,912     1,489     1,571  
Tangible assets $ 752,524   $ 681,835   $ 570,377  
 
Total stockholders' equity to total assets 15.8 % 9.2 % 10.6 %
Tangible common equity to tangible assets 15.5 % 9.0 % 10.4 %

Total Stockholders' Equity and Total Assets are presented in accordance with Generally Accepted Accounting Principles (GAAP). Tangible Common Equity and Tangible Assets are non-GAAP financial measures. The Company provides these balances and resulting Tangible Common Equity Ratio, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.
     

Unaudited Financial Highlights

(In thousands, except per share amounts)
 

Fourth Quarter Ended

December 31,
Year Ended

December 31,
  2010     2009     2010       2009  
Interest income $ 7,740 $ 5,836 $ 28,439 $ 23,401
Interest expense   1,787   1,914     8,274     8,794  
Net interest income 5,953 3,922 20,165 14,607
Provision for loan losses   3,400   3,700     5,500     7,500  
Net interest income after provision

for loan losses
2,553 222 14,665 7,107
Noninterest income 6,238 1,858 12,484 7,788
Noninterest expense   7,540   4,967     26,050     18,271  
Income (loss) before income taxes 1,251 (2,887 ) 1,099 (3,376 )
Income tax (benefit) expense   329   (1,150 )   (307 )   (1,724 )
Net income (loss) $ 922 $ (1,737 ) $ 1,406   $ (1,652 )
Net income (loss) per share:
Basic $ 0.11 $ (0.21 ) $ 0.17   $ (0.20 )
Diluted $ 0.11 $ (0.21 ) $ 0.17   $ (0.20 )
Weighted average shares outstanding:
Basic   8,485   8,443     8,450     8,423  
Diluted   8,486   8,443     8,451     8,423  
Dividends declared per share $ 0.11 $ 0.10   $ 0.43   $ 0.38  
 

Dec. 31,

2010
Sept. 30,

2010
Dec. 31,

2009
Total assets $ 755,436 $ 683,324 $ 571,948
Cash and cash equivalents 28,803 33,275 14,922
Interest-bearing deposits in banks 10,911 10,579 43,236
Securities available for sale 238,377 161,798 120,527
Loans 418,997 413,980 334,138
Allowance for loan losses 8,101 6,534 6,060
Total deposits 534,243 535,392 426,606
Federal Home Loan Bank advances 62,500 42,500 42,500
Stockholders' equity 119,340 63,085 60,817

Prior-period share and per share data have been adjusted throughout this press release to reflect the 0.8377:1 conversion ratio used in conjunction with the completion of the Company's second-step offering on November 30, 2010.
 
Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
 
   

Fourth Quarter Ended

December 31,
 

Year Ended

December 31,
 
  2010     2009     2010       2009  
Income Statement Data

Interest income
Loans $ 6,584 $ 4,834 $ 23,810 $ 18,555
Securities - taxable 923 683 3,495 3,604
Securities - nontaxable 211 292 960 1,174

Federal funds sold
7 14 45 54
Interest bearing deposits in banks   15   13     129     14  
Total interest income   7,740   5,836     28,439     23,401  

Interest expense
Deposits 1,092 1,422 5,759 6,472
Other borrowings   695   492     2,515     2,322  
Total interest expense   1,787   1,914     8,274     8,794  
Net interest income 5,953 3,922 20,165 14,607
Provision for loan losses   3,400   3,700     5,500     7,500  
Net interest income after provision for loan losses   2,553   222     14,665     7,107  

Non-interest income
Service charges on deposit accounts 1,194 951 4,113 3,547
Other service charges, fees & commissions 553 345 2,064 1,406
Brokerage fees 337 252 1,070 914
Mortgage origination fees 270 69 607 345
Bank owned life insurance 151 156 610 621
Life insurance proceeds 916 - 916 -
Gain (loss) on sale of securities 63 73 294 909
Bargain purchase gain 2,722 - 2,722 -
Other   32   12     88     46  
Total non-interest income   6,238   1,858     12,484     7,788  

Non-interest expense
Salaries and employee benefits 3,691 2,179 12,676 8,899
Equipment 320 225 1,131 985
Occupancy 452 297 1,511 1,198
Advertising & marketing 183 94 593 439
Legal & accounting 176 103 616 493
Consulting & other professional fees 156 75 364 297
Director fees & retirement 144 93 564 553
Telecommunications 213 70 517 239
Supplies 99 46 351 177
Data processing fees 594 461 2,190 1,606

(Gain) loss on sale and write-downs of other real estate owned
326 38 (17 ) 422
Foreclosed asset expenses 234 85 1,013 257
FDIC insurance and other regulatory fees 242 371 923 872
Impairment loss of premise held for sale - 502 - 502
Impairment loss on intangible assets - - 1,000 -
Other operating   710   328     2,618     1,332  
Total non-interest expense   7,540   4,967     26,050     18,271  
Income before taxes 1,251 (2,887 ) 1,099 (3,376 )
Applicable income tax (benefit)   329   (1,150 )   (307 )   (1,724 )
Net income (loss) $ 922 $ (1,737 ) $ 1,406   $ (1,652 )
 
Weighted average shares - basic 8,485 8,443 8,450 8,423
Weighted average shares - diluted 8,486 8,443 8,451 8,423
 
Basic earnings (loss) per share $ 0.11 $ (0.21 ) $ 0.17 $ (0.20 )
Diluted earnings (loss) per share 0.11 (0.21 ) 0.17 (0.20 )
Cash dividend declared per share 0.11 0.10 0.43 0.38
 
 
Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
      Year Ended
December 31,
  2010       2009  
Balance Sheet Data (at period end)
Total loans $ 418,997 $ 334,138
Allowance for loan losses 8,101 6,060
Intangible assets 2,912 1,571
Total assets 755,436 571,948
Non-interest bearing deposits 44,769 28,882
Interest bearing deposits 489,474 397,724
Federal home loan bank advances 62,500 42,500

Federal funds purchased and securities sold under agreement to repurchase
32,421 32,843
Stockholders' equity 119,340 60,817
-
Total shares outstanding 8,711 9,593
Less treasury shares   -     873  
Net shares outstanding   8,711     8,720  
 
Shares held by Heritage, MHC - 6,592
Unearned ESOP shares 492 203
 
Book value per share $ 14.52 $ 7.14
Tangible book value per share (non-GAAP) 14.17 6.96
Market value per share 12.42 8.65
 
 
Fourth Quarter Ended Year Ended
December 31, December 31,
  2010     2009     2010     2009  
Average Balance Sheet Data
Average interest bearing deposits in banks $ 10,910 $ 5,954 $ 26,075 $ 1,927
Average federal funds sold 11,181 21,607 17,472 21,102
Average investment securities 179,682 103,410 142,301 114,337
Average loans 419,572 305,694 379,461 299,390
Average mortgage loans held for sale 315 - 235 -
Average earning assets 621,660 436,665 565,544 436,756
Average assets 712,689 494,889 644,212 491,272
Average noninterest bearing deposits 49,612 23,208 41,446 20,875
Average interest bearing deposits 491,903 325,547 449,676 313,445
Average total deposits 541,515 348,755 491,122 334,320

Average federal funds purchased and securities sold under agreement to repurchase
35,234 33,827 34,097 40,113
Average Federal Home Loan Bank advances 44,435 42,572 42,984 47,268
Average interest bearing liabilities 571,572 401,946 526,757 400,826
Average stockholders' equity 83,154 63,067 67,383 63,084
 
Performance Ratios
Annualized return on average assets 0.52 % -1.40 % 0.22 % -0.34 %
Annualized return on average equity 4.44 % -11.02 % 2.09 % -2.62 %
Net interest margin 3.88 % 3.72 % 3.66 % 3.49 %
Net interest spread 3.78 % 3.57 % 3.55 % 3.31 %
Efficiency ratio 61.85 % 85.93 % 79.79 % 81.59 %
 
Capital Ratios
Average stockholders' equity to average assets 11.67 % 12.74 % 10.46 % 12.84 %
Tangible equity to tangible assets (non-GAAP) 15.47 % 10.39 % 15.47 % 10.39 %
Tier 1 leverage ratio 16.1 % 12.4 % 16.1 % 12.4 %
Tier 1 risk-based capital ratio 25.1 % 15.5 % 25.1 % 15.5 %
Total risk-based capital ratio 26.4 % 16.8 % 26.4 % 16.8 %
 
Other Information
Full-time equivalent employees 217 134 217 134
Number of full-service offices 16 10 16 10
 
 

 

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
    Five Quarter Comparison
  12/31/09       3/31/10       6/30/10       9/30/10       12/31/10
Income Statement Data

Interest income
Loans $ 4,834 $ 5,320 $ 5,763 $ 6,142 $ 6,584
Securities - taxable 682 776 790 1,006 923
Securities - nontaxable 292 298 239 212 211
Federal funds sold 14 9 18 11 7
Interest bearing deposits in banks   13     44     45     25     15
Total interest income   5,835     6,447     6,855     7,396     7,740

Interest expense
Deposits 1,422 1,524 1,512 1,631 1,092
Other borrowings   492     513     647     659     695
Total interest expense   1,914     2,037     2,159     2,290     1,787
Net interest income 3,921 4,410 4,696 5,106 5,953
Provision for loan losses   3,700     500     650     950     3,400
Net interest income after provision for loan losses   221     3,910     4,046     4,156     2,553

Non-interest income
Service charges on deposit accounts 950 824 982 1,112 1,194
Other service charges, fees & commissions 345 403 466 643 553
Brokerage fees 252 222 257 253 337
Mortgage origination fees 68 38 71 227 270
Bank owned life insurance 156 152 154 153 151
Life insurance proceeds - - - - 916
Gain (loss) on sale of securities 73 152 8 71 63
Bargain purchase gain - - - - 2,722
Other   15     21     17     19     32
Total non-interest income   1,859     1,812     1,955     2,478     6,238

Non-interest expense
Salaries and employee benefits 2,177 2,565 2,974 3,446 3,691
Equipment 225 255 252 304 320
Occupancy 297 306 329 424 452
Advertising & marketing 94 120 124 166 183
Legal & accounting 102 149 179 112 176
Consulting & other professional fees 74 71 66 71 156
Director fees & retirement 92 139 139 142 144
Telecommunications 70 69 103 132 213
Supplies 47 58 96 98 99
Data processing fees 461 481 511 604 594

(Gain) loss on sale and write-downs of other real estate owned
38 (231 ) (112 ) - 326
Foreclosed asset expenses 86 171 427 181 234
FDIC insurance and other regulatory fees 371 170 228 283 242
Impairment loss on premises held for sale 502 - - - -
Impairment loss on intangible assets - - - 1,000 -
Other operating   328     382     710     816     710
Total non-interest expense   4,964     4,705     6,026     7,779     7,540
Income (loss) before taxes (2,884 ) 1,017 (25 ) (1,145 ) 1,251
Applicable income tax (benefit)   (1,148 )   219     (153 )   (702 )   329
Net income (loss) $ (1,736 ) $ 798   $ 128   $ (443 ) $ 922
 
Weighted average shares - basic 8,421 8,445 8,469 8,493 8,485
Weighted average shares - diluted 8,421 8,445 8,471 8,495 8,486
 
Basic earnings (loss) per share $ (0.21 ) $ 0.09 $ 0.02 $ (0.05 ) $ 0.11
Diluted earnings (loss) per share (0.21 ) 0.09 0.02 (0.05 ) 0.11
Cash dividend declared per share 0.10 0.11 0.11 0.11 0.11
 
           

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
 
Five Quarter Comparison
  12/31/09     3/31/10     6/30/10     9/30/10     12/31/10  
Balance Sheet Data (at period end)
Total loans $ 334,138 $ 342,495 $ 388,737 $ 413,980 $ 418,997
Allowance for loan losses 6,060 5,816 6,027 6,534 8,101
Intangible assets 1,571 1,540 2,604 1,489 2,912
Total assets 571,948 574,363 661,876 683,324 755,436
Non-interest bearing deposits 28,882 28,375 46,221 48,014 44,769
Interest bearing deposits 397,724 400,028 469,491 487,378 489,474
Federal home loan bank advances 42,500 42,500 42,500 42,500 62,500

Federal funds purchased and securities sold under agreement to repurchase
32,843 32,778 33,954 35,092 32,421
Stockholders' equity 60,817 61,615 62,359 63,085 119,340
 
Total shares outstanding 9,595 9,595 9,595 9,595 8,711
Less treasury shares   884     884     885     885     -  
Net shares outstanding   8,711     8,711     8,710     8,710     8,711  
 
Unearned ESOP shares 203 194 184 175 492
 
Book value per share $ 7.15 $ 7.23 $ 7.31 $ 7.39 $ 14.52
Tangible book value per share (non-GAAP) 6.96 7.05 7.01 7.22 14.17
Market value per share 8.65 14.42 12.92 10.05 12.42
 
 
Five Quarter Comparison
  12/31/09     3/31/10     6/30/10     9/30/10     12/31/10  
Average Balance Sheet Data
Average interest bearing deposits in banks $ 5,954 $ 33,419 $ 37,193 $ 31,130 $ 10,910
Average federal funds sold 21,607 14,002 20,693 19,569 11,181
Average investment securities 103,410 117,578 115,370 129,841 179,682
Average loans 305,694 336,801 350,438 366,091 419,572
Average earning assets 436,665 501,800 523,694 546,631 621,345
Average assets 494,889 569,898 593,696 621,386 712,689
Average noninterest bearing deposits 23,208 29,171 33,957 38,724 49,612
Average interest bearing deposits 325,547 395,033 413,008 435,600 491,903
Average total deposits 348,755 424,204 446,965 474,324 541,515

Average federal funds purchased and securities sold under agreement to repurchase
33,827 33,048 33,273 33,718 35,234
Average Federal Home Loan Bank advances 42,572 42,500 42,500 42,500 44,435
Average interest bearing liabilities 401,946 470,581 488,781 511,818 571,572
Average stockholders' equity 63,067 61,145 61,699 62,126 83,154
 
Performance Ratios
Annualized return on average assets -1.40 % 0.56 % 0.62 % -0.29 % 0.52 %
Annualized return on average equity -7.28 % 5.22 % 6.00 % -2.85 % 4.44 %
Net interest margin 3.72 % 3.68 % 3.61 % 3.57 % 3.88 %
Net interest spread 3.57 % 3.57 % 3.50 % 3.46 % 3.78 %
Efficiency ratio 85.88 % 75.62 % 83.36 % 102.57 % 61.85 %
 
Capital Ratios
Average stockholders' equity to average assets 12.7 % 10.7 % 10.4 % 10.0 % 11.7 %
Tangible equity to tangible assets (non-GAAP) 10.4 % 10.5 % 9.2 % 9.0 % 15.5 %
Tier 1 leverage ratio 11.2 % 9.3 % 9.3 % 8.7 % 16.1 %
Tier 1 risk-based capital ratio 14.2 % 14.0 % 14.0 % 13.4 % 25.1 %
Total risk-based capital ratio 15.5 % 15.3 % 15.3 % 14.7 % 26.4 %
 
Other Information
Full-time equivalent employees 134 139 194 206 217
Number of full-service offices 10 10 16 16 16
 
           

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
 
Fourth Quarter Ended Year Ended
Total Portfolio December 31, December 31,
  2010     2009     2010     2009  
Loans by Type
Construction and land loans $ 24,522 $ 30,881 $ 24,522 $ 30,881
Farmland loans 19,314 15,129 19,314 15,129
Permanent 1 - 4 135,180 85,614 135,180 85,614
Permanent 1 - 4 - junior liens and revolving 26,424 24,459 26,424 24,459
Multifamily 13,612 12,153 13,612 12,153
Nonresidential 115,424 79,334 115,424 79,334
Commercial business loans 54,558 48,101 54,558 48,101
Consumer and other loans   29,963     38,467     29,963     38,467  
  418,997     334,138     418,997     334,138  
 
Asset Quality Data
Allowance for loan losses to total loans 1.93 % 1.81 % 1.93 % 1.81 %
Allowance for loan losses to average loans 1.93 % 1.98 % 2.13 % 2.02 %
Allowance for loan losses to non-performing loans 81.47 % 42.63 % 81.47 % 42.63 %
Accruing past due loans $ 2,499 $ 1,277 $ 2,499 $ 1,277
Nonaccrual loans 9,944 12,990 9,944 12,990
Loans - 90 days past due & still accruing - - - -
Total non-performing loans 9,944 14,216 9,944 14,216
OREO and repossessed assets 3,889 1,503 3,889 1,503
Total non-performing assets 13,833 15,719 13,833 15,719
Non-performing loans to total loans 2.37 % 2.66 % 2.37 % 4.25 %
Non-performing assets to total assets 1.83 % 1.63 % 1.83 % 2.75 %
Net charge-offs to average loans (annualized) 1.75 % 7.57 % 0.91 % 2.85 %
Net charge-offs $ 1,833 $ 5,667 $ 3,459 $ 6,390
 
 
Five Quarter Comparison
  12/31/09     3/31/10     6/30/10     9/30/10     12/31/10  
Loans by Type
Construction and land loans $ 30,881 $ 24,138 $ 25,326 $ 25,622 $ 24,522
Farmland loans 15,129 20,213 22,130 21,642 19,314
Permanent 1 - 4 85,614 92,122 114,614 129,002 135,180
Permanent 1 - 4 - junior liens and revolving 24,459 25,182 27,829 27,317 26,424
Multifamily 12,153 10,242 12,601 13,737 13,612
Nonresidential 79,334 88,283 103,755 112,163 115,424
Commercial business loans 48,101 47,014 47,728 51,292 54,558
Consumer and other loans   38,467     35,301     34,754     33,205     29,963  
  334,138     342,495     388,737     413,980     418,997  
 
Asset Quality Data
Allowance for loan losses to total loans 1.81 % 1.70 % 1.55 % 1.58 % 1.93 %
Allowance for loan losses to average loans 1.98 % 1.73 % 1.66 % 1.64 % 1.93 %
Allowance for loan losses to non-performing loans 71.61 % 89.23 % 80.21 % 53.56 % 81.47 %
Accruing past due loans $ 3,247 $ 1,810 $ 2,498 $ 899 $ 2,499
Nonaccrual loans 8,463 6,518 7,514 12,199 9,944
Loans - 90 days past due & still accruing - - - - -
Total non-performing loans 8,463 6,518 7,514 12,199 9,944
OREO and repossessed assets 1,795 3,567 3,019 2,787 3,889
Total non-performing assets 10,258 10,085 10,533 14,986 13,833
Non-performing loans to total loans 2.53 % 1.90 % 1.93 % 2.95 % 2.37 %
Non-performing assets to total assets 1.79 % 1.76 % 1.59 % 2.19 % 1.83 %
Net charge-offs to average loans (annualized) 7.42 % 0.88 % 0.48 % 0.45 % 1.75 %
Net charge-offs $ 5,667 $ 744 $ 439 $ 443 $ 1,833
 
           

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
 
Fourth Quarter Ended Year Ended
Core Portfolio December 31, December 31,
  2010     2009     2010     2009  
Loans by Type
Construction and land loans $ 22,426 $ 28,002 $ 22,426 $ 28,002
Farmland loans 11,775 9,013 11,775 9,013
Permanent 1 - 4 106,690 81,255 106,690 81,255
Permanent 1 - 4 - junior liens and revolving 20,909 17,313 20,909 17,313
Multifamily 10,770 11,650 10,770 11,650
Nonresidential 97,482 71,013 97,482 71,013
Commercial business loans 50,195 45,785 50,195 45,785
Consumer and other loans   25,274     34,981     25,274     34,981  
  345,521     299,012     345,521     299,012  
 
Asset Quality Data
Accruing past due loans $ 1,596 $ 1,277 $ 1,596 $ 1,277
Nonaccrual loans 8,092 12,990 8,092 12,990
Loans - 90 days past due & still accruing - - - -
Total non-performing loans 8,092 12,990 8,092 12,990
OREO and repossessed assets 3,653 898 3,653 898
Total non-performing assets 11,745 13,888 11,745 13,888
Non-performing loans to total loans 2.34 % 4.34 % 2.34 % 4.34 %
Net charge-offs $ 1,833 $ 5,667 $ 3,459 $ 6,390
 
 
Five Quarter Comparison
  12/31/09     3/31/10     6/30/10     9/30/10     12/31/10  
Loans by Type
Construction and land loans $ 28,002 $ 22,021 $ 22,030 $ 23,257 $ 22,426
Farmland loans 9,013 12,955 13,039 13,421 11,775
Permanent 1 - 4 81,255 87,552 89,888 96,709 106,690
Permanent 1 - 4 - junior liens and revolving 17,313 17,055 16,915 21,191 20,909
Multifamily 11,650 9,779 9,896 10,845 10,770
Nonresidential 71,013 80,887 80,436 95,854 97,482
Commercial business loans 45,785 44,440 42,903 42,377 50,195
Consumer and other loans   34,981     31,663     29,611     26,397     25,274  
  299,012     306,352     304,718     330,051     345,521  
 
Asset Quality Data
Accruing past due loans $ 1,826 $ 1,300 $ 369 $ 641 $ 1,596
Nonaccrual loans 7,237 6,441 7,450 10,854 8,092
Loans - 90 days past due & still accruing - - - - -
Total non-performing loans 7,237 6,441 7,450 10,854 8,092
OREO and repossessed assets 1,190 3,253 2,782 2,551 3,653
Total non-performing assets 8,427 9,694 10,232 13,405 11,745
Non-performing loans to total loans, excluding purchased 2.42 % 2.10 % 2.44 % 3.29 % 2.34 %
Net charge-offs $ 5,667 $ 744 $ 1,184 $ 1,626 $ 3,459
 
           

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
 
Fourth Quarter Ended Year Ended
Purchased Portfolio December 31, December 31,
  2010     2009     2010     2009  
Loans by Type
Construction and land loans $ 2,096 $ 2,879 $ 2,096 $ 2,879
Farmland loans 7,539 6,116 7,539 6,116
Permanent 1 - 4 28,490 4,359 28,490 4,359
Permanent 1 - 4 - junior liens and revolving 5,515 7,146 5,515 7,146
Multifamily 2,842 503 2,842 503
Nonresidential 17,942 8,321 17,942 8,321
Commercial business loans 4,363 2,316 4,363 2,316
Consumer and other loans   4,689     3,486     4,689     3,486  
  73,476     35,126     73,476     35,126  
 
Asset Quality Data
Accruing past due loans $ 903 $ 1,421 $ 903 $ 1,421
Nonaccrual loans 1,852 1,226 1,852 1,226
Loans - 90 days past due & still accruing 0 0 0 0
Total non-performing loans 1,852 1,226 1,852 1,226
OREO and repossessed assets 236 605 236 605
Total non-performing assets 2,088 1,831 2,088 1,831
Non-performing loans to total loans 2.52 % 3.49 % 2.52 % 3.49 %
Net charge-offs - - - -
 
 
Five Quarter Comparison
  12/31/09     3/31/10     6/30/10     9/30/10     12/31/10  
Loans by Type
Construction and land loans $ 2,879 $ 2,117 $ 3,296 $ 2,365 $ 2,096
Farmland loans 6,116 7,258 9,091 8,221 7,539
Permanent 1 - 4 4,359 4,570 24,726 32,293 28,490
Permanent 1 - 4 - junior liens and revolving 7,146 8,127 10,914 6,126 5,515
Multifamily 503 463 2,705 2,892 2,842
Nonresidential 8,321 7,396 23,319 16,309 17,942
Commercial business loans 2,316 2,574 4,825 8,915 4,363
Consumer and other loans   3,486     3,638     5,143     6,808     4,689  
  35,126     36,143     84,019     83,929     73,476  
 
Asset Quality Data
Accruing past due loans $ 1,421 $ 510 $ 2,129 $ 258 $ 903
Nonaccrual loans 1,226 77 64 1,345 1,852
Loans - 90 days past due & still accruing - - - - -
Total non-performing loans 1,226 77 64 1,345 1,852
OREO and repossessed assets 605 314 237 236 236
Total non-performing assets 1,831 391 301 1,581 2,088
Non-performing loans to total purchased loans 3.49 % 0.21 % 0.08 % 1.60 % 2.52 %
Net charge-offs - - - - -
 

Note:
Certain prior-period amounts have been reclassified to conform with current presentation.
For non-GAAP measures see reconciliation to closest GAAP measures contained in this press release.
Prior-period share and per share data have been adjusted to reflect the 0.8377:1 conversion ratio used in conjunction with the completion of the Company's second-step stock offering on November 30, 2010.
Core portfolio represents loans originated by the Company and participation loans. Purchased loans represent loans purchased by the Company in branch and FDIC-assisted acquisitions.
 

Copyright Business Wire 2010

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