Heritage Financial Group Inc - FORM 8-K - EX-99 - EXHIBIT 99

Attached files

file	filename
8-K - HERITAGE FINANCIAL GROUP INC 8-K 2-7-2011 (4TH QTR EARNINGS) - Heritage Financial Group Inc	form8k.htm

EXHIBIT 99

For additional information, contact:

T. Heath Fountain

Senior Vice President and

Chief Financial Officer

(229) 878-2055

HERITAGE FINANCIAL GROUP, INC. REPORTS FOURTH QUARTER NET INCOME

OF $922,000 OR $0.11 PER DILUTED SHARE

ALBANY, Ga. (February 7, 2011) – 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.

-MORE-

HBOS Reports Fourth Quarter 2010 Results

Page 2

February 7, 2011

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.

-MORE-

HBOS Reports Fourth Quarter 2010 Results

Page 3

February 7, 2011

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.

-MORE-

HBOS Reports Fourth Quarter 2010 Results

Page 4

February 7, 2011

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.

-MORE-

HBOS Reports Fourth Quarter 2010 Results

Page 5

February 7, 2011

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.

-MORE-

HBOS Reports Fourth Quarter 2010 Results

Page 6

February 7, 2011

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.

-MORE-

HBOS Reports Fourth Quarter 2010 Results

Page 7

February 7, 2011

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.

-MORE-

Heritage Financial Group, Inc.

Page 1 of 7

Fourth Quarter 2010 Earnings Release Supplement

(Dollars in thousands)

	Fourth Quarter Ended					Year Ended
	December 31,					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.

Page 2 of 7

Fourth Quarter 2010 Earnings Release Supplement

(Dollars in thousands)

	Year Ended
	December 31,
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.

Page 3 of 7

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.

Page 4 of 7

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.

Page 5 of 7

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.

Page 6 of 7

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.

Page 7 of 7

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.

Heritage Financial Group Inc - FORM 8-K - EX-99 - EXHIBIT 99 - February 7, 2011

Attached files