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

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8-K - HERITAGE FINANCIAL GROUP, INC. 8-K 1-26-2012 - Heritage Financial Group Inc	form8-k.htm

Exhibit 99

For additional information, contact:

T. Heath Fountain

Executive Vice President and

Chief Financial Officer

(229) 878-2055

HERITAGE FINANCIAL GROUP, INC. 2011 NET INCOME MORE THAN DOUBLES VERSUS 2010,
INCREASING TO $3.8 MILLION OR $0.47 PER DILUTED SHARE

FOURTH QUARTER NET INCOME UP 47% TO $1.4 MILLION OR $0.16 PER DILUTED SHARE

ALBANY, Ga. (January 26, 2012) – Heritage Financial Group, Inc. (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced unaudited financial results for the quarter and year ended December 31, 2011. Key aspects of the Company's results for the year ended 2011 include:

Net income of $3.8 million, or $0.47 per diluted share, compared with net income of $1.4 million or $0.17 per diluted share for the year ended 2010;

Excluding special items for each year, net income was $1.6 million or $0.19 per diluted share versus a net loss of $434,000 or $0.05 per diluted share for 2010 (see reconciliation of non-GAAP items);

Organic loan growth, excluding loans acquired in FDIC-assisted acquisitions, of $36.8 million or 9% from 2010;

Loans acquired through FDIC-assisted acquisitions increased $104.8 million or 490% from 2010, driven primarily by two FDIC-assisted acquisitions completed during 2011;

A decrease in the allowance for loan losses to 1.72% of period-end loans, excluding loans acquired in FDIC-assisted acquisitions, from 2.04% of period-end loans, excluding loans acquired in FDIC-assisted acquisitions, for 2010;

A slight increase in annualized net charge-offs to 0.91% for 2011 from 0.87% for 2010; and

A decline in nonperforming assets (NPAs) to total assets, excluding loans acquired in FDIC-assisted acquisitions, to 0.95% at year-end 2011 from 1.80% at year-end 2010.

Commenting on the results, Leonard Dorminey, President and Chief Executive Officer, said, "This past year marked a period of historic growth for our company as we completed two strategic FDIC-assisted acquisitions that vastly expanded our branch network and increased our market share in Southeast Georgia. We have fully integrated these acquisitions and continue to explore other opportunities for strategic expansion.

"During 2011, we saw a dramatic decrease in our provision expense as we continue to experience improvement in the credit quality in our loan portfolio, excluding loans acquired through FDIC-assisted acquisitions," Dorminey continued. "We are optimistic about the prospects for continued improvement in our financial performance in 2012."

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HBOS Reports Fourth Quarter 2011 Results

Page 2

January 26, 2012

Fourth Quarter 2011 Results of Operations

The Company reported net income of $1.4 million, or $0.16 per diluted share, for the three months ended December 31, 2011, compared with net income of $922,000 or $0.11 per diluted share for the three months ended December 31, 2010. This $430,000 improvement in earnings was primarily the result of the following items:

Improved net interest income of $3.3 million due to growth in interest-earning assets;

Lower provision expense of $2.8 million reflecting lower net charge-offs compared with the 2010 quarter; offset by

Reduced noninterest income of $3.1 million, reflecting a $2.7 million bargain purchase gain associated with the Tattnall FDIC-assisted acquisition and $916,000 of life insurance proceeds on a former key employee recorded during the 2010 quarter, partially offset by improvement in mortgage banking fees of $404,000; and

Increased non-interest expense of $3.0 million due to increased salaries and employment benefits of $2.1 million driven by the acquisition-related hiring of an additional 121 full-time equivalent employees, on top of growth in most other noninterest expense categories.

The Company's results for the three months ended December 31, 2011, included acquisition-related expenses, net of tax, of $177,000 and a $477,000 income tax benefit for state tax credits recorded as the Company returned to core profitability. Excluding special items, the Company would have reported net income of $1.1 million or $0.13 per diluted share for the fourth quarter of 2011 compared with a net loss of $1.6 million or $0.19 per diluted share in the fourth quarter of 2010 (see reconciliation of non-GAAP items).

Net interest income for the fourth quarter increased 55% to $9.2 million from $5.9 million in the year-earlier quarter, primarily reflecting an increase in interest-earning assets related to both acquisitions and organic growth. The Company's net interest margin for the fourth quarter of 2011 increased 75 basis points to 4.19% on a linked-quarter basis from 3.44% in the third quarter of 2011 and increased 31 basis points from 3.88% in the year-earlier period. The improvement in the fourth quarter of 2011 net interest margin on a linked-quarter basis was driven by an increase in loan yields on the Company's FDIC-assisted loan portfolios, coupled with a decline in the cost of interest bearing deposits as rates continue to reset to lower levels.

The Company's estimated total risk-based capital ratio at December 31, 2011, was 19.2%, 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 11.0% as of December 31, 2011.

In the fourth quarter of 2011, the Company continued to post organic and acquisition-related loan growth, increasing on a linked-quarter basis and advancing significantly compared with the year-earlier quarter. Still, bank acquisitions, including the Company's second and third whole-bank acquisitions in February 2011 and August 2011, respectively, accounted for much of the growth in loans and deposits over the past 12 months. At December 31, 2011, the Company's loan portfolio, including loans acquired through FDIC-assisted acquisitions, totaled $560.6 million, which was flat on a linked-quarter basis as a result of organic loan growth of $14.4 million, which offset loan pay-downs in the FDIC-assisted portfolios. Total deposits stood at $884.2 million at the end of the fourth quarter of 2011, down $15.9 million or 2% from $900.1 million at September 30, 2011, driven primarily by planned time deposit runoff.

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HBOS Reports Fourth Quarter 2011 Results

Page 3

January 26, 2012

Accounting for FDIC-Assisted Loans

The Company performs ongoing assessments of the estimated cash flows of its acquired FDIC-assisted loan portfolios. The fair value of the FDIC-assisted loan portfolios consist of $107.5 million in covered and $18.7 million in non-covered loans as of December 31, 2011, compared with $116.2 million in covered and $24.7 million in non-covered loans as of September 30, 2011. The principal balance of the FDIC-assisted loan portfolios totaled $228.4 million as of December 31, 2011, compared with $248.6 million as of September 30, 2011. The details of the accounting for the FDIC-assisted loan portfolios for the fourth quarter of 2011 are as follows:

Covered loans acquired in FDIC-assisted acquisitions decreased $8.7 million to $107.5 million;

Non-covered loans acquired in FDIC-assisted acquisitions decreased $6.0 million to $18.7 million;

The FDIC loss-share receivable associated with covered loans acquired in FDIC-assisted acquisitions decreased $3.9 million to $83.9 million;

The accretion for the FDIC loss-share receivable turned negative $72,000;

The non-accretable discount decreased $9.3 million to $89.5 million; and

The accretable discount increased $4.0 million to $12.8 million.

At December 31, 2011, covered and non-covered loans acquired in FDIC-assisted acquisitions decreased to $107.5 million and $18.7 million, respectively, on a linked-quarter basis from $116.2 million and $24.7 million, respectively, primarily driven by loan pay-downs. The net charge-offs for both the covered and non-covered loans were fully provided for by the associated loan discounts and expected reimbursement from the FDIC and did not affect the Company's loan loss reserve. The FDIC loss-share receivable associated with covered FDIC-assisted loans decreased $3.9 million from $87.8 million in the prior quarter to $83.9 million, driven by $3.2 million of reimbursements received from the FDIC.

The non-accretable discount decreased to $89.5 million at the end of the fourth quarter of 2011 from $98.8 million on a linked-quarter basis, primarily driven by net charge-offs in the FDIC-assisted loan portfolios and transfers to accretable discount. The accretable discount increased to $12.8 million for the current quarter from $8.8 million on a linked-quarter basis, primarily driven by transfers from accretable discount as a result of the improvement in cash flows received from the Company's FDIC-assisted loan portfolios. Moreover, the improvement in cash flows received also negatively affected the accretion for the loss-share receivable and turned it negative $72,000.

Asset Quality

Total nonperforming loans, excluding loans acquired in FDIC-assisted acquisitions, were $7.0 million at December 31, 2011, down from $8.0 million at September 30, 2011. Other real estate owned and repossessed assets, excluding assets acquired in FDIC-assisted acquisitions, were $3.4 million at December 31, 2011, up from $1.8 million at September 30, 2011, and primarily driven by the resolution process of moving nonperforming loans to foreclosure. Nonperforming loans to total loans, excluding loans acquired in FDIC-assisted acquisitions, decreased to 1.62% as of December 31, 2011, from 1.90% as of September 30, 2011. Net charge-offs to average outstanding loans, excluding loans acquired in FDIC-assisted acquisitions, on an annualized basis, were 0.04% for the fourth quarter of 2011 versus 0.73% for the third quarter of 2011, while the year-to-date net charge-offs were 0.91% as of December 31, 2011, versus 0.87% as of December 31, 2010.

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HBOS Reports Fourth Quarter 2011 Results

Page 4

January 26, 2012

The provision for loan losses decreased to $595,000 for the fourth quarter of 2011 from $1.0 million for the third quarter of 2011, driven primarily by a decrease in annualized net charge-offs. At December 31, 2011, the allowance for loan losses represented 1.72% of total loans outstanding, excluding loans acquired in FDIC-assisted acquisitions, versus 1.65% at September 30, 2011.

About Heritage Financial Group, Inc. and HeritageBank of the South

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 22 full-service branch locations, 11 mortgage offices, and 3 investment offices. As of December 31, 2011, the Company reported total assets of approximately $1.1 billion and total stockholders' equity of approximately $124 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.

Cautionary Note Regarding Forward Looking Statements

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. These statements can be identified by the fact that they do not relate strictly to historical or current facts and often use words or phrases "opportunities," "prospects," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "intends" or similar expressions. The forward-looking statements made herein represent the current expectations, plans or forecasts of the Company's future results and revenues. The Company intends 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. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond the Company's control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. Investors should not place undue reliance on any forward-looking statement and should consider the uncertainties and risks, discussed under Item 1A. "Risk Factors" of the Company's 2010 Annual Report on Form 10-K and in any of the Company's subsequent SEC filings. Further information concerning the Company and its business, including additional factors that could materially affect the Company's financial results, is included in its other filings with the SEC.

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HBOS Reports Fourth Quarter 2011 Results

Page 5

January 26, 2012

HERITAGE FINANCIAL GROUP, INC.

Unaudited Reconciliation of Non-GAAP Measures Presented in Earnings Release

(In thousands, except per share amounts)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2011			2010			2011			2010
Total noninterest income	$	3,172		$	6,238		$	17,467		$	12,483
Bargain purchase gain		--			(2,722	)		(4,217	)		(2,722	)
Life insurance proceeds		--			(916	)		--			(916	)
Adjusted noninterest income	$	3,172		$	2,600		$	13,250		$	8,845

Total noninterest expense	$	10,528		$	7,540		$	38,746		$	26,049
Acquisition related expense		(254	)		(103	)		(1,309	)		(627	)
Impairment of intangible asset (Florida bank charter)		--			--			--			(1,000	)
Adjusted noninterest expense	$	10,274		$	7,437		$	37,437		$	24,422


Net income as reported	$	1,352		$	922		$	3,825		$	1,406
Bargain purchase gain and acquisition related expense, net of tax*		177			(1,633	)		(2,259	)		(1,633	)
Life insurance proceeds, net of tax*		--			(916	)		--			(916	)
Impairment of intangible asset (Florida bank charter), net of tax*		--			--			--			709
Adjustment for state tax credits		(477	)		--			--			--
Adjusted net income (loss)	$	1,052		$	(1,627	)	$	1,566		$	(434	)

Diluted earnings per share	$	0.16		$	0.11		$	0.47		$	0.17
Bargain purchase gain and acquisition related expense, net of tax*		0.02			(0.19	)		(0.28	)		(0.19	)
Life insurance proceeds, net of tax *		--			(0.11	)		--			(0.11	)
Impairment of intangible asset (Florida bank charter), net of tax*		--			--			--			0.08
Adjustment for state tax credits		(0.05	)		--			--			--
Adjusted diluted earnings (loss) per share	$	0.13		$	(0.19	)	$	0.19		$	(0.05	)

* The effective tax rate is used for the period presented to determine net of tax amounts.

Net Income (Loss) and Diluted Earnings (Loss) Per Share are presented in accordance with Generally Accepted Accounting Principles (GAAP). Adjusted Noninterest Income, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) 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.

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HBOS Reports Fourth Quarter 2011 Results

Page 6

January 26, 2012

HERITAGE FINANCIAL GROUP, INC.

Unaudited Financial Highlights

(In thousands, except per share amounts)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2011			2010		2011		2010
Interest income	$	11,569		$	7,740	$	39,449	$	28,439
Interest expense		2,357			1,787		10,350		8,274
Net interest income		9,212			5,953		29,099		20,165
Provision for loan losses		595			3,400		2,895		5,500
Net interest income after provisionfor loan losses		8,617			2,553		26,204		14,665
Noninterest income		3,172			6,238		17,467		12,484
Noninterest expense		10,528			7,540		38,746		26,050
Income before income taxes		1,261			1,251		4,925		1,099
Income tax (benefit) expense		(91	)		329		1,100		(307	)
Net income	$	1,352		$	922	$	3,825	$	1,406
Net income per share:
Basic*	$	0.16		$	0.11	$	0.47	$	0.17
Diluted*	$	0.16		$	0.11	$	0.47	$	0.17
Weighted average shares outstanding:
Basic		8,229,293			8,485,215		8,211,302		8,424,394
Diluted		8,230,206			8,485,733		8,212,521		8,432,282
Dividends declared per share*	$	0.03		$	0.11	$	0.12	$	0.43

	Dec. 31, 2011		Sept 30, 2011		Dec. 31, 2010
Total assets	$	1,089,852	$	1,102,504	$	755,436
Cash and cash equivalents		34,521		23,292		28,803
Interest-bearing deposits in banks		43,101		99,211		10,911
Securities available for sale		259,017		218,384		238,377
Loans		560,620		560,940		418,997
Allowance for loan losses		7,494		6,936		8,101
Total deposits		884,187		900,103		534,243
Federal Home Loan Bank advances		35,000		35,000		62,500
Stockholders' equity		124,136		123,638		119,340

*	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.

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Heritage Financial Group, Inc.	Page 1 of 6
Fourth Quarter 2011 Earnings Release Supplement
(Unaudited)
(Dollars in thousands, except per share data)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2011			2010		2011			2010
Income Statement Data
Interest income
Loans	$	9,945		$	6,581	$	33,428		$	23,800
Loans held for sale		198			3		297			10
Securities - taxable		1,095			923		4,536			3,495
Securities - nontaxable		251			211		880			960
Federal funds sold		15			7		60			45
interest-bearing deposits in banks		65			15		248			129
Total interest income		11,569			7,740		39,449			28,439
Interest expense
Deposits		1,671			1,092		7,550			5,759
Other borrowings		686			695		2,800			2,515
Total interest expense		2,357			1,787		10,350			8,274
Net interest income		9,212			5,953		29,099			20,165
Provision for loan losses		595			3,400		2,895			5,500
Net interest income after provision for loan losses		8,617			2,553		26,204			14,665
Non-interest income
Service charges on deposit accounts		1,237			1,194		4,777			4,113
Other service charges, fees & commissions		879			553		3,034			2,064
Brokerage fees		298			337		1,386			1,070
Mortgage banking fees		674			270		2,285			606
Bank owned life insurance		148			151		588			610
Life insurance proceeds		-			916		32			916
Impairment loss on securities available for sale		(43	)		-		(43	)		-
Gain on sale of securities		18			63		684			294
Bargain purchase gain		-			2,722		4,217			2,722
Accretion of FDIC loss share receivable		(72	)		-		381			-
Other		33			32		126			88
Total non-interest income		3,172			6,238		17,467			12,483
Non-interest expense
Salaries and employee benefits		5,758			3,691		20,393			12,676
Equipment		701			320		1,996			1,131
Occupancy		613			452		2,279			1,512
Advertising & marketing		233			183		785			593
Legal & accounting		93			176		588			616
Consulting & other professional fees		131			156		716			364
Director fees & retirement		151			144		699			563
Telecommunications		274			213		829			517
Supplies		151			99		547			350
Data processing fees		856			594		2,846			2,190
(Gain) loss on sale and write-downsof other real estate owned		(119	)		326		388			(18	)
Foreclosed asset expenses		22			234		725			1,013
FDIC insurance and other regulatory fees		179			242		954			924
Impairment loss on intangible assets		-			-		-			1,000
Acquisition related expenses		254			103		1,309			627
Deposit Intangible expense		207			55		692			276
Other operating		1,024			552		3,000			1,715
Total non-interest expense		10,528			7,540		38,746			26,049
Income before taxes		1,261			1,251		4,925			1,099
Applicable income tax		(91	)		329		1,100			(307	)
Net income	$	1,352		$	922	$	3,825		$	1,406

Weighted average shares - basic		8,229,293			8,485,215		8,211,302			8,424,394
Weighted average shares - diluted		8,230,206			8,485,733		8,212,521			8,432,282

Basic earnings per share	$	0.16		$	0.11	$	0.47		$	0.17
Diluted earnings per share		0.16			0.11		0.47			0.17
Cash dividend declared per share		0.03			0.11		0.12			0.43

Heritage Financial Group, Inc.	Page 2 of 6
Fourth Quarter 2011 Earnings Release Supplement
(Unaudited)
(Dollars in thousands, except per share data)

	December 31,
	2011		2010
Balance Sheet Data (Ending Balance)
Total loans	$	560,620	$	418,997
Loans held for sale		7,471		225
Covered loans		107,457		-
Allowance for loan losses		7,494		8,101
Total foreclosed assets		13,441		3,689
Covered other real estate owned		10,084		-
FDIC loss-share receivable		83,901		-
Intangible assets		4,848		2,912
Total assets		1,089,852		755,436
Non-interest-bearing deposits		78,823		44,769
Interest-bearing deposits		805,364		489,474
Federal Home Loan Bank advances		35,000		62,500
Federal funds purchased and securities sold under agreement to repurchase		35,049		32,421
Stockholders' equity		124,136		119,340
Total shares outstanding		8,712,031		8,710,640

Unearned ESOP shares		439,138		492,320

Book value per share	$	15.01	$	14.52
Tangible book value per share (non-GAAP)		14.42		14.17
Market value per share		11.80		12.42

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2011			2010			2011			2010
Average Balance Sheet Data
Average interest-bearing deposits in banks	$	56,025		$	10,910		$	54,867		$	26,075
Average federal funds sold		22,805			11,181			23,563			17,472
Average investment securities		240,101			179,682			220,164			142,301
Average loans		559,556			419,572			512,956			379,461
Average mortgage loans held for sale		7,599			315			4,137			235
Average FDIC loss-share receivable		86,544			-			71,942			-
Average earning assets		886,086			621,660			815,687			565,544
Average assets		1,085,490			712,686			987,853			644,211
Average noninterest-bearing deposits		80,376			49,612			70,019			41,446
Average interest-bearing deposits		801,246			491,903			707,286			449,676
Average total deposits		881,622			541,515			777,305			491,122
Average federal funds purchased and securities sold under agreement to repurchase		36,621			35,234			33,383			34,097
Average Federal Home Loan Bank advances		35,000			44,435			46,473			42,984
Average interest-bearing liabilities		872,867			571,572			787,142			526,757
Average stockholders' equity		124,257			83,154			122,719			67,383

Performance Ratios
Annualized return on average assets		0.50	%		0.52	%		0.39	%		0.22	%
Annualized return on average equity		4.35	%		4.44	%		1.04	%		2.09	%
Net interest margin		4.19	%		3.88	%		3.62	%		3.66	%
Net interest spread		4.17	%		3.78	%		3.58	%		3.55	%
Efficiency ratio		85.01	%		61.85	%		83.21	%		79.79	%

Capital Ratios
Average stockholders' equity to average assets		11.4	%		11.7	%		12.4	%		10.5	%
Tangible equity to tangible assets (non-GAAP)		11.0	%		15.5	%		11.0	%		15.5	%
Tier 1 leverage ratio (1)		10.9	%		16.1	%		10.9	%		16.1	%
Tier 1 risk-based capital ratio (1)		18.0	%		25.1	%		18.0	%		25.1	%
Total risk-based capital ratio (1)		19.2	%		26.4	%		19.2	%		26.4	%

Other Information
Full-time equivalent employees		327			206			327			206
Number of full-service offices		22			16			22			16
Mortgage loan offices		11			1			11			1

(1) December 31, 2011 consolidated ratios are estimated and may be subject to change pending the filing of the call report; all other periods are presented as filed.

Heritage Financial Group, Inc.	Page 3 of 6
Fourth Quarter 2011 Earnings Release Supplement
(Unaudited)
(Dollars in thousands, except per share data)

	Five Quarter Comparison for the Three Months Ended
	12/31/11			9/30/11			6/30/11			3/31/11		12/31/10
Income Statement Data
Interest income
Loans	$	9,945		$	8,774		$	7,564		$	7,145	$	6,584
Loans held for sale		198			45			46			8		4
Securities - taxable		1,095			1,013			1,221			1,207		923
Securities - nontaxable		251			207			211			211		211
Federal funds sold		15			16			16			13		7
Interest-bearing deposits in banks		65			93			51			40		15
Total interest income		11,569			10,148			9,109			8,624		7,740
Interest expense
Deposits		1,671			2,048			1,983			1,848		1,092
Other borrowings		686			687			684			743		695
Total interest expense		2,357			2,735			2,667			2,591		1,787
Net interest income		9,212			7,413			6,442			6,033		5,953
Provision for loan losses		595			1,000			700			600		3,400
Net interest income after provision for loan losses		8,617			6,413			5,742			5,433		2,553
Non-interest income
Service charges on deposit accounts		1,237			1,267			1,222			1,051		1,194
Other service charges, fees & commissions		879			746			749			660		553
Brokerage fees		298			328			406			354		337
Mortgage banking fees		674			719			624			268		270
Bank owned life insurance		148			146			149			145		151
Life insurance proceeds		-			-			32			-		916
Gain on sale of securities		18			213			453			-		63
Bargain purchase gain		-			2,000			(117	)		2,334		2,722
Accretion of FDIC loss share receivable		(72	)		448			5			-		-
Other		33			25			37			29		32
Total non-interest income		3,215			5,892			3,560			4,841		6,238
Non-interest expense
Salaries and employee benefits		5,758			5,384			4,923			4,328		3,691
Equipment		701			516			428			351		320
Occupancy		613			685			536			445		452
Advertising & marketing		233			167			220			164		183
Legal & accounting		93			118			167			210		176
Consulting & other professional fees		131			208			198			179		156
Director fees & retirement		151			160			161			227		144
Telecommunications		274			206			204			145		213
Supplies		151			156			145			95		99
Data processing fees		856			857			615			518		594
(Gain) loss on sale and write-downs of other real estate owned		(119	)		(385	)		490			402		326
Foreclosed asset expenses		22			288			245			170		234
FDIC insurance and other regulatory fees		179			128			354			293		242
Impairment loss on intangible assets		-			-			-			-		-
Acquisition related expenses		254			299			474			282		103
Deposit intangible expense		207			183			207			95		55
Other operating		1,024			809			673			494		552
Total non-interest expense		10,528			9,779			10,040			8,398		7,540
Income (loss) before taxes		1,304			2,526			(738	)		1,876		1,251
Applicable income tax (benefit)		(91	)		786			(257	)		661		329
Net income (loss)	$	1,395			1,740			(481	)	$	1,215	$	922

Weighted average shares - basic		8,229,293			8,215,077			8,213,761			8,186,502		8,485,215
Weighted average shares - diluted		8,230,206			8,216,472			8,215,090			8,187,835		8,485,733

Basic earnings (loss) per share	$	0.17		$	0.21		$	(0.05	)	$	0.15	$	0.11
Diluted earnings (loss) per share		0.17			0.21			(0.05	)		0.15		0.11
Cash dividend declared per share		0.03			0.03			0.03			0.03		0.11

Heritage Financial Group, Inc.	Page 4 of 6
Fourth Quarter 2011 Earnings Release Supplement
(Unaudited)
(Dollars in thousands, except per share data)

	Five Quarter Comparison
	12/31/11		9/30/11		6/30/11		3/31/11		12/31/10
Balance Sheet Data (at period end)
Total loans	$	560,620		560,940		500,724	$	496,067	$	418,997
Loans held for sale		7,471		5,538		5,579		2,642		225
Covered loans		107,457		116,206		60,426		62,372		-
Allowance for loan losses		7,494		6,936		6,585		6,138		8,101
Total foreclosed assets		13,441		12,355		9,693		10,577		3,689
Covered other real estate owned		10,084		10,514		6,968		7,361		-
FDIC loss-share receivable		83,901		87,757		58,152		58,174		-
Intangible assets		4,848		5,056		4,388		4,713		2,912
Total assets		1,089,852		1,102,504		963,571		951,918		755,436
Non-interest-bearing deposits		78,823		84,716		73,382		63,134		44,769
Interest-bearing deposits		805,364		815,387		690,291		667,954		489,474
Federal home loan bank advances		35,000		35,000		35,000		60,000		62,500
Federal funds purchased and securities sold under agreement to repurchase		35,049		36,118		31,989		31,509		32,421
Stockholders' equity		124,136		123,638		122,038		121,331		119,340

Total shares outstanding		8,712,031		8,712,140		8,712,750		8,712,750		8,710,640

Unearned ESOP shares		439,138		452,348		465,673		478,996		492,320

Book value per share	$	15.01	$	14.97	$	14.80	$	14.74	$	14.52
Tangible book value per share (non-GAAP)		14.42		14.36		14.26		14.16		14.17
Market value per share		11.80		10.36		11.92		12.73		12.42

	Five Quarter Comparison
	12/31/11			9/30/11			6/30/11			3/31/11			12/31/10
Average Balance Sheet Data
Average interest-bearing deposits in banks	$	56,025		$	102,769		$	44,525		$	16,150		$	10,910
Average federal funds sold		22,805			26,889			20,447			24,111			11,181
Average investment securities		240,101			201,762			210,261			228,530			179,682
Average loans		559,556			533,487			501,929			456,851			419,572
Average mortgage loans held for sale		7,599			4,336			3,878			737			315
Average FDIC Loss-Share Receivable		86,544			71,942			58,149			58,174			-
Average earning assets		878,487			864,907			777,162			725,642			621,345
Average assets		1,085,490			1,040,575			966,962			858,398			712,689
Average noninterest-bearing deposits		80,376			76,940			70,346			52,414			49,612
Average interest-bearing deposits		801,246			761,344			680,424			586,129			491,903
Average total deposits		881,622			838,284			750,770			638,543			541,515
Average federal funds purchased and securities sold under agreement to repurchase		36,621			33,678			31,664			31,568			35,234
Average Federal Home Loan Bank advances		35,000			35,000			54,143			61,749			44,435
Average interest-bearing liabilities		872,867			830,022			766,231			679,446			571,572
Average stockholders' equity		124,257			123,844			122,528			120,248			83,154

Performance Ratios
Annualized return on average assets		0.51	%		0.67	%		-0.20	%		0.57	%		0.52	%
Annualized return on average equity		4.49	%		5.62	%		-1.57	%		4.04	%		4.44	%
Net interest margin		4.19	%		3.44	%		3.36	%		3.42	%		3.88	%
Net interest spread		4.17	%		3.38	%		3.34	%		3.32	%		3.78	%
Efficiency ratio		85.01	%		73.50	%		100.38	%		77.23	%		61.85	%

Capital Ratios
Average stockholders' equity to average assets		11.4	%		11.9	%		12.7	%		14.0	%		11.7	%
Tangible equity to tangible assets (non-GAAP)		11.0	%		10.8	%		12.3	%		12.3	%		15.5	%
Tier 1 leverage ratio		10.9	%		11.3	%		12.1	%		13.4	%		16.1	%
Tier 1 risk-based capital ratio		18.0	%		21.2	%		22.2	%		23.3	%		25.1	%
Total risk-based capital ratio		19.2	%		22.4	%		23.4	%		24.5	%		26.4	%

Other Information
Full-time equivalent employees		327			313			295			273			217
Number of full-service offices		22			23			21			20			16
Mortgage loan offices		11			11			10			5			1

Heritage Financial Group, Inc.	Page 5 of 6
Fourth Quarter 2011 Earnings Release Supplement
(Dollars in thousands)

	Twelve Months Ended December 31,
	12/31/11			12/31/10
Loans by Type
Construction and land loans	$	26,804		$	24,522
Farmland loans		17,921			12,339
Permanent 1 - 4		129,745			131,293
Permanent 1 - 4 - junior liens and revolving		26,154			26,091
Multifamily		15,797			13,598
Nonresidential		138,970			110,079
Commercial business loans		55,178			52,589
Consumer and other loans		23,872			27,115
		434,442			397,626
Loans acquired through FDIC-assisted acquisitions:
Non covered loans		18,721			21,371
Covered loans		107,457			-
		560,620			418,997

Asset Quality Data (excluding Loans acquired through FDIC-assisted acquisitions):
Allowance for loan losses to total loans		1.72	%		2.04	%
Allowance for loan losses to average loans		1.32	%		2.03	%
Allowance for loan losses to non-performing loans		106	%		81.79	%
Accruing past due loans	$	371		$	1,879
Nonaccrual loans		7,043			9,905
Loans - 90 days past due & still accruing		-			-
Total non-performing loans		7,043			9,905
OREO and repossessed assets		3,356			3,689
Total non-performing assets		10,399			13,594
Non-performing loans to total loans		1.62	%		2.49	%
Non-performing assets to total assets		0.95	%		1.80	%
QTD Net charge-offs to average loans (annualized)		0.04	%		1.84	%
Net charge-offs QTD	$	37		$	1,833

YTD Net charge-offs to average loans (annualized)		0.91	%		0.87	%
Net charge-offs YTD	$	3,502		$	3,459

Heritage Financial Group, Inc.	Page 6 of 6
Fourth Quarter 2011 Earnings Release Supplement
(Dollars in thousands)

	Five Quarter Comparison for the Quarter Ended
	12/31/11			9/30/11			6/30/11			3/31/11			12/31/10
Loans by Type
Construction and land loans	$	26,804		$	28,115		$	26,688		$	27,580		$	24,522
Farmland loans		17,921			18,272			13,276			13,707			12,339
Permanent 1 - 4		129,745			134,269			131,596			129,371			131,293
Permanent 1 - 4 - junior liens and revolving		26,154			26,071			26,140			25,642			26,091
Multifamily		15,797			13,754			12,755			12,110			13,598
Nonresidential		138,970			129,730			131,027			119,325			110,079
Commercial business loans		55,178			47,854			50,997			52,662			52,589
Consumer and other loans		23,872			21,955			23,592			25,046			27,115
		434,442			420,020			416,071			405,443			397,626

Loans acquired through FDIC-assisted acquisitions:
Non covered		18,721			24,713			24,227			28,252			21,371
Covered loans		107,457			116,206			60,427			62,372			-
		560,620			560,939			500,725			496,067			418,997

Asset Quality Data (excluding Loans acquired through FDIC-assisted acquisitions):
Allowance for loan losses to total loans		1.72	%		1.65	%		1.58	%		1.51	%		2.04	%
Allowance for loan losses to average loans		1.32	%		1.29	%		1.48	%		1.59	%		2.03	%
Allowance for loan losses to non-performing loans		106.40	%		86.76	%		76.67	%		67.63	%		81.79	%
Accruing past due loans	$	371		$	1,487		$	727		$	1,245		$	1,879
Nonaccrual loans		7,043			7,994			8,589			9,077			9,905
Loans - 90 days past due & still accruing		-			-			-			-			-
Total non-performing loans		7,043			7,994			8,589			9,077			9,905
OREO and repossessed assets		3,356			1,841			2,725			3,215			3,689
Total non-performing assets		10,399			9,835			11,314			12,292			13,594
Non-performing loans to total loans		1.62	%		1.90	%		2.06	%		2.24	%		2.49	%
Non-performing assets to total assets		0.95	%		0.89	%		1.17	%		1.29	%		1.80	%
Net charge-offs to average loans (annualized)		0.04	%		0.73	%		0.26	%		2.80	%		1.84	%
Net charge-offs	$	37		$	650		$	253		$	2,563		$	1,833

Note:

Certain prior-period amounts have been reclassified to conform with current presentation.

Prior period share and per share data have been adjusted for the 0.8377:1 conversion ratio in conjunction with the completion of the second step stock offering on November 30, 2010.

Loans acquired through FDIC-assisted acquisitions include loans acquired in the acquisition of The Tattnall Bank in December of 2009 and the acquisition of Citizens Bank of Effingham in February 2011 and First Southern National Bank in August 2011. The acquisition of The Tattnall Bank did not involve a loss-share agreement with the FDIC. The acquisition of Citizens Bank of Effingham involved a loss-share agreement in which the FDIC will, for a specified number of years, reimburse the Bank for 80% of all losses and related expenses on covered assets.

Heritage Financial Group Inc - FORM 8-K - EX-99 - EXHIBIT 99 - January 26, 2012

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