Exhibits 99.1
* * GULF SOUTH BANK CONFERENCE O. Leonard DormineyChief Executive OfficerT. Heath FountainChief Financial Officer New Orleans, May 12 – 14, 2014
* Cautionary Statements This presentation contains forward-looking statements about future financial performance, business plans and strategies of Heritage Financial Group, Inc. Because forward-looking statements involve risks and uncertainties, actual results may differ materially from those expressed or implied. Investors are cautioned not to place undue reliance on these forward-looking statements and are advised to carefully review the discussion of forward-looking statements and risk factors in documents that the Company files with the Securities and Exchange Commission, including the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.
* Disclosures This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication is being made in respect of a proposed business combination transaction involving the Company and Alarion Financial Services, Inc. In connection with the proposed transaction, the Company will file with the SEC a registration statement on Form S-4 to register the shares of the Company's common stock issuable in the contemplated transactions. The registration statement will contain a proxy statement and prospectus to be distributed to the shareholders of Alarion in connection with their vote on the proposed transaction. Alarion will mail the final proxy statement and prospectus to its shareholders. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION REGARDING THE PROPOSED TRANSACTION, ALARION SHAREHOLDERS ARE URGED TO READ ALL FILINGS MADE BY THE COMPANY IN CONNECTION WITH THE TRANSACTION, INCLUDING THE REGISTRATION STATEMENT AND THE PROXY STATEMENT AND PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Copies of all documents filed with the SEC regarding this transaction may be obtained, free of charge, at the SEC's website (www.sec.gov) and by accessing the Company's website (www.eheritagebank.com) under the heading "Investors" and then under the link "SEC Filings." These documents may also be obtained free of charge from the Company by requesting them in writing to T. Heath Fountain, Executive Vice President and Chief Financial Officer, Heritage Financial Group, Inc., 721 North Westover Boulevard, Albany, Georgia 31707, or by telephone at (229) 878-2055. The directors, executive officers and certain other members of management and employees of the Company may be deemed to be participants in the solicitation of proxies in favor of the proposed transaction from the shareholders of Alarion. You can find information about the Company’s executive officers and directors in the Company’s most recent Annual Report on Form 10-K filed with the SEC on March 14, 2014, and its most recent definitive proxy statement filed with the SEC on April 18, 2013. The directors, executive officers and certain other members of management and employees of Alarion may also be deemed to be participants in the solicitation of proxies in favor of the proposed transaction from the shareholders of Alarion. Information about the directors and executive officers of Alarion will be included in the proxy statement and prospectus for the proposed transaction. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement and prospectus regarding the proposed transaction when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.
* Management Team Name Position Years in Banking Years with HBOS O. Leonard Dorminey Chief Executive Officer 35 13 T. Heath Fountain Chief Financial Officer 14 11 David A. Durland Chief Banking Officer 31 3 Carol W. Slappey Chief Retail Officer 39 20 O. Mitchell Smith Chief Credit Officer 37 9
* Market Footprint AL GA FL ALBANY OCALA LAKE CITY Banking (29)Mortgage (15)Investments (5) STATESBORO VALDOSTA BIRMINGHAM ATLANTA
* History and Expansion Activity Started as a credit union in Albany, GA in 19552001 to 2005 – converted to a bank, assembled a commercial banking team and built infrastructure for growth2005 – completed initial public offering selling 30% of the Company and raising $30 million in capital (MHC structure)2006 – de novo branch expansion in Florida2009 – FDIC-assisted acquisition in Georgia and branch acquisition in Florida2010 – purchase of five branches in Georgia and one de novo branch in Georgia $0 $755 million 1955 2010 $364 million 2005 Assets
* History and Expansion Activity 2010 – completed second step offering, becoming fully public and raising $60 million in capital primarily to accomplish the following:Expand through FDIC-assisted acquisitionsPurchase strategic branchesGrow internally in acquired markets and in de novo markets with management liftouts2011 – 2 FDIC-assisted acquisitions in Georgia2012 – De novo branch in Georgia and branch acquisition in Alabama 2012 – Hired a mortgage management team in Georgia2013 – FDIC-assisted acquisition in Alabama2014 – Definitive agreement to acquire Alarion Financial Services, Inc., the holding company for Alarion Bank $755million $1.4 billion 2010 2013 $1.1billion 2011 Assets
* Alarion Acquisition Company’s first open whole bank acquisitionSix branches in Ocala, Gainesville and Alachua, FloridaAcquiring $200 million in loans and $241 million in deposits15% accretive to 2014 EPSWill triple the number of HeritageBank of the South branches in North Central FloridaWill move our deposit market share into the top 10 in both Ocala and GainesvilleExisting mortgage banking operations fit nicely with our efforts to expand those services across our marketsSignificant cost saving opportunities expected from back office consolidationExpected to close in third quarter 2014
* Strategic Plan Pursue acquisition opportunitiesOpen bank acquisitions in Alabama, Georgia and FloridaIncludes metropolitan and rural marketsBranch acquisition opportunities Hire talented bankers in growth marketsDe novo branching when able to hire key commercial bankersSupplement banking teams in existing growth marketsExpand the mortgage origination line of business Hire originators with realtor relationships focused on purchases in Atlanta and branch footprintWholesale and correspondent lending
* Strategic Plan Continue organic loan growthImportant as we experience run off in our FDIC-acquired portfoliosOrganic growth of 35% in 2012, 17% in 2013 and on pace for double digit growth in 2014Commercial bankers have capacity to continue moving relationshipsEntered into new markets to sustain growthImprove operating efficiencyBranch networkBack office operationsEnhance and reinforce the HeritageBank cultureImportant as we bring in new team members from a variety of other banks with their own culture
* Acquisition Opportunities Many factors will lead to consolidation in the banking industryIncreased cost of compliance / regulatory burdenLimited growth opportunitiesExhausted boards and management teamsOver 420 banks in Georgia, Florida and AlabamaNearly 400 are under $1 billion About 20 banks between $500 - $750 million About 80 banks between $250 - $500 millionOver 250 banks under $250 millionLimited number of acquirers interested in smaller banks HBOS seeks to be a consolidator
* Mortgage Expansion August 2012 – hired an experienced, Atlanta-based management teamBuilding out platform and infrastructureRetail WholesaleCorrespondentQ1 2014 mix of 80% purchase / 20% refinance2013 originations of over $400 million Q1 2014 originations of $135 million2014 total production expected to exceed $800 million
* Improve Operating Efficiency Early retirement programs and closing of two branches in 2012 resulted in cost savings of $1.2 million per year starting in 2013Reduced Bank branch staffing by 9 FTE’s resulting in savings of approximately $460,000 per yearIn Q3 2013, closed two branches acquired in FDIC-assisted acquisition of Frontier BankFocused on improving efficiency in branch networkLeveraging our expense base through acquisition activity Ability to absorb acquisitions without the addition of management-level back office staff
* Internal Focus Creating and reinforcing the HeritageBank cultureStarted with a focus on improving operating efficiencyCurrent focus is to communicate more effectivelyEnhanced intranetPositive “can d0” attitudeMore frequent communicationSenior management committeeEngage all stakeholders in process improvementResolve differences directly
* Quarterly Financial Data 1Q13 2Q13 3Q13 4Q13 1Q14 Diluted Earnings per share $0.52 $0.36 $0.18 $0.45 $0.18 Dividends per share $ - * $ - * $ -* $ -* $0.07 Return on assets 1.37% 0.79% 0.40% 1.00% 0.39% Return on equity 13.01% 8.74% 4.41% 11.10% 4.26% Net interest margin 5.35% 4.78% 4.73% 5.50% 4.66% Efficiency ratio 80.22% 74.17% 82.29% 71.66% 84.20% Provision expense on core loans $450,000 $640,000 $350,000 $220,000 $65,000 *In December 2012, the Company paid a one-time special dividend of $0.20, equivalent to four quarterly payments at an increased rate of $0.05 per share, in lieu of regular quarterly dividends that would have been anticipated to be paid in 2013. The Company has announced it will resume paying cash dividends on a quarterly basis in 2014, beginning with $0.07 per share in February 2014.
* Investment Portfolio Breakdown Total Investments - $312.9 millionUnrealized Loss - $7.9 millionAverage Life – 4.9 years
* Total Deposits - $1.1 billion Solid Core Deposit Franchise
* Core Loan Portfolio Breakdown Core Loans - $702.6 millionYear over year growth of 16% Excludes loans acquired in FDIC-assisted acquisitions.
* Capital Ratios
* Core Commercial Real Estate Portfolio Breakdown Total Commercial Real Estate Loans - $262.8 millionOwner occupied 52% Non-owner occupied 48% Excludes loans acquired in FDIC-assisted acquisitions.
* Capacity for Growth
* Asset & Credit Quality Trends Excludes loans acquired in FDIC-assisted acquisitions. (dollars in millions)
* Loss Share Assets and Indemnification Asset (dollars in millions)
* Indemnification Asset Reduction (dollars in millions) Excludes the portion of the indemnification asset related to pending reimbursements.
* Total Return – Second Step Through May 7, 2014 Source: SNL Financial
* Key Investment Points Growth opportunitiesBranch and open bank opportunitiesOrganic loan growthAbility to attract and hire talented bankersMortgage expansionAcquirer with a proven ability to do dealsExperienced management Diversified loan portfolioSolid core deposit franchiseAbility to improve our operating efficiencyLaser focus on earnings
* * NASDAQ: HBOS