Exhibit 99
| | For additional information, contact: |
| | T. Heath Fountain |
| | Executive Vice President and |
| | Chief Financial Officer |
| | (229) 878-2055 |
HERITAGE FINANCIAL GROUP, INC. REPORTS FIRST QUARTER NET INCOME OF
$1.0 MILLION OR $0.12 PER DILUTED SHARE
ALBANY, Ga. (April 30, 2012) – Heritage Financial Group, Inc. (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced unaudited financial results for the quarter ended March 31, 2012. Highlights of the Company's results for the first quarter 2012 include:
| | · | Net income of $1.0 million or $0.12 per diluted share compared with net income of $1.2 million or $0.15 per diluted share for the first quarter of 2011; |
| | · | Excluding special items for each quarter, net income was $1.2 million or $0.15 per diluted share for 2012 versus a net loss of $3,000 or $0.00 per diluted share for 2011 (see reconciliation of non-GAAP items); |
| | · | Organic loan growth, excluding loans acquired in FDIC-assisted acquisitions, of $44.2 million or 11% from 2011; |
| | · | Loans acquired through FDIC-assisted acquisitions increased $22.3 million or 25% from the first quarter of 2011; |
| | · | A decrease in provision for loan losses of $200,000 for the first quarter of 2012 compared with the same quarter for 2011; |
| | · | A significant decrease in annualized net charge-offs to 0.24% for the first quarter of 2012 from 2.80% for the first quarter of 2011; and |
| | · | A slight decline in nonperforming assets (NPAs) to total assets, excluding assets acquired in FDIC-assisted acquisitions, to 1.27% for 2012 from 1.29% for 2011. |
Commenting on the results, Leonard Dorminey, President and Chief Executive Officer, said, "During the first quarter of 2012, Heritage Financial Group continued to post improving results. Excluding the effects of special items associated with acquisitions, net income per diluted share increased to $0.15 for the first quarter of 2012 versus essentially flat earnings in the year-earlier quarter. Importantly, this improvement reflected both organic growth across most of our markets as well as the contribution of two FDIC-assisted acquisitions completed during 2011. With respect to acquisitions, we are pleased with our integration activities over the past year, which have been very successful, providing us with a sense of optimism about the prospects for seizing additional opportunities to expand in the months and years ahead."
Regarding expansion activity, Dorminey noted that the Company recently signed a definitive agreement to purchase a branch office in Auburn, Alabama, marking the Company's initial entry into that state. When completed, the purchase is expected to add approximately $13 million in loans and approximately $20 million in deposits. While this acquisition is small, we view the Auburn-Opelika area as one of the most attractive markets in the state of Alabama, characterized by low unemployment and a dynamic economic environment, and it is home to Auburn University and is in close proximity to two automobile manufacturing plants, along with their related suppliers in the area. The Company also recently announced that it will open a new commercial banking office in Macon, Georgia, after entering that market in August 2011 with a mortgage loan office. The Company considers Macon to be a strategically important and vibrant market and an attractive expansion opportunity.
HBOS Reports First Quarter 2012 Results
Page 2
April 30, 2012
During the first quarter, the Company also closed the single branch it acquired in Statesboro in connection with the August 2011 FDIC-assisted acquisition of First Southern National Bank. Management was pleased to see continued strong and loyal support from its new First Southern customers during and following this consolidation effort to improve efficiency and reduce costs.
In closing, Dorminey added, "We were pleased with our company's overall progress in the first quarter and consider it a solid start to the new year. Importantly, we saw meaningful improvements in credit quality and, thus, were able to reduce our provision for loan losses. While the first quarter did include some acquisition-related expenses associated with the closing of the First Southern office, it marked the beginning of a return to a more normalized level of noninterest expenses following two years of heightened expansion activity. Throughout the remainder of the year, we will continue to focus aggressively on efforts to reduce our operating expenses. We also are taking steps to enhance revenue through loan growth, as evidenced by our core portfolio growth and our entrance into the Auburn and Macon markets."
Capital Initiatives
The Company's estimated total risk-based capital ratio at March 31, 2012, was 22.2%, 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 11.2% as of March 31, 2012.
During the first quarter of 2012, the Company repurchased approximately 43,000 shares under its stock repurchase program. The program, which expires in July 2012 unless completed sooner or otherwise extended, has a remaining authorization to repurchase approximately 438,000 shares. Additionally, in February 2012, Heritage Financial Group's Board of Directors increased the Company's quarterly cash dividend 33% to $0.04 per share.
First Quarter 2012 Results of Operations
The Company reported net income of $1.0 million or $0.12 per diluted share for the first quarter in 2012 compared with net income of $1.2 million or $0.15 per diluted share for the first quarter in 2011. However, the Company's results for the first quarters of 2012 and 2011 included special items that affect comparability. Results for the first quarter of 2012 included acquisition-related expenses of $246,000 net of tax, while the results of the year-earlier quarter included a bargain purchase gain and acquisition-related expenses that together totaled $1.2 million net of tax. Excluding these special items, the Company's adjusted net income for the first quarter of 2012 was $1.2 million or $0.15 per diluted share compared with a net loss of $3,000 or $0.00 per diluted share for the first quarter of 2011 (see reconciliation of non-GAAP items).
The $244,000 quarter-over-quarter reduction in reported earnings was primarily the result of the following items:
| | · | Reduced noninterest income of $2.1 million, reflecting a $2.3 million bargain purchase gain associated with the Citizens FDIC-assisted acquisition during the first quarter of 2011 and $498,000 of negative accretion of the FDIC loss-share receivable during the first quarter of 2012, partially offset by improvement in mortgage banking fees of $421,000 and bankcard services income of $238,000; |
HBOS Reports First Quarter 2012 Results
Page 3
April 30, 2012
| | · | Increased noninterest expense of $2.4 million due to higher salaries and employment benefits of $1.2 million and increased equipment and occupancy expense of $528,000, driven by the acquisition-related hiring of an additional 51 full-time equivalent employees, as well as growth in most other noninterest expense categories; offset by |
| | · | Improved net interest income of $3.7 million due to growth in interest-earning assets and a reduction in the cost of interest-bearing deposits; and |
| | · | Lower provision expense of $200,000 reflecting lower net charge-offs compared with the 2011 quarter. |
Net interest income for the first quarter of 2012 increased 62% to $9.7 million from $6.0 million in the year-earlier quarter, primarily reflecting an increase in interest-earning assets related to both acquisitions and organic growth and a reduction in the cost of interest-bearing deposits. The Company's net interest margin for the first quarter of 2012 increased 30 basis points to 4.49% on a linked-quarter basis from 4.19% for the fourth quarter of 2011 and 107 basis points from 3.42% in the year-earlier period. The improvement in the first quarter of 2012 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.
In the first quarter of 2012, the Company continued to achieve loan growth, with its loan portfolio increasing $15.2 million organically on a linked-quarter basis and advancing $44.2 million overall compared with the year-earlier quarter. For the first quarter ended 2012, the Company's loan portfolio, including loans acquired through FDIC-assisted acquisitions, totaled $562.5 million, which increased $1.9 million on a linked-quarter basis as a result of organic loan growth of $15.2 million. This increase was partially offset by loan pay-downs in the FDIC-assisted portfolios. Total deposits stood at $868.7 million at the end of the first quarter of 2012, down 2% or $15.5 million from $884.2 million for the fourth quarter of 2011, driven primarily by planned runoff of time deposits.
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 consisted of $95.5 million in covered and $17.4 million in non-covered loans for the first quarter ended 2012 compared with $107.5 million in covered and $18.7 million in non-covered loans for the fourth quarter ended 2011. The principal balance of the FDIC-assisted loan portfolios totaled $209.8 million for the first quarter ended 2012 compared with $228.4 million as of the fourth quarter ended 2011. The details of the accounting for the FDIC-assisted loan portfolios for the first quarter of 2012 are as follows:
| | · | Covered loans acquired in FDIC-assisted acquisitions decreased $12.0 million to $95.5 million; |
| | · | Non-covered loans acquired in FDIC-assisted acquisitions decreased $1.3 million to $17.4 million; |
| | · | The FDIC loss-share receivable associated with covered loans acquired in FDIC-assisted acquisitions decreased $1.0 million to $82.9 million; |
| | · | The accretion for the FDIC loss-share receivable turned negative $498,000; |
| | · | The non-accretable discount decreased $5.4 million to $84.1 million; and |
| | · | The accretable discount decreased $100,000 to $12.7 million. |
HBOS Reports First Quarter 2012 Results
Page 4
April 30, 2012
For the first quarter ended 2012, net charge-offs for both the covered and non-covered loans were fully provided 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 $1.0 million from $83.9 million for the prior quarter to $82.9 million primarily, driven by negative accretion of $843,000 affecting the loss-share receivable asset that was associated with the improvement in expected cash flows of the loss-share performing portfolios.
The non-accretable discount decreased to $84.1 million at the end of the first quarter of 2012 from $89.5 million on a linked-quarter basis, primarily driven by the clearing of $3.9 million of discount in conjunction with the resolution of the FDIC-assisted loans and transfers to accretable discount of $1.5 million. The accretable discount decreased to $12.7 million for the current quarter from $12.8 million on a linked-quarter basis, primarily due to loan discount accretion of $1.6 million that was partially offset by the transfer from the non-accretable discount as a result of the improvement in cash flows.
Asset Quality
Net charge-offs to average outstanding loans on an annualized basis, excluding loans acquired in FDIC-assisted acquisitions, were down sharply to 0.24% for the first quarter of 2012 versus 2.80% for the first quarter of 2011. Total nonperforming loans, excluding loans acquired in FDIC-assisted acquisitions, were $10.7 million or 2.38% of total loans for the first quarter of 2012 compared with $9.1 million or 2.24% of total loans for the same quarter in 2011. Other real estate owned and repossessed assets, excluding assets acquired in FDIC-assisted acquisitions, were $3.0 million for the first quarter of 2012, down from $3.2 million for the same quarter in 2011.
The provision for loan losses decreased to $400,000 for the first quarter of 2012 from $600,000 for the same quarter in 2011, reflecting primarily a decline in annualized net charge-offs. For the first quarter in 2012, the allowance for loan losses represented 1.70% of total loans outstanding, excluding loans acquired in FDIC-assisted acquisitions, versus 1.51% for the first quarter in 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 21 full-service branch locations, 11 mortgage offices, and 3 investment offices. As of March 31, 2012, the Company reported total assets of approximately $1.1 billion and total stockholders' equity of approximately $125 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.
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HBOS Reports First Quarter 2012 Results
Page 5
April 30, 2012
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 includes 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 2011 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.
HBOS Reports First Quarter 2012 Results
Page 6
April 30, 2012
HERITAGE FINANCIAL GROUP, INC.
Unaudited Reconciliation of Non-GAAP Measures Presented in Earnings Release
(Dollars in thousands, except per share data)
| | | Three Months Ended March 31, | |
| | | | | | | |
| Total noninterest income | | $ | 2,783 | | | $ | 4,841 | |
| Bargain purchase gain | | | -- | | | | (2,334 | ) |
| Adjusted noninterest income | | $ | 2,783 | | | $ | 2,507 | |
| | | | | | | | | |
| Total noninterest expense | | $ | 10,801 | | | $ | 8,398 | |
| Acquisition-related expenses | | | (331 | ) | | | (282 | ) |
| Adjusted noninterest expense | | $ | 10,470 | | | $ | 8,116 | |
| | | | | | | | | |
| | | | | | | | | |
| Net income as reported | | $ | 971 | | | $ | 1,215 | |
| Bargain purchase gain and acquisition-related expenses, net of tax* | | | 246 | | | | (1,218 | ) |
| Adjusted net income (loss) | | $ | 1,217 | | | $ | (3 | ) |
| | | | | | | | | |
| Diluted earnings per share | | $ | 0.12 | | | $ | 0.15 | |
| Bargain purchase gain and acquisition-related expenses, net of tax* | | | 0.03 | | | | (0.15 | ) |
| Adjusted diluted earnings (loss) per share | | $ | 0.15 | | | $ | (0.00 | ) |
* 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 Noninterest Expense, 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.
HBOS Reports First Quarter 2012 Results
Page 7
April 30, 2012
HERITAGE FINANCIAL GROUP, INC.
Unaudited Financial Highlights
(Dollars in thousands, except per share data)
| | | Three Months Ended March 31, | |
| | | | | | | |
| Interest income | | $ | 11,659 | | | $ | 8,624 | |
| Interest expense | | | 1,935 | | | | 2,591 | |
| Net interest income | | | 9,724 | | | | 6,033 | |
| Provision for loan losses | | | 400 | | | | 600 | |
| Net interest income after provision for loan losses | | | 9,324 | | | | 5,433 | |
| Noninterest income | | | 2,783 | | | | 4,841 | |
| Noninterest expense | | | 10,801 | | | | 8,398 | |
| Income before income taxes | | | 1,306 | | | | 1,876 | |
| Income tax expense | | | 335 | | | | 661 | |
| Net income | | $ | 971 | | | $ | 1,215 | |
| Net income per share: | | | | | | | | |
| Basic | | $ | 0.12 | | | $ | 0.15 | |
| Diluted | | $ | 0.12 | | | $ | 0.15 | |
| Weighted average shares outstanding: | | | | | | | | |
| Basic | | | 8,144,382 | | | | 8,186,502 | |
| Diluted | | | 8,145,730 | | | | 8,187,835 | |
| Dividends declared per share | | $ | 0.04 | | | $ | 0.03 | |
| | | | | | | | | | |
| Total assets | | $ | 1,075,510 | | | $ | 1,089,852 | | | $ | 951,918 | |
| Cash and cash equivalents | | | 22,438 | | | | 34,521 | | | | 64,580 | |
| Interest-bearing deposits in banks | | | 47,174 | | | | 43,101 | | | | 21,800 | |
| Securities available for sale | | | 264,535 | | | | 259,017 | | | | 220,803 | |
| Loans | | | 562,495 | | | | 560,620 | | | | 496,067 | |
| Allowance for loan losses | | | 7,629 | | | | 7,494 | | | | 6,138 | |
| Total deposits | | | 868,743 | | | | 884,187 | | | | 731,088 | |
| Federal Home Loan Bank advances | | | 35,000 | | | | 35,000 | | | | 60,000 | |
| Stockholders' equity | | | 125,067 | | | | 124,136 | | | | 121,331 | |
Heritage Financial Group, Inc. | Page 1 of 6 |
| First Quarter 2012 Earnings Release Supplement | |
| (Unaudited) | |
| (Dollars in thousands, except per share data) | |
| | | Three Months Ended | |
| | | March 31, | |
| | | 2012 | | | 2011 | |
| Income Statement Data | | | | | | |
| Interest income | | | | | | |
| Loans | | $ | 10,147 | | | $ | 7,145 | |
| Loans held for sale | | | 182 | | | | 8 | |
| Securities - taxable | | | 979 | | | | 1,207 | |
| Securities - nontaxable | | | 299 | | | | 211 | |
| Federal funds sold | | | 15 | | | | 13 | |
| Interest-bearing deposits in banks | | | 37 | | | | 40 | |
| Total interest income | | | 11,659 | | | | 8,624 | |
| Interest expense | | | | | | | | |
| Deposits | | | 1,263 | | | | 1,848 | |
| Other borrowings | | | 672 | | | | 743 | |
| Total interest expense | | | 1,935 | | | | 2,591 | |
| Net interest income | | | 9,724 | | | | 6,033 | |
| Provision for loan losses | | | 400 | | | | 600 | |
| Net interest income after provision for loan losses | | | 9,324 | | | | 5,433 | |
| Non-interest income | | | | | | | | |
| Service charges on deposit accounts | | | 1,020 | | | | 1,051 | |
| Bankcard services income | | | 824 | | | | 586 | |
| Other service charges, fees & commissions | | | 85 | | | | 74 | |
| Brokerage fees | | | 446 | | | | 354 | |
| Mortgage banking fees | | | 689 | | | | 268 | |
| Bank owned life insurance | | | 140 | | | | 145 | |
| Gain on sale of securities | | | 42 | | | | - | |
| Bargain purchase gain | | | - | | | | 2,334 | |
| Accretion of FDIC loss-share receivable | | | (498 | ) | | | - | |
| Other | | | 35 | | | | 29 | |
| Total non-interest income | | | 2,783 | | | | 4,841 | |
| Non-interest expense | | | | | | | | |
| Salaries and employee benefits | | | 5,536 | | | | 4,328 | |
| Equipment | | | 667 | | | | 351 | |
| Occupancy | | | 657 | | | | 445 | |
| Advertising & marketing | | | 180 | | | | 164 | |
| Legal & accounting | | | 119 | | | | 210 | |
| Consulting & other professional fees | | | 119 | | | | 179 | |
| Director fees & retirement | | | 165 | | | | 227 | |
| Telecommunications | | | 231 | | | | 145 | |
| Supplies | | | 154 | | | | 95 | |
| Data processing fees | | | 821 | | | | 518 | |
| (Gain) loss on sale and write-downs of other real estate owned | | | (7 | ) | | | 402 | |
| Loss on sale and write-downs of FDIC acquired other real estate | | | 174 | | | | - | |
| Foreclosed asset expenses | | | 221 | | | | 170 | |
| Foreclosed FDIC acquired asset expenses | | | 162 | | | | - | |
| FDIC insurance and other regulatory fees | | | 245 | | | | 293 | |
| Acquisition related expenses | | | 331 | | | | 282 | |
| Deposit Intangible expense | | | 201 | | | | 95 | |
| Other operating | | | 825 | | | | 494 | |
| Total non-interest expense | | | 10,801 | | | | 8,398 | |
| Income before taxes | | | 1,306 | | | | 1,876 | |
| Applicable income tax | | | 335 | | | | 661 | |
| Net income | | $ | 971 | | | $ | 1,215 | |
| | | | | | | | | |
| Weighted average shares - basic | | | 8,144,382 | | | | 8,186,502 | |
| Weighted average shares - diluted | | | 8,145,730 | | | | 8,187,835 | |
| | | | | | | | | |
| Basic earnings per share | | $ | 0.12 | | | $ | 0.15 | |
| Diluted earnings per share | | | 0.12 | | | | 0.15 | |
| Cash dividend declared per share | | | 0.04 | | | | 0.03 | |
| Heritage Financial Group, Inc. | Page 2 of 6 |
| First Quarter 2012 Earnings Release Supplement | |
| (Unaudited) | |
| (Dollars in thousands, except per share data) | |
| | | March 31, | |
| | | 2012 | | | 2011 | |
| Balance Sheet Data (Ending Balance) | | | | | | |
| Total loans | | $ | 562,495 | | | $ | 496,067 | |
| Loans held for sale | | | 4,731 | | | | 2,642 | |
| Covered loans | | | 95,493 | | | | 62,372 | |
| Allowance for loan losses | | | 7,629 | | | | 6,138 | |
| Total foreclosed assets | | | 12,117 | | | | 10,577 | |
| Covered other real estate owned | | | 8,445 | | | | 7,361 | |
| FDIC loss-share receivable | | | 82,925 | | | | 58,174 | |
| Intangible assets | | | 4,647 | | | | 4,713 | |
| Total assets | | | 1,075,510 | | | | 951,918 | |
| Non-interest-bearing deposits | | | 88,582 | | | | 63,134 | |
| Interest-bearing deposits | | | 780,161 | | | | 667,954 | |
| Federal Home Loan Bank advances | | | 35,000 | | | | 60,000 | |
| Federal funds purchased and securities | | | | | | | | |
| sold under agreement to repurchase | | | 37,227 | | | | 31,509 | |
| Stockholders' equity | | | 125,067 | | | | 121,331 | |
| Total shares outstanding | | | 8,668,752 | | | | 8,712,750 | |
| | | | | | | | | |
| Unearned ESOP shares | | | 425,813 | | | | 478,996 | |
| | | | | | | | | |
| Book value per share | | $ | 15.17 | | | $ | 14.74 | |
| Tangible book value per share (non-GAAP) | | | 14.61 | | | | 14.16 | |
| Market value per share | | | 11.82 | | | | 12.73 | |
| | | Three Months Ended | |
| | | March 31, | |
| | | 2012 | | | 2011 | |
| Average Balance Sheet Data | | | | | | |
| Average interest-bearing deposits in banks | | $ | 37,999 | | | $ | 16,150 | |
| Average federal funds sold | | | 22,363 | | | | 24,111 | |
| Average investment securities | | | 257,863 | | | | 228,530 | |
| Average loans | | | 560,385 | | | | 456,851 | |
| Average mortgage loans held for sale | | | 4,550 | | | | 737 | |
| Average FDIC loss-share receivable | | | 84,017 | | | | 27,489 | |
| Average earning assets | | | 883,160 | | | | 726,379 | |
| Average assets | | | 1,074,260 | | | | 858,398 | |
| Average noninterest-bearing deposits | | | 84,920 | | | | 52,414 | |
| Average interest-bearing deposits | | | 784,944 | | | | 586,129 | |
| Average total deposits | | | 869,864 | | | | 638,543 | |
| Average federal funds purchased and securities | | | | | | | | |
| sold under agreement to repurchase | | | 33,822 | | | | 31,568 | |
| Average Federal Home Loan Bank advances | | | 35,000 | | | | 61,749 | |
| Average interest-bearing liabilities | | | 853,766 | | | | 679,446 | |
| Average stockholders' equity | | | 125,503 | | | | 120,248 | |
| | | | | | | | | |
| Performance Ratios | | | | | | | | |
| Annualized return on average assets | | | 0.36 | % | | | 0.57 | % |
| Annualized return on average equity | | | 3.09 | % | | | 4.04 | % |
| Net interest margin | | | 4.49 | % | | | 3.42 | % |
| Net interest spread | | | 4.46 | % | | | 3.32 | % |
| Efficiency ratio | | | 86.36 | % | | | 77.23 | % |
| | | | | | | | | |
| Capital Ratios | | | | | | | | |
| Average stockholders' equity to average assets | | | 11.7 | % | | | 14.0 | % |
| Tangible equity to tangible assets (non-GAAP) | | | 11.2 | % | | | 12.3 | % |
| Tier 1 leverage ratio (1) | | | 11.4 | % | | | 13.4 | % |
| Tier 1 risk-based capital ratio (1) | | | 21.0 | % | | | 23.3 | % |
| Total risk-based capital ratio (1) | | | 22.2 | % | | | 24.5 | % |
| | | | | | | | | |
| Other Information | | | | | | | | |
| Full-time equivalent employees | | | 324 | | | | 273 | |
| Number of full-service offices | | | 21 | | | | 20 | |
| Mortgage loan offices | | | 11 | | | | 5 | |
| Investment offices | | | 3 | | | | 2 | |
(1) March 31, 2012 consolidated ratios may be subject to change pending the filing of an amendment to our call report; all other periods are presented as filed.
| Heritage Financial Group, Inc. | Page 3 of 6 |
| First Quarter 2012 Earnings Release Supplement | |
| (Unaudited) | |
| (Dollars in thousands, except per share data) | |
| | | Five Quarter Comparison for the Three Months Ended | |
| | | 3/31/12 | | | 12/31/11 | | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | |
| Income Statement Data | | | | | | | | | | | | | | | |
| Interest income | | | | | | | | | | | | | | | |
| Loans | | $ | 10,147 | | | $ | 9,945 | | | $ | 8,774 | | | $ | 7,564 | | | $ | 7,145 | |
| Loans held for sale | | | 182 | | | | 198 | | | | 45 | | | | 46 | | | | 8 | |
| Securities - taxable | | | 979 | | | | 1,095 | | | | 1,013 | | | | 1,221 | | | | 1,207 | |
| Securities - nontaxable | | | 299 | | | | 251 | | | | 207 | | | | 211 | | | | 211 | |
| Federal funds sold | | | 15 | | | | 15 | | | | 16 | | | | 16 | | | | 13 | |
| Interest-bearing deposits in banks | | | 37 | | | | 65 | | | | 93 | | | | 51 | | | | 40 | |
| Total interest income | | | 11,659 | | | | 11,569 | | | | 10,148 | | | | 9,109 | | | | 8,624 | |
| Interest expense | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | 1,263 | | | | 1,671 | | | | 2,048 | | | | 1,983 | | | | 1,848 | |
| Other borrowings | | | 672 | | | | 686 | | | | 687 | | | | 684 | | | | 743 | |
| Total interest expense | | | 1,935 | | | | 2,357 | | | | 2,735 | | | | 2,667 | | | | 2,591 | |
| Net interest income | | | 9,724 | | | | 9,212 | | | | 7,413 | | | | 6,442 | | | | 6,033 | |
| Provision for loan losses | | | 400 | | | | 595 | | | | 1,000 | | | | 700 | | | | 600 | |
| Net interest income after provision for loan losses | | | 9,324 | | | | 8,617 | | | | 6,413 | | | | 5,742 | | | | 5,433 | |
| Non-interest income | | | | | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 1,020 | | | | 1,237 | | | | 1,267 | | | | 1,222 | | | | 1,051 | |
| Bankcard services income | | | 824 | | | | 691 | | | | 684 | | | | 674 | | | | 586 | |
| Other service charges, fees & commissions | | | 85 | | | | 188 | | | | 62 | | | | 75 | | | | 74 | |
| Brokerage fees | | | 446 | | | | 298 | | | | 328 | | | | 406 | | | | 354 | |
| Mortgage banking fees | | | 689 | | | | 674 | | | | 719 | | | | 624 | | | | 268 | |
| Bank owned life insurance | | | 140 | | | | 148 | | | | 146 | | | | 149 | | | | 145 | |
| Life insurance proceeds | | | - | | | | - | | | | - | | | | 32 | | | | - | |
| Gain on sale of securities | | | 42 | | | | 18 | | | | 213 | | | | 453 | | | | - | |
| Bargain purchase gain | | | - | | | | - | | | | 2,000 | | | | (117 | ) | | | 2,334 | |
| Accretion of FDIC loss-share receivable | | | (498 | ) | | | (72 | ) | | | 448 | | | | 5 | | | | - | |
| Other | | | 35 | | | | 33 | | | | 25 | | | | 37 | | | | 29 | |
| Total non-interest income | | | 2,783 | | | | 3,215 | | | | 5,892 | | | | 3,560 | | | | 4,841 | |
| Non-interest expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 5,536 | | | | 5,758 | | | | 5,384 | | | | 4,923 | | | | 4,328 | |
| Equipment | | | 667 | | | | 701 | | | | 516 | | | | 428 | | | | 351 | |
| Occupancy | | | 657 | | | | 613 | | | | 685 | | | | 536 | | | | 445 | |
| Advertising & marketing | | | 180 | | | | 233 | | | | 167 | | | | 220 | | | | 164 | |
| Legal & accounting | | | 119 | | | | 93 | | | | 118 | | | | 167 | | | | 210 | |
| Consulting & other professional fees | | | 119 | | | | 131 | | | | 208 | | | | 198 | | | | 179 | |
| Director fees & retirement | | | 165 | | | | 151 | | | | 160 | | | | 161 | | | | 227 | |
| Telecommunications | | | 231 | | | | 274 | | | | 206 | | | | 204 | | | | 145 | |
| Supplies | | | 154 | | | | 151 | | | | 156 | | | | 145 | | | | 95 | |
| Data processing fees | | | 821 | | | | 856 | | | | 857 | | | | 615 | | | | 518 | |
| (Gain) loss on sale and write-downs of other real estate owned | | | (7 | ) | | | (27 | ) | | | (139 | ) | | | 535 | | | | 402 | |
Loss (gain) on sale and write-downs of FDIC acquired other real estate | | | 174 | | | | (92 | ) | | | (246 | ) | | | (45 | ) | | | - | |
| Foreclosed asset expenses | | | 221 | | | | 22 | | | | 216 | | | | 244 | | | | 170 | |
| Foreclosed FDIC acquired asset expenses | | | 162 | | | | 118 | | | | 72 | | | | 1 | | | | - | |
| FDIC insurance and other regulatory fees | | | 245 | | | | 179 | | | | 128 | | | | 354 | | | | 293 | |
| Acquisition related expenses | | | 331 | | | | 254 | | | | 299 | | | | 474 | | | | 282 | |
| Deposit intangible expense | | | 201 | | | | 207 | | | | 183 | | | | 207 | | | | 95 | |
| Other operating | | | 825 | | | | 906 | | | | 809 | | | | 673 | | | | 494 | |
| Total non-interest expense | | | 10,801 | | | | 10,528 | | | | 9,779 | | | | 10,040 | | | | 8,398 | |
| Income (loss) before taxes | | | 1,306 | | | | 1,304 | | | | 2,526 | | | | (738 | ) | | | 1,876 | |
| Applicable income tax (benefit) | | | 335 | | | | (91 | ) | | | 786 | | | | (257 | ) | | | 661 | |
| Net income (loss) | | $ | 971 | | | $ | 1,395 | | | $ | 1,740 | | | $ | (481 | ) | | $ | 1,215 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average shares - basic | | | 8,144,382 | | | | 8,229,293 | | | | 8,215,077 | | | | 8,213,761 | | | | 8,186,502 | |
| Weighted average shares - diluted | | | 8,145,730 | | | | 8,230,206 | | | | 8,216,472 | | | | 8,215,090 | | | | 8,187,835 | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic earnings (loss) per share | | $ | 0.12 | | | $ | 0.17 | | | $ | 0.21 | | | $ | (0.05 | ) | | $ | 0.15 | |
| Diluted earnings (loss) per share | | | 0.12 | | | | 0.17 | | | | 0.21 | | | | (0.05 | ) | | | 0.15 | |
| Cash dividend declared per share | | | 0.04 | | | | 0.03 | | | | 0.03 | | | | 0.03 | | | | 0.03 | |
| | | | | | | | | | | | | | | | | | | | | |
| Heritage Financial Group, Inc. | Page 4 of 6 |
| First Quarter 2012 Earnings Release Supplement | |
| (Unaudited) | |
| (Dollars in thousands, except per share data) | |
| | | Five Quarter Comparison | |
| | | 3/31/12 | | | 12/31/11 | | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | |
| Balance Sheet Data (at period end) | | | | | | | | | | | | | | | |
| Total loans | | $ | 562,495 | | | $ | 560,620 | | | $ | 560,940 | | | $ | 500,724 | | | $ | 496,067 | |
| Loans held for sale | | | 4,731 | | | | 7,471 | | | | 5,538 | | | | 5,579 | | | | 2,642 | |
| Covered loans | | | 95,493 | | | | 107,457 | | | | 116,206 | | | | 60,426 | | | | 62,372 | |
| Allowance for loan losses | | | 7,629 | | | | 7,494 | | | | 6,936 | | | | 6,585 | | | | 6,138 | |
| Total foreclosed assets | | | 12,117 | | | | 13,441 | | | | 12,355 | | | | 9,693 | | | | 10,577 | |
| Covered other real estate owned | | | 8,445 | | | | 10,084 | | | | 10,514 | | | | 6,968 | | | | 7,361 | |
| FDIC loss-share receivable | | | 82,925 | | | | 83,901 | | | | 87,757 | | | | 58,152 | | | | 58,174 | |
| Intangible assets | | | 4,647 | | | | 4,848 | | | | 5,056 | | | | 4,388 | | | | 4,713 | |
| Total assets | | | 1,075,510 | | | | 1,089,852 | | | | 1,102,504 | | | | 963,571 | | | | 951,918 | |
| Non-interest-bearing deposits | | | 88,582 | | | | 78,823 | | | | 84,716 | | | | 73,382 | | | | 63,134 | |
| Interest-bearing deposits | | | 780,161 | | | | 805,364 | | | | 815,387 | | | | 690,291 | | | | 667,954 | |
| Federal home loan bank advances | | | 35,000 | | | | 35,000 | | | | 35,000 | | | | 35,000 | | | | 60,000 | |
| Federal funds purchased and securities | | | | | | | | | | | | | | | | | | | | |
| sold under agreement to repurchase | | | 37,227 | | | | 35,049 | | | | 36,118 | | | | 31,989 | | | | 31,509 | |
| Stockholders' equity | | | 125,067 | | | | 124,136 | | | | 123,638 | | | | 122,038 | | | | 121,331 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total shares outstanding | | | 8,668,752 | | | | 8,712,031 | | | | 8,712,140 | | | | 8,712,750 | | | | 8,712,750 | |
| | | | | | | | | | | | | | | | | | | | | |
| Unearned ESOP shares | | | 425,813 | | | | 439,138 | | | | 452,348 | | | | 465,673 | | | | 478,996 | |
| | | | | | | | | | | | | | | | | | | | | |
| Book value per share | | $ | 15.17 | | | $ | 15.01 | | | $ | 14.97 | | | $ | 14.80 | | | $ | 14.74 | |
| Tangible book value per share (non-GAAP) | | | 14.61 | | | | 14.42 | | | | 14.36 | | | | 14.26 | | | | 14.16 | |
| Market value per share | | | 11.82 | | | | 11.80 | | | | 10.36 | | | | 11.92 | | | | 12.73 | |
| | | Five Quarter Comparison | |
| | | 3/31/12 | | | 12/31/11 | | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | |
| Average Balance Sheet Data | | | | | | | | | | | | | | | |
| Average interest-bearing deposits in banks | | $ | 37,999 | | | $ | 56,025 | | | $ | 102,769 | | | $ | 44,525 | | | $ | 16,150 | |
| Average federal funds sold | | | 22,363 | | | | 22,805 | | | | 26,889 | | | | 20,447 | | | | 24,111 | |
| Average investment securities | | | 257,863 | | | | 240,101 | | | | 201,762 | | | | 210,261 | | | | 228,530 | |
| Average loans | | | 560,385 | | | | 559,556 | | | | 533,487 | | | | 501,929 | | | | 456,851 | |
| Average mortgage loans held for sale | | | 4,550 | | | | 7,599 | | | | 4,336 | | | | 3,878 | | | | 737 | |
| Average FDIC Loss-Share Receivable | | | 84,017 | | | | 86,544 | | | | 71,942 | | | | 58,149 | | | | 27,489 | |
| Average earning assets | | | 883,160 | | | | 878,487 | | | | 864,907 | | | | 777,162 | | | | 725,642 | |
| Average assets | | | 1,074,260 | | | | 1,085,490 | | | | 1,040,575 | | | | 966,962 | | | | 858,398 | |
| Average noninterest-bearing deposits | | | 84,920 | | | | 80,376 | | | | 76,940 | | | | 70,346 | | | | 52,414 | |
| Average interest-bearing deposits | | | 784,944 | | | | 801,246 | | | | 761,344 | | | | 680,424 | | | | 586,129 | |
| Average total deposits | | | 869,864 | | | | 881,622 | | | | 838,284 | | | | 750,770 | | | | 638,543 | |
| Average federal funds purchased and securities | | | | | | | | | | | | | | | | | | | | |
| sold under agreement to repurchase | | | 33,822 | | | | 36,621 | | | | 33,678 | | | | 31,664 | | | | 31,568 | |
| Average Federal Home Loan Bank advances | | | 35,000 | | | | 35,000 | | | | 35,000 | | | | 54,143 | | | | 61,749 | |
| Average interest-bearing liabilities | | | 853,766 | | | | 872,867 | | | | 830,022 | | | | 766,231 | | | | 679,446 | |
| Average stockholders' equity | | | 125,503 | | | | 124,257 | | | | 123,844 | | | | 122,528 | | | | 120,248 | |
| | | | | | | | | | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | 0.36 | % | | | 0.51 | % | | | 0.67 | % | | | -0.20 | % | | | 0.57 | % |
| Annualized return on average equity | | | 3.09 | % | | | 4.49 | % | | | 5.62 | % | | | -1.57 | % | | | 4.04 | % |
| Net interest margin | | | 4.49 | % | | | 4.19 | % | | | 3.44 | % | | | 3.36 | % | | | 3.42 | % |
| Net interest spread | | | 4.46 | % | | | 4.17 | % | | | 3.38 | % | | | 3.34 | % | | | 3.32 | % |
| Efficiency ratio | | | 86.36 | % | | | 85.01 | % | | | 73.50 | % | | | 100.38 | % | | | 77.23 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Capital Ratios | | | | | | | | | | | | | | | | | | | | |
| Average stockholders' equity to average assets | | | 11.7 | % | | | 11.4 | % | | | 11.9 | % | | | 12.7 | % | | | 14.0 | % |
| Tangible equity to tangible assets (non-GAAP) | | | 11.2 | % | | | 11.0 | % | | | 10.8 | % | | | 12.3 | % | | | 12.3 | % |
| Tier 1 leverage ratio | | | 11.4 | % | | | 11.2 | % | | | 11.3 | % | | | 12.1 | % | | | 13.4 | % |
| Tier 1 risk-based capital ratio | | | 21.0 | % | | | 21.2 | % | | | 21.2 | % | | | 22.2 | % | | | 23.3 | % |
| Total risk-based capital ratio | | | 22.2 | % | | | 22.4 | % | | | 22.4 | % | | | 23.4 | % | | | 24.5 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Other Information | | | | | | | | | | | | | | | | | | | | |
| Full-time equivalent employees | | | 324 | | | | 327 | | | | 313 | | | | 295 | | | | 273 | |
| Number of full-service offices | | | 21 | | | | 22 | | | | 23 | | | | 21 | | | | 20 | |
| Mortgage loan offices | | | 11 | | | | 11 | | | | 11 | | | | 10 | | | | 5 | |
| Investment offices | | | 3 | | | | 3 | | | | 3 | | | | 2 | | | | 2 | |
| Heritage Financial Group, Inc. | Page 5 of 6 |
| First Quarter 2012 Earnings Release Supplement | |
| (Dollars in thousands) | |
| | | Three Months Ended | |
| | | March 31, | |
| | | 2012 | | | 2011 | |
| Loans by Type | | | | | | |
| Construction and land loans | | $ | 24,375 | | | $ | 27,580 | |
| Farmland loans | | | 17,150 | | | | 13,707 | |
| Permanent 1 - 4 | | | 132,172 | | | | 129,371 | |
| Permanent 1 - 4 - junior liens and revolving | | | 25,220 | | | | 25,642 | |
| Multifamily | | | 18,577 | | | | 12,110 | |
| Nonresidential | | | 150,492 | | | | 119,325 | |
| Commercial business loans | | | 59,697 | | | | 52,662 | |
| Consumer and other loans | | | 21,935 | | | | 25,046 | |
| | | | 449,618 | | | | 405,443 | |
| Loans acquired through FDIC-assisted acquisitions: | | | | | | | | |
| Non covered loans | | | 17,384 | | | | 28,252 | |
| Covered loans | | | 95,493 | | | | 62,372 | |
| | | | 562,495 | | | | 496,067 | |
| | | | | | | | | |
| OREO | | | 2,992 | | | | 2,659 | |
| | | | | | | | | |
| OREO assets acquired through FDIC-assisted acquisitions: | | | | | | | | |
| Non Covered | | | 680 | | | | 556 | |
| Covered | | | 8,445 | | | | - | |
| | | | 12,117 | | | | 3,215 | |
| | | | | | | | | |
| Asset Quality Data (excluding assets acquired through FDIC-assisted acquisitions): | | | | | | | | |
| Allowance for loan losses to total loans | | | 1.70 | % | | | 1.51 | % |
| Allowance for loan losses to average loans | | | 1.35 | % | | | 1.59 | % |
| Allowance for loan losses to non-performing loans | | | 71.42 | % | | | 67.63 | % |
| Accruing past due loans | | $ | 452 | | | $ | 1,245 | |
| Nonaccrual loans | | | 10,681 | | | | 9,077 | |
| Loans - 90 days past due & still accruing | | | - | | | | - | |
| Total non-performing loans | | | 10,681 | | | | 9,077 | |
| OREO and repossessed assets | | | 2,992 | | | | 3,215 | |
| Total non-performing assets | | | 13,673 | | | | 12,292 | |
| Non-performing loans to total loans | | | 2.38 | % | | | 2.24 | % |
| Non-performing assets to total assets | | | 1.27 | % | | | 1.29 | % |
| QTD Net charge-offs to average loans (annualized) | | | 0.24 | % | | | 2.80 | % |
| Net charge-offs QTD | | $ | 265 | | | $ | 2,563 | |
| | | | | | | | | |
| Heritage Financial Group, Inc. | Page 6 of 6 |
| First Quarter 2012 Earnings Release Supplement | |
| (Dollars in thousands) | |
| | | Five Quarter Comparison for the Quarter Ended | |
| | | 3/31/12 | | | 12/31/11 | | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | |
| Loans by Type | | | | | | | | | | | | | | | |
| Construction and land loans | | $ | 24,375 | | | $ | 26,804 | | | $ | 28,115 | | | $ | 26,688 | | | $ | 27,580 | |
| Farmland loans | | | 17,150 | | | | 17,921 | | | | 18,272 | | | | 13,276 | | | | 13,707 | |
| Permanent 1 - 4 | | | 132,172 | | | | 129,745 | | | | 134,269 | | | | 131,596 | | | | 129,371 | |
| Permanent 1 - 4 - junior liens and revolving | | | 25,220 | | | | 26,154 | | | | 26,071 | | | | 26,140 | | | | 25,642 | |
| Multifamily | | | 18,577 | | | | 15,797 | | | | 13,754 | | | | 12,755 | | | | 12,110 | |
| Nonresidential | | | 150,492 | | | | 138,970 | | | | 129,730 | | | | 131,027 | | | | 119,325 | |
| Commercial business loans | | | 59,697 | | | | 55,179 | | | | 47,854 | | | | 50,997 | | | | 52,662 | |
| Consumer and other loans | | | 21,935 | | | | 23,872 | | | | 21,955 | | | | 23,592 | | | | 25,046 | |
| | | | 449,618 | | | | 434,442 | | | | 420,020 | | | | 416,071 | | | | 405,443 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loans acquired through FDIC-assisted acquisitions: | | | | | | | | | | | | | | | | | |
| Non covered loans | | | 17,384 | | | | 18,721 | | | | 24,713 | | | | 24,227 | | | | 28,252 | |
| Covered loans | | | 95,493 | | | | 107,457 | | | | 116,206 | | | | 60,427 | | | | 62,372 | |
| | | | 562,495 | | | | 560,620 | | | | 560,939 | | | | 500,725 | | | | 496,067 | |
| Asset Quality Data (excluding Loans acquired through FDIC-assisted acquisitions): | | | | | | | | | | |
| Allowance for loan losses to total loans | | | 1.70 | % | | | 1.72 | % | | | 1.65 | % | | | 1.58 | % | | | 1.51 | % |
| Allowance for loan losses to average loans | | | 1.35 | % | | | 1.32 | % | | | 1.29 | % | | | 1.48 | % | | | 1.59 | % |
| Allowance for loan losses to non-performing loans | | | 71.42 | % | | | 106.40 | % | | | 86.76 | % | | | 76.67 | % | | | 67.63 | % |
| Accruing past due loans | | $ | 452 | | | $ | 371 | | | $ | 1,487 | | | $ | 727 | | | $ | 1,245 | |
| Nonaccrual loans | | | 10,681 | | | | 7,043 | | | | 7,994 | | | | 8,589 | | | | 9,077 | |
| Loans - 90 days past due & still accruing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total non-performing loans | | | 10,681 | | | | 7,043 | | | | 7,994 | | | | 8,589 | | | | 9,077 | |
| OREO and repossessed assets | | | 2,992 | | | | 3,356 | | | | 1,841 | | | | 2,725 | | | | 3,215 | |
| Total non-performing assets | | | 13,673 | | | | 10,399 | | | | 9,835 | | | | 11,314 | | | | 12,292 | |
| Non-performing loans to total loans | | | 2.38 | % | | | 1.62 | % | | | 1.90 | % | | | 2.06 | % | | | 2.24 | % |
| Non-performing assets to total assets | | | 1.27 | % | | | 0.95 | % | | | 0.89 | % | | | 1.17 | % | | | 1.29 | % |
| Net charge-offs to average loans (annualized) | | | 0.24 | % | | | 0.04 | % | | | 0.73 | % | | | 0.26 | % | | | 2.80 | % |
| Net charge-offs | | $ | 265 | | | $ | 37 | | | $ | 650 | | | $ | 253 | | | $ | 2,563 | |
Note:
Certain prior-period amounts have been reclassified to conform with current presentation.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.
