For additional information, contact:
T. Heath Fountain
Executive Vice President and
Chief Financial Officer
(229) 878-2055
HERITAGE FINANCIAL GROUP, INC. REPORTS HIGHER NET INCOME
FOR THE FOURTH QUARTER AND YEAR
COMPANY DECLARES QUARTERLY DIVIDEND OF $0.07 PER SHARE
ALBANY, Ga. (January 29, 2014) – 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, 2013. Highlights of the Company's results for the year ended 2013 include:
| · | Net income of $11.3 million or $1.50 per diluted share, up 67% from net income of $6.8 million or $0.85 per diluted share for the year ended 2012; |
| · | Excluding special items for each year, net income of $10.6 million or $1.42 per diluted share, up 86% from $5.7 million or $0.71 per diluted share for the year ended 2012 (see reconciliation of non-GAAP items); |
| · | Loan growth, excluding loans acquired through FDIC-assisted acquisitions, of $98.8 million or 17% from 2012; |
| · | A decline in the provision for loan losses, excluding FDIC-acquired loans, to $1.7 million, down 34% from $2.5 million for 2012; |
Commenting on the results, Leonard Dorminey, President and Chief Executive Officer, said, "We are pleased to announce solid financial results for the fourth quarter and for all of 2013. Our team has been focused on several strategic initiatives, and we are excited to report that those efforts came to fruition in our financial results this past quarter. Contributing to our results were organic loan growth from commercial banking, fee income and improved efficiency from our branch network, fee income and growth in assets under management from our brokerage division, continued growth in mortgage banking, and significant gains on resolutions from our FDIC-acquired special asset team. We enter 2014 well positioned on all strategic fronts."
Dorminey also noted that the Company's Board of Directors has declared a quarterly cash dividend of $0.07 per share, resuming regular payments after a special dividend was paid in December 2012 in lieu of dividends for 2013. The new dividend will be paid on February 28, 2014, to stockholders of record as of February 14, 2014.
Operating Efficiency Initiatives
During 2013, the Company closed its branch in Vincent, Alabama, and its Broadway Avenue branch in Sylacauga, Alabama, both of which were added with the FDIC-assisted acquisition of Frontier Bank in March 2013. Also, the Company completed staffing reductions related to the Frontier acquisition that will result in a decrease of approximately $1.6 million from Frontier's pre-acquisition level of personnel expenses. Separately, the Company reduced Bank staffing by nine full-time equivalent employees, resulting in a one-time charge of $67,000 for severance ($60,000 in the third quarter of 2013 and $7,000 in the fourth quarter), and anticipates expense savings of approximately $460,000 per year related to this staffing reduction.
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HBOS Reports Fourth Quarter 2013 Results
Page 2
January 29, 2014
Commenting on the operating efficiency initiatives, Heath Fountain, Executive Vice President and Chief Financial Officer, said, "We continue to focus on improving our operating efficiency while expanding our mortgage and banking presence. While we have completed many efficiency initiatives, we anticipate building on the momentum gained in 2013 to further improve our operating efficiency in 2014."
Fourth Quarter 2013 Results of Operations
Highlights of the Company's results for the fourth quarter of 2013 include:
| · | Net income of $3.4 million or $0.45 per diluted share, up 158% from $1.3 million or $0.18 per diluted share for the linked quarter and up 40% from $2.4 million or $0.31 per diluted share for the year-earlier quarter; |
| · | Excluding special items for each quarter, net income of $4.0 million or $0.53 per diluted share, up 124% from $1.8 million or $0.24 per diluted share for the linked quarter and up 221% from $1.2 million or $0.16 per diluted share for the year-earlier quarter (see reconciliation of non-GAAP items); |
| · | Loan growth, excluding loans acquired through FDIC-assisted acquisitions, of $19.0 million or 3% on a linked-quarter basis and $98.8 million or 17% compared with the year-earlier quarter; |
| · | A decrease in FDIC-acquired loans of $9.3 million, or 8%, on a linked-quarter basis, but an increase of $29.9 million or 36% compared with the year-earlier quarter; |
| · | A decrease in the provision for loan losses, excluding FDIC-acquired loans, to $220,000, down 37% from $350,000 for the linked quarter and down 63% compared with $600,000 for the year-earlier quarter; |
The $2.1 million increase in reported quarterly earnings for the fourth quarter of 2013 compared with the linked quarter resulted primarily from the following items:
| · | Increased loan discount accretion from FDIC-acquired loans of $2.3 million, partially offset by increased negative accretion of the FDIC loss-share receivable of $522,000; |
| · | Increased mortgage banking fees of $1.0 million; |
| · | Decreased FDIC-acquired other real estate owned write-downs and foreclosed asset expenses of $410,000; |
| · | Decreased legacy other real estate owned write-downs and foreclosed asset expenses of $394,000; |
| · | Increased interest income on core loans and loans held for sale of $385,000; |
| · | Decreased acquisition-related expenses of $178,000; offset by |
| · | Increased salaries and employee benefits of $614,000; and |
| · | Increased impairment loss on assets held for sale of $328,000. |
Commenting on the fourth quarter results, Fountain added, "During the fourth quarter, we were able to resolve several FDIC-acquired non‑covered loans that significantly improved our loan discount accretion income. Loan discount accretion income can vary significantly based on the timing of asset resolutions and will continue to cause volatility in earnings. We also posted a significant increase in our mortgage banking fees, building on the momentum that our mortgage division developed in the previous quarter."
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HBOS Reports Fourth Quarter 2013 Results
Page 3
January 29, 2014
The $977,000 increase in reported quarterly earnings for the fourth quarter of 2013 compared with the year-earlier quarter primarily resulted from the following items:
| · | Improved net interest income of $1.7 million; |
| · | Decreased provision expense of $2.3 million; |
| · | Increased non-interest income of $1.4 million; offset by |
| · | Increased non-interest expense of $3.4 million. |
Net interest income for the fourth quarter of 2013 increased 12% to $16.3 million from $14.5 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 liabilities. The Company's net interest margin was 5.50% for the fourth quarter of 2013, a decline of 87 basis points from 6.37% for the year-earlier period. The reduction in net interest margin for the fourth quarter of 2013 compared with the year-earlier quarter was driven by a decline in the yield on loans, offset in part by an increase in the yield on investment securities coupled with a reduction in the cost of interest-bearing liabilities as rates continue to reset to lower levels and the Company takes advantage of historically low interest rates on non-deposit funding. Excluding FDIC-acquired loan discount adjustments from the net interest margin, the core net interest margin was 3.20% for the fourth quarter of 2013, a decrease of two basis points from 3.22% for the year-earlier quarter.
In the fourth quarter of 2013, the Company continued to achieve loan growth, with its core loan portfolio increasing $19.0 million organically on a linked-quarter basis and advancing $98.8 million overall compared with the year-earlier quarter. For the fourth quarter of 2013, the Company's loan portfolio, including FDIC-acquired loans, totaled $798.8 million, increasing $9.7 million on a linked-quarter basis from $789.1 million and from $670.0 million compared with the year-earlier quarter. The organic loan growth for the linked quarter was primarily driven by growth in Albany, Macon, and South Atlanta, Georgia markets, Auburn and Birmingham, Alabama markets, and the Ocala, Florida market. Total deposits stood at $1.076 billion at the end of the fourth quarter of 2013, up 2% from $1.052 billion on a linked-quarter basis, and up 24% from $869.6 million for the year-earlier quarter.
For the fourth quarter of 2013, the Company's loans held for sale totaled $110.7 million, increasing significantly by $72.6 million, or 191%, on a linked-quarter basis from $38.0 million, and increasing $95.1 million, or 609%, from $15.6 million compared with the year-earlier quarter. The significant increase in the loans held for sale for the current quarter was driven by a slowing in loan sales as the Company prepared to deliver directly to Fannie Mae. Loan sales to Fannie Mae for the fourth quarter totaled $20.8 million and, separately, the Company recorded a gain of $202,000 related to the mortgage servicing rights for those loans. Total mortgage production for the fourth quarter was $120.4 million, up 4% on a linked-quarter basis from $115.3 million and up 116% from $55.8 million compared with the year-earlier quarter.
Non-interest income for the fourth quarter of 2013 increased 47% to $4.5 million from $3.1 million in the year-earlier quarter, primarily driven by increases in mortgage banking fees of $1.5 million and service charges on deposit accounts of $335,000 and a decline in negative accretion for the FDIC loss-share receivable of $552,000, together which were partially offset by a decline in the gain on sales of securities of $1.2 million. Non-interest expense for the fourth quarter of 2013 increased 28% to $15.7 million from $12.3 million in the year-earlier quarter, primarily driven by increases in salaries and employee benefits of $2.6 million, impairment loss on assets held for sale of $328,000 and realized loss on assets held for sale of $228,000. The increase in salaries and employee benefits was associated with the hiring of employees from the Frontier acquisition and for the mortgage division expansion, while the impairment loss on assets held for sale was driven by two former branch buildings and a corporate facility the Company holds, and the realized loss on assets held for sale was the result of the Company selling its former corporate headquarters building in Albany, Georgia.
HBOS Reports Fourth Quarter 2013 Results
Page 4
January 29, 2014
Accounting for FDIC-Assisted Acquisitions
The Company performs ongoing assessments of the estimated cash flows of its FDIC-acquired loan portfolios. The fair value of the FDIC-acquired loan portfolios consisted of $50.9 million in covered and $63.3 million in non-covered loans at the end of the fourth quarter of 2013 compared with $72.4 million in covered and $11.9 million in non-covered loans for the year-earlier quarter. The outstanding principal balance of the FDIC-acquired loan portfolios totaled $177.8 million at the end of the fourth quarter of 2013 compared with $152.1 million for the year-earlier quarter. The details of the accounting for the FDIC-acquired loan portfolios for the fourth quarter of 2013 are as follows:
| · | Covered FDIC-acquired loans decreased $3.0 million from the linked quarter to $50.9 million; |
| · | Non-covered FDIC-acquired loans decreased $6.3 million to $63.3 million; |
| · | The FDIC loss-share receivable associated with covered assets acquired in FDIC-assisted acquisitions decreased $3.2 million to $41.3 million; |
| · | The negative accretion for the FDIC loss-share receivable was $2.0 million and the FDIC loss-share clawback accrual increased to $1.9 million; |
| · | Increase in provision expense for FDIC-acquired non-covered loans to $12,000; |
| · | Loan discount accretion recognized in interest income improved $2.6 million; |
| · | The non-accretable discount decreased $11.8 million to $36.7 million; and |
| · | The accretable discount increased $3.4 million to $26.9 million. |
For the fourth quarter of 2013, loan discount accretion recognized in interest income improved 69% to $6.3 million from $3.7 million for the linked quarter, but declined 6% from $6.6 million for the year-earlier quarter. The FDIC loss-share receivable associated with covered FDIC-acquired assets decreased 7% to $41.3 million from $44.5 million for the linked quarter and declined 32% from $60.7 million for the year-earlier quarter. The reduction in the FDIC loss-share receivable for the linked quarter was primarily driven by negative accretion of $2.0 million affecting the loss-share receivable asset associated with the improvement in expected cash flows of the covered FDIC-acquired performing loan portfolios and FDIC reimbursements received of $1.2 million. An increase to the FDIC clawback liability accrual was recorded as an expense for the current quarter of $261,000, which increased the total accrual to $1.9 million. This clawback was caused by an improvement in estimates of expected cash flows for both FDIC-assisted acquisitions covered under loss-sharing agreements.
The covered FDIC-acquired loan discount affecting the loss-share receivable was $39.1 million, or 94.6% of the loss-share receivable, for the fourth quarter 2013 compared with $55.2 million, or 90.9% of the loss-share receivable, for the year-earlier quarter. The gross balance of covered FDIC-acquired assets decreased to $109.2 million for the fourth quarter of 2013 compared with $156.0 million for the year-earlier quarter. The FDIC loss-share receivable as a percent of the covered FDIC-acquired assets decreased to 37.8% compared with 38.9% for the year-earlier quarter.
Asset Quality
Total non-performing assets, excluding FDIC-acquired assets, decreased to $11.2 million, or 0.81% of total assets, compared with $13.6 million, or 1.03% of total assets, for the linked quarter and declined from $17.3 million, or 1.58% of total assets, for the year-earlier quarter. Annualized net charge-offs to average outstanding loans, excluding FDIC-acquired loans, were 0.10% for the fourth quarter of 2013 compared with 0.31% for the linked quarter and 0.05% for the year-earlier quarter. Non-performing loans, excluding FDIC-acquired loans, totaled $9.4 million, down from $11.0 million for the linked quarter and from $14.7 million for the year-earlier quarter. Other real estate owned and repossessed assets, excluding FDIC-acquired assets, totaled $1.8 million for the fourth quarter of 2013, down from $2.7 million for the linked quarter and from $2.6 million for the year-earlier quarter.
HBOS Reports Fourth Quarter 2013 Results
Page 5
January 29, 2014
The provision for loan losses on non-FDIC-acquired loans decreased to $220,000 for the fourth quarter of 2013 from $350,000 for the linked quarter and from $600,000 for the year-earlier quarter, primarily driven by improving trends in total criticized and classified loans. For the fourth quarter in 2013, the allowance for loan losses represented 1.31% of total loans outstanding, excluding FDIC-acquired loans, versus 1.34% for the linked quarter and 1.55% for the year-earlier quarter. The improving loan loss allowance was primarily the result of declining criticized and classified loans as a percentage of total loans.
Capital Management Initiatives
The Company reinstated its regular quarterly dividend during January 2014 at $0.07 per share. Looking ahead, the Company intends to maintain its capital strength at the current level to support growth and its acquisition activities. The Company currently has authorization to purchase approximately 344,000 shares under the current repurchase program, which is set to expire in April 2014, unless extended or otherwise completed. Accordingly, future stock buybacks and future dividends will be premised largely on the Company's future earnings power rather than a return of capital to stockholders.
The Company's estimated total risk-based capital ratio at December 31, 2013, was 14.5%, 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 8.8% as of December 31, 2013.
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, North Central Florida and Eastern Alabama through 27 full-service branch locations, 14 mortgage offices, and 4 investment offices. As of December 31, 2013, the Company reported total assets of approximately $1.4 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 Investors.
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 2012 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 2013 Results
Page 6
January 29, 2014
HERITAGE FINANCIAL GROUP, INC.
Unaudited Reconciliation of Non-GAAP Measures Presented in Earnings Release
(Dollars in thousands, except per share data)
| | Three Months Ended | | | Twelve Months Ended | |
| | December 31, | | | Sept. 30, | | | December 31, | |
| | 2013 | | | 2012 | | | 2013 | | | 2013 | | | 2012 | |
| Total interest income | | $ | 18,115 | | | $ | 16,351 | | | $ | 15,393 | | | $ | 65,651 | | | $ | 54,738 | |
| Loan held for sale – fair value election | | | – | | | | – | | | | – | | | | – | | | | (156 | ) |
| Adjusted interest income | | $ | 18,115 | | | $ | 16,351 | | | $ | 15,393 | | | $ | 65,651 | | | $ | 54,582 | |
| | | | | | | | | | | | | | | | | | | | |
| Total non-interest income | | $ | 4,536 | | | $ | 3,092 | | | $ | 3,918 | | | $ | 18,414 | | | $ | 14,399 | |
| Mortgage banking activities – fair value election | | | – | | | | – | | | | – | | | | – | | | | (336 | ) |
| Gain on sale of securities | | | (85 | ) | | | (1,285 | ) | | | – | | | | (85 | ) | | | (2,838 | ) |
| (Gain) loss on acquisitions | | | – | | | | – | | | | – | | | | (4,188 | ) | | | 56 | |
| Adjusted non-interest income | | $ | 4,451 | | | $ | 1,738 | | | $ | 3,918 | | | $ | 14,141 | | | $ | 11,281 | |
| | | | | | | | | | | | | | | | | | | | |
| Total non-interest expense | | $ | 15,706 | | | $ | 12,314 | | | $ | 15,334 | | | $ | 58,951 | | | $ | 46,250 | |
| Salaries and employee benefits – early retirement and severance expense | | | (7 | ) | | | – | | | | (60 | ) | | | (67 | ) | | | (641 | ) |
| Acquisition-related expenses | | | (102 | ) | | | (3 | ) | | | (280 | ) | | | (1,322 | ) | | | (418 | ) |
| Impairment loss on assets held for sale | | | (328 | ) | | | – | | | | – | | | | (328 | ) | | | – | |
| Realized loss on the disposition of assets held for sale | | | (226 | ) | | | – | | | | – | | | | (241 | ) | | | – | |
| Accrual of FDIC acquisitions estimated clawback liability | | | (261 | ) | | | (219 | ) | | | (286 | ) | | | (1,237 | ) | | | (703 | ) |
| Adjusted non-interest expense | | $ | 14,782 | | | $ | 12,092 | | | $ | 14,708 | | | $ | 55,756 | | | $ | 44,488 | |
| | | | | | | | | | | | | | | | | | | | |
| Net income as reported | | $ | 3,405 | | | $ | 2,428 | | | $ | 1,322 | | | $ | 11,315 | | | $ | 6,757 | |
| Total adjustments, net of tax* | | | 589 | | | | (921 | ) | | | 462 | | | | (763 | ) | | | (1,094 | ) |
| Adjustment for state tax credits | | | – | | | | (264 | ) | | | – | | | | – | | | | – | |
| Adjusted net income | | $ | 3,994 | | | $ | 1,243 | | | $ | 1,784 | | | $ | 10,552 | | | $ | 5,663 | |
| | | | | | | | | | | | | | | | | | | | |
| Diluted earnings per share | | $ | 0.45 | | | $ | 0.31 | | | $ | 0.18 | | | $ | 1.52 | | | $ | 0.85 | |
| Total adjustments, net of tax* | | | 0.08 | | | | (0.15 | ) | | | 0.06 | | | | (0.12 | ) | | | (0.14 | ) |
| Adjusted diluted earnings per share | | $ | 0.53 | | | $ | 0.16 | | | $ | 0.24 | | | $ | 1.40 | | | $ | 0.71 | |
* The effective tax rate for the period presented is used to determine net of tax amounts.
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.
Heritage Financial Group, Inc. and Subsidiary
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)
| | (Unaudited) | | | | |
| | December 31, | | | December 31, | |
| | 2013 | | | | 2012* | |
| | | | | | | |
| | | | | | | |
| Cash and due from banks | | $ | 34,804 | | | $ | 23,993 | |
| Interest-bearing deposits in banks | | | 3,249 | | | | 15,393 | |
| Federal funds sold | | | 130 | | | | 4,306 | |
| Cash and cash equivalents | | | 38,183 | | | | 43,692 | |
| | | | | | | | |
| Securities available for sale, at fair value | | | 294,299 | | | | 221,406 | |
| Federal Home Loan Bank stock, at cost | | | 7,342 | | | | 4,330 | |
| Other equity securities, at cost | | | 1,010 | | | | 1,010 | |
| Loans held for sale | | | 110,669 | | | | 15,608 | |
| Loans | | | 747,862 | | | | 597,579 | |
| Covered loans | | | 50,891 | | | | 72,425 | |
| Less allowance for loan losses | | | 8,955 | | | | 9,061 | |
| Loans, net | | | 789,798 | | | | 660,943 | |
| | | | | | | | |
| Other real estate owned | | | 3,482 | | | | 3,242 | |
| Covered other real estate owned | | | 7,053 | | | | 9,467 | |
| Total other real estate owned | | | 10,535 | | | | 12,709 | |
| | | | | | | | |
| FDIC loss-share receivable | | | 41,306 | | | | 60,731 | |
| Premises and equipment, net | | | 37,978 | | | | 33,015 | |
| Goodwill and intangible assets | | | 4,253 | | | | 4,235 | |
| Cash surrender value of bank owned life insurance | | | 24,183 | | | | 23,382 | |
| Other assets | | | 21,369 | | | | 16,445 | |
| Total assets | | $ | 1,380,925 | | | $ | 1,097,506 | |
| | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | |
| Non-interest-bearing deposits | | $ | 148,253 | | | $ | 116,272 | |
| Interest-bearing deposits | | | 928,168 | | | | 753,282 | |
| Total deposits | | | 1,076,421 | | | | 869,554 | |
| | | | | | | | |
| Federal funds purchased and securities sold under repurchase agreements | | | 37,648 | | | | 33,219 | |
| Other borrowings | | | 131,394 | | | | 60,000 | |
| Other liabilities | | | 10,399 | | | | 14,084 | |
| Total liabilities | | | 1,255,862 | | | | 976,857 | |
| | | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | |
| Preferred stock, par value; $0.01; 5,000,000 shares authorized; none issued | | | - | | | | - | |
Common stock, par value $0.01; 45,000,000 shares authorized; 7,834,537 and 8,172,486 shares issued and outstanding, respectively | | | 78 | | | | 82 | |
| Capital surplus | | | 78,566 | | | | 82,154 | |
| Retained earnings | | | 57,614 | | | | 46,299 | |
| Accumulated other comprehensive loss, net of tax of $5,175 and $2,566, respectively | | | (7,762 | ) | | | (3,849 | ) |
| Unearned employee stock ownership plan (ESOP), 332,535 and 385,836 shares, respectively | | | (3,433 | ) | | | (4,037 | ) |
| Total shareholders' equity | | | 125,063 | | | | 120,649 | |
| | | | | | | | |
| Total liabilities & shareholders' equity | | $ | 1,380,925 | | | $ | 1,097,506 | |
* Derived from Audited Consolidated Financial Statements.
Heritage Financial Group, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands except share and per share data)
| | Three Months Ended | | | Twelve Months Ended | |
| | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | | | | | | | | | | |
Interest income: | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 15,911 | | | $ | 15,084 | | | $ | 58,434 | | | $ | 48,831 | |
| Interest on loans held for sale | | | 619 | | | | 238 | | | | 1,458 | | | | 967 | |
| Interest on taxable securities | | | 1,231 | | | | 762 | | | | 4,347 | | | | 3,681 | |
| Interest on nontaxable securities | | | 337 | | | | 232 | | | | 1,248 | | | | 1,123 | |
| Interest on federal funds sold | | | 2 | | | | 9 | | | | 9 | | | | 30 | |
| Interest on deposits in other banks | | | 15 | | | | 26 | | | | 155 | | | | 106 | |
| Total interest income | | | 18,115 | | | | 16,351 | | | | 65,651 | | | | 54,738 | |
| | | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 1,000 | | | | 1,108 | | | | 4,077 | | | | 4,874 | |
| Interest on other borrowings | | | 862 | | | | 713 | | | | 3,308 | | | | 2,739 | |
| Total interest expense | | | 1,862 | | | | 1,821 | | | | 7,385 | | | | 7,613 | |
| | | | | | | | | | | | | | | | |
| Net interest income | | | 16,253 | | | | 14,530 | | | | 58,266 | | | | 47,125 | |
| | | | | | | | | | | | | | | | |
| Provision for loan losses | | | 232 | | | | 2,507 | | | | 1,735 | | | | 5,930 | |
| | | | | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 16,021 | | | | 12,023 | | | | 56,531 | | | | 41,195 | |
| | | | | | | | | | | | | | | | |
Non-interest income: | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 1,642 | | | | 1,307 | | | | 5,670 | | | | 4,748 | |
| Bankcard services income | | | 890 | | | | 794 | | | | 3,335 | | | | 3,231 | |
| Other service charges, commissions and fees | | | 121 | | | | 89 | | | | 513 | | | | 326 | |
| Brokerage fees | | | 560 | | | | 463 | | | | 2,138 | | | | 1,838 | |
| Mortgage banking activities | | | 2,949 | | | | 1,451 | | | | 10,509 | | | | 4,768 | |
| Bank-owned life insurance | | | 198 | | | | 210 | | | | 801 | | | | 771 | |
| Gain on sales of securities | | | 85 | | | | 1,285 | | | | 85 | | | | 2,838 | |
| Gain (loss) on acquisitions | | | - | | | | - | | | | 4,188 | | | | (56 | ) |
| Accretion of FDIC loss-share receivable | | | (2,021 | ) | | | (2,573 | ) | | | (9,293 | ) | | | (4,325 | ) |
| Other | | | 112 | | | | 66 | | | | 468 | | | | 260 | |
| Total non-interest income | | | 4,536 | | | | 3,092 | | | | 18,414 | | | | 14,399 | |
Non-interest expense: | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 8,722 | | | | 6,167 | | | | 31,445 | | | | 23,543 | |
| Equipment and occupancy | | | 1,922 | | | | 1,597 | | | | 7,358 | | | | 5,632 | |
| Advertising and marketing | | | 299 | | | | 147 | | | | 1,170 | | | | 656 | |
| Professional fees | | | 559 | | | | 387 | | | | 1,416 | | | | 1,319 | |
| Information services expenses | | | 1,285 | | | | 1,184 | | | | 5,109 | | | | 4,641 | |
| Loss (gain) on sales and write-downs of other real estate owned | | | 38 | | | | 277 | | | | 406 | | | | 219 | |
| Gain on sales and write-downs of FDIC-acquired other real estate owned | | | (536 | ) | | | (204 | ) | | | (969 | ) | | | (313 | ) |
| Foreclosed asset expenses | | | 240 | | | | 353 | | | | 1,019 | | | | 970 | |
| Foreclosed FDIC-acquired asset expenses | | | 286 | | | | 575 | | | | 1,386 | | | | 1,767 | |
| FDIC insurance and other regulatory fees | | | 254 | | | | 252 | | | | 1,081 | | | | 1,037 | |
| Impairment loss on assets held for sale | | | 328 | | | | - | | | | 328 | | | | - | |
| Acquisition related expenses | | | 102 | | | | 3 | | | | 1,322 | | | | 418 | |
| Deposit intangible expenses | | | 200 | | | | 191 | | | | 809 | | | | 781 | |
| FDIC loss-share clawback expenses | | | 261 | | | | 219 | | | | 1,237 | | | | 703 | |
| Other operating expenses | | | 1,746 | | | | 1,166 | | | | 5,834 | | | | 4,879 | |
| Total non-interest expense | | | 15,706 | | | | 12,314 | | | | 58,951 | | | | 46,252 | |
| | | | | | | | | | | | | | | | |
| Income before income taxes | | | 4,851 | | | | 2,801 | | | | 15,994 | | | | 9,342 | |
| | | | | | | | | | | | | | | | |
| Applicable income tax | | | 1,446 | | | | 373 | | | | 4,679 | | | | 2,585 | |
| | | | | | | | | | | | | | | | |
| Net income | | $ | 3,405 | | | $ | 2,428 | | | $ | 11,315 | | | $ | 6,757 | |
| | | | | | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.46 | | | $ | 0.31 | | | $ | 1.52 | | | $ | 0.85 | |
| Diluted earnings per share | | $ | 0.45 | | | $ | 0.31 | | | $ | 1.50 | | | $ | 0.85 | |
| | | | | | | | | | | | | | | | |
Weighted average-common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 7,407,722 | | | | 7,720,839 | | | | 7,421,348 | | | | 7,969,104 | |
| Diluted | | | 7,530,606 | | | | 7,722,867 | | | | 7,528,246 | | | | 7,970,903 | |
Heritage Financial Group, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands except share and per share data)
| | Five Quarter Comparison | |
| | 12/31/2013 | | | 9/30/2013 | | | 6/30/2013 | | | 3/31/2013 | | | 12/31/2012 | |
| | | | | | | | | | | | | | | |
Interest income: | | | | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 15,911 | | | $ | 13,452 | | | $ | 15,702 | | | $ | 13,369 | | | $ | 15,084 | |
| Interest on loans held for sale | | | 619 | | | | 434 | | | | 290 | | | | 115 | | | | 238 | |
| Interest on taxable securities | | | 1,231 | | | | 1,155 | | | | 1,095 | | | | 866 | | | | 762 | |
| Interest on nontaxable securities | | | 337 | | | | 318 | | | | 308 | | | | 285 | | | | 232 | |
| Interest on federal funds sold | | | 2 | | | | 4 | | | | 2 | | | | 1 | | | | 9 | |
| Interest on deposits in other banks | | | 15 | | | | 30 | | | | 88 | | | | 22 | | | | 26 | |
| Total interest income | | | 18,115 | | | | 15,393 | | | | 17,485 | | | | 14,658 | | | | 16,351 | |
| | | | | | | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 1,000 | | | | 982 | | | | 1,041 | | | | 1,054 | | | | 1,108 | |
| Interest on other borrowings | | | 862 | | | | 853 | | | | 844 | | | | 749 | | | | 713 | |
| Total interest expense | | | 1,862 | | | | 1,835 | | | | 1,885 | | | | 1,803 | | | | 1,821 | |
| | | | | | | | | | | | | | | | | | | | |
| Net interest income | | | 16,253 | | | | 13,558 | | | | 15,600 | | | | 12,855 | | | | 14,530 | |
| | | | | | | | | | | | | | | | | | | | |
| Provision for loan losses | | | 220 | | | | 350 | | | | 640 | | | | 450 | | | | 600 | |
| Provision for loan losses- FDIC-acquired covered | | | - | | | | - | | | | 28 | | | | 35 | | | | 1,907 | |
| Provision for loan losses- FDIC-acquired non-covered | | | 12 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 16,021 | | | | 13,208 | | | | 14,932 | | | | 12,370 | | | | 12,023 | |
| | | | | | | | | | | | | | | | | | | | |
Non-interest income: | | | | | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 1,642 | | | | 1,577 | | | | 1,297 | | | | 1,154 | | | | 1,307 | |
| Bankcard services income | | | 890 | | | | 852 | | | | 831 | | | | 762 | | | | 794 | |
| Other service charges, commissions and fees | | | 121 | | | | 136 | | | | 157 | | | | 99 | | | | 89 | |
| Brokerage fees | | | 560 | | | | 561 | | | | 536 | | | | 481 | | | | 463 | |
| Mortgage banking activities | | | 2,949 | | | | 1,953 | | | | 3,425 | | | | 2,182 | | | | 1,451 | |
| Bank-owned life insurance | | | 198 | | | | 200 | | | | 201 | | | | 202 | | | | 210 | |
| Gain on sales of securities | | | 85 | | | | - | | | | - | | | | - | | | | 1,285 | |
| Gain (loss) on acquisitions | | | - | | | | - | | | | - | | | | 4,188 | | | | - | |
| Accretion of FDIC loss-share receivable | | | (2,021 | ) | | | (1,499 | ) | | | (3,376 | ) | | | (2,397 | ) | | | (2,573 | ) |
| Other | | | 112 | | | | 138 | | | | 124 | | | | 94 | | | | 66 | |
| Total non-interest income | | | 4,536 | | | | 3,918 | | | | 3,195 | | | | 6,765 | | | | 3,092 | |
Non-interest expense: | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 8,722 | | | | 8,108 | | | | 8,185 | | | | 6,430 | | | | 6,167 | |
| Equipment and occupancy | | | 1,922 | | | | 1,932 | | | | 1,838 | | | | 1,666 | | | | 1,597 | |
| Advertising and marketing | | | 299 | | | | 335 | | | | 349 | | | | 187 | | | | 147 | |
| Professional fees | | | 559 | | | | 340 | | | | 302 | | | | 215 | | | | 387 | |
| Information services expenses | | | 1,285 | | | | 1,335 | | | | 1,307 | | | | 1,182 | | | | 1,184 | |
| Loss (gain) on sales and write-downs of other real estate owned | | | 38 | | | | 335 | | | | 58 | | | | (25 | ) | | | 277 | |
| (Gain) loss on sales and write-downs of FDIC-acquired other real estate owned | | | (536 | ) | | | (206 | ) | | | (251 | ) | | | 24 | | | | (204 | ) |
| Foreclosed asset expenses | | | 240 | | | | 337 | | | | 227 | | | | 215 | | | | 353 | |
| Foreclosed FDIC-acquired asset expenses | | | 286 | | | | 366 | | | | 313 | | | | 421 | | | | 575 | |
| FDIC insurance and other regulatory fees | | | 254 | | | | 293 | | | | 278 | | | | 256 | | | | 252 | |
| Impairment loss on assets held for sale | | | 328 | | | | - | | | | - | | | | - | | | | - | |
| Acquisition related expenses | | | 102 | | | | 280 | | | | 148 | | | | 792 | | | | 3 | |
| Deposit intangible expenses | | | 200 | | | | 204 | | | | 211 | | | | 194 | | | | 191 | |
| FDIC loss-share clawback expenses | | | 261 | | | | 286 | | | | 124 | | | | 566 | | | | 219 | |
| Other operating expenses | | | 1,746 | | | | 1,389 | | | | 1,466 | | | | 1,233 | | | | 1,166 | |
| Total non-interest expense | | | 15,706 | | | | 15,334 | | | | 14,555 | | | | 13,356 | | | | 12,314 | |
| | | | | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 4,851 | | | | 1,792 | | | | 3,572 | | | | 5,779 | | | | 2,801 | |
| | | | | | | | | | | | | | | | | | | | |
| Applicable income tax | | | 1,446 | | | | 470 | | | | 912 | | | | 1,851 | | | | 373 | |
| | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 3,405 | | | $ | 1,322 | | | $ | 2,660 | | | $ | 3,928 | | | $ | 2,428 | |
| | | | | | | | | | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.46 | | | $ | 0.18 | | | $ | 0.36 | | | $ | 0.52 | | | $ | 0.31 | |
| Diluted earnings per share | | $ | 0.45 | | | $ | 0.18 | | | $ | 0.36 | | | $ | 0.52 | | | $ | 0.31 | |
| Dividends | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.24 | |
| | | | | | | | | | | | | | | | | | | | |
Weighted average-common shares outstanding: | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 7,407,722 | | | | 7,371,804 | | | | 7,381,370 | | | | 7,526,344 | | | | 7,720,839 | |
| Diluted | | | 7,530,606 | | | | 7,483,812 | | | | 7,383,992 | | | | 7,528,522 | | | | 7,722,867 | |
Heritage Financial Group, Inc. and Subsidiary
Condensed Average Balances, Interest Rates and Yields
(Unaudited)
(Dollars in thousands)
| | Three Months Ended | | | Twelve Months Ended | |
| | December 31, | | | December 31, | |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | Average | | | | | | Average | | | Average | | | | | | Average | | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans(1)(2) | | $ | 868,420 | | | $ | 16,536 | | | | 7.55 | % | | $ | 658,346 | | | $ | 15,325 | | | | 9.26 | % | | $ | 795,094 | | | $ | 59,907 | | | | 7.53 | % | | $ | 608,722 | | | $ | 49,807 | | | | 8.18 | % |
Investment securities (2) | | | 299,638 | | | | 1,683 | | | | 2.23 | % | | | 211,524 | | | | 1,073 | | | | 2.02 | % | | | 283,782 | | | | 6,020 | | | | 2.12 | % | | | 240,198 | | | | 5,186 | | | | 2.16 | % |
| Other short-term investments | | | 13,785 | | | | 16 | | | | 0.46 | % | | | 42,264 | | | | 35 | | | | 0.33 | % | | | 41,576 | | | | 164 | | | | 0.39 | % | | | 38,782 | | | | 137 | | | | 0.35 | % |
| Total interest-earning assets | | | 1,181,843 | | | | 18,235 | | | | 6.12 | % | | | 912,134 | | | | 16,433 | | | | 7.17 | % | | | 1,120,452 | | | | 66,091 | | | | 5.90 | % | | | 887,702 | | | | 55,130 | | | | 6.21 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest earning assets | | | 169,547 | | | | | | | | | | | | 174,694 | | | | | | | | | | | | 175,168 | | | | | | | | | | | | 183,373 | | | | | | | | | |
| Total assets | | $ | 1,351,390 | | | | | | | | | | | $ | 1,086,828 | | | | | | | | | | | $ | 1,295,620 | | | | | | | | | | | $ | 1,071,075 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest checking, money market and savings | | $ | 543,633 | | | $ | 343 | | | | 0.25 | % | | $ | 452,243 | | | $ | 276 | | | | 0.24 | % | | $ | 534,972 | | | $ | 1,261 | | | | 0.24 | % | | $ | 465,954 | | | $ | 1,347 | | | | 0.29 | % |
| Time deposits | | | 370,737 | | | | 658 | | | | 0.70 | % | | | 295,389 | | | | 832 | | | | 1.12 | % | | | 353,802 | | | | 2,818 | | | | 0.80 | % | | | 299,333 | | | | 3,528 | | | | 1.18 | % |
| Total interest bearing-deposits | | | 914,370 | | | | 1,001 | | | | 0.43 | % | | | 747,632 | | | | 1,108 | | | | 0.59 | % | | | 888,774 | | | | 4,079 | | | | 0.46 | % | | | 765,287 | | | | 4,875 | | | | 0.64 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | �� | | | | | | | |
| Federal Funds purchased and securities sold under repurchase agreements | | | 36,548 | | | | 337 | | | | 3.66 | % | | | 34,324 | | | | 336 | | | | 3.89 | % | | | 34,527 | | | | 1,331 | | | | 3.85 | % | | | 33,528 | | | | 1,333 | | | | 3.98 | % |
| Other Borrowings | | | 114,041 | | | | 525 | | | | 1.83 | % | | | 50,489 | | | | 377 | | | | 2.97 | % | | | 96,132 | | | | 1,976 | | | | 2.06 | % | | | 38,975 | | | | 1,406 | | | | 3.61 | % |
| Total interest-bearing liabilities | | | 1,064,959 | | | | 1,863 | | | | 0.69 | % | | | 832,445 | | | | 1,821 | | | | 0.87 | % | | | 1,019,433 | | | | 7,386 | | | | 0.72 | % | | | 837,790 | | | | 7,614 | | | | 0.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand Deposits | | | 152,577 | | | | | | | | | | | | 115,014 | | | | | | | | | | | | 142,578 | | | | | | | | | | | | 96,077 | | | | | | | | | |
| Other Liabilities | | | 12,147 | | | | | | | | | | | | 16,418 | | | | | | | | | | | | 12,852 | | | | | | | | | | | | 12,615 | | | | | | | | | |
| Total non-interest bearing liabilities | | | 164,724 | | | | | | | | | | | | 131,432 | | | | | | | | | | | | 155,430 | | | | | | | | | | | | 108,692 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities | | | 1,229,683 | | | | | | | | | | | | 963,877 | | | | | | | | | | | | 1,174,863 | | | | | | | | | | | | 946,482 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | 121,707 | | | | | | | | | | | | 122,951 | | | | | | | | | | | | 120,757 | | | | | | | | | | | | 124,593 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities & shareholders' equity | | $ | 1,351,390 | | | | | | | | | | | $ | 1,086,828 | | | | | | | | | | | $ | 1,295,620 | | | | | | | | | | | $ | 1,071,075 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | | | | | $ | 16,372 | | | | | | | | | | | $ | 14,612 | | | | | | | | | | | $ | 58,705 | | | | | | | | | | | $ | 47,516 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate spread | | | | | | | | | | | 5.43 | % | | | | | | | | | | | 6.30 | % | | | | | | | | | | | 5.17 | % | | | | | | | | | | | 5.30 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net yield on interest-earning assets (net interest margin) | | | | | | | | | | | 5.50 | % | | | | | | | | | | | 6.37 | % | | | | | | | | | | | 5.24 | % | | | | | | | | | | | 5.35 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Core net interest margin (non-GAAP): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans(1)(2) | | $ | 868,420 | | | $ | 16,536 | | | | 7.55 | % | | $ | 658,346 | | | $ | 15,325 | | | | 9.26 | % | | $ | 795,094 | | | $ | 59,907 | | | | 7.53 | % | | $ | 608,722 | | | $ | 49,807 | | | | 8.18 | % |
FDIC-acquired loan discount adjustments(3) | | | 69,283 | | | | 6,272 | | | | 35.92 | % | | | 73,309 | | | | 6,646 | | | | 36.07 | % | | | 73,647 | | | | 20,722 | | | | 28.14 | % | | | 86,382 | | | | 15,709 | | | | 18.19 | % |
| Adjusted loans | | | 937,703 | | | | 10,264 | | | | 4.34 | % | | | 731,655 | | | | 8,679 | | | | 4.72 | % | | | 868,741 | | | | 39,185 | | | | 4.51 | % | | | 695,104 | | | | 34,098 | | | | 4.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted total interest-earning assets | | $ | 1,251,126 | | | | 11,963 | | | | 3.79 | % | | $ | 985,443 | | | | 9,787 | | | | 3.95 | % | | $ | 1,194,099 | | | | 45,369 | | | | 3.80 | % | | $ | 974,084 | | | | 39,421 | | | | 4.05 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest-bearing liabilities | | $ | 1,064,959 | | | | 1,863 | | | | 0.69 | % | | $ | 832,445 | | | | 1,821 | | | | 0.87 | % | | $ | 1,019,433 | | | | 7,386 | | | | 0.72 | % | | $ | 837,790 | | | | 7,614 | | | | 0.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Core Net interest income | | | | | | $ | 10,100 | | | | | | | | | | | $ | 7,966 | | | | | | | | | | | $ | 37,983 | | | | | | | | | | | $ | 31,807 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Core Interest rate spread | | | | | | | | | | | 3.10 | % | | | | | | | | | | | 3.08 | % | | | | | | | | | | | 3.07 | % | | | | | | | | | | | 3.14 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Core Net yield on interest-earning assets (net interest margin non-GAAP) | | | | | | | | | | | 3.20 | % | | | | | | | | | | | 3.22 | % | | | | | | | | | | | 3.18 | % | | | | | | | | | | | 3.27 | % |
| (1) | Average loan balances includes nonaccrual loans for the periods presented. |
| (2) | Fully Taxable Equivalent (“FTE”) at the rate of 34%. The FTE basis adjusts for the tax benefits of income on certain tax-exempt loans and investments using the federal statutory rate of 34% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. |
| (3) | FDIC-acquired loan discount adjustments include the reduction of interest income for FDIC-acquired loan discount accretion excluding contractual interest payments and the increase of core loans for the total balance of FDIC-acquired loan discounts. |
Heritage Financial Group, Inc. and Subsidiary
Consolidated Financial Highlights
(Unaudited)
(Dollars in thousands except share and per share data)
| | | | Five Quarter Comparison | |
| Financial Condition Data: | | | 12/31/2013 | | | | 9/30/2013 | | | | 6/30/2013 | | | | 3/31/2013 | | | | 12/31/2012 | |
| Total loans | | $ | 798,753 | | | $ | 789,092 | | | $ | 769,921 | | | $ | 752,866 | | | $ | 670,004 | |
| Loans held for sale | | | 110,669 | | | | 38,042 | | | | 43,545 | | | | 18,905 | | | | 15,608 | |
| Covered loans | | | 50,891 | | | | 53,843 | | | | 57,176 | | | | 65,815 | | | | 72,425 | |
| Allowance for loan losses | | | 8,955 | | | | 8,894 | | | | 9,047 | | | | 9,105 | | | | 9,061 | |
| Total other real estate owned | | | 10,535 | | | | 10,244 | | | | 11,949 | | | | 13,851 | | | | 12,709 | |
| Covered other real estate owned | | | 7,053 | | | | 5,909 | | | | 7,815 | | | | 9,460 | | | | 9,467 | |
| FDIC loss-share receivable | | | 41,306 | | | | 44,527 | | | | 48,106 | | | | 52,012 | | | | 60,731 | |
| Goodwill and intangible assets | | | 4,253 | | | | 4,251 | | | | 4,455 | | | | 4,666 | | | | 4,235 | |
| Total assets | | | 1,380,925 | | | | 1,322,309 | | | | 1,334,016 | | | | 1,370,550 | | | | 1,097,506 | |
| Non-interest-bearing deposits | | | 148,253 | | | | 153,163 | | | | 148,219 | | | | 151,709 | | | | 116,272 | |
| Interest-bearing deposits | | | 928,168 | | | | 899,318 | | | | 917,712 | | | | 943,850 | | | | 753,282 | |
| Other borrowings | | | 131,394 | | | | 101,667 | | | | 101,940 | | | | 102,210 | | | | 60,000 | |
| Federal funds purchased and securities sold under agreement to repurchase | | | 37,648 | | | | 35,393 | | | | 33,094 | | | | 34,251 | | | | 33,219 | |
| Stockholders' equity | | | 125,063 | | | | 120,534 | | | | 118,540 | | | | 120,655 | | | | 120,649 | |
| | | | | | | | | | | | | | | | | | | | |
| Total shares outstanding | | | 7,834,537 | | | | 7,834,765 | | | | 7,803,910 | | | | 7,881,260 | | | | 8,172,486 | |
| Unearned ESOP shares | | | 332,535 | | | | 345,860 | | | | 359,186 | | | | 372,511 | | | | 385,836 | |
| Total shares outstanding net of unearned ESOP | | | 7,502,002 | | | | 7,488,905 | | | | 7,444,724 | | | | 7,508,749 | | | | 7,786,650 | |
| | | | | | | | | | | | | | | | | | | | |
| Book value per share | | $ | 16.67 | | | $ | 16.10 | | | $ | 15.92 | | | $ | 16.07 | | | $ | 15.49 | |
| Book value per share including unearned | | | | | | | | | | | | | | | | | | | | |
| ESOP (non-GAAP) | | | 15.96 | | | | 15.38 | | | | 15.19 | | | | 15.31 | | | | 14.76 | |
| Tangible book value per share (non-GAAP) | | | 16.10 | | | | 15.53 | | | | 15.32 | | | | 15.45 | | | | 14.95 | |
| Tangible book value per share including unearned ESOP (non-GAAP) | | | 15.42 | | | | 14.84 | | | | 14.62 | | | | 14.72 | | | | 14.24 | |
| Market value per share | | | 19.25 | | | | 17.42 | | | | 14.75 | | | | 14.48 | | | | 13.79 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Five Quarter Comparison | |
| | | | 12/31/2013 | | | | 9/30/2013 | | | | 6/30/2013 | | | | 3/31/2013 | | | | 12/31/2012 | |
Key Financial Ratios and other information: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | 1.00 | % | | | 0.40 | % | | | 0.79 | % | | | 1.37 | % | | | 0.89 | % |
| Annualized return on average equity | | | 11.10 | % | | | 4.41 | % | | | 8.74 | % | | | 13.01 | % | | | 7.90 | % |
| Net interest margin | | | 5.50 | % | | | 4.73 | % | | | 5.61 | % | | | 5.51 | % | | | 6.37 | % |
| Net interest spread | | | 5.43 | % | | | 4.66 | % | | | 5.55 | % | | | 5.44 | % | | | 6.30 | % |
| Core net interest margin | | | 3.20 | % | | | 3.23 | % | | | 3.27 | % | | | 3.35 | % | | | 3.22 | % |
| Core net interest spread | | | 3.10 | % | | | 3.13 | % | | | 3.17 | % | | | 3.23 | % | | | 3.08 | % |
| Efficiency ratio | | | 71.66 | % | | | 82.29 | % | | | 74.17 | % | | | 80.22 | % | | | 69.50 | % |
| | | | | | | | | | | | | | | | | | | | |
| Capital Ratios | | | | | | | | | | | | | | | | | | | | |
| Average stockholders' equity to average assets | | | 9.0 | % | | | 9.0 | % | | | 9.0 | % | | | 10.5 | % | | | 11.3 | % |
| Tangible equity to tangible assets (non-GAAP) | | | 8.8 | % | | | 8.8 | % | | | 8.6 | % | | | 8.5 | % | | | 10.6 | % |
| Tier 1 leverage ratio | | | 9.5 | % | | | 9.4 | % | | | 9.0 | % | | | 10.4 | % | | | 11.0 | % |
| Tier 1 risk-based capital ratio | | | 13.5 | % | | | 14.3 | % | | | 14.3 | % | | | 15.2 | % | | | 17.2 | % |
| Total risk-based capital ratio | | | 14.5 | % | | | 15.4 | % | | | 15.3 | % | | | 16.3 | % | | | 18.4 | % |
| | | | | | | | | | | | | | | | | | | | |
| Other Information | | | | | | | | | | | | | | | | | | | | |
| Full-time equivalent employees | | | 426 | | | | 412 | | | | 401 | | | | 355 | | | | 321 | |
| Banking | | | 306 | | | | 308 | | | | 316 | | | | 285 | | | | 264 | |
| Mortgage | | | 113 | | | | 97 | | | | 79 | | | | 64 | | | | 50 | |
| Investments | | | 7 | | | | 7 | | | | 6 | | | | 6 | | | | 7 | |
| Number of full-service offices | | | 27 | | | | 27 | | | | 29 | | | | 29 | | | | 20 | |
| Mortgage loan offices | | | 14 | | | | 12 | | | | 12 | | | | 12 | | | | 13 | |
| Investment offices | | | 4 | | | | 4 | | | | 4 | | | | 4 | | | | 4 | |
Heritage Financial Group, Inc. and Subsidiary
Consolidated Financial Highlights
(Unaudited)
(Dollars in thousands)
| | | | Five Quarter Comparison | |
| | | | 12/31/2013 | | | | 9/30/2013 | | | | 6/30/2013 | | | | 3/31/2013 | | | | 12/31/2012 | |
| Loans | | | | | | | | | | | | | | | | | | | | |
| Construction and land | | $ | 50,167 | | | $ | 48,808 | | | $ | 42,753 | | | $ | 37,659 | | | $ | 33,340 | |
| Farmland | | | 23,420 | | | | 22,561 | | | | 23,447 | | | | 20,749 | | | | 20,141 | |
| Permanent 1 - 4 | | | 174,565 | | | | 169,105 | | | | 166,199 | | | | 163,302 | | | | 161,883 | |
| Permanent 1 - 4 - junior liens and revolving | | | 32,038 | | | | 30,180 | | | | 29,432 | | | | 28,852 | | | | 27,345 | |
| Multifamily | | | 22,650 | | | | 27,468 | | | | 26,301 | | | | 24,280 | | | | 21,293 | |
| Nonresidential | | | 256,567 | | | | 250,859 | | | | 234,259 | | | | 225,946 | | | | 212,570 | |
| Commercial business | | | 101,161 | | | | 95,108 | | | | 88,828 | | | | 83,015 | | | | 83,659 | |
| Consumer and other | | | 23,976 | | | | 21,499 | | | | 26,889 | | | | 19,931 | | | | 25,498 | |
| Total core loans | | $ | 684,544 | | | $ | 665,588 | | | $ | 638,108 | | | $ | 603,734 | | | $ | 585,729 | |
| | | | | | | | | | | | | | | | | | | | |
| FDIC-acquired non-covered | | | 63,318 | | | | 69,661 | | | | 74,637 | | | | 83,317 | | | | 11,850 | |
| Total loans | | | 747,862 | | | | 735,249 | | | | 712,745 | | | | 687,051 | | | | 597,579 | |
| | | | | | | | | | | | | | | | | | | | |
| FDIC-acquired covered | | | 50,891 | | | | 53,843 | | | | 57,176 | | | | 65,815 | | | | 72,425 | |
| | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | | 8,955 | | | | 8,894 | | | | 9,047 | | | | 9,105 | | | | 9,061 | |
| | $ | 789,798 | | | $ | 780,198 | | | $ | 760,874 | | | $ | 743,761 | | | $ | 660,943 | |
| | | | | | | | | | | | | | | | | | | | | |
Loan Balances by Geographical Region (excluding FDIC- acquired loans): | | | | | | | | | | | | | | | | | | | | |
| | | | Five Quarter Comparison | |
| | | | 12/31/2013 | | | | 9/30/2013 | | | | 6/30/2013 | | | | 3/31/2013 | | | | 12/31/2012 | |
| | | | | | | | | | | | | | | | | | | | |
| Albany, Georgia | | $ | 294,033 | | | $ | 288,089 | | | $ | 282,509 | | | $ | 273,116 | | | $ | 282,151 | |
| Valdosta, Georgia | | | 100,936 | | | | 101,729 | | | | 96,485 | | | | 90,385 | | | | 84,198 | |
| Ocala, Florida | | | 58,343 | | | | 58,115 | | | | 58,240 | | | | 58,533 | | | | 55,197 | |
| Statesboro, Georgia | | | 122,928 | | | | 124,667 | | | | 118,056 | | | | 107,650 | | | | 103,176 | |
| Auburn, Alabama | | | 36,130 | | | | 31,485 | | | | 26,061 | | | | 24,386 | | | | 20,149 | |
| Macon, Georgia | | | 68,638 | | | | 60,197 | | | | 55,935 | | | | 49,165 | | | | 40,858 | |
| Birmingham, Alabama | | | 1,590 | | | | 344 | | | | 822 | | | | 499 | | | | - | |
| South Atlanta | | | 1,946 | | | | 962 | | | | - | | | | - | | | | - | |
| | $ | 684,544 | | | $ | 665,588 | | | $ | 638,108 | | | $ | 603,734 | | | $ | 585,729 | |
| | | | | | | | | | | | | | | | | | | | |
Asset Quality Data (excluding FDIC -acquired loans): | | | | | | | | | | | | | | | | | | | | |
| | | | Five Quarter Comparison | |
| | | | 12/31/2013 | | | | 9/30/2013 | | | | 6/30/2013 | | | | 3/31/2013 | | | | 12/31/2012 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 9,435 | | | $ | 10,986 | | | $ | 12,223 | | | $ | 12,723 | | | $ | 14,677 | |
| Loans - 90 days past due & still accruing | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total non-performing loans | | | 9,435 | | | | 10,986 | | | | 12,223 | | | | 12,723 | | | | 14,677 | |
| | | | | | | | | | | | | | | | | | | | |
| OREO | | | 1,789 | | | | 2,654 | | | | 3,046 | | | | 3,028 | | | | 2,620 | |
| Total non-performing assets | | $ | 11,224 | | | $ | 13,640 | | | $ | 15,269 | | | $ | 15,751 | | | $ | 17,297 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Trouble debt restructuring - nonaccrual | | $ | 5,763 | | | $ | 5,840 | | | $ | 6,496 | | | $ | 4,593 | | | $ | 6,856 | |
| Trouble debt restructuring - accruing | | | 1,983 | | | | 1,996 | | | | 2,009 | | | | 2,023 | | | | 7 | |
| Total trouble debt restructuring | | $ | 7,746 | | | $ | 7,836 | | | $ | 8,505 | | | $ | 6,616 | | | $ | 6,863 | |
| | | | | | | | | | | | | | | | | | | | |
| Accruing past due loans | | $ | 1,001 | | | $ | 669 | | | $ | 934 | | | $ | 1,316 | | | $ | 2,131 | |
| | | | | | | | | | | | | | | | | | | | |
| Total criticized assets | | | 22,741 | | | | 26,116 | | | | 25,785 | | | | 25,474 | | | | 28,194 | |
| Total classified assets | | | 19,582 | | | | 23,048 | | | | 22,985 | | | | 22,118 | | | | 25,129 | |
| | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | | 8,955 | | | | 8,894 | | | | 9,047 | | | | 9,105 | | | | 9,061 | |
| Net charge-offs | | $ | 160 | | | $ | 503 | | | $ | 698 | | | $ | 406 | | | $ | 68 | |
| | | | | | | | | | | | | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses to total core loans | | | 1.31 | % | | | 1.34 | % | | | 1.42 | % | | | 1.51 | % | | | 1.55 | % |
| Allowance for loan losses to average core loans | | | 1.33 | % | | | 1.37 | % | | | 1.45 | % | | | 1.53 | % | | | 1.62 | % |
| Allowance for loan losses to non-performing loans | | | 94.91 | % | | | 80.96 | % | | | 74.02 | % | | | 71.56 | % | | | 61.73 | % |
| Non-performing loans to total core loans | | | 1.38 | % | | | 1.65 | % | | | 1.92 | % | | | 2.11 | % | | | 2.51 | % |
| Non-performing assets to total assets | | | 0.81 | % | | | 1.03 | % | | | 1.14 | % | | | 1.15 | % | | | 1.58 | % |
| Net charge-offs to average core loans (annualized) | | | 0.10 | % | | | 0.31 | % | | | 0.45 | % | | | 0.27 | % | | | 0.05 | % |
Heritage Financial Group, Inc. and Subsidiary
Consolidated Financial Highlights
(Unaudited)
(Dollars in thousands)
| | Five Quarter Comparison | |
FDIC-acquired assets | | 12/31/2013 | | | 9/30/2013 | | | 6/30/2013 | | | 3/31/2013 | | | 12/31/2012 | |
| | | | | | | | | | | | | | | |
FDIC-acquired non-covered loans: | | | | | | | | | | | | | | | |
| Commercial real estate | | $ | 22,268 | | | $ | 25,027 | | | $ | 27,258 | | | $ | 30,851 | | | $ | 6,359 | |
| Residential real estate | | | 30,134 | | | | 32,318 | | | | 33,452 | | | | 34,938 | | | | 2,110 | |
| Construction and land | | | 5,156 | | | | 5,195 | | | | 5,941 | | | | 7,756 | | | | 494 | |
| Commercial and industrial | | | 2,604 | | | | 3,638 | | | | 4,106 | | | | 5,125 | | | | 1,574 | |
| Consumer and other | | | 3,156 | | | | 3,483 | | | | 3,880 | | | | 4,647 | | | | 1,313 | |
| Total | | | 63,318 | | | | 69,661 | | | | 74,637 | | | | 83,317 | | | | 11,850 | |
FDIC-acquired covered loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate | | | 14,161 | | | | 14,956 | | | | 15,384 | | | | 18,849 | | | | 21,820 | |
| Residential real estate | | | 23,886 | | | | 25,082 | | | | 27,283 | | | | 30,735 | | | | 32,846 | |
| Construction and land | | | 11,642 | | | | 12,469 | | | | 12,645 | | | | 13,370 | | | | 14,248 | |
| Commercial and industrial | | | 864 | | | | 924 | | | | 1,340 | | | | 2,216 | | | | 2,670 | |
| Consumer and other | | | 338 | | | | 412 | | | | 524 | | | | 645 | | | | 841 | |
| Total | | | 50,891 | | | | 53,843 | | | | 57,176 | | | | 65,815 | | | | 72,425 | |
| Total carrying value of FDIC-acquired loans | | $ | 114,209 | | | $ | 123,504 | | | $ | 131,813 | | | $ | 149,132 | | | $ | 84,275 | |
| Non-accrete discount for FDIC-acquired loans | | | 36,746 | | | | 48,545 | | | | 55,170 | | | | 59,558 | | | | 46,000 | |
| Accretable discount for FDIC-acquired loans | | | 26,860 | | | | 23,445 | | | | 23,007 | | | | 26,136 | | | | 21,834 | |
| Total discount for FDIC-acquired loans | | | 63,606 | | | | 71,990 | | | | 78,177 | | | | 85,694 | | | | 67,834 | |
| Outstanding principal balance for FDIC-acquired loans | | $ | 177,815 | | | $ | 195,494 | | | $ | 209,989 | | | $ | 234,826 | | | $ | 152,109 | |
| | | | | | | | | | | | | | | | | | | | |
FDIC-acquired OREO: | | | | | | | | | | | | | | | | | | | | |
| Non-covered | | $ | 1,694 | | | $ | 1,680 | | | $ | 1,087 | | | $ | 1,363 | | | $ | 602 | |
| Covered | | | 7,053 | | | | 5,909 | | | | 7,815 | | | | 9,460 | | | | 9,467 | |
| Total carrying value of FDIC-acquired OREO | | $ | 8,747 | | | $ | 7,589 | | | $ | 8,902 | | | $ | 10,823 | | | $ | 10,069 | |
| Total discount for FDIC-acquired OREO | | | 11,186 | | | | 12,038 | | | | 11,013 | | | | 12,176 | | | | 11,690 | |
| Gross carrying value of FDIC-acquired OREO | | $ | 19,933 | | | $ | 19,627 | | | $ | 19,915 | | | $ | 22,999 | | | $ | 21,759 | |
| | | | | | | | | | | | | | | | | | | | |
Total loan discount accretion recognized in income: | | | | | | | | | | | | | | | | | | | | |
| Individual assessed discount accretion | | $ | 3,132 | | | $ | 791 | | | $ | 2,336 | | | $ | 637 | | | $ | 2,515 | |
| Pooled assessed discount accretion | | | 3,140 | | | | 2,927 | | | | 3,808 | | | | 3,951 | | | | 4,131 | |
| Total loan discount accretion recognized in income | | $ | 6,272 | | | $ | 3,718 | | | $ | 6,144 | | | $ | 4,588 | | | $ | 6,646 | |
| | | | | | | | | | | | | | | | | | | | |
FDIC-acquired ratios: | | | | | | | | | | | | | | | | | | | | |
| Total discount to principal balance for FDIC-acquired loans | | | 35.8 | % | | | 36.8 | % | | | 37.2 | % | | | 36.5 | % | | | 44.6 | % |
| | | | | | | | | | | | | | | | | | | | |
| | Five Quarter Comparison | |
Non-covered FDIC-acquired assets | | 12/31/2013 | | | 9/30/2013 | | | 6/30/2013 | | | 3/31/2013 | | | 12/31/2012 | |
| | | | | | | | | | | | | | | | | | | | |
Outstanding principal balance: | | | | | | | | | | | | | | | | | | | | |
| FDIC-acquired non-covered loan pools | | $ | 61,893 | | | $ | 66,294 | | | $ | 70,144 | | | $ | 76,675 | | | $ | 14,196 | |
| FDIC-acquired non-covered loans individually assessed | | | 22,214 | | | | 27,627 | | | | 31,603 | | | | 35,837 | | | | 2,903 | |
| Total non-covered outstanding principal loan balance | | | 84,107 | | | | 93,921 | | | | 101,747 | | | | 112,512 | | | | 17,099 | |
| Gross carrying value for FDIC-acquired non-covered OREO | | | 4,470 | | | | 4,993 | | | | 2,529 | | | | 2,371 | | | | 793 | |
| Total gross balance of non-covered assets | | $ | 88,577 | | | $ | 98,914 | | | $ | 104,276 | | | $ | 114,883 | | | $ | 17,892 | |
Non-covered non-accretable discount for estimated credit losses: | | | | | | | | | | | | | | | | | | | | |
| FDIC-acquired non-covered loan pools | | $ | 8,932 | | | | 9,297 | | | | 9,341 | | | | 9,479 | | | | 1,775 | |
| FDIC-acquired non-covered loans individually assessed | | | 5,397 | | | | 12,294 | | | | 14,894 | | | | 16,482 | | | | 2,130 | |
| Total non-covered non-accretable discount | | | 14,329 | | | | 21,591 | | | | 24,235 | | | | 25,961 | | | | 3,905 | |
| FDIC-acquired non-covered OREO discount | | | 2,776 | | | | 3,313 | | | | 1,442 | | | | 1,008 | | | | 191 | |
| Total non-covered discount for estimated credit losses | | | 17,105 | | | | 24,904 | | | | 25,677 | | | | 26,969 | | | | 4,096 | |
Non-covered accretable discount: | | | | | | | | | | | | | | | | | | | | |
| Non-covered accretable discount for improvement in cash flows | | | 5,458 | | | | 380 | | | | 318 | | | | 475 | | | | 381 | |
| Other non-covered accretable discount | | | 1,002 | | | | 2,288 | | | | 2,558 | | | | 2,759 | | | | 963 | |
| Total non-covered accretable discount | | | 6,460 | | | | 2,668 | | | | 2,876 | | | | 3,234 | | | | 1,344 | |
| Total non-covered discount | | $ | 23,565 | | | $ | 27,572 | | | $ | 28,553 | | | $ | 30,203 | | | $ | 5,440 | |
| | | | | | | | | | | | | | | | | | | | |
Non-covered loan discount accretion recognized in income: | | | | | | | | | | | | | | | | | | | | |
| Individual assessed discount accretion | | $ | 2,375 | | | $ | 619 | | | $ | 974 | | | $ | 42 | | | $ | 29 | |
| Pooled assessed discount accretion | | | 249 | | | | 184 | | | | 174 | | | | 24 | | | | 39 | |
| Total non-covered discount accretion recognized in income | | $ | 2,624 | | | $ | 803 | | | $ | 1,148 | | | $ | 66 | | | $ | 68 | |
| | | | | | | | | | | | | | | | | | | | |
Non-covered FDIC-acquired ratios: | | | | | | | | | | | | | | | | | | | | |
| Total discount to principal balance for non-covered FDIC-acquired assets | | | 26.6 | % | | | 27.9 | % | | | 27.4 | % | | | 26.3 | % | | | 30.4 | % |
| Gross balance of non-covered loans to total FDIC-acquired loans | | | 47.3 | % | | | 48.0 | % | | | 48.5 | % | | | 47.9 | % | | | 11.2 | % |
Heritage Financial Group, Inc. and Subsidiary
Consolidated Financial Highlights
(Unaudited)
(Dollars in thousands)
| | Five Quarter Comparison | |
Covered FDIC-acquired assets | | 12/31/2013 | | | 9/30/2013 | | | 6/30/2013 | | | 3/31/2013 | | | 12/31/2012 | |
| | | | | | | | | | | | | | | | | | | | |
Outstanding principal balance: | | | | | | | | | | | | | | | | | | | | |
| FDIC-acquired covered loan pools | | $ | 69,192 | | | $ | 74,020 | | | $ | 79,552 | | | $ | 90,020 | | | $ | 98,570 | |
| FDIC-acquired covered loans individually assessed | | | 24,517 | | | | 27,554 | | | | 28,690 | | | | 32,294 | | | | 36,440 | |
| Total covered outstanding principal loan balance | | | 93,709 | | | | 101,574 | | | | 108,242 | | | | 122,314 | | | | 135,010 | |
| Gross carrying value for FDIC-acquired OREO covered | | | 15,463 | | | | 14,634 | | | | 17,385 | | | | 20,628 | | | | 20,966 | |
| Total gross balance of covered assets | | $ | 109,172 | | | $ | 116,208 | | | $ | 125,627 | | | $ | 142,942 | | | $ | 155,976 | |
Covered non-accretable discount for estimated credit losses: | | | | | | | | | | | | | | | | | | | | |
| FDIC-acquired covered loan pools | | $ | 15,284 | | | $ | 16,281 | | | $ | 19,917 | | | $ | 20,705 | | | $ | 27,194 | |
| FDIC-acquired covered loans individually assessed | | | 7,133 | | | | 10,673 | | | | 11,018 | | | | 12,892 | | | | 14,900 | |
| Total covered non-accretable discount | | | 22,417 | | | | 26,954 | | | | 30,935 | | | | 33,597 | | | | 42,094 | |
| FDIC-acquired covered OREO discount | | | 8,410 | | | | 8,725 | | | | 9,570 | | | | 11,168 | | | | 11,499 | |
| Total covered discount for estimated credit losses | | | 30,827 | | | | 35,679 | | | | 40,505 | | | | 44,765 | | | | 53,593 | |
Covered accretable discount: | | | | | | | | | | | | | | | | | | | | |
| Covered accretable discount for improvement in cash flows | | | 18,012 | | | | 17,676 | | | | 16,297 | | | | 18,820 | | | | 15,396 | |
| Other covered accretable discount | | | 2,389 | | | | 3,101 | | | | 3,834 | | | | 4,082 | | | | 5,095 | |
| Total covered accretable discount | | | 20,401 | | | | 20,777 | | | | 20,131 | | | | 22,902 | | | | 20,491 | |
| Total covered discount | | $ | 51,228 | | | $ | 56,456 | | | $ | 60,636 | | | $ | 67,667 | | | $ | 74,084 | |
| | | | | | | | | | | | | | | | | | | | |
Covered loan discount accretion recognized in income: | | | | | | | | | | | | | | | | | | | | |
| Individual assessed accretion | | $ | 757 | | | $ | 172 | | | $ | 1,362 | | | $ | 595 | | | $ | 2,486 | |
| Pooled assessed accretion | | | 2,891 | | | | 2,743 | | | | 3,634 | | | | 3,927 | | | | 4,092 | |
| Total covered discount accretion recognized in income | | $ | 3,648 | | | $ | 2,915 | | | $ | 4,996 | | | $ | 4,522 | | | $ | 6,578 | |
| | | | | | | | | | | | | | | | | | | | |
Covered FDIC-acquired ratios: | | | | | | | | | | | | | | | | | | | | |
| Total discount to principal balance for covered FDIC-acquired assets | | | 46.9 | % | | | 48.6 | % | | | 48.3 | % | | | 47.3 | % | | | 47.5 | % |
| | | | | | | | | | | | | | | | | | | | |
| | Five Quarter Comparison | |
FDIC loss-share receivable | | 12/31/2013 | | | 9/30/2013 | | | 6/30/2013 | | | 3/31/2013 | | | 12/31/2012 | |
| | | | | | | | | | | | | | | | | | | | |
FDIC loss-share receivable: | | | | | | | | | | | | | | | | | | | | |
| Single family estimated credit losses | | $ | 8,995 | | | $ | 9,134 | | | $ | 9,764 | | | $ | 10,720 | | | $ | 11,292 | |
| Non-single family estimated credit losses | | | 30,077 | | | | 33,550 | | | | 35,678 | | | | 40,148 | | | | 43,899 | |
| Pending reimbursements and other | | | 2,234 | | | | 1,843 | | | | 2,664 | | | | 1,144 | | | | 5,540 | |
| Total | | $ | 41,306 | | | $ | 44,527 | | | $ | 48,106 | | | $ | 52,012 | | | $ | 60,731 | |
| | | | | | | | | | | | | | | | | | | | |
| FDIC loss-share clawback liability | | $ | 1,941 | | | $ | 1,681 | | | $ | 1,393 | | | $ | 1,269 | | | $ | 703 | |
| | | | | | | | | | | | | | | | | | | | |
| Total covered discount | | $ | 51,228 | | | $ | 56,456 | | | $ | 60,636 | | | $ | 67,667 | | | $ | 74,084 | |
| Total covered discount impacting FDIC loss-share receivable | | $ | 48,839 | | | $ | 53,355 | | | $ | 56,802 | | | $ | 63,585 | | | $ | 68,989 | |
| Total covered discount impacting FDIC loss-share receivable at 80% | | $ | 39,071 | | | $ | 42,684 | | | $ | 45,442 | | | $ | 50,868 | | | $ | 55,191 | |
| | | | | | | | | | | | | | | | | | | | |
FDIC loss-share receivable ratios: | | | | | | | | | | | | | | | | | | | | |
| FDIC receivable as % of gross balance of covered assets | | | 37.8 | % | | | 38.3 | % | | | 38.3 | % | | | 36.4 | % | | | 38.9 | % |
| Covered discount at 80% as of % of FDIC receivable | | | 94.6 | % | | | 95.9 | % | | | 94.5 | % | | | 97.8 | % | | | 90.9 | % |
Heritage Financial Group, Inc. and Subsidiary
Consolidated Financial Highlights
(Unaudited)
Mortgage Segment Information | | | | | | | | | | | | | | | |
| | Five Quarter Comparison | |
| | 12/31/2013 | | | 9/30/2013 | | | 6/30/2013 | | | 3/31/2013 | | | 12/31/2012 | |
| | | | | | | | | | | | | | | |
| Net interest income | | $ | 114 | | | $ | 218 | | | $ | 112 | | | $ | 19 | | | $ | 156 | |
| Provision for loan losses | | | - | | | | - | | | | - | | | | - | | | | - | |
| Noninterest income | | | 2,951 | | | | 1,952 | | | | 3,424 | | | | 2,182 | | | | 1,452 | |
| Noninterest expense | | | 3,149 | | | | 2,968 | | | | 3,239 | | | | 2,206 | | | | 1,732 | |
| Income tax expense (benefit) | | | (26 | ) | | | (247 | ) | | | 92 | | | | (2 | ) | | | (38 | ) |
| Mortgage profit (loss) | | $ | (58 | ) | | $ | (551 | ) | | $ | 205 | | | $ | (3 | ) | | $ | (86 | ) |
| | | | | | | | | | | | | | | | | | | | |
| Mortgage segment assets | | $ | 120,716 | | | $ | 44,588 | | | $ | 46,854 | | | $ | 20,849 | | | $ | 16,382 | |
| | | | | | | | | | | | | | | | | | | | |
Mortgage Segment Selected Other Information: | | | | | | | | | | | | | | | | | | | | |
| | Five Quarter Comparison | |
| | 12/31/2013 | | | 9/30/2013 | | | 6/30/2013 | | | 3/31/2013 | | | 12/31/2012 | |
| | | | | | | | | | | | | | | | | | | | |
| Retail production | | $ | 84,381 | | | $ | 83,657 | | | $ | 97,608 | | | $ | 49,450 | | | $ | 55,815 | |
| Wholesale production | | $ | 36,030 | | | $ | 31,646 | | | $ | 19,072 | | | $ | 5,588 | | | $ | - | |
| Purchase as a % of total production | | | 78 | % | | | 76 | % | | | 66 | % | | | 54 | % | | | 42 | % |
| Refi as a % of total production | | | 22 | % | | | 24 | % | | | 34 | % | | | 46 | % | | | 58 | % |
| End of period Locks | | $ | 43,054 | | | $ | 47,871 | | | $ | 53,910 | | | $ | 49,964 | | | $ | 20,271 | |
-END-
