April 22, 2005
Mail Stop 0408
By U.S. Mail and facsimile to (229) 888-8386
Mr. O. Leonard Dorminey
Heritage Financial Group
310 W. Oglethorpe Blvd.
Albany, GA 31701
Re: Heritage Financial Group
Form SB-2 filed March 25, 2005
File No. 333-123581
Dear Mr. Dorminey:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects. We welcome any questions you may have
about our comments or any other aspect of our review. Feel free
to
call us at the telephone numbers listed at the end of this letter.
General
1. We note the "form of" exhibits as well as exhibits to be filed
in
the future. Please file all executed and final exhibits,
including
opinions, with the next amendment, if possible.
2. We note that you engaged new accountants to audit the fiscal
year
ended December 31, 2004 financials, please revise to provide all
of
the disclosures required by Item 304 of Regulation S-B, including
filing a letter from your former accountant as Exhibit 16.
3. If applicable, please provide a section which describes
transactions with related parties, as required by Item 404 of
Regulation S-B.
Front Cover of Prospectus
4. Confirm that the outside front cover page of the prospectus
will
be one page. Refer to Item 501(a) of Regulation S-B.
Summary
General
5. Please consider providing a section at the beginning of the
Summary, before the more detailed information you have included,
which broadly outlines the offering and what the company hopes to
accomplish through this offering.
6. In several sections, you refer to the regulatory requirements
for
Heritage, MHC. For example, the first sentence of "The Companies:
Heritage, MHC" and the first sentence of "The Stock Offering."
Please briefly provide the context for these requirements.
Risk Factors
General
Heritage, MHC will own more than half of the stock of Heritage
Financial Group... - page 13
7. We note your intention to increase your construction lending
business, as described on page 68. Please consider discussing the
increased risks of this lending category in a risk factor.
Pro Forma Data - page 25
8. Please revise to include a footnote quantifying the components
that make up offering expenses and commissions.
Management`s Discussion and Analysis of Financial Condition and
Plan
of Operations - page 49
General
9. Please revisit Item 303 of Regulation S-B, as well as
Interpretive
Release No. 34-48960 and Interpretive Release No. 34-6835. You
have
provided analysis of your financial condition but we would like
Management to discuss trends and the direction of the business
more
broadly. Consider adding a section at the beginning of this
section
which talks about the overall business development and trends.
For
example, management should provide more detail with regard to
factors
behind the numbers. In the first section on page 57, you
attribute
the net income increase of 55.2% to a reduction in non-interest
expense but never provide detail as to why non-interest expenses
have
decreased.
Average Balances, Net Interest Income, Yields Earned and Rates
Paid -
page 55
10. Please revise to disclose whether yields on tax-exempt
obligations, if any, have been computed on a tax equivalent basis.
Refer to Instruction for Item II.B of Industry Guide 3.
Liquidity and Commitments - page 58
11. Please revise your liquidity and commitments discussion to:
* Include a more robust discussion focusing on your statement of
cash
flows in analyzing liquidity. Present a balanced discussion
dealing
with cash flows from operating, investing and financing
activities.
Discuss the underlying reasons for the changes as well as their
reasonably likely impact on future cash flows and management
decisions;
* Discuss the impact of any known trends, events or uncertainties;
Please refer to Section IV or SEC Release No. 33-8350
for additional guidance.
Capital - page 59
12. Please revise your capital discussion to include prospective
information regarding your Company`s needs for capital, including
an
enhanced discussion of the impact of the offering on capital.
Business of Heritage Financial Group: General - page 61
13. Please confirm that you meant to use "Our principal business"
and
"We offer a variety" instead of "HeritageBank of the South" in the
last two paragraphs of this section.
Loan Origination, Purchases, Sales, Repayments and Servicing -
page
70
14. In the third paragraph of this section, you discuss a
relationship with another lender where you originate mortgage
loans
in accordance with that lender`s policies, terms and conditions.
If
appropriate, please provide this, and all other material
contracts,
as exhibits (required by Item 601(10) of Regulation S-B).
Loan Origination, Purchases, Sales, Repayments and Servicing -
page
71
15. We note from this table that your originations of one-to-four-
family fixed rate loans have dropped significantly since 2003.
However, you have not discussed this significant decrease in your
customer base in your analysis. Please revisit this issue in your
discussion of one-to-four family loans on page 66.
Deposits - page 83
16. We note that your maturity table on page 83 does not agree to
the
schedule of maturities as set forth in Note 5 to the consolidated
financial statements. Please revise as necessary.
Legal Proceedings - page 86
17. Please include disclosure relating to material legal fees
spent
in the "various legal actions" described.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
acceleration of a registration statement. Please allow adequate
time
after the filing of any amendment for further review before
submitting a request for acceleration. Please provide this
request
at least two business days in advance of the requested effective
date.
You may contact Benjamin Phippen at (202) 942-2906 or Don
Walker at (202) 942-1799 if you have questions regarding comments
on
the financial statements and related matters. Please contact
Kathryn
McHale at (202) 824-5538 or me at (202) 942-2887 with any other
questions.
Sincerely,
Todd Schiffman
Assistant Director
cc: Marianne Roche
Silver, Freedman & Taff, L.L.P.
1700 Wisconsin Avenue, NW
Washington, DC 20007
Facsimile: 202-337-5502
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Heritage Financial Group
Mr. O. Leonard Dorminey
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