Exhibit 99
Heritage Financial Group Announces Second Quarter Results
Company Declares Quarterly Cash Dividend of $0.06 Per Share
ALBANY, Ga.--(BUSINESS WIRE)--July 19, 2007--Heritage Financial
Group (NASDAQ: HBOS), the mid-tier holding company for HeritageBank of
the South, today announced financial results for the second quarter
and six months ended June 30, 2007. Highlights of the quarter included
continued growth in the Company's loan portfolio, which has increased
12% over the past year in large measure because of the Company's entry
into the Florida market during the summer of 2006. Credit quality
remained generally strong and stable in the second quarter, however,
the Company's provision for loan losses on a comparable basis was
higher, reflecting growth in the loan portfolio, an increase in
criticized loans this year, and a positive adjustment to the provision
in the year-earlier quarter. Largely because of the year-over-year
change in the provision for loan losses, the Company reported lower
earnings for the second quarter of 2007 versus the same period last
year.
Separately, the Company also announced that its Board of Directors
has declared a cash dividend of $0.06 per common share. The dividend
will be paid on August 17, 2007, to stockholders of record as of
August 3, 2007.
Net income for the second quarter of 2007 was $549,000 or $0.05
per share, down 34% from $835,000 or $0.08 per share in the second
quarter last year. For the first six months of 2007, net income
declined 5% to $1,268,000 from $1,331,000 in the year-earlier period;
on a per share basis, earnings were $0.12 for the first half of both
2007 and 2006.
Commenting on the Company's announcement, Leonard Dorminey,
President and Chief Executive Officer of Heritage Financial Group,
said, "Although market conditions remain challenging, we are pleased
to note the fundamental progress posted by the Company during the
second quarter. We have experienced strong growth on both sides of the
balance sheet - in part attributable to our new Ocala branch,
highlighted by the addition of more than $32,000,000 to our loan
portfolio and $71,000,000 in deposits during the past year.
"In many areas, both with our existing operations in Albany and
our presence in Ocala, we continue to invest in our business to lay
the groundwork for sustainable and attractive growth," Dorminey
continued. "Our goal is not only to develop new lending and banking
relationships, extending the reach of our bank, but to support that
growth with a more efficient operational platform that will allow us
to translate top-line expansion into greater stockholder value over
the long term. I am pleased with the progress we made on both fronts
during the past quarter."
Net interest income for the second quarter increased 3% to
$3,659,000 from $3,568,000 for the year-earlier period. In the
quarter, the Company recorded a loan loss provision of $337,000 versus
a positive adjustment to the loan loss provision of $30,000 in the
same period last year. Net interest income after provision for loan
losses declined 8% to $3,322,000 in the second quarter of 2007 from
$3,598,000 in the prior-year period. Net interest income for the first
six months of 2007 increased 1% to $7,146,000 from $7,057,000 in the
year-earlier period. The year-to-date provision for loan losses rose
to $495,000 from $60,000 in the comparable 2006 period. Net interest
income after provision for loan losses declined 5% to $6,651,000 for
the first six months of 2007 versus $6,997,000 in the same period last
year.
Although non-performing loans at the end of the second quarter of
2007 increased to $546,000 versus $363,000 in the first quarter of
2007, the total was 26% lower than non-performing loans of $737,000 at
June 30, 2006, underscoring a trend of generally improving credit
quality during the past year. As a percent of total loans outstanding,
non-performing loans were 0.19%, up from 0.13% in the first quarter of
2007, but down from 0.29% for the year-earlier period. Meanwhile, net
charge-offs to average outstanding loans, on an annualized basis, were
0.01% for the second quarter of 2007 versus 0.07% in the first quarter
of 2007 and 0.09% for the prior-year period.
The Company's net interest margin was 3.73% in the second quarter,
unchanged from the first quarter of 2007, but down 63 basis points
from second quarter last year. The decline was due to a continuation
of a flat yield curve and upward pressures on deposit rates, as the
Company has remained aggressive in building its deposit base to
support the growth of its loan portfolio. The Company's net interest
margin for the first half of 2007 was 3.72%, down 64 basis points from
the comparable period last year.
Noninterest income for the second quarter of 2007 increased 27% to
$1,709,000 from $1,342,000 in the same period last year, reflecting
primarily higher service charges and transaction fees, as well as
increased brokerage fees. Noninterest income for the first half of the
year increased 29% to $3,297,000 from $2,554,000 in the year-earlier
period, mirroring the trends seen in the second quarter.
Noninterest expense for the second quarter of 2007 increased 16%
to $4,346,000 from $3,737,000 in the second quarter of 2006, primarily
reflecting higher salaries, employee benefits and occupancy costs
related to the Company's new branch in Ocala that opened in August
2006, increased data processing fees, and costs to streamline and
realign HeritageBank's back office operations to support future growth
with greater efficiency. In the second quarter, the Company also
incurred a full period of stock option expense related to plans
implemented in June 2006.
Annualized return on average stockholders' equity for the second
quarter and six months ended June 30, 2007, was 3.43% and 3.98%,
respectively, versus 4.79% and 3.83%, respectively, for the comparable
periods last year. Annualized return on average total assets for the
second quarter and six months ended June 30, 2007, was 0.49% and
0.58%, respectively, compared with 0.92% and 0.73%, respectively, for
the same periods in 2006.
The Company's total assets increased 8% to $448,061,000 at
June 30, 2007, from $413,330,000 at December 31, 2006, and increased
18% from $381,337,000 at June 30, 2006. Gross loans increased 7% to
$294,920,000 at June 30, 2007, from $276,776,000 at December 31, 2006,
and increased 12% from $262,566,000 at the end of the second quarter
last year. Deposits increased 10% to $327,766,000 at the end of the
second quarter of 2007 from $299,189,000 at December 31, 2006, and
increased 28% from $256,574,000 at June 30, 2006. Total stockholders'
equity increased slightly to $62,982,000 at June 30, 2007, from
$62,809,000 as of December 31, 2006, and declined 7% from $67,773,000
at June 30, 2006, reflecting the Company's ongoing stock repurchase
programs.
Heritage Financial Group is the mid-tier holding company for
HeritageBank of the South, a community-oriented bank serving primarily
Albany, Georgia, and surrounding Dougherty, Lee and Worth counties in
Georgia through six full-service banking offices. HeritageBank also
commenced operations in the State of Florida during the third quarter
of 2006 with the opening of a full-service banking office in Ocala.
As of June 30, 2007, Heritage Financial Group reported total
assets of approximately $448 million and total stockholders' equity of
approximately $63 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.
Heritage, MHC, a mutual holding company formed in 2002, holds
approximately 72% of the shares of Heritage Financial Group. The
remaining 28% of Heritage Financial Group's shares are held by public
stockholders following the Company's June 2005 initial public
offering.
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. We intend such
forward-looking statements to be covered by the safe harbor provisions
for forward-looking statements contained in the Private Securities
Reform Act of 1995 and include this statement for purposes of these
safe harbor provisions. Further information concerning the Company and
its business, including additional factors that could materially
affect our financial results, is included in our other filings with
the SEC.
HERITAGE FINANCIAL GROUP
Unaudited Financial Highlights
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
Total interest income $7,004 $ 5,406 $ 13,588 $ 10,598
Total interest expense 3,345 1,838 6,442 3,541
--------- -------- -------- --------
Net interest income 3,659 3,568 7,146 7,057
Provision (adjustment) for loan
losses 337 (30) 495 60
--------- -------- -------- --------
Net interest income after
provision for loan losses 3,322 3,598 6,651 6,997
Non-interest income 1,708 1,342 3,297 2,554
Non-interest expense 4,346 3,737 8,253 7,610
--------- -------- -------- --------
Income before income taxes 684 1,203 1,695 1,941
Income tax expense 135 368 427 610
--------- -------- -------- --------
Net income $ 549 $ 835 $ 1,268 $ 1,331
========= ======== ======== ========
Basic and diluted earnings per
share $ 0.05 $ 0.08 $ 0.12 $ 0.12
========= ======== ======== ========
June 30, Dec. 31, June 30,
2007 2006 2006
-------- -------- --------
Total assets $448,061 $413,330 $381,337
Cash and cash equivalents 10,948 9,781 9,884
Interest-bearing deposits in
banks 385 2,154 490
Securities available for sale 108,432 84,572 61,505
Loans receivable 294,920 276,776 262,566
Allowance for loan losses 4,514 4,076 3,564
Total deposits 327,766 299,189 256,574
Federal Home Loan Bank advances 40,000 40,000 50,000
Stockholders' equity 62,982 62,809 67,773
Selected Consolidated Financial Ratios and Other Data (unaudited)
for the second quarter and six months ended June 30, 2007 and 2006,
may be found at the following link:
http://www.irinfo.com/hbos/HBOS2Q07TNS.pdf. Investors should refer to
the Company's Form 10-Q for the three and six months ended June 30,
2007, for additional information and disclosures; the Form 10-Q will
be available at the Investor Information section of the Company's
website immediately upon filing with the Securities and Exchange
Commission.
CONTACT: Heritage Financial Group
T. Heath Fountain, 229-878-2055
Senior Vice President and Chief Financial Officer