Company Declares Quarterly Cash Dividend of
$0.07 Per Share
Heritage Financial Group, Inc. (NASDAQ: HBOS), the holding
company for HeritageBank of the South, today announced unaudited
financial results for the quarter ended September 30, 2014. Key
highlights of the Company's report for the third quarter of 2014
include:
- Net income of $2.0 million or $0.26 per
diluted share, up 11% from $1.8 million or $0.23 per diluted share
for the linked quarter, and up 48% from $1.3 million or $0.18 per
diluted share for the year-earlier quarter;
- Net income, excluding special items for
each quarter, of $3.2 million or $0.42 per diluted share, up 35%
from $2.4 million or $0.31 per diluted share for the linked
quarter, and up 84% from $1.7 million or $0.23 per diluted share
for the year-earlier quarter (see non-GAAP reconciliation);
- The successful completion of the
Company's first open-bank acquisition, Alarion Financial Services,
Inc. and its subsidiary Alarion Bank ("Alarion"), on September 30,
2014;
- Loan growth, excluding acquired loans,
of $29.3 million or 4% on a linked-quarter basis and $108.5 million
or 16% compared with the year-earlier quarter;
- A decline in nonperforming loans,
excluding acquired loans, of 2% on a linked-quarter basis and 37%
compared with the year-earlier quarter;
- An increase in the provision for loan
losses, excluding acquired loans, to $575,000, up from $510,000 for
the linked quarter and up 64% compared with $350,000 for the
year-earlier quarter; and
- An increase in mortgage originations to
$292.6 million, up $42.7 million or 17% from the linked quarter and
up $177.3 million or 154% from the year-earlier quarter.
Commenting on the announcement, Leonard Dorminey, President and
Chief Executive Officer, said, "Results for this past quarter
reflected significant progress in the growth of our business and
the execution of our expansion strategies – most notably with the
completion of the Alarion acquisition, which facilitated our entry
into the Gainesville, Florida market. Additionally, HeritageBank
Mortgage has experienced continued growth, recording its second
consecutive profitable quarter, and, with a record level of loan
locks at quarter's end, is on track to finish the year strong. All
aspects of our operations continue to perform well, as indicated by
ongoing organic loan growth and continued momentum in loan
production across most of our markets, which keeps us on pace for
another year of double-digit growth. This progress, coupled with
further improvements in credit quality measures, has greatly
strengthened our banking operations.
"Subsequent to quarter's end, we were pleased to announce an
agreement to purchase our first branch in the Metro Atlanta area,"
Dorminey continued. "The branch, to be acquired from The
PrivateBank and Trust Company ("PrivateBank"), a wholly owned
subsidiary of Chicago-based PrivateBancorp, Inc., is located on the
northeast area of the city. It is expected to give us greater
visibility and access to an attractive number of small- and
medium-sized businesses, which will allow us to pursue a
niche-focused commercial bank model and will provide the footing
for further expansion in metro Atlanta. We are excited about this
opportunity, especially considering Brian Schmitt has joined our
company as Executive Vice President, Atlanta Market CEO and
Director of Mergers & Acquisitions. Schmitt has over 30 years
of experience in the Atlanta market and will be a tremendous asset
in support of our growth plans."
Dorminey also noted that the Company's Board of Directors has
declared a regular quarterly cash dividend of $0.07 per share,
which will be paid on November 26, 2014, to stockholders of record
as of November 12, 2014.
Alarion Merger
On September 30, 2014, the Company successfully completed the
merger of Alarion Financial Services, Inc. and its subsidiary
Alarion Bank with and into Heritage Financial Group, Inc. and
subsidiary HeritageBank of the South. In connection with the
merger, the Company issued 1,158,147 shares for exchange of
Alarion's shares and recorded $6.8 million in goodwill. The Company
acquired $160.5 million in non-credit impaired loans, $38.7 million
in credit impaired loans, $2.0 million in other real estate owned
("OREO"), and $230.7 million in total deposits. Immediately
following the merger, the Company redeemed all of Alarion's
preferred stock in exchange for $4.5 million in cash and 178,267
shares of the Company's common stock. The Company expects to
complete Alarion's system conversion during the fourth quarter of
2014.
Third Quarter 2014 Results of Operations
The $187,000 increase in reported quarterly earnings for the
third quarter of 2014 compared with the linked quarter resulted
primarily from the following items:
- Solid growth in revenue from mortgage
banking activities of $1.7 million;
- Decreased FDIC loss-share clawback
expenses of $917,000;
- Reduced negative accretion of the FDIC
loss-share receivable of $708,000;
- Increased gain on sales of securities
of $490,000; offset by
- Increased acquisition-related expenses
of $2.4 million, driven primarily by the Alarion merger; and
- Increased salaries and employee
benefits of $1.1 million, driven primarily by mortgage banking
expansion.
The $637,000 increase in reported quarterly earnings for the
third quarter of 2014 compared with the year-earlier quarter
primarily reflected the following items:
- Solid growth in revenue from mortgage
banking activities of $4.8 million;
- Increased interest income of $2.6
million;
- Increased gain on sales of securities
of $628,000; offset by
- Increased salaries and employee
benefits of $3.3 million;
- Increased acquisition-related expenses
of $2.3 million; and
- Increased negative accretion of the
FDIC loss-share receivable of $1.2 million
Net interest income for the third quarter of 2014 increased 17%
to $15.9 million from $13.6 million in the year-earlier quarter,
primarily reflecting an increase in interest-earning assets related
to acquisitions and organic growth. The Company's net interest
margin was 4.80% for the third quarter of 2014, an increase of
seven basis points from 4.73% for the year-earlier period. The
increase in net interest margin for the third quarter of 2014
compared with the year-earlier quarter was driven by an improvement
in the interest-earning asset mix, which increased the yield on
interest earning assets by five basis points coupled with a one
basis point decline in the cost of interest-bearing liabilities.
Excluding acquired credit impaired loan discount adjustments from
the net interest margin, the core net interest margin was 3.29% for
the third quarter of 2014, an improvement of six basis points from
3.23% for the year-earlier quarter. The improvement in the core net
interest margin was driven primarily by an improvement in the
interest-earning asset mix compared with the year-earlier
quarter.
In the third quarter of 2014, the Company continued to achieve
loan growth, with its non-acquired loan portfolio increasing $29.3
million organically on a linked-quarter basis and advancing $108.5
million overall compared with the year-earlier quarter. For the
third quarter of 2014, the Company's loan portfolio, including
acquired loans, totaled $1.069 billion, increasing $224.0 million
on a linked-quarter basis from $845.1 million and $280.0 million
from $789.1 million compared with the year-earlier quarter, driven
primarily by the Alarion merger and to a lesser extent organic loan
growth. The organic loan growth from the linked quarter reflected
primarily growth in the South Atlanta, Statesboro, Macon,
Birmingham, Auburn/Columbus, and Ocala markets. Total deposits
stood at $1.341 billion at the end of the third quarter of 2014, up
11% from $1.209 billion on a linked-quarter basis, and up 27% from
$1.052 billion for the year-earlier quarter, driven primarily by
the Alarion merger, which was offset in part by a large withdrawal
by a municipal depositor.
For the third quarter of 2014, the Company's loans held for sale
totaled $147.9 million, increasing $20.7 million or 16% on a
linked-quarter basis from $127.2 million, and increasing $109.8
million or 289% from $38.0 million compared with the year-earlier
quarter. The increase in the loans held for sale for the current
quarter occurred as production outpaced loan sales. Loan sales to
agencies in the third quarter totaled $195.4 million and,
separately, the Company recorded a gain of $1.9 million related to
the mortgage servicing rights for those loans. Total mortgage
production for the third quarter was $292.6 million, up 17% on a
linked-quarter basis from $249.9 million and up 154% from $115.3
million compared with the year-earlier quarter.
Noninterest income for the third quarter of 2014 improved 111%
to $8.3 million from $3.9 million in the year-earlier quarter,
driven primarily by increases in revenue from mortgage banking
activities of $4.8 million and gain on sales of securities of
$628,000 offset in part by an increase in negative accretion of the
FDIC loss-share receivable of $1.2 million. Noninterest expense for
the third quarter of 2014 increased 34% to $20.6 million from $15.3
million in the year-earlier quarter, driven primarily by increases
in salaries and employee benefits of $3.3 million related to the
expansion of the mortgage division and an increase in
acquisition-related expenses of $2.3 million primarily related to
the Alarion merger.
Accounting for Acquired Assets
The Company performs ongoing assessments of the estimated cash
flows of its acquired credit impaired loan portfolios. The fair
value of the acquired loan portfolios consisted of $92.1 million in
non-covered and $42.4 million in covered loans at the end of the
third quarter of 2014 compared with $69.7 million in non-covered
and $53.8 million in covered loans for the year-earlier quarter.
The outstanding principal balance of the FDIC-acquired loan
portfolios totaled $188.8 million at the end of the third quarter
of 2014 compared with $195.5 million for the year-earlier quarter.
The details of the accounting for the acquired credit impaired loan
portfolios for the third quarter of 2014 are as follows:
- Covered loans decreased $1.0 million
and non-covered loans increased $35.2 million from the linked
quarter;
- The negative accretion for the FDIC
loss-share receivable was $2.7 million and the FDIC loss-share
clawback accrual decreased to $35,000;
- Provision expense for covered loans
increased to $65,000; and
- Loan discount accretion recognized in
interest income increased to $4.6 million.
For the third quarter of 2014, credit impaired loan discount
accretion recognized in interest income declined to $4.62 million
from $4.64 million for the linked quarter, but improved 24% from
$3.7 million for the year-earlier quarter. Provision expense of
$65,000 was recorded for loan charge-offs on acquired credit
impaired covered loans individually assessed and not provided for
by the discount, with approximately 80% of the charge-offs
reimbursable by the FDIC. The provision expense for these covered
loans did not affect the Company's loan loss reserve. The FDIC
loss-share receivable associated with acquired assets covered
decreased 16% to $27.9 million from $33.2 million for the linked
quarter and declined 37% from $44.5 million for the year-earlier
quarter. The reduction in the FDIC loss-share receivable for the
linked quarter was driven primarily by negative accretion of $2.7
million, affecting the loss-share receivable asset associated with
the improvement in expected cash flows of the acquired credit
impaired performing loan portfolios covered and by FDIC
reimbursements received of $2.6 million. A decrease to the FDIC
clawback liability accrual was recorded as a reduction to the
expense for the current quarter of $35,000, which decreased the
total accrual to $3.3 million. This FDIC clawback liability was
caused by improvement in the estimates of expected cash flows for
acquired credit impaired loans covered under loss-sharing
agreements.
The acquired credit impaired loan covered discount affecting the
loss-share receivable was $25.7 million, or 91.9% of the loss-share
receivable, for the third quarter of 2014 compared with $42.7
million, or 95.9% of the loss-share receivable, for the
year-earlier quarter. The gross balance of acquired assets covered
decreased to $82.8 million for the third quarter of 2014 compared
with $116.2 million for the year-earlier quarter. The FDIC
loss-share receivable as a percent of the acquired assets covered
decreased to 33.8% compared with 38.3% for the year-earlier
quarter.
Asset Quality
Total nonperforming assets, excluding acquired assets, decreased
to $7.5 million, or 0.43% of total assets, compared with $7.5
million, or 0.50% of total assets, for the linked quarter and
declined from $13.6 million, or 1.03% of total assets, for the
year-earlier quarter. Annualized net charge-offs to average
outstanding loans, excluding acquired loans, were 0.06% for the
third quarter of 2014 compared with annualized net charge-offs of
0.05% for the linked quarter and annualized net charge-offs of
0.31% for the year-earlier quarter. Nonperforming loans, excluding
acquired loans, totaled $6.9 million for the third quarter of 2014,
down from $7.0 million for the linked quarter and down from $11.0
million for the year-earlier quarter. OREO and repossessed assets,
excluding acquired assets, totaled $648,000 for the third quarter
of 2014, up from $507,000 for the linked quarter, but down from
$2.7 million for the year-earlier quarter.
The provision for loan losses on non-acquired loans increased to
$575,000 for the third quarter of 2014 from $510,000 for the linked
quarter and from $350,000 for the year-earlier quarter, primarily
driven by core loan growth. For the third quarter of 2014, the
allowance for loan losses represented 1.28% of total loans
outstanding, excluding acquired loans, versus 1.27% for the linked
quarter and 1.34% for the year-earlier quarter.
Capital Management Initiatives
The Company intends to maintain its capital strength at the
current level to support growth and its acquisition activities.
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
September 30, 2014, was 12.8%, 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 8.2%
as of September 30, 2014.
Investor Presentation
The Company will make available to investors a presentation,
updated for third quarter results, on the Company's website at
www.eheritagebank.com under the "Investors" tab and will remain
available for 90 days.
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 Georgia, Florida and Alabama through 36 banking
locations, 20 mortgage offices, and 5 investment offices. As of
September 30, 2014, the Company reported total assets of
approximately $1.8 billion and total stockholders' equity of
approximately $160 million. For more information about the Company,
visit HeritageBank of the South on the Web at www.eheritagebank.com
under the "Investors" tab.
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 2013 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.
HERITAGE FINANCIAL GROUP, INC.
Unaudited Reconciliation of Non-GAAP
Measures Presented in Earnings Release
(Dollars in thousands, except per share
data)
Three Months Ended Nine Months Ended
September 30, June 30, September
30, 2014 2013 2014
2014 2013 Total noninterest income $
8,274 $ 3,918 $ 5,286 $ 17,047 $ 13,875 Gain on sale of securities
(628 ) – (138 ) (766 ) – Gain on acquisitions –
– – – (4,188 )
Adjusted noninterest income $ 7,646 $ 3,918 $ 5,148
$ 16,281 $ 9,687 Total noninterest expense $
20,597 $ 15,334 $ 18,116 $ 54,188 $ 43,242 Acquisition-related
expenses (2,543 ) (280 ) (101 ) (2,696 ) (1,220 )
Accrual of FDIC acquisitions estimated
clawback liability
35 (286 ) (882 ) (1,390 )
(978 ) Adjusted noninterest expense $ 18,089 $ 14,768
$ 17,133 $ 50,102 $ 41,044 Net income as
reported $ 1,959 $ 1,322 $ 1,772 $ 5,074 $ 7,910 Total adjustments,
net of tax* 1,242 418 606
2,324 (1,413 ) Adjusted net income $ 3,201
$ 1,740 $ 2,378 $ 7,398 $ 6,497
Diluted earnings per share $ 0.26 $ 0.18 $ 0.23 $ 0.68 $ 1.07 Total
adjustments, net of tax* 0.16 0.05
0.08 0.29 (0.21 ) Adjusted
diluted earnings per share $ 0.42 $ 0.23 $ 0.31
$ 0.97 $ 0.86
* 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)
September 30, December 31, 2014 2013*
ASSETS
Cash and due from banks $ 26,793 $ 34,804 Interest-bearing deposits
in banks 10,945 3,249 Federal funds sold 1,434 130
Cash and cash equivalents 39,172 38,183 Securities available for
sale, at fair value 339,189 294,299 Federal Home Loan Bank stock,
at cost 9,950 7,342 Other equity securities, at cost 1,010 1,010
Loans held for sale 147,867 110,669 Loans: Non-acquired loans
774,108 684,544 Acquired non-credit impaired loans 160,502 -
Acquired credit impaired loans non-covered 92,051 63,318 Acquired
credit impaired loans covered 42,447 50,891 Less allowance for
non-acquired loans 9,916 8,955 Loans, net
1,059,192 789,798 Non-acquired other real estate owned 648
1,789 Acquired non-covered other real estate owned 3,296 1,693
Acquired covered other real estate owned 5,281 7,053
Total other real estate owned 9,225 10,535 FDIC
loss-share receivable 27,929 41,306 Premises and equipment, net
49,922 37,978 Goodwill and intangible assets 16,702 4,253 Cash
surrender value of bank owned life insurance 24,749 24,183 Other
assets 30,627 21,369
Total assets $
1,755,534 $ 1,380,925
LIABILITIES AND
SHAREHOLDERS' EQUITY
Non-interest-bearing deposits $ 199,336 $ 148,253 Interest-bearing
deposits 1,141,925 928,168 Total deposits
1,341,261 1,076,421 Federal funds purchased Federal funds
purchased and securities sold under repurchase agreements 42,815
37,648 Other borrowings 190,440 131,394 Other liabilities
21,070 10,399
Total liabilities
1,595,586 1,255,862 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; 9,183,574 and 7,834,537 shares issued and
outstanding, respectively
92 78 Capital surplus 106,510 78,566 Retained earnings 61,262
57,614 Accumulated other comprehensive loss, net of tax of $3,292
and $5,175, respectively (4,937) (7,762) Unearned employee stock
ownership plan (ESOP), 292,559 and 332,535 shares, respectively
(2,979) (3,433)
Total shareholders' equity
159,948 125,063 Total liabilities
& shareholders' equity $ 1,755,534 $
1,380,925
* 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 Nine Months Ended September 30,
September 30, September 30, September 30,
2014 2013 2014 2013
Interest
income:
Interest and fees on loans $ 14,901 $ 13,452 $ 42,981 $ 42,523
Interest on loans held for sale 1,493 434 3,984 839 Interest on
taxable securities 1,180 1,155 3,600 3,116 Interest on nontaxable
securities 381 318 1,103 911 Interest on federal funds sold 2 4 4 7
Interest on deposits in other banks 20 30
69 140
Total interest
income 17,977 15,393
51,741 47,536
Interest
expense:
Interest on deposits 1,192 982 3,508 3,077 Interest on other
borrowings 856 853 2,560
2,446
Total interest expense
2,048 1,835 6,068
5,523 Net interest income
15,929 13,558 45,673 42,013 Provision
for loan losses 640 350 1,284
1,503
Net interest income after provision
for loan losses 15,289
13,208 44,389
40,510
Noninterest
income:
Service charges on deposit accounts 1,612 1,577 4,558 4,028
Bankcard services income 919 852 2,749 2,445 Other service charges,
commissions and fees 178 126 494 370 Brokerage fees 644 561 1,825
1,578 Mortgage banking activities 6,723 1,963 13,915 7,582
Bank-owned life insurance 190 200 566 603 Gain on sales of
securities 628 - 766 - Gain on acquisitions - - - 4,188 Accretion
of FDIC loss-share receivable (2,669 ) (1,499 ) (8,077 ) (7,275 )
Other 49 138 251
356
Total noninterest income 8,274
3,918 17,047
13,875
Noninterest
expense:
Salaries and employee benefits 11,382 8,108 30,272 22,723 Equipment
and occupancy 2,234 1,932 6,382 5,436 Advertising and marketing 288
335 737 871 Professional fees 446 340 1,420 857 Information
services expenses 1,080 1,335 3,430 3,824 Net loss on sales and
write-downs of other real estate owned 8 335 433 368 Net gain on
sales and write-downs of acquired other real estate owned (37 )
(206 ) (128 ) (433 ) Foreclosed asset expenses 77 337 246 779
Foreclosed acquired asset expenses 217 366 835 1,087 FDIC insurance
and other regulatory fees 274 293 817 827 Acquisition related
expenses 2,543 280 2,696 1,220 Deposit intangible expenses 186 204
574 609 FDIC loss-share clawback expenses (35 ) 286 1,390 978 Other
operating expenses 1,934 1,389
5,084 4,096
Total noninterest expense
20,597 15,334
54,188 43,242 Income before
income taxes 2,966 1,792 7,248
11,143 Applicable income tax 1,007 470
2,174 3,233
Net income
$ 1,959 $ 1,322 $
5,074 $ 7,910
Earnings per
common share:
Basic earnings per share $ 0.26 $ 0.18 $ 0.68
$ 1.07 Diluted earnings per share $ 0.26 $ 0.18
$ 0.67 $ 1.05
Weighted
average-common shares outstanding:
Basic
7,485,528 7,371,804
7,448,329 7,425,940
Diluted
7,676,233 7,483,812
7,622,378 7,519,664
Heritage Financial Group, Inc. and
Subsidiary Consolidated Statements of Income
(Unaudited) (Dollars in thousands except share and per
share data)
Five Quarter Comparison
9/30/2014 6/30/2014 3/31/2014
12/31/2013 9/30/2013
Interest
income:
Interest and fees on loans $ 14,901 $ 14,730 $ 13,350 $ 15,911 $
13,452 Interest on loans held for sale 1,493 1,466 1,025 619 434
Interest on taxable securities 1,180 1,215 1,206 1,231 1,155
Interest on nontaxable securities 381 368 354 337 318 Interest on
federal funds sold 2 1 1 2 4 Interest on deposits in other banks
20 30 19 15
30
Total interest income 17,977
17,810 15,955
18,115 15,393
Interest
expense:
Interest on deposits 1,192 1,176 1,140 1,000 982 Interest on other
borrowings 856 860 844
862 853
Total interest expense
2,048 2,036
1,984 1,862 1,835
Net interest income 15,929 15,774
13,971 16,253 13,558 Provision for loan losses
- non-acquired 575 510 65 220 350 Provision for loan losses -
acquired covered 65 25 - - - Provision for loan losses - acquired
non-covered - (61 ) 105
12 -
Net interest income after provision
for loan losses 15,289
15,300 13,801
16,021 13,208
Noninterest
income:
Service charges on deposit accounts 1,612 1,503 1,443 1,642 1,577
Bankcard services income 919 941 889 890 852 Other service charges,
commissions and fees 178 154 162 121 126 Brokerage fees 644 615 566
560 561 Mortgage banking activities 6,723 5,026 2,166 2,949 1,963
Bank-owned life insurance 190 187 189 198 200 Gain on sales of
securities 628 138 - 85 - Accretion of FDIC loss-share receivable
(2,669 ) (3,377 ) (2,031 ) (2,021 ) (1,499 ) Other 49
99 103 112 138
Total noninterest income 8,274
5,286 3,487
4,536 3,918
Noninterest
expense:
Salaries and employee benefits 11,382 10,310 8,580 8,722 8,108
Equipment and occupancy 2,234 2,153 1,995 1,922 1,932 Advertising
and marketing 288 221 228 299 335 Professional fees 446 523 451 559
340 Information services expenses 1,080 1,150 1,200 1,285 1,335 Net
loss on sales and write-downs of other real estate owned 8 107 318
38 335 Net (gain) loss on sales and write-downs of acquired other
real estate owned (37 ) 173 (264 ) (536 ) (206 ) Foreclosed asset
expenses 77 82 87 240 337 Foreclosed acquired asset expenses 217
285 333 286 366 FDIC insurance and other regulatory fees 274 299
244 254 293 Impairment loss on assets held for sale - - - 328 -
Acquisition related expenses 2,543 101 52 102 280 Deposit
intangible expenses 186 192 196 200 204 FDIC loss-share clawback
expenses (35 ) 882 543 261 286 Other operating expenses
1,934 1,638 1,513 1,746
1,389
Total noninterest expense
20,597 18,116
15,476 15,706
15,334 Income before income taxes 2,966
2,470 1,812 4,851 1,792 Applicable
income tax 1,007 698 469
1,446 470
Net income $
1,959 $ 1,772 $
1,343 $ 3,405 $
1,322
Earnings per
common share:
Basic earnings per share $ 0.26 $ 0.24 $ 0.18
$ 0.46 $ 0.18 Diluted earnings per share $ 0.26
$ 0.23 $ 0.18 $ 0.45 $ 0.18
Dividends $ 0.07 $ 0.07 $ 0.07 $ - $ -
Weighted
average-common shares outstanding:
Basic
7,485,528 7,436,717
7,422,044 7,407,722
7,371,804 Diluted
7,676,233
7,607,501 7,581,775
7,530,606 7,483,812
Other Financial
Items:
Fixed compensation 5,787 5,431 5,092 4,979 5,175 Variable
compensation 3,321 3,074 1,617 1,531 1,336 Employee benefits and
taxes 2,274 1,805 1,871 2,212 1,597
Heritage
Financial Group, Inc. and Subsidiary Condensed Average
Balances, Interest Rates and Yields (Unaudited)
(Dollars in thousands)
Three Months
Ended September 30, 2014 2013 Average
Average Average Average Balance
Interest Rate Balance Interest
Rate
Interest-earning
assets:
Loans(1)(2) $ 999,848 $ 16,399 6.51 % $ 817,366 $ 13,891 6.74 %
Investment securities (2) 301,646 1,691 2.22 % 303,349 1,582 2.07 %
Other short-term investments 27,367 22 0.32 %
26,862 34 0.50 %
Total interest-earning assets
1,328,861 18,112 5.41 %
1,147,577 15,507 5.36 %
Non-interest earning assets 155,007 179,188
Total
assets $ 1,483,868 $ 1,326,765
Interest-bearing
liabilities:
Deposits:
Interest checking, money market and savings $ 659,883 $ 377 0.23 %
$ 549,561 $ 306 0.22 % Time deposits 366,918 815 0.88
% 359,631 676 0.75 %
Total interest-bearing
deposits 1,026,801 1,192
0.46 % 909,192 982
0.43 % Federal Funds purchased and securities sold
under repurchase agreements 37,480 339 3.59 % 33,965 335 3.91 %
Other Borrowings 111,829 517 1.83 % 101,814
518 2.02 %
Total interest-bearing liabilities
1,176,110 2,048 0.69 %
1,044,971 1,835 0.70 %
Non-interest
bearing liabilities:
Demand Deposits 162,917 150,840 Other Liabilities 11,353
12,120
Total non-interest bearing liabilities
174,270 162,960
Total liabilities 1,350,380
1,207,931 Shareholders' equity 133,488 118,834
Total
liabilities & shareholders' equity $
1,483,868 $ 1,326,765 Net interest
income $ 16,064 $ 13,672
Interest rate spread 4.72 % 4.66
%
Net yield on interest-earning assets
(net interest margin)
4.80 % 4.73 % Core net interest
margin (non-GAAP): Loans(1)(2) $ 999,848 $ 16,399 6.51 % $
817,366 $ 13,891 6.74 %
Acquired credit impaired loan discount
adjustments(3)
50,607 4,621 36.23 % 75,023 3,718 19.66
%
Adjusted loans 1,050,455 11,778 4.45 %
892,389 10,173 4.52 %
Adjusted total
interest-earning assets $ 1,379,468
13,491 3.88 % $ 1,222,600
11,789 3.83 % Total interest-bearing
liabilities $ 1,176,110 2,048
0.69 % $ 1,044,971 1,835
0.70 % Core Net interest income $
11,443 $ 9,954 Core Interest rate
spread 3.19 % 3.13 %
Core Net yield on interest-earning
assets (net interest margin non-GAAP)
3.29 % 3.23 % (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)
Acquired credit impaired loan discount adjustments include the
reduction of interest income for discount accretion excluding
contractual interest payments and the increase of core loans for
the total balance of acquired credit impaired loan discounts.
Heritage Financial Group, Inc. and Subsidiary
Condensed Average Balances, Interest Rates and Yields
(Unaudited) (Dollars in thousands)
Nine Months Ended September 30, 2014
2013 Average Average Average
Average Balance Interest Rate
Balance Interest Rate
Interest-earning
assets:
Loans(1)(2) $ 953,249 $ 46,977 6.59 % $ 770,383 $ 43,371 7.53 %
Investment securities (2) 301,729 5,078 2.25 % 278,438 4,337 2.08 %
Other short-term investments 29,195 73 0.33 %
50,941 147 0.39 %
Total interest-earning assets
1,284,173 52,128 5.43 %
1,099,762 47,855 5.82 %
Non-interest earning assets 159,311 177,064
Total
assets $ 1,443,484 $ 1,276,826
Interest-bearing
liabilities:
Deposits:
Interest checking, money market and savings $ 608,483 $ 1,062 0.23
% $ 532,053 $ 918 0.23 % Time deposits 376,457 2,446
0.87 % 348,095 2,159 0.83 %
Total interest-bearing
deposits 984,940 3,508 0.48
% 880,148 3,077 0.47
%
Federal Funds purchased and securities
sold under repurchase agreements
35,967 999 3.71 % 33,846 995 3.93 % Other Borrowings 121,204
1,561 1.72 % 90,096 1,451 2.15 %
Total
interest-bearing liabilities 1,142,111
6,068 0.71 % 1,004,090
5,523 0.74 %
Non-interest
bearing liabilities:
Demand Deposits 161,326 139,208 Other Liabilities 9,243
13,091
Total non-interest bearing liabilities
170,569 152,299
Total liabilities 1,312,680
1,156,389 Shareholders' equity 130,804 120,437
Total
liabilities & shareholders' equity $
1,443,484 $ 1,276,826 Net interest
income $ 46,060 $ 42,332
Interest rate spread 4.72 % 5.08
%
Net yield on interest-earning assets
(net interest margin)
4.80 % 5.15 % Core net interest
margin (non-GAAP): Loans(1)(2) $ 953,249 $ 46,977 6.59 % $
770,383 $ 43,371 7.53 % Acquired credit impaired loan discount
adjustments(3) 55,998 13,115 31.31 % 75,118
14,450 25.72 %
Adjusted loans 1,009,247
33,862 4.49 % 845,501 28,921 4.57 %
Adjusted total
interest-earning assets $ 1,340,171
39,013 3.89 % $ 1,174,880
33,405 3.80 % Total interest-bearing
liabilities $ 1,142,111 6,068
0.71 % $ 1,004,090 5,523
0.74 % Core Net interest income $
32,945 $ 27,882 Core Interest rate
spread 3.18 % 3.07 %
Core Net yield on interest-earning
assets (net interest margin non-GAAP)
3.29 % 3.17 % (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)
Acquired credit impaired loan discount adjustments include the
reduction of interest income for discount accretion excluding
contractual interest payments and the increase of core loans for
the total balance of acquired credit impaired 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:
9/30/2014 6/30/2014 3/31/2014
12/31/2013 9/30/2013 Total loans $ 1,069,108 $
845,101 $ 810,028 $ 798,753 $ 789,092 Loans held for sale 147,867
127,186 126,436 110,669 38,042 Acquired credit impaired loans
covered 42,447 43,442 47,684 50,891 53,843 Allowance for loan
losses 9,916 9,457 9,145 8,955 8,894 Total other real estate owned
9,225 7,710 8,727 10,535 10,244 Acquired other real estate owned
covered 5,281 5,865 6,095 7,053 5,909 FDIC loss-share receivable
27,929 33,239 37,637 41,306 44,527 Goodwill and intangible assets
16,702 5,786 4,757 4,253 4,251 Total assets 1,755,534 1,487,431
1,413,540 1,380,925 1,322,309 Non-interest-bearing deposits 199,336
168,666 163,090 148,253 153,163 Interest-bearing deposits 1,141,925
1,040,134 963,564 928,168 899,318 Other borrowings 190,440 100,789
116,127 131,394 101,667
Federal funds purchased and securities
sold under agreement to repurchase
42,815 35,350 33,785 37,648 35,393 Stockholders' equity 159,948
131,660 127,984 125,063 120,534 Total shares outstanding 9,183,574
7,851,296 7,834,517 7,834,537 7,834,765 Unearned ESOP shares
292,559 305,885 319,210
332,535 345,860 Total shares outstanding net
of unearned ESOP 8,891,015 7,545,411
7,515,307 7,502,002 7,488,905
Book value per share $ 17.99 $ 17.45 $ 17.03 $ 16.67 $ 16.10
Book value per share including unearned
ESOP (non-GAAP)
17.42 16.77 16.34 15.96 15.38 Tangible book value per share
(non-GAAP) 16.11 16.68 16.40 16.10 15.53 Tangible book value per
share, including unearned ESOP (non-GAAP) 15.60 16.03 15.73 15.42
14.84 Market value per share 20.19 19.83 19.65 19.25 17.42
Five Quarter Comparison 9/30/2014 6/30/2014
3/31/2014 12/31/2013 9/30/2013
Key Financial
Ratios and other information:
Performance Ratios Annualized return on average assets 0.52
% 0.49 % 0.39 % 1.00 % 0.40 % Annualized return on average equity
5.82 % 5.42 % 4.26 % 11.10 % 4.41 % Net interest margin 4.80 % 4.92
% 4.66 % 5.50 % 4.73 % Net interest spread 4.72 % 4.84 % 4.59 %
5.43 % 4.66 % Efficiency ratio 84.80 % 82.07 % 84.20 % 71.66 %
82.29 %
Capital Ratios Average stockholders' equity to
average assets 9.0 % 9.0 % 9.2 % 9.0 % 9.0 % Tangible equity to
tangible assets (non-GAAP) 8.2 % 8.5 % 8.7 % 8.8 % 8.8 % Tier 1
leverage ratio 10.3 % 9.1 % 9.0 % 9.5 % 9.4 % Tier 1 risk-based
capital ratio 12.0 % 13.0 % 12.8 % 13.5 % 14.3 % Total risk-based
capital ratio 12.8 % 14.0 % 13.8 % 14.5 % 15.4 %
Other
Information Full-time equivalent employees 586 490 455 426 412
Banking 371 312 305 306 308 Mortgage 209 171 143 113 97 Investments
6 7 7 7 7 Number of banking offices 36 29 29 27 27 Mortgage loan
offices 20 15 15 14 12 Investment offices 5 5 5 4 4
Heritage Financial Group, Inc. and Subsidiary
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
Five Quarter Comparison
Loans
9/30/2014 6/30/2014 3/31/2014
12/31/2013 9/30/2013 Construction and land $ 73,137 $
57,863 $ 53,138 $ 50,167 $ 48,808 Farmland 29,441 28,502 30,116
23,420 22,561 Permanent 1 - 4 176,191 174,026 173,581 174,565
169,105 Permanent 1 - 4 - junior liens and revolving 39,694 35,827
34,661 32,038 30,180 Multifamily 28,742 26,436 25,718 22,650 27,468
Nonresidential 284,218 277,295 262,753 256,567 250,859 Commercial
business 121,073 116,926 101,696 101,161 95,108 Consumer and other
21,612 27,918 20,907 23,976
21,499 Total non-acquired loans $ 774,108 $ 744,793 $ 702,570 $
684,544 $ 665,588 Allowance for non-acquired loans 9,916
9,457 9,145 8,955 8,894 Net
non-acquired loans $ 764,192 $ 735,336 $ 693,425 $ 675,589 $
656,694 Acquired non-credit impaired loans 160,502 - - - - Acquired
credit impaired non-covered 92,051 56,866 59,774 63,318 69,661
Acquired credit impaired covered 42,447 43,442
47,684 50,891 53,843 Total acquired credit impaired
loans 134,498 100,308 107,458 114,209
123,504 Net loans $ 1,059,192 $ 835,644 $ 800,883 $ 789,798
$ 780,198
Loan Balances by
Geographical Region (excluding acquired loans):
Five Quarter Comparison 9/30/2014 6/30/2014
3/31/2014 12/31/2013 9/30/2013 Albany $
314,875 $ 321,566 $ 302,664 $ 294,033 $ 288,089 Valdosta 102,751
103,231 103,479 100,936 101,729 Ocala 64,678 55,231 57,322 58,343
58,115 Statesboro 135,861 128,421 121,636 122,928 124,667
Auburn/Columbus 41,092 36,023 36,171 36,130 31,485 Macon 86,041
80,323 75,722 68,638 60,197 Birmingham 14,798 10,834 2,091 1,590
344 South Atlanta 14,012 9,164 3,485
1,946 962 $ 774,108 $ 744,793 $ 702,570 $ 684,544 $ 665,588
Heritage Financial Group, Inc. and Subsidiary
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
Asset Quality
Data (excluding acquired loans):
Five Quarter Comparison 9/30/2014 6/30/2014
3/31/2014 12/31/2013 9/30/2013 Nonaccrual
loans $ 6,895 $ 7,003 $ 9,245 $ 9,435 $ 10,986 Loans - 90 days past
due & still accruing - - -
- - Total non-performing loans
6,895 7,003 9,245
9,435 10,986 OREO 648 507
1,104 1,789 2,654
Total non-performing assets $ 7,543 $ 7,510 $ 10,349
$ 11,224 $ 13,640 Trouble debt restructuring -
nonaccrual $ 3,097 $ 3,426 $ 5,702 $ 5,763 $ 5,840 Trouble debt
restructuring - accruing 4,683 4,392
1,968 1,983 1,996 Total
trouble debt restructuring $ 7,780 $ 7,818 $ 7,670
$ 7,746 $ 7,836 Accruing past due loans $
1,065 $ 752 $ 830 $ 1,001 $ 669 Total criticized assets 23,737
21,553 22,026 22,741 26,116 Total classified assets 19,280 18,573
18,717 19,582 23,048 Allowance for loan losses 9,916 9,457 9,145
8,955 8,894 Net charge-offs (recoveries) $ 117 $ 92 $ (20 ) $ 160 $
503
Asset Quality
Ratios:
Allowance for loan losses to total non-acquired loans 1.28 % 1.27 %
1.30 % 1.31 % 1.34 % Allowance for loan losses to average
non-acquired loans 1.30 % 1.31 % 1.32 % 1.33 % 1.37 % Allowance for
loan losses to non-performing loans 143.81 % 135.04 % 98.92 % 94.91
% 80.96 % Non-performing loans to total non-acquired loans 0.89 %
0.94 % 1.32 % 1.38 % 1.65 % Non-performing assets to total assets
0.43 % 0.50 % 0.73 % 0.81 % 1.03 % Net charge-offs (recoveries) to
average non-acquired loans (annualized) 0.06 % 0.05 % -0.01 % 0.10
% 0.31 %
Heritage Financial Group, Inc. and
Subsidiary Consolidated Financial Highlights
(Unaudited) (Dollars in thousands)
Five
Quarter Comparison
Acquired credit
impaired assets
9/30/2014 6/30/2014 3/31/2014
12/31/2013 9/30/2013
Acquired credit
impaired loans non-covered:
Commercial real estate $ 47,409 $ 21,020 $ 21,269 $ 22,268 $ 25,027
Residential real estate 30,446 26,456 28,115 30,134 32,318
Construction and land 5,309 4,934 5,573 5,156 5,195 Commercial and
industrial 5,796 1,800 1,926 2,604 3,638 Consumer and other
3,091 2,656 2,891 3,156
3,483 Total 92,051 56,866 59,774 63,318 69,661
Acquired credit
impaired loans covered:
Commercial real estate 12,344 12,295 14,044 14,161 14,956
Residential real estate 19,219 19,637 22,372 23,886 25,082
Construction and land 10,126 10,679 10,332 11,642 12,469 Commercial
and industrial 680 762 801 864 924 Consumer and other 78
69 135 338
412 Total 42,447 43,442
47,684 50,891 53,843 Total
carrying value of acquired credit impaired loans $ 134,498 $
100,308 $ 107,458 $ 114,209 $ 123,504
Non-accrete discount for acquired credit impaired loans 22,729
16,600 30,818 36,746 48,545 Accretable discount for acquired credit
impaired loans 31,540 36,066
27,492 26,860 23,445 Total
discount for acquired credit impaired loans 54,269
52,666 58,310 63,606
71,990 Outstanding principal balance for acquired
credit impaired loans $ 188,767 $ 152,974 $ 165,768
$ 177,815 $ 195,494
Acquired
OREO:
Non-covered $ 3,296 $ 1,338 $ 1,527 $ 1,694 $ 1,680 Covered
5,281 5,865 6,095 7,053
5,909 Total carrying value of acquired OREO $
8,577 $ 7,203 $ 7,622 $ 8,747 $ 7,589
Total discount for acquired OREO 7,340
7,593 10,255 11,186
12,038 Gross carrying value of acquired OREO $ 15,917
$ 14,796 $ 17,877 $ 19,933 $ 19,627
Total credit
impaired loan discount accretion recognized in income:
Individual assessed discount accretion $ 300 $ 1,681 $ 808 $ 3,132
$ 791 Pooled assessed discount accretion 4,320
2,963 3,042 3,140 2,927
Total credit impaired loan discount accretion recognized in
income $ 4,620 $ 4,644 $ 3,850 $ 6,272
$ 3,718
Acquired credit
impaired ratios:
Total discount to principal balance for acquired loans 28.7 % 34.4
% 35.2 % 35.8 % 36.8 %
Heritage Financial Group,
Inc. and Subsidiary Consolidated Financial Highlights
(Unaudited) (Dollars in thousands)
Five Quarter Comparison
Acquired credit
impaired assets non-covered
9/30/2014 6/30/2014 3/31/2014
12/31/2013 9/30/2013
Outstanding
principal balance:
Acquired loan pools non-covered $ 81,787 $ 54,899 $ 58,294 $ 61,893
$ 66,294 Acquired loans individually assessed non-covered
33,774 19,497 20,644
22,214 27,627 Total outstanding principal loan
balance non-covered 115,561 74,396 78,938 84,107 93,921 Gross
carrying value for acquired OREO non-covered 6,373
3,892 4,254 4,470
4,993 Total gross balance of assets non-covered $ 121,934
$ 78,288 $ 83,192 $ 88,577 $ 98,914
Non-accretable
discount for estimated credit losses non-covered:
Acquired loan pools non-covered $ 6,293 $ 2,883 $ 7,337 $ 8,932 $
9,297 Acquired loans individually assessed non-covered 7,224
3,524 4,283 5,397
12,294 Total non-accretable discount non-covered
13,517 6,407 11,620 14,329 21,591 Acquired OREO discount
non-covered 3,077 2,554 2,728
2,776 3,313 Total discount for
estimated credit losses non-covered $ 16,594 $ 8,961
$ 14,348 $ 17,105 $ 24,904
Accretable discount
non-covered:
Accretable discount for improvement in cash flows non-covered $
9,200 $ 10,270 $ 6,603 $ 5,458 $ 380 Other accretable discount
non-covered 793 855 941
1,002 2,288 Total accretable discount
non-covered 9,993 11,125 7,544
6,460 2,668 Total discount
non-covered $ 26,587 $ 20,086 $ 21,892 $
23,565 $ 27,572
Loan discount
accretion recognized in income non-covered:
Individual assessed discount accretion $ 18 $ 690 $ 428 $ 2,375 $
619 Pooled assessed discount accretion 475 321
187 249 184
Total discount accretion recognized in
income non-covered
$ 493 $ 1,011 $ 615 $ 2,624 $ 803
Acquired ratios
non-covered:
Total discount to principal balance for acquired assets non-covered
21.8 % 25.7 % 26.3 % 26.6 % 27.9 % Gross balance of loans
non-covered to total acquired loans 61.2 % 48.6 % 47.6 % 47.3 %
48.0 %
Heritage Financial Group, Inc. and
Subsidiary Consolidated Financial Highlights
(Unaudited) (Dollars in thousands)
Acquired credit
impaired assets covered
9/30/2014 6/30/2014 3/31/2014
12/31/2013 9/30/2013
Outstanding
principal balance:
Acquired loan pools covered $ 53,733 $ 57,567 $ 63,789 $ 69,192 $
74,020 Acquired loans individually assessed covered 19,473
21,010 23,041 24,517
27,554 Total outstanding principal loan
balance covered 73,206 78,577 86,830 93,709 101,574 Gross carrying
value for acquired OREO covered 9,544 10,904
13,622 15,463 14,634
Total gross balance of assets covered $ 82,750 $
89,481 $ 100,452 $ 109,172 $ 116,208
Non-accretable
discount for estimated credit losses covered:
Acquired loan pools covered
$ 5,027 $ 5,401 $ 12,215 $ 15,284 $ 16,281 Acquired loans
individually assessed covered 4,184 4,792
6,983 7,133 10,673
Total non-accretable discount covered 9,211 10,193 19,198 22,417
26,954 Acquired OREO discount covered 4,263
5,039 7,528 8,410 8,725
Total discount for estimated credit losses covered $ 13,474
$ 15,232 $ 26,726 $ 30,827 $ 35,679
Accretable discount
covered:
Accretable discount for improvement in cash flows covered $ 18,597
$ 22,084 $ 18,156 $ 18,012 $ 17,676 Other accretable discount
covered 2,951 2,858 1,792
2,389 3,101 Total accretable discount
covered 21,548 24,942 19,948
20,401 20,777 Total discount
covered $ 35,022 $ 40,174 $ 46,674 $ 51,228
$ 56,456
Loan discount
accretion recognized in income covered:
Individual assessed accretion $ 282 $ 991 $ 380 $ 757 $ 172 Pooled
assessed accretion 3,845 2,642
2,855 2,891 2,743 Total discount
accretion recognized in income covered $ 4,127 $ 3,633
$ 3,235 $ 3,648 $ 2,915
Acquired ratios
covered:
Total discount to principal balance for acquired assets covered
42.3 % 44.9 % 46.5 % 46.9 % 48.6 %
Five Quarter
Comparison
FDIC loss-share
receivable
9/30/2014 6/30/2014 3/31/2014
12/31/2013 9/30/2013
FDIC loss-share
receivable:
Single family estimated credit losses $ 6,524 $ 7,506 $ 8,446 $
8,995 $ 9,134 Non-single family estimated credit losses 19,133
22,347 27,459 30,077 33,550 Pending reimbursements and other
2,272 3,386 1,732 2,234
1,843 Total $ 27,929 $ 33,239 $
37,637 $ 41,306 $ 44,527 FDIC loss-share
clawback liability $ 3,332 $ 3,366 $ 2,484 $
1,941 $ 1,681 Total covered discount $ 35,022
$ 40,174 $ 46,674 $ 51,228 $ 56,456
Total covered discount impacting FDIC loss-share receivable $
32,071 $ 37,316 $ 44,882 $ 48,839 $
53,355 Total covered discount impacting FDIC loss-share
receivable at 80% $ 25,657 $ 29,853 $ 35,906 $
39,071 $ 42,684
FDIC loss-share
receivable ratios:
FDIC receivable as % of gross balance of covered assets 33.8 % 37.1
% 37.5 % 37.8 % 38.3 % Covered discount at 80% as % of FDIC
receivable 91.9 % 89.8 % 95.4 % 94.6 % 95.9 %
Heritage Financial Group, Inc. and Subsidiary
Consolidated Financial Highlights (Unaudited)
Mortgage Segment
Information
Five Quarter Comparison 9/30/2014 6/30/2014
3/31/2014 12/31/2013 9/30/2013 Net interest
income $ 716 $ 924 $ 825 $ 114 $ 218 Provision for loan losses - -
- - - Noninterest income 6,892 6,153 2,392 2,951 1,952 Noninterest
expense 7,103 6,178 3,815 3,149 2,968 Income tax expense (benefit)
157 278 (185 ) (26 )
(247 ) Mortgage profit (loss) $ 348 $ 621 $
(413 ) $ (58 ) $ (551 ) Mortgage segment assets $ 158,277 $
139,024 $ 136,662 $ 120,716 $ 44,588
Other Financial
Items:
Fixed compensation $ 1,594 $ 1,375 $ 1,106 $ 1,037 $ 1,010 Variable
compensation 3,433 2,832 1,402 1,311 1,121
Mortgage Segment
Selected Other Information:
Five Quarter Comparison 9/30/2014
6/30/2014 3/31/2014 12/31/2013
9/30/2013 Retail production $ 207,315 $ 187,669 $ 98,554 $
84,381 $ 83,657 Wholesale production 85,294
62,228 36,941 36,030
31,646 Total production $ 292,609 $ 249,897 $ 135,495 $
120,411 $ 115,303 Purchase as a % of total production 78 % 84 % 80
% 78 % 76 % Refi as a % of total production 22 % 16 % 20 % 22 % 24
% End of period locks $ 135,963 $ 117,940 $ 71,121 $ 43,054 $
47,871
Heritage Financial Group, Inc.T. Heath Fountain,
229-878-2055Executive Vice President andChief Financial Officer
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