Heritage Financial Group, Inc. Reports Fourth Quarter Net Income of $922,000 or $0.11 Per Diluted Share

Heritage Financial Group, Inc. (NASDAQ: HBOS), the holding company for HeritageBank of the South, today announced improved financial results for the fourth quarter and year ended December 31, 2010.

The Company's net income for the fourth quarter totaled $922,000 or $0.11 per diluted share compared with the prior year's fourth quarter net loss of $1.7 million or $0.21 per diluted share. For the year ended December 31, 2010, the Company's net income increased to $1.4 million or $0.17 per diluted share compared with a net loss of $1.7 million or $0.20 per diluted share in the year-earlier period.

Several special items were included in the Company's results for the fourth quarter and year ended December 31, 2010 and 2009, which obscured the Company's underlying performance. In the fourth quarter of 2010, the Company recorded a $2.7 million bargain purchase gain based on the fair market valuation report on its December 2009 acquisition of The Tattnall Bank, which was completed by an independent third party valuation firm. In addition, the Company received approximately $0.9 million of life insurance proceeds on a former key employee. Results for 2010 also included a $1.0 million pre-tax charge taken in the third quarter to write-off an intangible asset related to the elimination of restrictions on interstate banking in the Dodd-Frank Wall Street Reform and Consumer Protection Act. Additionally, in the fourth quarter of 2009 the Company recorded an impairment loss of $0.5 million on premise held for sale. Excluding these special items, the net loss for the fourth quarter of 2010 was $1.6 million or $0.19 per diluted share compared with a net loss for 2009 of $2.0 million or $0.24 per diluted share for the year-earlier quarter, and the net loss for 2010 was $434,000 or $0.06 per diluted share compared with a net loss for 2009 of $2.0 million or $0.23 per diluted share (see reconciliation of net income and net income per diluted share to these non-GAAP amounts later in this release).

Other financial highlights of the fourth quarter included significant growth in total loans and deposits as the Company continued to capitalize on its entry into new markets with the acquisition of eight branch locations since December 2009 in South Georgia and North Central Florida as well as with the Company's de novo entry into the Valdosta, Georgia, market. This expansion has provided the Company with opportunities for follow-on organic growth in these new markets, particularly Statesboro and Valdosta, enabling the Company to increase its loan portfolio to $419.0 million at December 31, 2010, up 25% from $334.1 million at December 31, 2009. Likewise, the Company has enjoyed significant deposit growth during the past year, with deposits increasing 25% to $534.2 million at December 31, 2010, from $426.6 million at December 31, 2009. Also, in the fourth quarter of 2010, the Company completed its conversion to a fully public stock holding company with a successful second-step offering, which increased total stockholders' equity to $119.3 million at December 31, 2010, versus $60.8 million at the end of 2009.

Commenting on the results, Leonard Dorminey, President and Chief Executive Officer of Heritage Financial Group, said, "The past year has been a remarkable period of growth for our company, one marked by accelerated and successful expansion into many attractive and strategically important growth markets. In little more than a year, we have significantly expanded our footprint, more than doubled our banking locations, and have firmly positioned HeritageBank of the South to serve a growing customer base. More importantly, because of our solid reputation, we have been able to attract talented and experienced bankers with strong local ties to these new markets to lead our expansion efforts. At the same time, we have continued to expand the services we offer, most notably with the recent opening of new mortgage production offices in Valdosta and McDonough, Georgia, and a retail brokerage operation in Statesboro, Georgia, further enhancing our capabilities as a full-service financial services provider.

"Of course, the Company's solid capital base has positioned us favorably to take advantage of these opportunities," Dorminey continued. "Our firm capital position during the past year also enabled us to maintain and increase our cash dividends to stockholders at a time when many financial institutions in capital preservation mode were reducing or eliminating dividends. Now, strengthened further by the completion of our second-step offering, we remain watchful for emerging growth opportunities created by a shifting banking landscape, and we look forward to building our presence across our markets with unmatched service, extraordinary bankers, and uncommon financial strength."

In November 2010, the Company completed the conversion of Heritage MHC to full stock form and through the related offering Heritage Financial Group, Inc. became the successor company to Heritage Financial Group and the parent holding company for HeritageBank of the South. In the conversion and offering, the Company sold 6,591,756 shares of common stock at $10.00 per share, including 327,677 shares purchased by the Bank's Employee Stock Ownership Plan, for gross proceeds of approximately $65.9 million. Already significantly above the level required to be considered "well-capitalized" under regulatory standards, the Company's capital at the end of the fourth quarter was strengthened further by the capital raise. The Company's total risk-based capital ratio at December 31, 2010, was 26.4%, 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 15.5% as of December 31, 2010 (see reconciliation of GAAP and non-GAAP capital measures later in this release).

In consideration of its expanded stockholder base and to better align the payment of cash dividends with the Board of Directors' quarterly performance review, the Company will adopt a new schedule for quarterly dividend payments in 2011. Accordingly, the Company expects to declare its next cash dividend in February 2011 and quarterly thereafter, subject to regulatory approval and the Board's customary review of operations, investment opportunities and other pertinent considerations.

Net interest income for the fourth quarter increased 52% to $6.0 million from $3.9 million in the year-earlier quarter, primarily reflecting a higher level of interest-earning assets as reduced funding costs offset lower loan yields. The Company's net interest margin increased 16 basis points to 3.88% in the fourth quarter of 2010 from 3.72% in the year-earlier period and increased 31 basis points on a linked-quarter basis from 3.57% in the third quarter of 2010. Net interest income for 2010 increased 38% to $20.2 million from $14.6 million for the year-earlier period, again primarily reflecting a higher level of interest-earning assets. The Company's net interest margin was 3.66% for 2010, an increase of 17 basis points from 3.49% in the comparable period last year.

Total nonperforming loans and nonperforming assets were $9.9 million and $13.8 million, respectively, at December 31, 2010, down from $12.2 million and $15.0 million, respectively, at September 30, 2010, but up from $8.5 million and $10.3 million, respectively, at December 31, 2009. Nonperforming loans to total loans declined during the fourth quarter versus the third quarter of 2010, falling to 2.37% as of December 31, 2010, versus 2.95% as of September 30, 2010, and 2.53% at December 31, 2009. The decline in the levels of nonperforming loans and assets at December 31, 2010, primarily reflected migration of loans to foreclosure status and increased charge-off activity as the Company continued to aggressively confront credit quality issues in its loan portfolio. Net charge-offs to average outstanding loans in the total portfolio, on an annualized basis, were 1.75% for the fourth quarter of 2010 versus 0.45% for the third quarter of 2010 and 7.42% in the year-earlier period, with the latter reflecting additional provisioning and write-off related to a single nonperforming loan on raw land in Atlanta, Georgia. The Company continues to reduce its exposure to acquisition, construction and development loans, which were 6% of its core portfolio at December 31, 2010, from 9% at the end of the fourth quarter of 2009. Management believes that nonperforming assets and net charge-offs will likely remain at elevated levels, at least in the near term, because of the continued weakness in the economy.

On a linked-quarter basis, the Company increased its provision for loan losses to $3.4 million for the fourth quarter of 2010 from $1.0 million in the third quarter of 2010, reflecting increased charge-offs during the fourth quarter of 2010 as well as general growth of the loan portfolio. The fourth quarter provision was down from $3.7 million in the year-earlier quarter, the majority of which resulted of an additional $2.0 million loan loss provision related to the disposition of a single nonperforming loan. For 2010, the provision for loan losses was $5.5 million versus $7.5 million for 2009. At December 31, 2010, the allowance for loan losses represented 1.93% of total loans outstanding versus 1.58% of total loans outstanding at September 30, 2010, and 1.81% of total loans outstanding at December 31, 2009.

Noninterest income for the fourth quarter of 2010, excluding the aforementioned bargain purchase gain and the receipt of life insurance proceeds, increased 40% to $2.6 million from $1.9 million in the prior-year quarter. This increase reflected higher service charges, fees and commissions, brokerage fees and mortgage origination fees associated with both organic growth and the acquisition of eight branch offices since December 2009. Noninterest income for 2010, excluding special items, increased 14% to $8.8 million from $7.8 million in the year-earlier period, as higher service charges, fees and commissions, brokerage fees and mortgage origination fees were offset partially by lower gains on the sale of securities in 2010.

Noninterest expense for the fourth quarter of 2010, excluding special items, increased 69% to $7.5 million from $4.5 million in the fourth quarter of 2009 and primarily reflected the addition of personnel and occupancy expenses associated with eight acquired branch offices since December 2009, as well as those related to the opening of a de novo branch in Valdosta. Noninterest expense for 2010, excluding special items, rose 41% to $25.0 million compared with $17.8 million for the year-earlier period. The Company's efficiency ratio was 61.85% and 79.79%, respectively, for the fourth quarter and year ended December 31, 2010, versus 85.93% and 81.59%, respectively, for the year-earlier periods.

Heritage Financial Group, Inc. is the holding company for HeritageBank of the South, a community-oriented bank serving primarily South Georgia and North Central Florida through 16 full-service branch locations and two mortgage production offices. As of December 31, 2010, the Company reported total assets of approximately $755.4 million and total stockholders' equity of approximately $119.4 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.

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 Reconciliation of Net Income to Adjusted Net Income (In thousands, except per share amounts)
			Fourth Quarter Ended December 31,								Year Ended December 31,
				2010				2009				2010				2009
Total noninterest income			$	6,238			$	1,858			$	12,484			$	7,788
Bargain purchase gain				(2,722	)			--				(2,722	)			--
Life insurance proceeds				(916	)			--				(916	)			--
Adjusted noninterest income			$	2,600			$	1,858			$	8,846			$	7,788
Total noninterest expense			$	7,540			$	4,967			$	26,050			$	18,271
Impairment of intangible asset (Florida bank charter)				--				--				(1,000	)			--
Impairment loss on premise held for sale				--				(502	)			--				(502	)
Adjusted noninterest expense			$	7,540			$	4,465			$	25,050			$	17,769
Net income (loss) as reported			$	922			$	(1,735	)		$	1,406			$	(1,652	)
Bargain purchase gain, net of tax				(1,633	)			--				(1,633	)			--
Life insurance proceeds, net of tax				(916	)			--				(916	)			--
Impairment of intangible asset, net of tax				--				--				709				--
Impairment loss on premise held for sale, net of tax				--				(301	)			--				(301	)
Adjusted loss			$	(1,627	)		$	(2,038	)		$	(434	)		$	(1,953	)
Diluted earnings (loss) per share			$	0.11			$	(0.21	)		$	0.17			$	(0.20	)
Bargain purchase gain, net of tax				(0.19	)			--				(0.19	)			--
Life insurance proceeds, net of tax				(0.11	)			--				(0.11	)			--
Impairment of intangible asset, net of tax				--				--				0.07				--
Impairment loss on premise held for sale, net of tax				--				(0.03	)			--				(0.03	)
Adjusted loss per diluted share			$	(0.19	)		$	(0.24	)		$	(0.06	)		$	(0.23	)

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.

Reconciliation of Stockholders' Equity and Total Assets to Tangible Common Equity and Tangible Assets, Including Calculation of Tangible Common Equity Ratio (Unaudited) (Dollars in thousands)
			Dec. 31, 2010				Sept. 30, 2010				Dec. 31, 2009
Total stockholders' equity			$	119,340			$	63,085			$	60,817
Less intangible assets				2,912				1,489				1,571
Tangible common equity			$	116,428			$	61,596			$	59,246
Total assets			$	755,436			$	683,324			$	571,948
Less intangible assets				2,912				1,489				1,571
Tangible assets			$	752,524			$	681,835			$	570,377
Total stockholders' equity to total assets				15.8	%			9.2	%			10.6	%
Tangible common equity to tangible assets				15.5	%			9.0	%			10.4	%

Total Stockholders' Equity and Total Assets are presented in accordance with Generally Accepted Accounting Principles (GAAP). Tangible Common Equity and Tangible Assets are non-GAAP financial measures. The Company provides these balances and resulting Tangible Common Equity Ratio, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.

Unaudited Financial Highlights (In thousands, except per share amounts)
			Fourth Quarter Ended December 31,							Year Ended December 31,
				2010			2009				2010				2009
Interest income			$	7,740		$	5,836			$	28,439			$	23,401
Interest expense				1,787			1,914				8,274				8,794
Net interest income				5,953			3,922				20,165				14,607
Provision for loan losses				3,400			3,700				5,500				7,500
Net interest income after provision for loan losses				2,553			222				14,665				7,107
Noninterest income				6,238			1,858				12,484				7,788
Noninterest expense				7,540			4,967				26,050				18,271
Income (loss) before income taxes				1,251			(2,887	)			1,099				(3,376	)
Income tax (benefit) expense				329			(1,150	)			(307	)			(1,724	)
Net income (loss)			$	922		$	(1,737	)		$	1,406			$	(1,652	)
Net income (loss) per share:
Basic			$	0.11		$	(0.21	)		$	0.17			$	(0.20	)
Diluted			$	0.11		$	(0.21	)		$	0.17			$	(0.20	)
Weighted average shares outstanding:
Basic				8,485			8,443				8,450				8,423
Diluted				8,486			8,443				8,451				8,423
Dividends declared per share			$	0.11		$	0.10			$	0.43			$	0.38
						Dec. 31, 2010				Sept. 30, 2010				Dec. 31, 2009
Total assets						$	755,436			$	683,324			$	571,948
Cash and cash equivalents							28,803				33,275				14,922
Interest-bearing deposits in banks							10,911				10,579				43,236
Securities available for sale							238,377				161,798				120,527
Loans							418,997				413,980				334,138
Allowance for loan losses							8,101				6,534				6,060
Total deposits							534,243				535,392				426,606
Federal Home Loan Bank advances							62,500				42,500				42,500
Stockholders' equity							119,340				63,085				60,817

Prior-period share and per share data have been adjusted throughout this press release to reflect the 0.8377:1 conversion ratio used in conjunction with the completion of the Company's second-step offering on November 30, 2010.

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
			Fourth Quarter Ended December 31,							Year Ended December 31,
				2010			2009				2010				2009
Income Statement Data
Interest income
Loans			$	6,584		$	4,834			$	23,810			$	18,555
Securities - taxable				923			683				3,495				3,604
Securities - nontaxable				211			292				960				1,174
Federal funds sold				7			14				45				54
Interest bearing deposits in banks				15			13				129				14
Total interest income				7,740			5,836				28,439				23,401
Interest expense
Deposits				1,092			1,422				5,759				6,472
Other borrowings				695			492				2,515				2,322
Total interest expense				1,787			1,914				8,274				8,794
Net interest income				5,953			3,922				20,165				14,607
Provision for loan losses				3,400			3,700				5,500				7,500
Net interest income after provision for loan losses				2,553			222				14,665				7,107
Non-interest income
Service charges on deposit accounts				1,194			951				4,113				3,547
Other service charges, fees & commissions				553			345				2,064				1,406
Brokerage fees				337			252				1,070				914
Mortgage origination fees				270			69				607				345
Bank owned life insurance				151			156				610				621
Life insurance proceeds				916			-				916				-
Gain (loss) on sale of securities				63			73				294				909
Bargain purchase gain				2,722			-				2,722				-
Other				32			12				88				46
Total non-interest income				6,238			1,858				12,484				7,788
Non-interest expense
Salaries and employee benefits				3,691			2,179				12,676				8,899
Equipment				320			225				1,131				985
Occupancy				452			297				1,511				1,198
Advertising & marketing				183			94				593				439
Legal & accounting				176			103				616				493
Consulting & other professional fees				156			75				364				297
Director fees & retirement				144			93				564				553
Telecommunications				213			70				517				239
Supplies				99			46				351				177
Data processing fees				594			461				2,190				1,606
(Gain) loss on sale and write-downs of other real estate owned				326			38				(17	)			422
Foreclosed asset expenses				234			85				1,013				257
FDIC insurance and other regulatory fees				242			371				923				872
Impairment loss of premise held for sale				-			502				-				502
Impairment loss on intangible assets				-			-				1,000				-
Other operating				710			328				2,618				1,332
Total non-interest expense				7,540			4,967				26,050				18,271
Income before taxes				1,251			(2,887	)			1,099				(3,376	)
Applicable income tax (benefit)				329			(1,150	)			(307	)			(1,724	)
Net income (loss)			$	922		$	(1,737	)		$	1,406			$	(1,652	)
Weighted average shares - basic				8,485			8,443				8,450				8,423
Weighted average shares - diluted				8,486			8,443				8,451				8,423
Basic earnings (loss) per share			$	0.11		$	(0.21	)		$	0.17			$	(0.20	)
Diluted earnings (loss) per share				0.11			(0.21	)			0.17				(0.20	)
Cash dividend declared per share				0.11			0.10				0.43				0.38

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
										Year Ended
										December 31,
											2010				2009
Balance Sheet Data (at period end)
Total loans										$	418,997			$	334,138
Allowance for loan losses											8,101				6,060
Intangible assets											2,912				1,571
Total assets											755,436				571,948
Non-interest bearing deposits											44,769				28,882
Interest bearing deposits											489,474				397,724
Federal home loan bank advances											62,500				42,500
Federal funds purchased and securities sold under agreement to repurchase											32,421				32,843
Stockholders' equity											119,340				60,817
															-
Total shares outstanding											8,711				9,593
Less treasury shares											-				873
Net shares outstanding											8,711				8,720
Shares held by Heritage, MHC											-				6,592
Unearned ESOP shares											492				203
Book value per share										$	14.52			$	7.14
Tangible book value per share (non-GAAP)											14.17				6.96
Market value per share											12.42				8.65
		Fourth Quarter Ended								Year Ended
		December 31,								December 31,
			2010				2009				2010				2009
Average Balance Sheet Data
Average interest bearing deposits in banks		$	10,910			$	5,954			$	26,075			$	1,927
Average federal funds sold			11,181				21,607				17,472				21,102
Average investment securities			179,682				103,410				142,301				114,337
Average loans			419,572				305,694				379,461				299,390
Average mortgage loans held for sale			315				-				235				-
Average earning assets			621,660				436,665				565,544				436,756
Average assets			712,689				494,889				644,212				491,272
Average noninterest bearing deposits			49,612				23,208				41,446				20,875
Average interest bearing deposits			491,903				325,547				449,676				313,445
Average total deposits			541,515				348,755				491,122				334,320
Average federal funds purchased and securities sold under agreement to repurchase			35,234				33,827				34,097				40,113
Average Federal Home Loan Bank advances			44,435				42,572				42,984				47,268
Average interest bearing liabilities			571,572				401,946				526,757				400,826
Average stockholders' equity			83,154				63,067				67,383				63,084
Performance Ratios
Annualized return on average assets			0.52	%			-1.40	%			0.22	%			-0.34	%
Annualized return on average equity			4.44	%			-11.02	%			2.09	%			-2.62	%
Net interest margin			3.88	%			3.72	%			3.66	%			3.49	%
Net interest spread			3.78	%			3.57	%			3.55	%			3.31	%
Efficiency ratio			61.85	%			85.93	%			79.79	%			81.59	%
Capital Ratios
Average stockholders' equity to average assets			11.67	%			12.74	%			10.46	%			12.84	%
Tangible equity to tangible assets (non-GAAP)			15.47	%			10.39	%			15.47	%			10.39	%
Tier 1 leverage ratio			16.1	%			12.4	%			16.1	%			12.4	%
Tier 1 risk-based capital ratio			25.1	%			15.5	%			25.1	%			15.5	%
Total risk-based capital ratio			26.4	%			16.8	%			26.4	%			16.8	%
Other Information
Full-time equivalent employees			217				134				217				134
Number of full-service offices			16				10				16				10

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
			Five Quarter Comparison
				12/31/09				3/31/10				6/30/10				9/30/10				12/31/10
Income Statement Data
Interest income
Loans			$	4,834			$	5,320			$	5,763			$	6,142			$	6,584
Securities - taxable				682				776				790				1,006				923
Securities - nontaxable				292				298				239				212				211
Federal funds sold				14				9				18				11				7
Interest bearing deposits in banks				13				44				45				25				15
Total interest income				5,835				6,447				6,855				7,396				7,740
Interest expense
Deposits				1,422				1,524				1,512				1,631				1,092
Other borrowings				492				513				647				659				695
Total interest expense				1,914				2,037				2,159				2,290				1,787
Net interest income				3,921				4,410				4,696				5,106				5,953
Provision for loan losses				3,700				500				650				950				3,400
Net interest income after provision for loan losses				221				3,910				4,046				4,156				2,553
Non-interest income
Service charges on deposit accounts				950				824				982				1,112				1,194
Other service charges, fees & commissions				345				403				466				643				553
Brokerage fees				252				222				257				253				337
Mortgage origination fees				68				38				71				227				270
Bank owned life insurance				156				152				154				153				151
Life insurance proceeds				-				-				-				-				916
Gain (loss) on sale of securities				73				152				8				71				63
Bargain purchase gain				-				-				-				-				2,722
Other				15				21				17				19				32
Total non-interest income				1,859				1,812				1,955				2,478				6,238
Non-interest expense
Salaries and employee benefits				2,177				2,565				2,974				3,446				3,691
Equipment				225				255				252				304				320
Occupancy				297				306				329				424				452
Advertising & marketing				94				120				124				166				183
Legal & accounting				102				149				179				112				176
Consulting & other professional fees				74				71				66				71				156
Director fees & retirement				92				139				139				142				144
Telecommunications				70				69				103				132				213
Supplies				47				58				96				98				99
Data processing fees				461				481				511				604				594
(Gain) loss on sale and write-downs of other real estate owned				38				(231	)			(112	)			-				326
Foreclosed asset expenses				86				171				427				181				234
FDIC insurance and other regulatory fees				371				170				228				283				242
Impairment loss on premises held for sale				502				-				-				-				-
Impairment loss on intangible assets				-				-				-				1,000				-
Other operating				328				382				710				816				710
Total non-interest expense				4,964				4,705				6,026				7,779				7,540
Income (loss) before taxes				(2,884	)			1,017				(25	)			(1,145	)			1,251
Applicable income tax (benefit)				(1,148	)			219				(153	)			(702	)			329
Net income (loss)			$	(1,736	)		$	798			$	128			$	(443	)		$	922
Weighted average shares - basic				8,421				8,445				8,469				8,493				8,485
Weighted average shares - diluted				8,421				8,445				8,471				8,495				8,486
Basic earnings (loss) per share			$	(0.21	)		$	0.09			$	0.02			$	(0.05	)		$	0.11
Diluted earnings (loss) per share				(0.21	)			0.09				0.02				(0.05	)			0.11
Cash dividend declared per share				0.10				0.11				0.11				0.11				0.11

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
			Five Quarter Comparison
				12/31/09				3/31/10				6/30/10				9/30/10				12/31/10
Balance Sheet Data (at period end)
Total loans			$	334,138			$	342,495			$	388,737			$	413,980			$	418,997
Allowance for loan losses				6,060				5,816				6,027				6,534				8,101
Intangible assets				1,571				1,540				2,604				1,489				2,912
Total assets				571,948				574,363				661,876				683,324				755,436
Non-interest bearing deposits				28,882				28,375				46,221				48,014				44,769
Interest bearing deposits				397,724				400,028				469,491				487,378				489,474
Federal home loan bank advances				42,500				42,500				42,500				42,500				62,500
Federal funds purchased and securities sold under agreement to repurchase				32,843				32,778				33,954				35,092				32,421
Stockholders' equity				60,817				61,615				62,359				63,085				119,340
Total shares outstanding				9,595				9,595				9,595				9,595				8,711
Less treasury shares				884				884				885				885				-
Net shares outstanding				8,711				8,711				8,710				8,710				8,711
Unearned ESOP shares				203				194				184				175				492
Book value per share			$	7.15			$	7.23			$	7.31			$	7.39			$	14.52
Tangible book value per share (non-GAAP)				6.96				7.05				7.01				7.22				14.17
Market value per share				8.65				14.42				12.92				10.05				12.42
			Five Quarter Comparison
				12/31/09				3/31/10				6/30/10				9/30/10				12/31/10
Average Balance Sheet Data
Average interest bearing deposits in banks			$	5,954			$	33,419			$	37,193			$	31,130			$	10,910
Average federal funds sold				21,607				14,002				20,693				19,569				11,181
Average investment securities				103,410				117,578				115,370				129,841				179,682
Average loans				305,694				336,801				350,438				366,091				419,572
Average earning assets				436,665				501,800				523,694				546,631				621,345
Average assets				494,889				569,898				593,696				621,386				712,689
Average noninterest bearing deposits				23,208				29,171				33,957				38,724				49,612
Average interest bearing deposits				325,547				395,033				413,008				435,600				491,903
Average total deposits				348,755				424,204				446,965				474,324				541,515
Average federal funds purchased and securities sold under agreement to repurchase				33,827				33,048				33,273				33,718				35,234
Average Federal Home Loan Bank advances				42,572				42,500				42,500				42,500				44,435
Average interest bearing liabilities				401,946				470,581				488,781				511,818				571,572
Average stockholders' equity				63,067				61,145				61,699				62,126				83,154
Performance Ratios
Annualized return on average assets				-1.40	%			0.56	%			0.62	%			-0.29	%			0.52	%
Annualized return on average equity				-7.28	%			5.22	%			6.00	%			-2.85	%			4.44	%
Net interest margin				3.72	%			3.68	%			3.61	%			3.57	%			3.88	%
Net interest spread				3.57	%			3.57	%			3.50	%			3.46	%			3.78	%
Efficiency ratio				85.88	%			75.62	%			83.36	%			102.57	%			61.85	%
Capital Ratios
Average stockholders' equity to average assets				12.7	%			10.7	%			10.4	%			10.0	%			11.7	%
Tangible equity to tangible assets (non-GAAP)				10.4	%			10.5	%			9.2	%			9.0	%			15.5	%
Tier 1 leverage ratio				11.2	%			9.3	%			9.3	%			8.7	%			16.1	%
Tier 1 risk-based capital ratio				14.2	%			14.0	%			14.0	%			13.4	%			25.1	%
Total risk-based capital ratio				15.5	%			15.3	%			15.3	%			14.7	%			26.4	%
Other Information
Full-time equivalent employees				134				139				194				206				217
Number of full-service offices				10				10				16				16				16

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
							Fourth Quarter Ended								Year Ended
Total Portfolio							December 31,								December 31,
								2010				2009				2010				2009
Loans by Type
Construction and land loans							$	24,522			$	30,881			$	24,522			$	30,881
Farmland loans								19,314				15,129				19,314				15,129
Permanent 1 - 4								135,180				85,614				135,180				85,614
Permanent 1 - 4 - junior liens and revolving								26,424				24,459				26,424				24,459
Multifamily								13,612				12,153				13,612				12,153
Nonresidential								115,424				79,334				115,424				79,334
Commercial business loans								54,558				48,101				54,558				48,101
Consumer and other loans								29,963				38,467				29,963				38,467
								418,997				334,138				418,997				334,138
Asset Quality Data
Allowance for loan losses to total loans								1.93	%			1.81	%			1.93	%			1.81	%
Allowance for loan losses to average loans								1.93	%			1.98	%			2.13	%			2.02	%
Allowance for loan losses to non-performing loans								81.47	%			42.63	%			81.47	%			42.63	%
Accruing past due loans							$	2,499			$	1,277			$	2,499			$	1,277
Nonaccrual loans								9,944				12,990				9,944				12,990
Loans - 90 days past due & still accruing								-				-				-				-
Total non-performing loans								9,944				14,216				9,944				14,216
OREO and repossessed assets								3,889				1,503				3,889				1,503
Total non-performing assets								13,833				15,719				13,833				15,719
Non-performing loans to total loans								2.37	%			2.66	%			2.37	%			4.25	%
Non-performing assets to total assets								1.83	%			1.63	%			1.83	%			2.75	%
Net charge-offs to average loans (annualized)								1.75	%			7.57	%			0.91	%			2.85	%
Net charge-offs							$	1,833			$	5,667			$	3,459			$	6,390
			Five Quarter Comparison
				12/31/09				3/31/10				6/30/10				9/30/10				12/31/10
Loans by Type
Construction and land loans			$	30,881			$	24,138			$	25,326			$	25,622			$	24,522
Farmland loans				15,129				20,213				22,130				21,642				19,314
Permanent 1 - 4				85,614				92,122				114,614				129,002				135,180
Permanent 1 - 4 - junior liens and revolving				24,459				25,182				27,829				27,317				26,424
Multifamily				12,153				10,242				12,601				13,737				13,612
Nonresidential				79,334				88,283				103,755				112,163				115,424
Commercial business loans				48,101				47,014				47,728				51,292				54,558
Consumer and other loans				38,467				35,301				34,754				33,205				29,963
				334,138				342,495				388,737				413,980				418,997
Asset Quality Data
Allowance for loan losses to total loans				1.81	%			1.70	%			1.55	%			1.58	%			1.93	%
Allowance for loan losses to average loans				1.98	%			1.73	%			1.66	%			1.64	%			1.93	%
Allowance for loan losses to non-performing loans				71.61	%			89.23	%			80.21	%			53.56	%			81.47	%
Accruing past due loans			$	3,247			$	1,810			$	2,498			$	899			$	2,499
Nonaccrual loans				8,463				6,518				7,514				12,199				9,944
Loans - 90 days past due & still accruing				-				-				-				-				-
Total non-performing loans				8,463				6,518				7,514				12,199				9,944
OREO and repossessed assets				1,795				3,567				3,019				2,787				3,889
Total non-performing assets				10,258				10,085				10,533				14,986				13,833
Non-performing loans to total loans				2.53	%			1.90	%			1.93	%			2.95	%			2.37	%
Non-performing assets to total assets				1.79	%			1.76	%			1.59	%			2.19	%			1.83	%
Net charge-offs to average loans (annualized)				7.42	%			0.88	%			0.48	%			0.45	%			1.75	%
Net charge-offs			$	5,667			$	744			$	439			$	443			$	1,833

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
							Fourth Quarter Ended								Year Ended
Core Portfolio							December 31,								December 31,
								2010				2009				2010				2009
Loans by Type
Construction and land loans							$	22,426			$	28,002			$	22,426			$	28,002
Farmland loans								11,775				9,013				11,775				9,013
Permanent 1 - 4								106,690				81,255				106,690				81,255
Permanent 1 - 4 - junior liens and revolving								20,909				17,313				20,909				17,313
Multifamily								10,770				11,650				10,770				11,650
Nonresidential								97,482				71,013				97,482				71,013
Commercial business loans								50,195				45,785				50,195				45,785
Consumer and other loans								25,274				34,981				25,274				34,981
								345,521				299,012				345,521				299,012
Asset Quality Data
Accruing past due loans							$	1,596			$	1,277			$	1,596			$	1,277
Nonaccrual loans								8,092				12,990				8,092				12,990
Loans - 90 days past due & still accruing								-				-				-				-
Total non-performing loans								8,092				12,990				8,092				12,990
OREO and repossessed assets								3,653				898				3,653				898
Total non-performing assets								11,745				13,888				11,745				13,888
Non-performing loans to total loans								2.34	%			4.34	%			2.34	%			4.34	%
Net charge-offs							$	1,833			$	5,667			$	3,459			$	6,390
			Five Quarter Comparison
				12/31/09				3/31/10				6/30/10				9/30/10				12/31/10
Loans by Type
Construction and land loans			$	28,002			$	22,021			$	22,030			$	23,257			$	22,426
Farmland loans				9,013				12,955				13,039				13,421				11,775
Permanent 1 - 4				81,255				87,552				89,888				96,709				106,690
Permanent 1 - 4 - junior liens and revolving				17,313				17,055				16,915				21,191				20,909
Multifamily				11,650				9,779				9,896				10,845				10,770
Nonresidential				71,013				80,887				80,436				95,854				97,482
Commercial business loans				45,785				44,440				42,903				42,377				50,195
Consumer and other loans				34,981				31,663				29,611				26,397				25,274
				299,012				306,352				304,718				330,051				345,521
Asset Quality Data
Accruing past due loans			$	1,826			$	1,300			$	369			$	641			$	1,596
Nonaccrual loans				7,237				6,441				7,450				10,854				8,092
Loans - 90 days past due & still accruing				-				-				-				-				-
Total non-performing loans				7,237				6,441				7,450				10,854				8,092
OREO and repossessed assets				1,190				3,253				2,782				2,551				3,653
Total non-performing assets				8,427				9,694				10,232				13,405				11,745
Non-performing loans to total loans, excluding purchased				2.42	%			2.10	%			2.44	%			3.29	%			2.34	%
Net charge-offs			$	5,667			$	744			$	1,184			$	1,626			$	3,459

Heritage Financial Group, Inc.
Fourth Quarter 2010 Earnings Release Supplement
(Dollars in thousands)
							Fourth Quarter Ended								Year Ended
Purchased Portfolio							December 31,								December 31,
								2010				2009				2010				2009
Loans by Type
Construction and land loans							$	2,096			$	2,879			$	2,096			$	2,879
Farmland loans								7,539				6,116				7,539				6,116
Permanent 1 - 4								28,490				4,359				28,490				4,359
Permanent 1 - 4 - junior liens and revolving								5,515				7,146				5,515				7,146
Multifamily								2,842				503				2,842				503
Nonresidential								17,942				8,321				17,942				8,321
Commercial business loans								4,363				2,316				4,363				2,316
Consumer and other loans								4,689				3,486				4,689				3,486
								73,476				35,126				73,476				35,126
Asset Quality Data
Accruing past due loans							$	903			$	1,421			$	903			$	1,421
Nonaccrual loans								1,852				1,226				1,852				1,226
Loans - 90 days past due & still accruing								0				0				0				0
Total non-performing loans								1,852				1,226				1,852				1,226
OREO and repossessed assets								236				605				236				605
Total non-performing assets								2,088				1,831				2,088				1,831
Non-performing loans to total loans								2.52	%			3.49	%			2.52	%			3.49	%
Net charge-offs								-				-				-				-
			Five Quarter Comparison
				12/31/09				3/31/10				6/30/10				9/30/10				12/31/10
Loans by Type
Construction and land loans			$	2,879			$	2,117			$	3,296			$	2,365			$	2,096
Farmland loans				6,116				7,258				9,091				8,221				7,539
Permanent 1 - 4				4,359				4,570				24,726				32,293				28,490
Permanent 1 - 4 - junior liens and revolving				7,146				8,127				10,914				6,126				5,515
Multifamily				503				463				2,705				2,892				2,842
Nonresidential				8,321				7,396				23,319				16,309				17,942
Commercial business loans				2,316				2,574				4,825				8,915				4,363
Consumer and other loans				3,486				3,638				5,143				6,808				4,689
				35,126				36,143				84,019				83,929				73,476
Asset Quality Data
Accruing past due loans			$	1,421			$	510			$	2,129			$	258			$	903
Nonaccrual loans				1,226				77				64				1,345				1,852
Loans - 90 days past due & still accruing				-				-				-				-				-
Total non-performing loans				1,226				77				64				1,345				1,852
OREO and repossessed assets				605				314				237				236				236
Total non-performing assets				1,831				391				301				1,581				2,088
Non-performing loans to total purchased loans				3.49	%			0.21	%			0.08	%			1.60	%			2.52	%
Net charge-offs				-				-				-				-				-
Note:
Certain prior-period amounts have been reclassified to conform with current presentation.
For non-GAAP measures see reconciliation to closest GAAP measures contained in this press release.
Prior-period share and per share data have been adjusted to reflect the 0.8377:1 conversion ratio used in conjunction with the completion of the Company's second-step stock offering on November 30, 2010.
Core portfolio represents loans originated by the Company and participation loans. Purchased loans represent loans purchased by the Company in branch and FDIC-assisted acquisitions.