Heritage Financial now stock holding company

ALBANY -- Heritage Financial Group officials announced Friday that the holding company for HeritageBank of the South is reorganizing from a two-tier mutual holding company to a full stock holding company.

In addition, the reorganized Heritage Financial will be offering additional shares of common stock, company officials said.

"This is an important milestone in our company's growth strategy," Leonard Dorminey, president and chief executive officer of Heritage Financial, said in a news release from the company.

"While our total risk-based capital ratio at year-end was significantly higher than the required minimum of 10 percent to be considered a well-capitalized institution, we believe this step will enhance our ability to take advantage of attractive expansion opportunities and better position us for continued growth."

The conversion and offering is expected to be completed in the third quarter of 2010, subject to regulatory, stockholder and depositor approvals.

Now, the majority of Heritage Financial Group is owned by Heritage MHC, a mutual holding company that has 76 percent of Heritage Financial's shares. The remaining 24 percent of Heritage Financial shares are owned by public stockholders.

Under the reorganization, officials say, HeritageBank will be a wholly-owned subsidiary of a new stock corporation that will be named Heritage Financial Group Inc.

Shares not held by Heritage MHC will be converted into common shares of the new company utilizing an exchange ratio that preserves the current percentage of ownership interests.

The shares owned by Heritage MHC will be retired, and new shares representing that ownership will be offered and sold to the bank's eligible depositors, the bank's tax-qualified employee benefit plans and to the general public according to a plan for conversion and reorganization of Heritage MHC.

That plan first must be approved by the Office of Thrift Supervision and the Georgia Department of Banking and Finance before it can be approved by stockholders and HeritageBank depositors.

Heritage Financial intends to continue to be headquartered in Albany and to retain the current NASDAQ symbol HBOS, officials said.

Officials say the reorganiztion will not affect existing terms and conditions of deposit accounts and loans with HeritageBank and that normal business operations will not be disrupted by the changeover.

Also, the company's acquisition of five PAB Bankshares branches is expected to be completed in the second quarter, pending regulatory approvals and usual conditions, which officials say will transfer about $52 million in loans and approximately $72 million in deposits to HeritageBank, which will also assume about $26 million in certificates of deposit within 45 days of the closing of those acquisitions.

Last December, Heritage reported assets of $573.2 million, total stockholder equity of $62.1 million and a total risk-based capital ratio of 17 percent.

Silver, Freedman & Taff LLP is legal counsel to the Company and is advising Heritage Financial Group and Heritage MHC in this conversion.