Len Dorminey is president and chief executive of Heritage Financial Group Inc.
ALBANY, Ga. — Heritage Financial Group, the holding company of HeritageBank of the South, announced late Friday that it has entered into an agreement to purchase Frontier Bank based in LaGrange.
The agreement with Federal Deposit Insurance Corporation gives the local financial institution nine additional branches, bringing its overall total to 29.
Leonard Dorminey, president and chief executive officer of Heritage Financial Corp, noted the move gives Heritage an opportunity to enter the Birmingham, Ala., market.
Three of Frontier Bank’s branches are located along the 40-mile corridor between LaGrange and Auburn, Ala. Six branches are located south and southeast of Birmingham.
Although the bank is chartered in LaGrange, the majority of the bank’s business is conducted in the Birmingham area.
Speaking of the entry into a new market, Dorminey said, “We look forward to the opportunity to enter the Birmingham market, one of the major metropolitan markets in the state where we hope to differentiate HeritageBank of the South as a leader in community banking and build a solid banking platform for future growth.
“Overall, we feel confident about the quality of the assets we are acquiring and the limited risk structure of this deal.”
In the FDIC-assisted deal, Heritage gains about $224 million in deposits and about $111 million in loans. The deal does not involve a loss-share agreement, but was subject to an asset purchase discount of $34.8 million.
Dorminey said all branches of Frontier Bank will open either today or Monday as HeritageBank of the South. He said all deposits are fully accessible to existing customers using their regular account numbers, checks and debit/ATM cards. Frontier depositors automatically become depositors of HeritageBank with their funds FDIC insured.
HeritageBank, which has its roots as a credit union, has completed four acquisitions with FDIC.
The bank’s capital position has allowed the Albany-based company to expand through the FDIC acquisitions. Dorminey said the total risk-based capital ratio at the end of 2012 was 18.4 percent.
T. Heath Fountain, executive vice president and chief financial officer of Heritage Financial, said a bank must have a ratio of at least 10 percent to be considered well capitalized.
Officially, Frontier Bank was closed Friday by order of the Georgia Superior Court with FDIC appointed as receiver. Heritage Financial submitted the winning bid for the bank and immediately assumed control.
In addition to the 29 bank branches, Heritage also has 13 mortgage offices and four investment offices. The bank ended the year with total assets of about $1.1 billion. Friday’s announcement will bring that total to about $1.4 billion.
Heritage previously operated one branch in Auburn and had a mortgage office in LaGrange before Friday’s transaction.
Fountain added that both geographic segments of Friday’s deal are in growth areas — the LaGrange to Auburn corridor and the Birmingham metro area.
“We’re excited about being able to get into those parts of the state,” Fountain said.