Heritage Financial Group, Inc., the holding company for HeritageBank of the South, today announced that the Bank has entered into a definitive whole-bank purchase and assumption agreement with theFederal Deposit Insurance Corporation to acquire substantially all of the assets and assume substantially all of the deposits ofFirst Southern National Bank, a full-service bank based inStatesboro, Georgia, with total assets of approximately$175 million.The Office of the Comptroller of the Currencytoday closed First Southern and appointed theFDICas receiver.

In the acquisition, HeritageBank of the South will assume approximately$170 millionin deposits and acquire$120 millionin loans. In addition to assuming all of the deposits of First Southern, HeritageBank of the South will purchase essentially all of its assets. TheFDICand the Bank have entered into a loss-share agreement under which theFDICwill reimburse HeritageBank of the South for 80% of the losses on First Southern's covered loans and other real estate owned.

The single office previously operated by First Southern inStatesborowill reopen on Saturday, according to its normal operating hours, as a branch of HeritageBank of the South. Depositors of First Southern will automatically become depositors of HeritageBank of the South, and deposits will continue to be insured by theFDICup to applicable limits.

First Southern, with a single location inStatesboro, further expands the Bank's footprint in theStatesboromarket, increasing to three the number of branch offices there. The acquisition is expected to boost the Bank's market ranking, in terms of deposit market share, into the top four banks inStatesboro. HeritageBank of the South will now operate 22 branch locations inSouth Georgiaand North Central Florida.

Commenting on the announcement,Leonard Dorminey, President and Chief Executive Officer ofHeritage Financial Group, Inc., said, "We are pleased to welcome all First Southern's customers to HeritageBank of the South. Our goal is to make this transition as simple and transparent as possible for all customers and introduce them to the distinctly different style of community banking that our customers have come to expect. We believe customers will see this difference in the stronger service capabilities we have brought to theStatesboromarket, including not only an array of traditional banking products and services, but also a platform for mortgage lending and investment services. We point out to our new customers that their deposits are safe and fully accessible using their existing account numbers, checks, and debit/ATM cards. We look forward to forging even stronger relationships with all current First Southern customers in the months and years ahead.

"With this acquisition, we continue to strategically deploy our capital," Dorminey continued. "First Southern marks the thirdFDIC-assisted acquisition we have completed, which, along with our other transactions, have greatly expanded our footprint across southernGeorgiaand have strengthened our presence in attractive markets such asStatesboro. These steps have enhanced our regional footprint and have increased our asset base significantly." Dorminey noted that, considering the Company's strong capital position – with a total risk-based capital ratio of 23.4% atJune 30, 2011, the Company remains well positioned to take advantage of possible future acquisition opportunities andFDIC-assisted deals that make sense for HeritageBankof the South'sbusiness and markets.

Sterne Agee acted as financial advisor to the Company in this transaction, whileSilver, Freedman & Taff, L.L.P.served as legal counsel.