OMB APPROVALOMB Number:  3235-0416Expires:   February 28, 2006Estimated Average BurdenHours per response  182

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|**United States**

(State or other jurisdiction of

incorporation or organization) | **45-0479535**(IRS Employer Identification Number)
|---------------------------------------------------------------------------------- | --------------------------------------------------

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|                                | Item 2.           
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|                                | Item 3.           
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|**Part II - OTHER INFORMATION** | 21                
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|                                | Item 1.           
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|                                | Item 2.           
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|                                | Item 6.           
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|**SIGNATURES**                  | 23                
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|**EXHIBITS**                    |                   
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|                                | 31.1              
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|                                | 31.2              
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|                                | 32                

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|Assets                                                                                                                | June 30,2005(Unaudited) | December 31,2004(Audited)
|--------------------------------------------------------------------------------------------------------------------- | ----------------------- | -------------------------
|Cash and due from banks                                                                                               | $    7,392,888          | $    6,621,232           
|Interest-bearing deposits in banks                                                                                    | 1,189,549               | 420,677                  
|Federal funds sold                                                                                                    | 30,077,000              | 12,783,000               
|Securities available for sale, at fair value                                                                          | 59,465,390              | 59,287,595               
|Federal home loan bank stock, at cost                                                                                 | 2,702,000               | 2,957,300                
|Corporate credit union membership shares                                                                              | -                       | 553,834                  
|Loans, net                                                                                                            | 241,661,635             | 235,276,942              
|Premises and equipment, net                                                                                           | 12,190,442              | 12,684,152               
|Accrued interest receivable                                                                                           | 1,487,634               | 1,425,871                
|Foreclosed assets                                                                                                     | 37,744                  | 200,554                  
|Cash surrender value of bank owned life insurance                                                                     | 7,835,825               | 7,690,065                
|Other assets                                                                                                          | 4,329,303               | 3,567,254                
|                                                                                                                      | $368,369,411            | $343,468,476             
|                                                                                                                      |                         |                          
|Liabilities and Stockholders' Equity                                                                                  |                         |                          
|Deposits                                                                                                              |                         |                          
|Noninterest-bearing                                                                                                   | $  24,032,552           | $  14,447,423            
|Interest-bearing                                                                                                      | 224,384,168             | 234,095,297              
|Total deposits                                                                                                        | 248,416,720             | 248,542,720              
|Other borrowings                                                                                                      | 45,550,000              | 51,000,000               
|Other liabilities                                                                                                     | 5,945,129               | 4,792,002                
|Total liabilities                                                                                                     | 299,911,849             | 304,334,722              
|Commitments and contingencies                                                                                         |                         |                          
|Stockholders' equity                                                                                                  |                         |                          
|Preferred stock, par value $0.01; 1,000,000 shares authorized; 
      no shares issued                                |                         |                          
|Common stock, par value $0.01; 25,000,000 shares authorized;
      11,241,250 and 1,000 shares issued and outstanding | 112,413                 | 10                       
|Paid-in capital                                                                                                       | 37,204,672              | 4,799,990                
|Retained earnings                                                                                                     | 37,333,093              | 35,935,700               
|Accumulated other comprehensive loss                                                                                  | (1,785,616)             | (1,601,946)              
|Unearned ESOP shares                                                                                                  | (4,407,000)             | -                        
|Total stockholders' equity                                                                                            | 68,457,562              | 39,133,754               
|                                                                                                                      | $368,369,411            | $343,468,476             

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|                                                             | Three Months Ended June 30,
|------------------------------------------------------------ | ---------------------------
|                                                             | 2005                       
|Interest income                                              |                            
|Interest and fees on loans                                   | $3,877,015                 
|Interest on taxable securities                               | 567,693                    
|Interest on nontaxable securities                            | 79,421                     
|Interest on federal funds sold                               | 89,363                     
|Interest on deposits in other banks                          | 6,920                      
|                                                             | 4,620,412                  
|                                                             |                            
|Interest expense                                             |                            
|Interest on deposits                                         | 994,114                    
|Interest on other borrowings                                 | 452,051                    
|                                                             | 1,446,165                  
|Net interest income                                          | 3,174,247                  
|Provision for loan losses                                    | 364,555                    
|Net interest income after provision for
         loan losses | 2,809,692                  
|                                                             |                            
|Noninterest income                                           |                            
|Service charges on deposit accounts                          | 811,519                    
|Other service charges, commissions and fees                  | 218,635                    
|Brokerage fees                                               | 151,939                    
|Mortgage origination fees                                    | 129,423                    
|Bank owned life insurance                                    | 74,364                     
|Loss on sale of securities                                   | (3,731)                    
|Other                                                        | 62,368                     
|                                                             | 1,444,517                  
|                                                             |                            
|Noninterest expense                                          |                            
|Salaries and employee benefits                               | 1,751,126                  
|Equipment                                                    | 451,834                    
|Occupancy                                                    | 238,813                    
|Advertising and marketing                                    | 66,095                     
|Legal and accounting                                         | 89,946                     
|Directors fees and retirement                                | 73,644                     
|Telephone                                                    | 62,017                     
|Supplies                                                     | 51,725                     
|Data processing fees                                         | 101,243                    
|Other operating                                              | 370,959                    
|                                                             | 3,257,402                  
|Income before income taxes                                   | 996,807                    
|                                                             |                            
|Applicable income taxes                                      | 330,839                    
|Net income                                                   | $   665,968                
|Basic earnings per share                                     | $          0.08            
|Diluted earnings per share                                   | $          0.08            

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|                                                                                                                          | Three Months Ended June 30,
|------------------------------------------------------------------------------------------------------------------------- | ---------------------------
|                                                                                                                          | 2005                       
|Net income                                                                                                                | $   665,968                
|                                                                                                                          |                            
|Other comprehensive income (loss):                                                                                        |                            
|Net unrealized holding gains (losses) arising during period,
      net of tax (benefits) of $(291,164) and  $(967,448)    | 443,171                    
|Reclassification adjustment for (gains) losses included in net
      income, net of tax benefits of $(1,479) and $(1,302) | 2,252                      
|                                                                                                                          |                            
|Total other comprehensive income (loss)                                                                                   | 445,423                    
|                                                                                                                          |                            
|Comprehensive income (loss)                                                                                               | $1,111,391                 

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|                                                              | Six Months Ended June 30,
|------------------------------------------------------------- | -------------------------
|                                                              | 2005                     
|Interest income                                               |                          
|                                                              |                          
|Interest and fees on loans                                    | $7,671,333               
|Interest on taxable securities                                | 1,155,319                
|Interest on nontaxable securities                             | 160,975                  
|Interest on federal funds sold                                | 143,242                  
|Interest on deposits in other banks                           | 15,789                   
|                                                              | 9,146,658                
|Interest expense                                              |                          
|Interest on deposits                                          | 1,960,544                
|Interest on other borrowings                                  | 921,899                  
|                                                              | 2,882,443                
|Net interest income                                           | 6,264,215                
|Provision for loan losses                                     | 464,555                  
|Net interest income after provision for 
         loan losses | 5,799,660                
|Noninterest income                                            |                          
|Service charges on deposit accounts                           | 1,472,593                
|Other service charges, commissions and fees                   | 438,540                  
|Brokerage fees                                                | 280,724                  
|Mortgage origination fees                                     | 176,074                  
|Bank owned life insurance                                     | 145,760                  
|Gain (loss) on sale of securities                             | (4,653)                  
|Other                                                         | 164,307                  
|                                                              | 2,673,345                
|Noninterest expense                                           |                          
|Salaries and employee benefits                                | 3,428,143                
|Equipment                                                     | 912,203                  
|Occupancy                                                     | 471,658                  
|Advertising and marketing                                     | 133,822                  
|Legal and accounting                                          | 196,398                  
|Directors fees and retirement                                 | 144,888                  
|Telephone                                                     | 123,662                  
|Supplies                                                      | 112,289                  
|Data processing fees                                          | 192,600                  
|Other operating                                               | 677,331                  
|                                                              | 6,392,994                
|Income before income taxes                                    | 2,080,011                
|Applicable income taxes                                       | 682,618                  
|Net income                                                    | $1,397,393               
|Basic earnings  per share                                     | $        0.18            
|Diluted earnings per share                                    | $        0.18            

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|                                                                                                                           | Six Months Ended June 30,
|-------------------------------------------------------------------------------------------------------------------------- | -------------------------
|                                                                                                                           | 2005                     
|Net income                                                                                                                 | $1,397,393               
|Other comprehensive loss:                                                                                                  |                          
|Net unrealized holding losses arising during period,
      net of tax benefits of $118,876 and  $791,382                   | (180,862)                
|Reclassification adjustment for (gains) losses included in net
      income, net of tax (benefits) of $(1,845) and $27,814 | (2,808)                  
|Total other comprehensive loss                                                                                             | (183,670)                
|Comprehensive income                                                                                                       | $1,213,723               

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|                                                                                        | Six Months Ended June 30,
|--------------------------------------------------------------------------------------- | -------------------------
|                                                                                        | 2005                     
|OPERATING ACTIVITIES                                                                    |                          
|Net income                                                                              | $1,397,393               
|Adjustments to reconcile net income to net cash
      provided by operating activities: |                          
|Depreciation and amortization                                                           | 743,413                  
|Provision for loan losses                                                               | 464,555                  
|Provision for deferred taxes                                                            | (550,092)                
|Net (gains) losses on sale of securities available for sale                             | 4,653                    
|Net losses on sale or disposal of premises and equipment                                | -                        
|Impairment loss on premises held for sale                                               | -                        
|Net decrease in foreclosed assets                                                       | 162,810                  
|Increase in bank owned life insurance                                                   | (145,760)                
|(Increase) decrease in interest receivable                                              | (61,763)                 
|Increase (decrease) in interest payable                                                 | (16,786)                 
|Increase (decrease) in taxes payable                                                    | 446,712                  
|Net other operating activities                                                          | 440,046                  
|Total adjustments                                                                       | 1,487,788                
|Net cash provided by operating activities                                               | 2,885,181                
|INVESTING ACTIVITIES                                                                    |                          
|(Increase) decrease in interest-bearing deposits in banks                               | (768,872)                
|Purchases of securities available for sale                                              | (21,100,116)             
|Proceeds from maturities of securities available for sale                               | 8,460,026                
|Proceeds from sale of securities available for sale                                     | 12,153,248               
|Redemption of Federal home loan bank stock, net                                         | 255,300                  
|Redemption of corporate credit union membership shares                                  | 553,834                  
|(Increase) decrease in federal funds sold                                               | (17,294,000)             
|(Increase) decrease in loans, net                                                       | (6,849,248)              
|Purchase of premises and equipment                                                      | (249,703)                
|Proceeds from sale of premises and equipment                                            | -                        
|Proceeds from sale of premises and equipment held for sale                              | -                        
|Net cash provided by (used in) investing activities                                     | (24,839,531)             
|FINANCING ACTIVITIES                                                                    |                          
|Increase (decrease) in deposits                                                         | (126,000)                
|Increase in repurchase agreements                                                       | 191,923                  
|Proceeds from other borrowings                                                          | 550,000                  
|Repayment of other borrowings                                                           | (6,000,000)              
|Issuance of common stock, net                                                           | 32,517,085               
|Leverage ESOP                                                                           | (4,407,000)              
|Net cash provided by (used in) financing activities                                     | 22,726,008               
|Net increase in cash and due from banks                                                 | 771,658                  
|Cash and due from banks at beginning of year                                            | 6,621,232                
|Cash and due from banks at end of year                                                  | $7,392,890               

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|                                                      | Common Stock | Paid-inCapital | RetainedEarnings | UnearnedESOPShares | AccumulatedOtherComprehensiveIncome (Loss) | Total       
|----------------------------------------------------- | ------------ | -------------- | ---------------- | ------------------ | ------------------------------------------ | ------------
|                                                      | Shares       | Par Value     
|Balance, December 31, 2004                            | 1,000        | $      10      | $4,799,990       | $(1,601,946)       | $               -                          | $(1,601,946)
|Net income                                            | -            | -              | -                | -                  | -                                          | -           
|Other comprehensive loss                              | -            | -              | -                | (183,670)          | -                                          | (183,670)   
|Additional shares issued for
   original 1,000 shares | 7,867,875    | 78,679         | (78,679)         | -                  | -                                          | -           
|Issuance of common stock,
   net                      | 3,372,375    | 33,724         | 32,483,361       | -                  | -                                          | -           
|Unearned ESOP shares                                  | -            | -              | -                | -                  | (4,407,000)                                | -           
|Balance, June 30, 2005                                | 11,241,250   | $112,413       | $37,204,672      | $(1,785,616)       | $(4,407,000)                               | $(1,785,616)

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|                                     | **(In
Thousands)**
|------------------------------------ | ------------------
|                                     |                   
|Commitments to extend credit         | $23,316           
|Financial stand-by letters of credit | 1,364             
|                                     | $24,680           

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|                                           | **Actual**                 | **Minimum Capital
Requirements** | **Minimum Required to
Be Well Capitalized
Under Prompt
Corrective ActionProvisions**
|------------------------------------------ | -------------------------- | -------------------------------- | ------------------------------------------------------------------------------------
|                                           | **Amount**                 | **Ratio**                        | **Amount**                                                                          
|                                           | **(Dollars in thousands)**
|                                           |                            |                                  |                                                                                     
|Leverage requirement (Tier 1)(1) - FDIC    | $36,121                    | 10.48%                           | $13,784                                                                             
|                                           |                            |                                  |                                                                                     
|Leverage requirement (Tier 1)(1) - Georgia | 36,121                     | 10.48                            | 15,507                                                                              
|                                           |                            |                                  |                                                                                     
|Risk-based requirement (Tier 1)(2)         | 36,121                     | 13.80                            | 10,467                                                                              
|                                           |                            |                                  |                                                                                     
|Risk-based requirement (Total 1)(2)        | 39,392                     | 15.05                            | 20,935                                                                              

|(1) | Based on adjusted quarterly average assets of $344.6 million for HeritageBank of  the South.    
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|(2) | Based on adjusted risk-weighted average assets of $261.7 million for HeritageBank of  the South.

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|Item 1. | Legal Proceedings                                                                                                                                                                                                                                                           
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | In the normal course of business, the Company occasionally becomes involved in various legal proceedings.  In the opinion of management, any liability from such proceedings would not have a material adverse effect on the business or financial condition of the Company.
|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                 
|        | (a)                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                             
|        | (b)                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                             
|        | (c)                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                             

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|Regulation S-BExhibit Number | Document            | Reference to Prior Filing or Exhibit Number Attached Hereto
|---------------------------- | ------------------- | -----------------------------------------------------------
|2                            | Stock Issuance Plan | **                                                         

|*  | Filed as an exhibit to the Company's Form SB-2 registration statement filed on March 25, 2005 (File No.333-123581) pursuant to Section 5 of the Securities Act of 1933.                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | Filed as an exhibit to Pre-effective Amendment No. 1 to the Company's Form SB-2 registration statement filed on May 6, 2005 (File No.333-123581)  pursuant to Section 5 of the Securities Act of 1933.

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|      |                 |  | HERITAGE FINANCIAL GROUP
|----- | --------------- |  | ------------------------
|Date: | August 15, 2005 |  | By:                     
|Date: | August 15, 2005 |  | By:                     

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