----

----

|   |   |   |
|--------|--------|--------|

|   |   |   |
|--------|--------|--------|

----

----

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INDEX

|                                 |                                                                                                                                      |   | PageNumber |
|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|
| PART I – FINANCIAL INFORMATION |                                                                                                                                      |   |       |
|                                 |                                                                                                                                      |   |       |   |
| ITEM 1.                              | FINANCIAL STATEMENTS                                                                                                                      |   |       |   |
|                                 |                                                                                                                                      |   |       |   |
|                                 | CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2011 AND DECEMBER 31, 2010                                                               |   | 3          |   |
|                                 |                                                                                                                                      |   |       |   |
|                                 | CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010                                             |   | 4          |   |
|                                 |                                                                                                                                      |   |       |   |
|                                 | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010                                   |   | 6          |   |
|                                 |                                                                                                                                      |   |       |   |
|                                 | CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND THE YEAR ENDED DECEMBER 31, 2010 |   | 7          |   |
|                                 |                                                                                                                                      |   |       |   |
|                                 | CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010                                             |   | 9          |   |
|                                 |                                                                                                                                      |   |       |   |
|                                 | CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                                      |   | 11         |   |
|                                 |                                                                                                                                      |   |       |   |
| ITEM 2.                              | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                               |   | 38         |   |
|                                 |                                                                                                                                      |   |       |   |
| ITEM 3.                              | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                |   | 53         |   |
|                                 |                                                                                                                                      |   |       |   |
| ITEM 4.                              | CONTROLS AND PROCEDURES                                                                                                                   |   | 56         |   |
|                                 |                                                                                                                                      |   |       |   |
| PART II – OTHER INFORMATION    |                                                                                                                                      | 58     |       |
|                                 |                                                                                                                                      |   |       |   |
| SIGNATURES                           |                                                                                                                                      |   | 60         |   |
|                                 |                                                                                                                                      |   |       |   |
| EXHIBITS                             |                                                                                                                                      |   |       |   |
|                                 |                                                                                                                                      |   |       |   |
| 31.1                                 | RULE 13A–14(A) CERTIFICATION OF CHIEF EXECUTIVE OFFICER                                                                             |   |       |   |
| 31.2                                 | RULE 13A–14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER                                                                             |   |       |   |
| 32                                   | SECTION 1350 CERTIFICATION                                                                                                                |   |       |   |

----

Index

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                       |   | UnauditedMarch 31,2011 |    |   | AuditedDecember 31, 2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------------------------|--------|
| Assets                                                                                                                                     |   |                   |    |   |                          |   |
|                                                                                                                                       |   |                   |    |   |                          |   |
| Cash and due from banks                                                                                                                    |   | $                      | 64,580  |   |                          | $      | 28,803 |   |
| Interest-bearing deposits in banks                                                                                                         |   |                   | 21,800  |   |                          |   | 10,911 |   |
| Federal funds sold                                                                                                                         |   |                   | 19,415  |   |                          |   | 2,700 |   |
| Securities available for sale, at fair value                                                                                               |   |                   | 220,803 |   |                          |   | 238,377 |   |
| Federal Home Loan Bank Stock, at cost                                                                                                      |   |                   | 4,450   |   |                          |   | 3,703 |   |
| Other equity securities, at cost                                                                                                           |   |                   | 1,010   |   |                          |   | 1,010 |   |
| Loans held for sale                                                                                                                        |   |                   | 2,642   |   |                          |   | 225 |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
| Loans                                                                                                                                      |   |                   | 433,695 |   |                          |   | 418,997 |   |
| Covered loans                                                                                                                              |   |                   | 62,372  |   |                          |   | — |   |
| Less allowance for loan losses                                                                                                             |   |                   | 6,138   |   |                          |   | 8,101 |   |
| Loans, net                                                                                                                                 |   |                   | 489,929 |   |                          |   | 410,896 |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
| Other real estate owned                                                                                                                    |   |                   | 3,215   |   |                          |   | 3,689 |   |
| Covered other real estate owned                                                                                                            |   |                   | 7,361   |   |                          |   | — |   |
| Total other real estate owned                                                                                                              |   |                   | 10,576  |   |                          |   | 3,689 |   |
| FDIC loss-share receivable                                                                                                                 |   |                   | 58,174  |   |                          |   | — |   |
| Premises and equipment, net                                                                                                                |   |                   | 22,039  |   |                          |   | 21,412 |   |
| Premises held for sale                                                                                                                     |   |                   | 1,080   |   |                          |   | 1,080 |   |
| Accrued interest receivable                                                                                                                |   |                   | 4,526   |   |                          |   | 2,907 |   |
| Goodwill and intangible assets                                                                                                             |   |                   | 4,713   |   |                          |   | 2,912 |   |
| Cash surrender value of bank owned life insurance                                                                                          |   |                   | 15,169  |   |                          |   | 15,024 |   |
| Other assets                                                                                                                               |   |                   | 11,012  |   |                          |   | 11,787 |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
|                                                                                                                                       |   | $                      | 951,918 |   |                          | $      | 755,436 |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
| Liabilities and Stockholders’ Equity                                                                                                 |   |                   |    |   |                          |   |   |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
| Deposits                                                                                                                                   |   |                   |    |   |                          |   |   |   |
| Noninterest-bearing                                                                                                                        |   | $                      | 63,134  |   |                          | $      | 44,769 |   |
| Interest-bearing                                                                                                                           |   |                   | 667,954 |   |                          |   | 489,474 |   |
| Total deposits                                                                                                                             |   |                   | 731,088 |   |                          |   | 534,243 |   |
| Federal funds purchased and securities sold under repurchase agreements                                                                    |   |                   | 31,509  |   |                          |   | 32,421 |   |
| Other borrowings                                                                                                                           |   |                   | 60,000  |   |                          |   | 62,500 |   |
| Accrued interest payable                                                                                                                   |   |                   | 1,102   |   |                          |   | 702 |   |
| Other liabilities                                                                                                                          |   |                   | 6,889   |   |                          |   | 6,230 |   |
| Total liabilities                                                                                                                          |   |                   | 830,588 |   |                          |   | 636,096 |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
| Commitments and contingencies                                                                                                              |   |                   |    |   |                          |   |   |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
| Stockholders’ equity                                                                                                                 |   |                   |    |   |                          |   |   |   |
| Preferred stock, par value; $0.01; 5,000,000 and 1,000,000 shares authorized;  none issued, respectively                         |   |                   | — |   |                          |   | — |   |
| Common stock, par value $0.01; 45,000,000 and 25,000,000 shares authorized; 8,712,750  and 8,710,511 shares issued, respectively |   |                   | 87      |   |                          |   | 87 |   |
| Capital surplus                                                                                                                            |   |                   | 89,071  |   |                          |   | 88,876 |   |
| Retained earnings                                                                                                                          |   |                   | 40,489  |   |                          |   | 39,536 |   |
| Accumulated other comprehensive loss, net of tax of $2,149 and $2,609                                                                      |   |                   | (3,223  | )      |                          |   | (3,914 | ) |
| Unearned employee stock ownership plan (ESOP) shares, 478,996 and 492,320 shares                                                           |   |                   | (5,094  | )      |                          |   | (5,245 | ) |
| Total stockholders’ equity                                                                                                           |   |                   | 121,330 |   |                          |   | 119,340 |   |
|                                                                                                                                       |   |                   |    |   |                          |   |   |   |
|                                                                                                                                       |   | $                      | 951,918 |   |                          | $      | 755,436 |   |

----

Index

| HERITAGE FINANCIAL GROUP, INC. AND SUBSIDIARY |
|-----------------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS         |
| (Dollars in thousands, except per share data) |
| (Unaudited)                                   |

|                                                            |   | Three Months Ended March 31, |    |
|-----------------------------------------------------------------|--------|------------------------------|---------|
|                                                            |   | 2011                         |    |   | 2010 |    |
| Interest income                                                 |   |                         |    |   |   |   |
| Interest and fees on loans                                      |   | $                            | 7,145   |   |   | $ | 5,320 |   |
| Interest and fees on loans held for sale                        |   |                         | 8       |   |   |   | — |   |
| Interest on taxable securities                                  |   |                         | 1,207   |   |   |   | 776 |   |
| Interest on nontaxable securities                               |   |                         | 211     |   |   |   | 298 |   |
| Interest on federal funds sold                                  |   |                         | 13      |   |   |   | 9 |   |
| Interest on deposits in other banks                             |   |                         | 40      |   |   |   | 44 |   |
|                                                            |   |                         | 8,624   |   |   |   | 6,447 |   |
| Interest expense                                                |   |                         |    |   |   |   |   |   |
| Interest on deposits                                            |   |                         | 1,848   |   |   |   | 1,524 |   |
| Interest on other borrowings                                    |   |                         | 743     |   |   |   | 513 |   |
|                                                            |   |                         | 2,591   |   |   |   | 2,037 |   |
|                                                            |   |                         |    |   |   |   |   |   |
| Net interest income                                             |   |                         | 6,033   |   |   |   | 4,410 |   |
| Provision for loan losses                                       |   |                         | 600     |   |   |   | 500 |   |
| Net interest income after provision for loan losses             |   |                         | 5,433   |   |   |   | 3,910 |   |
|                                                            |   |                         |    |   |   |   |   |   |
| Noninterest income                                              |   |                         |    |   |   |   |   |   |
| Service charges on deposit accounts                             |   |                         | 1,051   |   |   |   | 824 |   |
| Other service charges, commissions and fees                     |   |                         | 660     |   |   |   | 403 |   |
| Brokerage fees                                                  |   |                         | 354     |   |   |   | 222 |   |
| Mortgage origination fees                                       |   |                         | 268     |   |   |   | 38 |   |
| Bank owned life insurance                                       |   |                         | 145     |   |   |   | 152 |   |
| Gain on sales of securities                                     |   |                         | — |   |   |   | 152 |   |
| Bargain purchase gain                                           |   |                         | 2,334   |   |   |   | — |   |
| Other                                                           |   |                         | 29      |   |   |   | 21 |   |
|                                                            |   |                         | 4,841   |   |   |   | 1,812 |   |
| Noninterest expense                                             |   |                         |    |   |   |   |   |   |
| Salaries and employee benefits                                  |   |                         | 4,328   |   |   |   | 2,565 |   |
| Equipment                                                       |   |                         | 351     |   |   |   | 255 |   |
| Occupancy                                                       |   |                         | 445     |   |   |   | 306 |   |
| Data processing fees                                            |   |                         | 518     |   |   |   | 481 |   |
| Directors fees and retirement                                   |   |                         | 227     |   |   |   | 139 |   |
| Consulting and other professional fees                          |   |                         | 179     |   |   |   | 71 |   |
| Advertising and marketing                                       |   |                         | 164     |   |   |   | 120 |   |
| Legal and accounting                                            |   |                         | 210     |   |   |   | 149 |   |
| Telecommunications                                              |   |                         | 145     |   |   |   | 69 |   |
| Supplies                                                        |   |                         | 95      |   |   |   | 58 |   |
| FDIC insurance and other regulatory fees                        |   |                         | 293     |   |   |   | 170 |   |
| (Gain) loss on sales and write-downs of other real estate owned |   |                         | 402     |   |   |   | (231 | ) |
| Foreclosed asset and collection expenses                        |   |                         | 170     |   |   |   | 171 |   |
| Other operating                                                 |   |                         | 871     |   |   |   | 382 |   |
|                                                            |   | $                            | 8,398   |   |   | $ | 4,705 |   |
|                                                            |   |                         |    |   |   |   |   |   |
| (Continued)                                                     |   |                         |    |   |   |   |   |   |

----

Index

| HERITAGE FINANCIAL GROUP, INC. AND SUBSIDIARY |
|-----------------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS         |
| (Dollars in thousands, except per share data) |
| (Unaudited)                                   |

|                                                     |   | Three Months Ended March 31, |   |
|----------------------------------------------------------|--------|------------------------------|--------|
|                                                     |   | 2011                         |   |   | 2010 |   |
|                                                     |   |                         |   |   |   |   |
|      Income before income taxes |   | $                            | 1,876  |   |   | $ | 1,017 |   |
|                                                     |   |                         |   |   |   |   |   |   |
| Applicable income tax                                    |   |                         | 661    |   |   |   | 219 |   |
|                                                     |   |                         |   |   |   |   |   |   |
|       Net income           |   | $                            | 1,215  |   |   | $ | 798 |   |
|                                                     |   |                         |   |   |   |   |   |   |
| Basic income per share                                   |   | $                            | 0.15   |   |   | $ | 0.09 |   |
|                                                     |   |                         |   |   |   |   |   |   |
| Diluted income per share                                 |   | $                            | 0.15   |   |   | $ | 0.09 |   |

----

Index

| HERITAGE FINANCIAL GROUP, INC. AND SUBSIDIARY   |
|-------------------------------------------------|
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
| (Dollars in thousands, except per share data)   |
| (Unaudited)                                     |

|                                                                                         |   | Three Months Ended |    |
|----------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                         |   | 2011               |    |   | 2010 |   |
|                                                                                         |   |               |    |   |   |   |
| Net income                                                                                   |   | $                  | 1,215   |   |   | $ | 798 |   |
|                                                                                         |   |               |    |   |   |   |   |   |
| Other comprehensive income (loss):                                                           |   |               |    |   |   |   |   |   |
| Accretion of realized gain on terminated cash flow hedge, net of tax of $35                  |   |               | (53     | ) |   |   | (53 | ) |
| Net unrealized holding gains on securities arising during period, net of tax of $496 and $38 |   |               | 744     |   |   |   | 57 |   |
| Reclassification adjustment for gains, net of tax of $0 and $61                              |   |               | — |   |   |   | (91 | ) |
|                                                                                         |   |               |    |   |   |   |   |   |
| Total other comprehensive income (loss)                                                      |   |               | 691     |   |   |   | (87 | ) |
|                                                                                         |   |               |    |   |   |   |   |   |
| Comprehensive income                                                                         |   | $                  | 1,906   |   |   | $ | 711 |   |

----

Index

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

|                                                                      |   |         |       |   |      |   |    |     |   |   |     |   |   |     |    |   |    |   |    | Accumulated  |   |   |    |   |
|---------------------------------------------------------------------------|--------|--------------|------------|--------|-----------|--------|---------|----------|--------|--------|----------|--------|--------|----------|---------|--------|---------|--------|---------|-------------------|--------|--------|---------|--------|
|                                                                      |   |         |       |   |      |   |    |     |   |   |     |   |   |     |    |   |    |   |    | Other             |   |   |    |   |
|                                                                      |   |         |       |   |      |   |    |     |   |   |     |   |   | Unearned |    |   |    |   |    | Compre-           |   |   |    |   |
|                                                                      |   | Common Stock |       |   | Capital   |   |    | Retained |   |   | ESOP     |   |   | Treasury |    |   | hensive |   |    |              |   |
|                                                                      |   | Shares       |       |   | Par Value |   |    | Surplus  |   |   | Earnings |   |   | Shares   |    |   | Stock   |   |    | loss              |   |   | Total   |   |
| Balance, December 31, 2009                                                |   |         | 11,454,344 |   |      | $      | 115     |     |   | $      | 40,610   |   |   | $        | 38,984  |   |    | $      | (2,424  | )                 |   | $      | (14,080 | )      |   | $ | (2,387 | ) |   | $ | 60,818 |   |
| Net income                                                                |   |         | —    |   |      |   | — |     |   |   | —  |   |   |     | 1,406   |   |    |   | — |              |   |   | — |   |   |   | — |   |   |   | 1,406 |   |
| Cash dividend declared, $0.36 per share                              |   |         | —    |   |      |   | — |     |   |   | —  |   |   |     | (854    | )      |    |   | — |              |   |   | — |   |   |   | — |   |   |   | (854 | ) |
| Stock-based compensation expense                                          |   |         | —    |   |      |   | — |     |   |   | 810      |   |   |     | — |   |    |   | — |              |   |   | — |   |   |   | — |   |   |   | 810 |   |
| Repurchase of 1,578 shares of stock for the treasury                      |   |         | —    |   |      |   | — |     |   |   | —  |   |   |     | — |   |    |   | — |              |   |   | (19     | )      |   |   | — |   |   |   | (19 | ) |
| Issuance of 1,075 shares of common stock from the treasury                |   |         | —    |   |      |   | — |     |   |   | (4       | )      |   |     | — |   |    |   | — |              |   |   | 14      |   |   |   | — |   |   |   | 10 |   |
| Items relating to conversion and stock offering:                          |   |         |       |   |      |   |    |     |   |   |     |   |   |     |    |   |    |   |    |              |   |   |    |   |   |   |   |   |   |   |   |   |
|     Merger of Heritage MHC                            |   |         | (7,868,875 | )      |      |   | (79     | )        |   |   | 102      |   |   |     | — |   |    |   | — |              |   |   | — |   |   |   | — |   |   |   | 23 |   |
|     Treasury stock retired                            |   |         | (1,055,587 | )      |      |   | (11     | )        |   |   | (14,074  | )      |   |     | — |   |    |   | — |              |   |   | 14,085  |   |   |   | — |   |   |   | — |   |
| Common stock exchanged for cash in lieu of issuing fractional shares |   |         | (411,127   | )      |      |   | (4      | )        |   |   | 4        |   |   |     | — |   |    |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |
| Proceeds from stock offering, net offering expenses ($4,459)              |   |         | 6,591,756  |   |      |   | 66      |     |   |   | 61,393   |   |   |     | — |   |    |   | — |              |   |   | — |   |   |   | — |   |   |   | 61,459 |   |
| Purchase of ESOP shares (327,677)                                         |   |         | —    |   |      |   | — |     |   |   | —  |   |   |     | — |   |    |   | (3,277  | )                 |   |   | — |   |   |   | — |   |   |   | (3,277 | ) |
| Other comprehensive loss                                                  |   |         | —    |   |      |   | — |     |   |   | —  |   |   |     | — |   |    |   | — |              |   |   | — |   |   |   | (1,527 | ) |   |   | (1,527 | ) |
| Tax benefit from stock- based compensation plans                          |   |         | —    |   |      |   | — |     |   |   | (14      | )      |   |     | — |   |    |   | — |              |   |   | — |   |   |   | — |   |   |   | (14 | ) |
| ESOP shares earned, 38,403 shares                                         |   |         | —    |   |      |   | — |     |   |   | 3        |   |   |     | — |   |    |   | 456     |              |   |   | — |   |   |   | — |   |   |   | 459 |   |
| Tax benefit on ESOP expense                                               |   |         | —    |   |      |   | — |     |   |   | 46       |   |   |     | — |   |    |   | — |              |   |   | — |   |   |   | — |   |   |   | 46 |   |
| Balance, December 31, 2010                                                |   |         | 8,710,511  |   |      | $      | 87      |     |   | $      | 88,876   |   |   | $        | 39,536  |   |    | $      | (5,245  | )                 |   | $      | — |   |   | $ | (3,914 | ) |   | $ | 119,340 |   |

----

Index

|                                                                 |   |         |      |   |      |   |    |     |   |   |     |   |   |     |    |   | Accumulated   |   |    |   |   |
|----------------------------------------------------------------------|--------|--------------|-----------|--------|-----------|--------|---------|----------|--------|--------|----------|--------|--------|----------|---------|--------|---------------|--------|---------|--------|--------|
|                                                                 |   |         |      |   |      |   |    |     |   |   | Unearned |   |   |     |    |   | Other         |   |    |   |   |
|                                                                 |   | Common Stock |      |   | Capital   |   |    | Retained |   |   | ESOP     |   |   | Treasury |    |   | Comprehensive |   |    |   |   |
|                                                                 |   | Shares       |      |   | Par Value |   |    | Surplus  |   |   | Earnings |   |   | Shares   |    |   | Stock         |   |    | loss   |   |   | Total |   |
| Balance, December 31, 2010                                           |   |         | 8,710,511 |   |      | $      | 87      |     |   | $      | 88,876   |   |   | $        | 39,536  |   |          | $      | (5,245  | )      |   | $ | — |   |   | $ | (3,914 | ) |   | $ | 119,340 |   |
| Net income                                                           |   |         | —   |   |      |   | — |     |   |   | —  |   |   |     | 1,215   |   |          |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,215 |   |
| Cash dividend declared, $0.03 per share                              |   |         | —   |   |      |   | — |     |   |   | —  |   |   |     | (262    | )      |          |   | — |   |   |   | — |   |   |   | — |   |   |   | (262 | ) |
| Issuance of  4,000 shares of  restricted common stock |   |         | 4,000     |   |      |   | — |     |   |   | —  |   |   |     | — |   |          |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Forfeiture of 1,761 of restricted common stock                  |   |         | (1,761    | )      |      |   | — |     |   |   | —  |   |   |     | — |   |          |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Stock-based compensation expense                                     |   |         | —   |   |      |   | — |     |   |   | 187      |   |   |     | — |   |          |   | — |   |   |   | — |   |   |   | — |   |   |   | 187 |   |
| Other comprehensive income                                           |   |         | —   |   |      |   | — |     |   |   | —  |   |   |     | — |   |          |   | — |   |   |   | — |   |   |   | 691 |   |   |   | 691 |   |
| Tax benefit from stock-based compensation plans                      |   |         | —   |   |      |   | — |     |   |   | (1       | )      |   |     | — |   |          |   | — |   |   |   | — |   |   |   | — |   |   |   | (1 | ) |
| ESOP shares earned, 13,323 shares                                    |   |         | —   |   |      |   | — |     |   |   | 15       |   |   |     | — |   |          |   | 151     |   |   |   | — |   |   |   | — |   |   |   | 166 |   |
| Tax benefit on ESOP expense                                          |   |         | —   |   |      |   | — |     |   |   | (6       | )      |   |     | — |   |          |   | — |   |   |   | — |   |   |   | — |   |   |   | (6 | ) |
| Balance, March 31, 2011                                              |   |         | 8,712,750 |   |      | $      | 87      |     |   | $      | 89,071   |   |   | $        | 40,489  |   |          | $      | (5,094  | )      |   | $ | — |   |   | $ | (3,223 | ) |   | $ | 121,330 |   |

----

Index

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                |   | Three Months Ended |    |
|-------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                |   | 2011               |    |   | 2010 |   |
| OPERATING ACTIVITIES                                                                |   | $                  | 1,215   |   |   | $ | 798 |   |
| Net income                                                                          |   |               |    |   |   |   |   |   |
| Adjustments to reconcile net income to net cash provided by operating activities:   |   |               |    |   |   |   |   |   |
| Depreciation and amortization                                                       |   |               | 288     |   |   |   | 215 |   |
| Deposit premium amortization                                                        |   |               | 95      |   |   |   | 40 |   |
| Provision for loan losses                                                           |   |               | 600     |   |   |   | 500 |   |
| ESOP compensation expense                                                           |   |               | 166     |   |   |   | 101 |   |
| Provision for deferred taxes                                                        |   |               | 814     |   |   |   | (152 | ) |
| Stock-based compensation expense                                                    |   |               | 187     |   |   |   | 202 |   |
| Accretion of gain on termination of cash flow hedge                                 |   |               | (88     | ) |   |   | (88 | ) |
| Gain on sales of securities available for sale                                      |   |               | — |   |   |   | (152 | ) |
| (Gain) loss on sales and write-downs of other real estate owned                     |   |               | 402     |   |   |   | (231 | ) |
| Increase in bank owned life insurance                                               |   |               | (145    | ) |   |   | (152 | ) |
| Excess tax benefit related to stock-based compensation plans                   |   |               | 1       |   |   |   | (6 | ) |
| Excess tax expense related to ESOP                                                  |   |               | 6       |   |   |   | (7 | ) |
| (Increase) decrease in interest receivable                                          |   |               | (1,619  | ) |   |   | 63 |   |
| Increase (decrease) in interest payable                                             |   |               | 400     |   |   |   | (35 | ) |
| (Increase) decrease in taxes receivable                                             |   |               | (153    | ) |   |   | 826 |   |
| Decrease in prepaid FDIC assessment                                                 |   |               | 263     |   |   |   | — |   |
| Bargain purchase gain                                                               |   |               | (2,334  | ) |   |   | — |   |
| Net other operating activities                                                      |   |               | 1,571   |   |   |   | 1,119 |   |
|        Total adjustments                         |   |               | 454     |   |   |   | 2,243 |   |
|                                                                                |   |               |    |   |   |   |   |   |
|        Net cash provided by operating activities |   |               | 1,669   |   |   |   | 3,041 |   |
|                                                                                |   |               |    |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                |   |               |    |   |   |   |   |   |
| (Increase) decrease in interest-bearing deposits in banks                           |   |               | (10,888 | ) |   |   | 16,248 |   |
| Purchases of securities available for sale                                          |   |               | (1,996  | ) |   |   | (15,364 | ) |
| Proceeds from maturities of securities available for sale                           |   |               | 34,201  |   |   |   | 8,892 |   |
| Proceeds from sales of securities available for sale                                |   |               | — |   |   |   | 11,542 |   |
| Increase in Federal Home Loan Bank stock                                            |   |               | (87     | ) |   |   | — |   |
| Increase in federal funds sold                                                      |   |               | (16,715 | ) |   |   | (4,315 | ) |
| Decrease in loans, net                                                              |   |               | (9,539  | ) |   |   | (11,408 | ) |
| Purchases of premises and equipment                                                 |   |               | (873    | ) |   |   | (1,417 | ) |
| Net cash received from acquisition activity                                         |   |               | 57,900  |   |   |   | — |   |
| Proceeds from sales of premises and equipment                                       |   |               | 2       |   |   |   | 921 |   |
| Proceeds from sales of other real estate owned                                      |   |               | 458     |   |   |   | 767 |   |
|                                                                                |   |               |    |   |   |   |   |   |
|        Net cash provided by investing activities |   | $                  | 52,463  |   |   | $ | 5,866 |   |

----

Index

|                                                                                           |   | Three Months Ended |       |
|------------------------------------------------------------------------------------------------|--------|--------------------|------------|
|                                                                                           |   | 2011               |       |   | 2010 |   |
| FINANCING ACTIVITIES                                                                           |   |               |       |   |   |   |
| Increase (decrease) in deposits                                                                |   | $                  | (9,430     | ) |   | $ | 866 |   |
| Increase (decrease) in federal funds purchased and securities sold under repurchase agreements |   |               | (1,149     | ) |   |   | (65 | ) |
| Repayment of other borrowings                                                                  |   |               | (7,507     | ) |   |   |   |   |
| Excess tax benefit related to stock-based compensation plans                              |   |               | (1         | ) |   |   |  5 |   |
| Excess tax related to ESOP                                                                     |   |               | (6         | ) |   |   | 7 |   |
| Dividends paid to stockholders                                                                 |   |               | (262       | ) |   |   | (228 | ) |
|                                                                                           |   |               |       |   |   |   |   |   |
| Net cash provided by (used in) financing activities                                       |   |               | (18,355    | ) |   |   | 585 |   |
|                                                                                           |   |               |       |   |   |   |   |   |
| Net increase in cash and due from banks                                                        |   |               | 35,777     |   |   |   | 9,492 |   |
|                                                                                           |   |               |       |   |   |   |   |   |
| Cash and due from banks at beginning of year                                                   |   |               | 28,803     |   |   |   | 14,922 |   |
|                                                                                           |   |               |       |   |   |   |   |   |
| Cash and due from banks at end of year                                                         |   | $                  | 64,580     |   |   | $ | 24,414 |   |
|                                                                                           |   |               |       |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                         |   |               |       |   |   |   |   |   |
| Cash paid during the year for:                                                                 |   |               |       |   |   |   |   |   |
| Interest                                                                                       |   | $                  | 2,191      |   |   | $ | 2,073 |   |
| Income taxes paid                                                                              |   | $                  | —    |   |   | $ | 9 |   |
|                                                                                           |   |               |       |   |   |   |   |   |
| NONCASH TRANSACTIONS                                                                           |   |               |       |   |   |   |   |   |
| Increase (decrease) in unrealized losses on securities available for sale                 |   | $                  |  (744 | ) |   | $ | 57 |   |
| Principal balances of loans transferred to other real estate owned                        |   | $                  | 209        |   |   | $ | 2,346 |   |

----

Index

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

Index

|                                               |   | For the Three MonthsEnded March 31, |   |
|----------------------------------------------------|--------|-------------------------------------|--------|
|                                               |   | 2011                                |   |   | 2010 |   |
|                                               |   | (Unaudited)                         |   |
|                                               |   | (share data in thousands)           |   |
|                                               |   |                                |   |   |   |   |
| Basic earnings and shares:                         |   |                                |   |   |   |   |
| Net income                                         |   | $                                   | 1,215  |   |   | $ | 798 |   |
|                                               |   |                                |   |   |   |   |   |   |
| Weighted-average basic shares outstanding          |   |                                | 8,187  |   |   |   | 8,445 |   |
|                                               |   |                                |   |   |   |   |   |   |
|  Basic earnings per share                     |   | $                                   | 0.15   |   |   | $ | 0.09 |   |
|                                               |   |                                |   |   |   |   |   |   |
| Diluted earnings and shares:                       |   |                                |   |   |   |   |   |   |
| Net income                                         |   | $                                   | 1,215  |   |   | $ | 798 |   |
|                                               |   |                                |   |   |   |   |   |   |
| Weighted-average basic shares outstanding          |   |                                | 8,187  |   |   |   | 8,445 |   |
| Add:  Stock options and nonvested shares |   |                                | 1      |   |   |   | 1 |   |
| Weighted-average diluted shares outstanding        |   |                                | 8,188  |   |   |   | 8,446 |   |
|                                               |   |                                |   |   |   |   |   |   |
| Diluted earnings per share                         |   | $                                   | 0.15   |   |   | $ | 0.09 |   |

----

Index

----

Index

|                                                                     |   |                   |    |
|--------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                     |   | AmortizedCost          |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
| March 31, 2011 (unaudited):                                              |   | (dollars in thousands) |    |
| U. S. Government sponsored agencies (GSEs) and U. S. Treasury securities |   | $                      | 76,584  |   |   | $ | 253 |   |   | $ | (1,093 | ) |   | $ | 75,744 |   |
| State and municipal securities                                           |   |                   | 20,927  |   |   |   | 304 |   |   |   | (877 | ) |   |   | 20,354 |   |
| Corporate debt securities                                                |   |                   | 2,167   |   |   |   | 7 |   |   |   | (122 | ) |   |   | 2,052 |   |
| GSE residential mortgage-backed securities                               |   |                   | 120,025 |   |   |   | 640 |   |   |   | (977 | ) |   |   | 119,688 |   |
| Private label residential mortgage-backed securities                     |   |                   | 2,520   |   |   |   | 25 |   |   |   | — |   |   |   | 2,545 |   |
| Total debt securities                                                    |   |                   | 222,223 |   |   |   | 1,229 |   |   |   | (3,069 | ) |   |   | 220,383 |   |
| Equity securities                                                        |   |                   | 435     |   |   |   | 85 |   |   |   | (100 | ) |   |   | 420 |   |
| Total securities                                                         |   | $                      | 222,658 |   |   | $ | 1,314 |   |   | $ | (3,169 | ) |   | $ | 220,803 |   |

|                                                                     |   |   |    |   |   |   |    |   |   |   |    |   |
|--------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| December 31, 2010:                                                       |   |   |    |   |   |   |    |   |   |   |    |   |
| U. S. Government sponsored agencies (GSEs) and U. S. Treasury securities |   | $      | 89,680  |   |   | $      | 246     |   |   | $      | (894    | )      |   | $ | 89,032 |   |
| State and municipal securities                                           |   |   | 20,642  |   |   |   | 65      |   |   |   | (1,547  | )      |   |   | 19,160 |   |
| Corporate debt securities                                                |   |   | 2,170   |   |   |   | — |   |   |   | (470    | )      |   |   | 1,700 |   |
| GSE residential mortgage-backed securities                               |   |   | 125,749 |   |   |   | 724     |   |   |   | (1,137  | )      |   |   | 125,336 |   |
| Private label residential mortgage-backed securities                     |   |   | 2,800   |   |   |   | 7       |   |   |   | — |   |   |   | 2,807 |   |
| Total debt securities                                                    |   |   | 241,041 |   |   |   | 1,042   |   |   |   | (4,048  | )      |   |   | 238,035 |   |
| Equity securities                                                        |   |   | 435     |   |   |   | 31      |   |   |   | (124    | )      |   |   | 342 |   |
| Total securities                                                         |   | $      | 241,476 |   |   | $      | 1,073   |   |   | $      | (4,172  | )      |   | $ | 238,377 |   |

| * | At March 31, 2011 and December 31, 2010, the Company held no securities of any single issuer (excluding the U.S. Government and federal agencies) with a book value that exceeded 10% of stockholders’ equity. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

|                       |   | AmortizedCost          |    |   | FairValue |   |
|----------------------------|--------|------------------------|---------|--------|-----------|--------|
|                       |   | (dollars in thousands) |    |
| Due in one year or less    |   | $                      | 4,000   |   |      | $      | 4,000 |   |
| Due from one to five years |   |                   | 14,763  |   |      |   | 14,569 |   |
| Due from five to ten years |   |                   | 26,048  |   |      |   | 26,129 |   |
| Due after ten years        |   |                   | 55,302  |   |      |   | 53,872 |   |
| Mortgage-backed securities |   |                   | 122,545 |   |      |   | 122,233 |   |
|                       |   | $                      | 222,658 |   |      | $      | 220,803 |   |

|                                                         |   |  March 31,              |    |
|--------------------------------------------------------------|--------|------------------------------|---------|
|                                                         |   |  2011                   |    |   |  2010 |   |
|                                                         |   |                         |    |
|                                                         |   |  (dollars in thousands) |    |
| Gross gains on sales of securities                           |   | $                            | — |   |   | $ | 153 |   |
| Gross losses on sales of securities                          |   |                         | — |   |   |   | (1 | ) |
| Net realized gains on sales of securities available for sale |   | $                            | — |   |   | $ | 152 |   |

----

Index

|                                                 |   | Less Than 12 Months    |    |   | 12 Months or More |   |    | Total     |   |
|------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|---------|-----------|--------|
| Description of Securities                            |   | FairValue              |    |   | UnrealizedLosses  |   |    | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                                                 |   |                   |    |
|                                                 |   | (dollars in thousands) |    |
| March 31, 2011 (unaudited):                          |   |                   |    |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored agency securities (GSEs)   |   | $                      | 41,168  |   |              | $      | (1,093  | )         |   | $ | — |   |   | $ | — |   |   | $ | 41,168 |   |   | $ | (1,093 | ) |
| State and municipal securities                       |   |                   | 8,394   |   |              |   | (274    | )         |   |   | 3,632 |   |   |   | (603 | ) |   |   | 12,026 |   |   |   | (877 | ) |
| Corporate debt securities                            |   |                   | — |   |              |   | — |      |   |   | 1,045 |   |   |   | (122 | ) |   |   | 1,045 |   |   |   | (122 | ) |
| GSE residential mortgage-backed Securities           |   |                   | 74,330  |   |              |   | (977    | )         |   |   | — |   |   |   | — |   |   |   | 74,330 |   |   |   | (977 | ) |
| Private label residential mortgage-backed securities |   |                   | — |   |              |   | — |      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Subtotal, debt securities                            |   |                   | 123,892 |   |              |   | (2,344  | )         |   |   | 4,677 |   |   |   | (725 | ) |   |   | 128,569 |   |   |   | (3,069 | ) |
| Equity securities                                    |   |                   | — |   |              |   | — |      |   |   | 335 |   |   |   | (100 | ) |   |   | 335 |   |   |   | (100 | ) |
| Total temporarily impaired securities                |   | $                      | 123,892 |   |              | $      | (2,344  | )         |   | $ | 5,012 |   |   | $ | (825 | ) |   | $ | 128,904 |   |   | $ | (3,169 | ) |

|                                                                              |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|
| December 31, 2010 :                                                               |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |
| U.S. Government sponsored agencies  (GSEs) and U.S. Treasury securities |   | $      | 68,948  |   |   | $      | (894    | )      |   | $      | — |   |   | $      | — |   |   | $      | 68,948 |   |   | $ | (894 | ) |
| State and municipal securities                                                    |   |   | 13,815  |   |   |   | (639    | )      |   |   | 3,541   |   |   |   | (908    | )      |   |   | 17,356 |   |   |   | (1,547 | ) |
| Corporate debt securities                                                         |   |   | 934     |   |   |   | (79     | )      |   |   | 766     |   |   |   | (391    | )      |   |   | 1,700 |   |   |   | (470 | ) |
| GSE residential mortgage-backed Securities                                        |   |   | 72,748  |   |   |   | (1,137  | )      |   |   | — |   |   |   | — |   |   |   | 72,748 |   |   |   | (1,137 | ) |
| Subtotal, debt securities                                                         |   |   | 156,445 |   |   |   | (2,749  | )      |   |   | 4,307   |   |   |   | (1,299  | )      |   |   | 160,752 |   |   |   | (4,048 | ) |
| Equity securities                                                                 |   |   | — |   |   |   | — |   |   |   | 310     |   |   |   | (124    | )      |   |   | 310 |   |   |   | (124 | ) |
| Total temporarily impaired securities                                             |   | $      | 156,445 |   |   | $      | (2,749  | )      |   | $      | 4,617   |   |   | $      | (1,423  | )      |   | $      | 161,062 |   |   | $ | (4,172 | ) |

----

Index

|                                               |   | March 31,              |    |   | December 31, |   |
|----------------------------------------------------|--------|------------------------|---------|--------|--------------|--------|
|                                               |   | 2011                   |    |   | 2010         |   |
|                                               |   | (dollars in thousands) |    |
|                                               |   |                   |    |
| Commercial real estate                             |   | $                      | 145,142 |   |         | $      | 136,016 |   |
| Consumer real estate                               |   |                   | 155,013 |   |         |   | 157,384 |   |
| Construction and land                              |   |                   | 27,580  |   |         |   | 24,522 |   |
| Commercial and industrial loans                    |   |                   | 52,662  |   |         |   | 52,589 |   |
| Consumer and other                                 |   |                   | 25,046  |   |         |   | 27,115 |   |
|                                               |   |                   | 405,443 |   |         |   | 397,626 |   |
|                                               |   |                   |    |   |         |   |   |   |
| Loans acquired through FDIC assisted acquisitions* |   |                   |    |   |         |   |   |   |
| Non Covered                                        |   |                   | 28,252  |   |         |   | 21,371 |   |
| Covered                                            |   |                   | 62,372  |   |         |   | — |   |
| Total loans                                        |   |                   | 496,067 |   |         |   | 418,997 |   |
|                                               |   |                   |    |   |         |   |   |   |
| Total allowance for loan losses                    |   |                   | 6,138   |   |         |   | 8,101 |   |
| Loans, net                                         |   | $                      | 489,929 |   |         | $      | 410,896 |   |

----

Index

|                                       | March 31,              |   | December 31, |   |
|--------------------------------------------|------------------------|--------|--------------|--------|
|                                       | 2011                   |   | 2010         |   |
|                                       |                   |   |
|                                       | (dollars in thousands) |   |
| Balance, beginning of period               |                   | $      | 8,101        |   |   | $ | 6,060 |   |
| Provision for loan losses                  |                   |   | 600          |   |   |   | 5,500 |   |
| Loans charged off                          |                   |   | (2,632       | )      |   |   | (3,686 | ) |
| Recoveries of loans previously charged off |                   |   | 69           |   |   |   | 227 |   |
| Balance, end of period                     |                   | $      | 6,138        |   |   | $ | 8,101 |   |

|                                                  |   | CommercialRealEstate   |    |   | ConsumerRealEstate |   |    | ConstructionandLand |   |   | CommercialandIndustrialLoans |   |   |   Consumer |    |   |   Total |   |
|-------------------------------------------------------|--------|------------------------|---------|--------|--------------------|--------|---------|---------------------|--------|--------|------------------------------|--------|--------|----------------------|---------|--------|-------------------|--------|
|                                                  |   |                   |    |
|                                                  |   | (dollars in thousands) |    |
|                                                  |   |                   |    |   |               |   |    |                |   |   |                         |   |   |                 |    |   |              |   |
| Balance, January 1, 2011                              |   | $                      | 1,721   |   |               | $      | 2,197   |                |   | $      | 1,977                        |   |   | $                    | 1,601   |   |              | $      | 605 |   |   | $ | 8,101 |   |
| Add (deduct):                                         |   |                   |    |   |               |   |    |                |   |   |                         |   |   |                 |    |   |              |   |   |   |   |   |   |   |
| Charge-offs                                           |   |                   | (336    | )      |               |   | (2,138  | )                   |   |   | (8                           | )      |   |                 | (59     | )      |              |   | (91 | ) |   |   | (2,632 | ) |
| Recoveries                                            |   |                   |    |   |               |   | 3       |                |   |   | 1                            |   |   |                 | — |   |              |   | 65 |   |   |   | 69 |   |
| Provision                                             |   |                   | 375     |   |               |   | 1,783   |                |   |   | (838                         | )      |   |                 | (464    | )      |              |   | (256 | ) |   |   | 600 |   |
| Balance, March 31, 2011                               |   | $                      | 1,760   |   |               | $      | 1,845   |                |   | $      | 1,132                        |   |   | $                    | 1,078   |   |              | $      | 323 |   |   | $ | 6,138 |   |
| Loans:                                                |   |                   |    |   |               |   |    |                |   |   |                         |   |   |                 |    |   |              |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment |   | $                      | 227     |   |               | $      | 5,255   |                |   | $      | 4,707                        |   |   | $                    | 904     |   |              | $      | — |   |   | $ | 11,093 |   |
| Ending balance: collectively evaluated for impairment |   | $                      | 144,915 |   |               | $      | 149,758 |                |   | $      | 22,873                       |   |   | $                    | 51,758  |   |              | $      | 25,046 |   |   | $ | 394,350 |   |

----

Index

|                                                  |   | CommercialRealEstate   |    |   | ConsumerRealEstate |   |    | ConstructionandLand |   |   | CommercialandIndustrialLoans |   |   |   Consumer |    |   |   Total |   |
|-------------------------------------------------------|--------|------------------------|---------|--------|--------------------|--------|---------|---------------------|--------|--------|------------------------------|--------|--------|----------------------|---------|--------|-------------------|--------|
|                                                  |   |                   |    |
|                                                  |   | (dollars in thousands) |    |
|                                                  |   |                   |    |   |               |   |    |                |   |   |                         |   |   |                 |    |   |              |   |
| Balance, January 1, 2010                              |   | $                      | 1,176   |   |               | $      | 1,422   |                |   | $      | 1,419                        |   |   | $                    | 1,193   |   |              | $      | 850 |   |   | $ | 6,060 |   |
| Add (deduct):                                         |   |                   |    |   |               |   |    |                |   |   |                         |   |   |                 |    |   |              |   |   |   |   |   |   |   |
| Charge-offs                                           |   |                   | (412    | )      |               |   | (1,278  | )                   |   |   | (704                         | )      |   |                 | (804    | )      |              |   | (488 | ) |   |   | (3,686 | ) |
| Recoveries                                            |   |                   | — |   |               |   | 10      |                |   |   | —                      |   |   |                 | — |   |              |   | 217 |   |   |   | 227 |   |
| Provision                                             |   |                   | 957     |   |               |   | 2,043   |                |   |   | 1,262                        |   |   |                 | 1,212   |   |              |   | 26 |   |   |   | 5,500 |   |
| Balance, December 31, 2010                            |   | $                      | 1,721   |   |               | $      | 2,197   |                |   | $      | 1,977                        |   |   | $                    | 1,601   |   |              | $      | 605 |   |   | $ | 8,101 |   |
| Loans:                                                |   |                   |    |   |               |   |    |                |   |   |                         |   |   |                 |    |   |              |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment |   | $                      | 3,322   |   |               | $      | 6,757   |                |   | $      | 4,909                        |   |   | $                    | 932     |   |              | $      | — |   |   | $ | 15,920 |   |
| Ending balance: collectively evaluated for impairment |   | $                      | 132,694 |   |               | $      | 150,627 |                |   | $      | 19,613                       |   |   | $                    | 51,657  |   |              | $      | 27,115 |   |   | $ | 381,706 |   |

|                                              |   | March, 31              |    |   | December 31, |   |
|---------------------------------------------------|--------|------------------------|---------|--------|--------------|--------|
|                                              |   | 2011                   |    |   | 2010         |   |
|                                              |   |                   |    |
|                                              |   | (dollars in thousands) |    |
|                                              |   |                   |    |
| Impaired loans without a valuation allowance      |   | $                      | — |   |         | $      | — |   |
| Impaired loans with a valuation allowance         |   |                   | 14,691  |   |         |   | 16,441 |   |
| Total impaired loans                              |   | $                      | 14,691  |   |         | $      | 16,441 |   |
| Valuation allowance related to impaired loans     |   | $                      | 920     |   |         | $      | 2,803 |   |
| Year to date average investment in impaired loans |   | $                      | 14,966  |   |         | $      | 16,441 |   |
| Foregone interest income on impaired loans        |   | $                      | 473     |   |         | $      | 538 |   |

----

Index

|                            |                   |   |      |   |      |   |       |   | Interest   |   |
|---------------------------------|------------------------|--------|-----------|--------|-----------|--------|------------|--------|------------|--------|
|                            |                   |   | Unpaid    |   |      |   | Average    |   | Income     |   |
|                            | Recorded               |   | Principal |   | Related   |   | Recorded   |   | Recognized |   |
|                            | Investment             |   | Balance   |   | Allowance |   | Investment |   | QTD 2011   |   |
|                            | (dollars in thousands) |   |
|                            |                   |   |      |   |      |   |       |   |       |   |   |   |   |   |   |
| Commercial real estate          |                   | $      | 1,701     |   |      | $      | 2,113      |   |       | $      | 361 |   |   | $ | 1,876 |   |   | $ | — |   |
| Consumer real estate            |                   |   | 6,429     |   |      |   | 8,514      |   |       |   | 312 |   |   |   | 6,437 |   |   |   | 56 |   |
| Construction and land           |                   |   | 5,246     |   |      |   | 5,817      |   |       |   | 168 |   |   |   | 5,280 |   |   |   | 4 |   |
| Commercial and industrial loans |                   |   | 1,168     |   |      |   | 1,246      |   |       |   | 55 |   |   |   | 1,222 |   |   |   | 15 |   |
| Consumer                        |                   |   | 147       |   |      |   | 186        |   |       |   | 24 |   |   |   | 152 |   |   |   | — |   |
| Total                           |                   | $      | 14,691    |   |      | $      | 17,876     |   |       | $      | 920 |   |   | $ | 14,966 |   |   | $ | 75 |   |

----

Index

|                            |   | RecordedInvestment     |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognizedYTD 2010 |   |
|---------------------------------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------|--------|--------|---------------------------|--------|--------|----------------------------------|--------|
|                            |   | (dollars in thousands) |   |
|                            |   |                   |   |
| Commercial real estate          |   | $                      | 3,356  |   |                   | $      | 3,356  |             |   | $      | 455                       |   |   | $                                | 3,356  |   |   | $ | 77 |   |
| Consumer real estate            |   |                   | 6,918  |   |                   |   | 6,918  |             |   |   | 898                       |   |   |                             | 6,918  |   |   |   | 251 |   |
| Construction and land           |   |                   | 4,997  |   |                   |   | 4,997  |             |   |   | 1,114                     |   |   |                             | 4,997  |   |   |   | 198 |   |
| Commercial and industrial loans |   |                   | 1,005  |   |                   |   | 1,005  |             |   |   | 266                       |   |   |                             | 1,005  |   |   |   | 62 |   |
| Consumer                        |   |                   | 165    |   |                   |   | 165    |             |   |   | 70                        |   |   |                             | 165    |   |   |   | 8 |   |
| Total                           |   | $                      | 16,441 |   |                   | $      | 16,441 |             |   | $      | 2,803                     |   |   | $                                | 16,441 |   |   | $ | 596 |   |

|                            |   | 30-59DaysPast Due      |   |   | 60-89DaysPast Due |   |    | GreaterThan90 Days |   |   | TotalPastDue |   |   | Current |   |   | TotalLoans |   |
|---------------------------------|--------|------------------------|--------|--------|-------------------|--------|---------|--------------------|--------|--------|--------------|--------|--------|---------|--------|--------|------------|--------|
|                            |   | (dollars in thousands) |   |
|                            |   |                   |   |   |              |   |    |               |   |   |         |   |   |    |   |   |       |   |
| Commercial real estate          |   | $                      | 44     |   |              | $      | — |               |   | $      | 1,701        |   |   | $       | 1,745  |   |       | $      | 143,397 |   |   | $ | 145,142 |   |
| Consumer real estate            |   |                   | 911    |   |              |   | — |               |   |   | 4,369        |   |   |    | 5,280  |   |       |   | 149,733 |   |   |   | 155,013 |   |
| Construction and land           |   |                   | 24     |   |              |   | — |               |   |   | 1,692        |   |   |    | 1,716  |   |       |   | 25,864 |   |   |   | 27,580 |   |
| Commercial and industrial loans |   |                   | 172    |   |              |   | — |               |   |   | 1,168        |   |   |    | 1,340  |   |       |   | 51,322 |   |   |   | 52,662 |   |
| Consumer                        |   |                   | 59     |   |              |   | 35      |               |   |   | 147          |   |   |    | 241    |   |       |   | 24,805 |   |   |   | 25,046 |   |
| Total                           |   | $                      | 1,210  |   |              | $      | 35      |               |   | $      | 9,077        |   |   | $       | 10,322 |   |       | $      | 395,121 |   |   | $ | 405,443 |   |

----

Index

|                            |   | 30-59DaysPast Due      |    |   | 60-89DaysPast Due |   |    | GreaterThan90 Days |   |   | TotalPastDue |   |   | Current |   |   | TotalLoans |   |
|---------------------------------|--------|------------------------|---------|--------|-------------------|--------|---------|--------------------|--------|--------|--------------|--------|--------|---------|--------|--------|------------|--------|
|                            |   | (dollars in thousands) |    |
|                            |   |                   |    |   |              |   |    |               |   |   |         |   |   |    |   |   |       |   |
| Commercial real estate          |   | $                      | — |   |              | $      | — |               |   | $      | 3,356        |   |   | $       | 3,356  |   |       | $      | 132,660 |   |   | $ | 136,016 |   |
| Consumer real estate            |   |                   | 1,167   |   |              |   | 38      |               |   |   | 4,873        |   |   |    | 6,040  |   |       |   | 151,344 |   |   |   | 157,384 |   |
| Construction and land           |   |                   | 295     |   |              |   | — |               |   |   | 1,423        |   |   |    | 1,718  |   |       |   | 22,804 |   |   |   | 24,522 |   |
| Commercial and industrial loans |   |                   | 40      |   |              |   | 89      |               |   |   | 88           |   |   |    | 217    |   |       |   | 52,372 |   |   |   | 52,589 |   |
| Consumer                        |   |                   | 235     |   |              |   | 15      |               |   |   | 165          |   |   |    | 415    |   |       |   | 26,700 |   |   |   | 27,115 |   |
| Total                           |   | $                      | 1,737   |   |              | $      | 142     |               |   | $      | 9,905        |   |   | $       | 11,746 |   |       | $      | 385,880 |   |   | $ | 397,626 |   |

----

Index

----

Index

|                                       |   | CommercialReal Estate  |    |   | ConsumerReal Estate |   |    | ConstructionandLand |   |   | Commercial |   |
|--------------------------------------------|--------|------------------------|---------|--------|---------------------|--------|---------|---------------------|--------|--------|------------|--------|
|                                       |   | (dollars in thousands) |    |
| Real Estate and Commercial Credit Exposure |   |                   |    |   |                |   |    |                |   |   |       |   |
| Pass 1                                     |   | $                      | — |   |                | $      | — |                |   | $      | —    |   |   | $ | 1,228 |   |
| Pass 2                                     |   |                   | — |   |                |   | 48      |                |   |   | 1,068      |   |   |   | 270 |   |
| Pass 3                                     |   |                   | 71,990  |   |                |   | 112,483 |                |   |   | 8,463      |   |   |   | 28,635 |   |
| Pass 4                                     |   |                   | 63,494  |   |                |   | 29,654  |                |   |   | 11,506     |   |   |   | 19,756 |   |
| Special Mention 5                          |   |                   | 5,303   |   |                |   | 470     |                |   |   | 704        |   |   |   | 829 |   |
| Substandard 6                              |   |                   | 4,355   |   |                |   | 12,358  |                |   |   | 5,839      |   |   |   | 1,944 |   |
| Doubtful 7                                 |   |                   | — |   |                |   | — |                |   |   | —    |   |   |   | — |   |
| Loss 8                                     |   |                   | — |   |                |   | — |                |   |   | —    |   |   |   | — |   |
| Total                                      |   | $                      | 145,142 |   |                | $      | 155,013 |                |   | $      | 27,580     |   |   | $ | 52,662 |   |

|                           |   | ConsumerOther         |    |
|--------------------------------|--------|-----------------------|---------|
|                           |   | (dollars inthousands) |    |
| Consumer Other Credit Exposure |   |                  |    |
| Pass 1-4                       |   | $                     | 24,745  |   |
| Special Mention 5              |   |                  | 25      |   |
| Substandard 6                  |   |                  | 276     |   |
| Doubtful 7                     |   |                  | — |   |
| Loss 8                         |   |                  | — |   |
| Total                          |   | $                     | 25,046  |   |

----

Index

|                                       |   | CommercialReal Estate  |    |   | ConsumerReal Estate |   |    | Construction andLand |   |   | Commercial |   |
|--------------------------------------------|--------|------------------------|---------|--------|---------------------|--------|---------|----------------------|--------|--------|------------|--------|
|                                       |   | (dollars in thousands) |    |
| Real Estate and Commercial Credit Exposure |   |                   |    |   |                |   |    |                 |   |   |       |   |
| Pass 1                                     |   | $                      | — |   |                | $      | — |                 |   | $      | 75         |   |   | $ | 1,008 |   |
| Pass 2                                     |   |                   | — |   |                |   | 49      |                 |   |   | —    |   |   |   | 281 |   |
| Pass 3                                     |   |                   | 63,380  |   |                |   | 116,329 |                 |   |   | 8,497      |   |   |   | 29,683 |   |
| Pass 4                                     |   |                   | 64,718  |   |                |   | 29,504  |                 |   |   | 9,723      |   |   |   | 19,015 |   |
| Special Mention 5                          |   |                   | 2,832   |   |                |   | 2,896   |                 |   |   | 530        |   |   |   | 667 |   |
| Substandard 6                              |   |                   | 5,086   |   |                |   | 8,606   |                 |   |   | 5,697      |   |   |   | 1,935 |   |
| Doubtful 7                                 |   |                   | — |   |                |   | — |                 |   |   | —    |   |   |   | — |   |
| Loss 8                                     |   |                   | — |   |                |   | — |                 |   |   | —    |   |   |   | — |   |
| Total                                      |   | $                      | 136,016 |   |                | $      | 157,384 |                 |   | $      | 24,522     |   |   | $ | 52,589 |   |

|                           |   | ConsumerOther         |    |
|--------------------------------|--------|-----------------------|---------|
|                           |   | (dollars inthousands) |    |
| Consumer Other Credit Exposure |   |                  |    |
| Pass 1-4                       |   | $                     | 26,773  |   |
| Special Mention 5              |   |                  | 29      |   |
| Substandard 6                  |   |                  | 313     |   |
| Doubtful 7                     |   |                  | — |   |
| Loss 8                         |   |                  | — |   |
| Total                          |   | $                     | 27,115  |   |

----

Index

|                                          |   | Acquired Loans Without Specific Evidence of Deterioration in Credit Quality |   |   | Acquired Loans With Specific Evidence of Deterioration in Credit Quality |   |    | Total Loans Acquired |   |
|-----------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------|--------|---------|----------------------|--------|
|                                          |   | (dollars in thousands)                                                      |   |
| Contractually required principal and interest |   | $                                                                           | 23,317 |   |                                                                     | $      | 8,179   |                 |   | $ | 31,496 |   |
| Non-accretable difference                     |   |                                                                        | (964   | )      |                                                                     |   | (6,295  | )                    |   |   | (7,259 | ) |
| Cash flows expected to be collected           |   |                                                                        | 22,353 |   |                                                                     |   | 1,884   |                 |   |   | 24,237 |   |
| Accretable yield                              |   |                                                                        | (4,476 | )      |                                                                     |   | — |                 |   |   | (4,476 | ) |
| Basis in acquired loans                       |   | $                                                                           | 17,877 |   |                                                                     | $      | 1,884   |                 |   | $ | 19,761 |   |

----

Index

|                                                         |   | Acquired Loans Without Specific Evidence of Deterioration in Credit Quality |   |   | Acquired Loans With Specific Evidence of Deterioration in Credit Quality |   |    | Total Loans Acquired |   |
|--------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------|--------|---------|----------------------|--------|
|                                                         |   | (dollars in thousands)                                                      |   |
| Balance at acquisition, December 4, 2009                     |   | $                                                                           | 1,090  |   |                                                                     | $      | 2,480   |                 |   | $ | 3,570 |   |
| Accretion                                                    |   |                                                                        | (65    | )      |                                                                     |   | (128    | )                    |   |   | (193 | ) |
| Balance, December 31, 2009                                   |   | $                                                                           | 1,025  |   |                                                                     | $      | 2,352   |                 |   | $ | 3,377 |   |
| Transfers from non-accretable difference to accretable yield |   |                                                                        | 3,823  |   |                                                                     |   | (485    | )                    |   |   | 3,338 |   |
| Accretion                                                    |   |                                                                        | (1,549 | )      |                                                                     |   | (568    | )                    |   |   | (2,117 | ) |
| Balance, December 31, 2010                                   |   | $                                                                           | 3,299  |   |                                                                     | $      | 1,299   |                 |   | $ | 4,598 |   |
| Transfers from non-accretable difference to accretable yield |   |                                                                        | 1,573  |   |                                                                     |   | (1,299  | )                    |   |   | 1,495 |   |
|                                                         |
| Accretion                                                    |   |                                                                        | (396   | )      |                                                                     |   | — |                 |   |   | (396 | ) |
| Balance, December 31, 2010                                   |   | $                                                                           | 4,476  |   |                                                                     | $      | — |                 |   | $ | 4,476 |   |

----

Index

|                                          |   | Acquired Loans Without Specific Evidence of Deterioration in Credit Quality |    |   | Acquired Loans With Specific Evidence of Deterioration in Credit Quality |   |    | Total Loans Acquired |   |
|-----------------------------------------------|--------|----------------------------------------------------------------------------------|---------|--------|--------------------------------------------------------------------------|--------|---------|----------------------|--------|
|                                          |   | (dollars in thousands)                                                           |    |
| Contractually required principal and interest |   | $                                                                                | 128,495 |   |                                                                     | $      | 42,087  |                 |   | $ | 170,582 |   |
| Non-accretable difference                     |   |                                                                             | (39,144 | )      |                                                                     |   | (24,550 | )                    |   |   | (63,694 | ) |
| Cash flows expected to be collected           |   |                                                                             | 89,351  |   |                                                                     |   | 17,537  |                 |   |   | 106,888 |   |
| Accretable yield                              |   |                                                                             | (35,318 | )      |                                                                     |   | (423    | )                    |   |   | (35,741 | ) |
| Basis in acquired loans                       |   | $                                                                                | 54,033  |   |                                                                     | $      | 17,114  |                 |   | $ | 71,147 |   |

|                                      | Acquired Loans Without Specific Evidence of Deterioration in Credit Quality |   | Acquired Loans With Specific Evidence of Deterioration in Credit Quality |   | Total Loans Acquired |   |
|-------------------------------------------|-----------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|----------------------|--------|
|                                      | (dollars in thousands)                                                      |   |
| Balance at acquisition, February 18, 2011 |                                                                        | $      | 35,731                                                                   |   |                 | $      | 423 |   |   | $ | 36,154 |   |
| Accretion                                 |                                                                        |   | (413                                                                     | )      |                 |   | — |   |   |   | (413 | ) |
| Balance, March 31, 2011                   |                                                                        | $      | 35,318                                                                   |   |                 | $      | 423 |   |   | $ | 35,741 |   |

----

Index

----

Index

|                                     |   | Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |    | SignificantUnobservableInputs(Level 3) |   |   | Total   |   |
|------------------------------------------|--------|------------------------------------------------------------|--------|--------|-------------------------------------------|--------|---------|----------------------------------------|--------|--------|---------|--------|
| Assets                                   |   |                                                       |   |   |                                      |   |    |                                   |   |   |    |   |   |   |   |   |
| Available for sale investment securities |   | $                                                          | 85     |   |                                      | $      | 220,718 |                                   |   | $      | — |   |   | $ | 220,803 |   |
| Total assets at fair value               |   | $                                                          | 85     |   |                                      | $      | 220,718 |                                   |   | $      | — |   |   | $ | 220,803 |   |

----

Index

----

Index

----

Index

----

Index

|                                                                    |   | March 31, 2011 |         |   | December 31, 2010 |   |
|-------------------------------------------------------------------------|--------|----------------|--------------|--------|-------------------|--------|
|                                                                    |   | CarryingAmount |         |   | FairValue         |   |   | CarryingAmount |   |   | FairValue |   |
|                                                                    |   |           |         |   |              |   |   |   |   |   |   |   |
| Financial assets:                                                       |   |           |         |   |              |   |   |   |   |   |   |   |
| Cash, due from banks and interest-bearing deposits in banks             |   | $              | 86,380       |   |              | $      | 86,380 |   |   | $ | 39,714 |   |   | $ | 39,714 |   |
| Federal funds sold                                                      |   | $              | 19,415       |   |              | $      | 19,415 |   |   | $ | 2,700 |   |   | $ | 2,700 |   |
| Securities available for sale                                           |   | $              | 220,803      |   |              | $      | 220,803 |   |   | $ | 238,377 |   |   | $ | 238,377 |   |
| Federal home loan bank stock                                            |   | $              | 4,450        |   |              | $      | 4,450 |   |   | $ | 3,703 |   |   | $ | 3,703 |   |
| Other equity securities                                                 |   | $              | 1,010        |   |              | $      | 1,010 |   |   | $ | 1,010 |   |   | $ | 1,010 |   |
|                                                                    |   |           |         |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Loans held for sale                                                     |   | $              | 2,642        |   |              | $      | 2,642 |   |   | $ | 225 |   |   | $ | 225 |   |
|                                                                    |   |           |         |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Non covered loans                                                       |   | $              | 433,695      |   |              | $      | 426,938 |   |   | $ | 418,997 |   |   | $ | 419,835 |   |
| Allowance for loan losses                                               |   |           | 6,138        |   |              |   |   |   |   |   | 8,101 |   |   |   |   |   |
| Non covered loans, net                                                  |   |           | 427,557      |   |              | $      | 426,938 |   |   | $ | 410,896 |   |   | $ | 419,835 |   |
|                                                                    |   |           |         |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Covered loans                                                           |   | $              |  62,372 |   |              | $      |  62,372 |   |   | $ |  — |   |   | $ |  — |   |
| Accrued interest receivable                                             |   | $              | 4,526        |   |              | $      | 4,526 |   |   | $ | 2,907 |   |   | $ | 2,907 |   |
| FDIC loss-share receivable                                              |   | $              | 58,174       |   |              | $      | 58,174 |   |   | $ | — |   |   | $ | — |   |
|                                                                    |   |           |         |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                                                  |   |           |         |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                |   | $              | 731,088      |   |              | $      | 728,873 |   |   | $ | 534,242 |   |   | $ | 532,050 |   |
|                                                                    |   |           |         |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds purchased and securities sold under repurchase agreements |   | $              | 31,509       |   |              | $      | 31,512 |   |   | $ | 34,421 |   |   | $ | 32,425 |   |
| Other borrowings                                                        |   | $              | 60,000       |   |              | $      | 62,775 |   |   | $ | 62,500 |   |   | $ | 65,592 |   |
| Accrued interest payable                                                |   | $              | 1,102        |   |              | $      | 1,102 |   |   | $ | 702 |   |   | $ | 702 |   |

----

Index

|                                          |   | February 18,2011 |    |   | Averagematurity(years) |   |   | EffectiveYield /Cost |   |
|-----------------------------------------------|--------|------------------|---------|--------|------------------------|--------|--------|----------------------|--------|
| Assets Acquired:                              |   |             |    |   |                   |   |   |                 |   |
| Cash and due from banks                       |   | $                | 33,900  |   |                   |   |   |                 |   |   |
| Securities available for sale                 |   |             | 13,386  |   |                   |   | 4.20   |                 |   |   | 1.49 | % |
| Loans                                         |   |             | 72,720  |   |                   |   | 1.34   |                 |   |   | 4.53 | % |
| Other real estate owned                       |   |             | 7,540   |   |                   |   |   |                 |   |   |   |   |
| Estimated reimbursement from the FDIC         |   |             | 58,164  |   |                   |   |   |                 |   |   |   |   |
| Core deposit intangible                       |   |             | 1,895   |   |                   |   |   |                 |   |   |   |   |
| Other assets                                  |   |             | 2,245   |   |                   |   |   |                 |   |   |   |   |
| Total assets acquired                         |   |             | 189,850 |   |                   |   |   |                 |   |   |   |   |
| Cash paid to settle the acquisition           |   |             | 24,000  |   |                   |   |   |                 |   |   |   |   |
| Fair value of assets acquired                 |   |             | 213,850 |   |                   |   |   |                 |   |   |   |   |
| Liabilities assumed:                          |   |             |    |   |                   |   |   |                 |   |   |   |   |
| Deposits                                      |   |             | 206,276 |   |                   |   | 1.26   |                 |   |   | 1.58 | % |
| Other liabilities                             |   |             | 6,174   |   |                   |   |   |                 |   |   |   |   |
| Fair value of liabilities assumed             |   |             | 212,450 |   |                   |   |   |                 |   |   |   |   |
|                                          |   |             |    |   |                   |   |   |                 |   |   |   |   |
| Net Assets Acquired / Gained from Acquisition |   | $                | 1,400   |   |                   |   |   |                 |   |   |   |   |

----

Index

|   |   | AmountsCovered |    |   | FairValue |   |   | SFCertificate(10 Years forLosses) |   |   | Non-SFCertificate(5 YearsforLosses) |   |
|--------|--------|----------------|---------|--------|-----------|--------|--------|-----------------------------------|--------|--------|-------------------------------------|--------|
|   |   |           |    |   |      |   |   |                              |   |   |                                |   |
| Loans  |   | $              | 131,256 |   |      | $      | 66,671 |                              |   | $      | 22,744                              |   |   | $ | 108,512 |   |
| OREO   |   |           | 21,663  |   |      |   | 7,540  |                              |   |   | —                             |   |   |   | 21,663 |   |
| Total  |   | $              | 152,919 |   |      | $      | 74,211 |                              |   | $      | 22,744                              |   |   | $ | 130,175 |   |

|                        |   | Loans WithDeteriorationof CreditQuality |   |   | LoansWithout ADeteriorationof CreditQuality |   |   | Total Loans,atFairValue |   |
|-----------------------------|--------|-----------------------------------------|--------|--------|---------------------------------------------|--------|--------|-------------------------|--------|
|                        |   |                                    |   |   |                                        |   |   |                    |   |
| Construction and Land       |   | $                                       | 5,641  |   |                                        | $      | 7,454  |                    |   | $ | 7,454 |   |
| Farmland                    |   |                                    | 1,272  |   |                                        |   | 2,362  |                    |   |   | 2,362 |   |
| Residential (1 to 4 family) |   |                                    | 3,804  |   |                                        |   | 14,936 |                    |   |   | 14,936 |   |
| Commercial Real Estate      |   |                                    | 4,635  |   |                                        |   | 15,551 |                    |   |   | 15,551 |   |
| Commercial                  |   |                                    | 1,787  |   |                                        |   | 11,643 |                    |   |   | 11,643 |   |
| Consumer                    |   |                                    | 31     |   |                                        |   | 3,604  |                    |   |   | 3,604 |   |
|                        |   | $                                       | 17,170 |   |                                        | $      | 55,550 |                    |   | $ | 55,550 |   |

| Contractually-required principal and interest      |   | $      | 172,568 |   |
|----------------------------------------------------|--------|--------|---------|--------|
| Non-accretable difference                          |   |   | (63,694 | )      |
| Cash flows expected to be collected                |   |   | 108,874 |   |
| Accretable yield                                   |   |   | (36,154 | )      |
| Fair value of loans accounted for under ASC 310-30 |   | $      | 72,720  |   |

----

Index

----

Index

ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

----

Index

----

Index

----

Index

|                                 |   | (In Thousands) |    |
|--------------------------------------|--------|----------------|---------|
|                                 |   |           |    |
| Commitments to extend credit         |   | $              | 65,600  |   |
| Financial stand-by letters of credit |   |           | — |   |
|                                 |   | $              | 65,600  |   |

----

Index

|               |   | March 31,2011          |   |   | December 31, 2010 |   |   | AmountChange |   |   | PercentChange |   |
|--------------------|--------|------------------------|--------|--------|-------------------|--------|--------|--------------|--------|--------|---------------|--------|
|               |   | (Dollars in thousands) |   |
|               |   |                   |   |   |              |   |   |         |   |   |          |   |
| Non-accruing loans |   | $                      | 9,077  |   |              | $      | 9,905  |         |   | $      | (828          | )      |   |   | (8.4 | )% |
| Foreclosed assets  |   |                   | 3,215  |   |              |   | 3,689  |         |   |   | (474          | )      |   |   | (12.8 | )    |
| Total              |   | $                      | 12,292 |   |              | $      | 13,594 |         |   | $      | (1,302        | )      |   |   | (9.6 | )% |

----

Index

|                                                |   | Loans by Type as of |    |
|-----------------------------------------------------|--------|---------------------|---------|
|                                                |   | 3/31/10             |    |   | 12/31/10 |   |   | 3/31/11 |   |
|                                                |   |                |    |   |   |   |   |   |   |   |   |   |
| Construction and land loans                         |   | $                   | 22,274  |   |   | $ | 24,522 |   |   | $ | 27,580 |   |
| Farmland loans                                      |   |                | 12,766  |   |   |   | 12,339 |   |   |   | 13,707 |   |
| Permanent 1 - 4                                     |   |                | 87,301  |   |   |   | 131,293 |   |   |   | 129,371 |   |
| Permanent 1 - 4 - junior liens and revolving        |   |                | 24,513  |   |   |   | 26,091 |   |   |   | 25,642 |   |
| Multifamily                                         |   |                | 10,242  |   |   |   | 13,598 |   |   |   | 12,110 |   |
| Nonresidential                                      |   |                | 80,935  |   |   |   | 110,079 |   |   |   | 119,325 |   |
| Commercial business loans                           |   |                | 44,382  |   |   |   | 52,589 |   |   |   | 52,662 |   |
| Consumer and other loans                            |   |                | 34,689  |   |   |   | 27,115 |   |   |   | 25,046 |   |
|                                                |   | $                   | 317,102 |   |   | $ | 397,626 |   |   | $ | 405,443 |   |
|                                                |   |                |    |   |   |   |   |   |   |   |   |   |
| Loans acquired through FDIC- assisted acquisitions: |   |                |    |   |   |   |   |   |   |   |   |   |
| Non Covered                                         |   | $                   | 25,393  |   |   | $ | 21,371 |   |   | $ | 28,252 |   |
| Covered Loans                                       |   |                | — |   |   |   | — |   |   |   | 62,372 |   |
|                                                |   | $                   | 342,495 |   |   | $ | 418,997 |   |   | $ | 496,067 |   |

----

Index

|                                              |   |                                                                                             |    |   |           |   |    |          |   |   |    |   |
|---------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|---------|--------|----------------|--------|---------|---------------|--------|--------|---------|--------|
|                                              |   | Asset Quality Data(excluding loans acquired  through FDIC-assisted acquisitions) as of |    |
|                                              |   |  3/31/10                                                                                    |    |   |  12/31/10 |   |    |  3/31/11 |   |
|                                              |   |                                                                                             |    |   |           |   |    |          |   |   |    |   |
| Allowance for loan losses to total loans          |   |                                                                                             | 1.83    | %      |           |   | 2.04    | %             |   |   | 1.51    | %      |
| Allowance for loan losses to average loans        |   |                                                                                             | 1.87    | %      |           |   | 2.03    | %             |   |   | 1.59    | %      |
| Allowance for loan losses to non-performing loans |   |                                                                                             | 89.23   | %      |           |   | 81.79   | %             |   |   | 67.46   | %      |
| Accruing loans past due 30-89 days                |   | $                                                                                                | 1,603   |   |           | $      | 1,737   |          |   | $      | 1,245   |   |
| Nonaccrual loans                                  |   |                                                                                             | 6,506   |   |           |   | 9,905   |          |   |   | 9,077   |   |
| Loans - 90 days past due & still accruing     |   |                                                                                             | — |   |           |   | — |          |   |   | — |   |
| Total non-performing loans                        |   |                                                                                             | 6,506   |   |           |   | 9,905   |          |   |   | 9,077   |   |
| OREO and repossessed assets                       |   |                                                                                             | 3,567   |   |           |   | 3,689   |          |   |   | 3,215   |   |
| Total non-performing assets                       |   |                                                                                             | 10,073  |   |           |   | 13,594  |          |   |   | 12,292  |   |
| Non-performing loans to total loans               |   |                                                                                             | 2.05    | %      |           |   | 2.50    | %             |   |   | 2.24    | %      |
| Non-performing assets to total assets             |   |                                                                                             | 1.83    | %      |           |   | 1.85    | %             |   |   | 1.43    | %      |
| Net charge-offs to average loans (annualized)     |   |                                                                                             | 0.62    | %      |           |   | 1.84    | %             |   |   | 2.80    | %      |
| Net charge-offs                                   |   | $                                                                                                | 744     |   |           | $      | 1,833   |          |   | $      | 2,563   |   |

----

Index

|                                                                    |   | Three Months Ended March 31, |    |
|-------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                    |   | 2011                         |    |   | 2010 |   |
|                                                                    |   | (Dollars in Thousands)       |    |
|                                                                    |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | AverageOutstandingBalance    |    |   | InterestEarned/Paid |   |   | Yield/Rate |   |   | AverageOutstandingBalance |   |   | InterestEarned/Paid |   |   | Yield/Rate |   |
| Interest-Earning Assets:                                                |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                   |   | $                            | 456,851 |   |   | $ | 7,145 |   |   |   | 6.34 | % |   | $ | 336,800 |   |   | $ | 5,320 |   |   |   | 6.42 | % |
| Loans held for sale                                                     |   |                         | 737     |   |   |   | 8 |   |   |   | 4.1 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable investment securities                                           |   |                         | 207,884 |   |   |   | 1,207 |   |   |   | 2.32 |   |   |   | 88,166 |   |   |   | 776 |   |   |   | 3.52 |   |
| Tax exempt investment securities                                        |   |                         | 20,646  |   |   |   | 211 |   |   |   | 6.2 |   |   |   | 30,127 |   |   |   | 298 |   |   |   | 6.00 |   |
| Federal funds sold                                                      |   |                         | 24,111  |   |   |   | 13 |   |   |   | 0.23 |   |   |   | 14,001 |   |   |   | 9 |   |   |   | 0.26 |   |
| Interest bearing deposits with banks                               |   |                         | 16,150  |   |   |   | 40 |   |   |   | 0.99 |   |   |   | 33,419 |   |   |   | 44 |   |   |   | 0.54 |   |
| Total interest-earning Assets                                           |   |                         | 726,379 |   |   |   | 8,624 |   |   |   | 4.86 |   |   |   | 502,513 |   |   |   | 6,447 |   |   |   | 5.32 |   |
|                                                                    |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-Bearing Liabilities:                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing demand                                                 |   |                         | 123,286 |   |   |   | 240 |   |   |   | 0.79 |   |   |   | 67,713 |   |   |   | 183 |   |   |   | 1.10 | % |
| Savings and money market                                                |   |                         | 232,370 |   |   |   | 573 |   |   |   | 1.00 |   |   |   | 157,288 |   |   |   | 462 |   |   |   | 0.77 |   |
| Retail time deposits                                                    |   |                         | 218,297 |   |   |   | 986 |   |   |   | 1.83 |   |   |   | 156,448 |   |   |   | 800 |   |   |   | 2.49 |   |
| Wholesale time deposits                                                 |   |                         | 12,178  |   |   |   | 49 |   |   |   | 1.62 |   |   |   | 13,580 |   |   |   | 79 |   |   |   | 2.37 |   |
| Borrowings                                                              |   |                         | 93,318  |   |   |   | 743 |   |   |   | 3.23 |   |   |   | 75,548 |   |   |   | 513 |   |   |   | 2.76 |   |
| Total interest-bearing liabilities                                      |   |                         | 679,449 |   |   |   | 2,591 |   |   |   | 1.55 |   |   |   | 470,577 |   |   |   | 2,037 |   |   |   | 1.75 |   |
|                                                                    |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                     |   |                         |    |   |   | $ | 6,033 |   |   |   |   |   |   |   |   |   |   | $ | 4,410 |   |   |   |   |   |
| Net interest rate spread                                                |   |                         |    |   |   |   |   |   |   |   | 3.31 | % |   |   |   |   |   |   |   |   |   |   | 3.57 | % |
| Net earning assets                                                      |   | $                            | 46,930  |   |   |   |   |   |   |   |   |   |   | $ | 31,936 |   |   |   |   |   |   |   |   |   |
| Net interest margin                                                     |   |                         |    |   |   |   |   |   |   |   | 3.42 | % |   |   |   |   |   |   |   |   |   |   | 3.68 | % |
|                                                                    |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average interest-earning assets to average interest-bearing liabilities |   |                         | 1.07    | x |   |   |   |   |   |   |   |   |   |   | 1.07 | x |   |   |   |   |   |   |   |   |

----

Index

|                                 |   | Three Months Ended March 31, |   |
|--------------------------------------|--------|------------------------------|--------|
|                                 |   | 2011 vs. 2010                |   |
|                                 |   | Increase (Decrease)Due to    |   |   | TotalIncrease(Decrease) |   |
|                                 |   |                         |   |   |
|                                 |   | Volume                       |   |   | Rate |   |   |   |
|                                 |   | (Dollars in Thousands)       |   |
| Interest-earning assets:             |   |                         |   |   |   |   |   |   |   |
| Loans                                |   | $                            | 1,777  |   |   | $ | 48 |   |   | $ | 1,825 |   |
| Loans held for sale                  |   |                         | 8      |   |   |   | — |   |   |   | 8 |   |
| Taxable investment securities        |   |                         | 738    |   |   |   | (307 | ) |   |   | 431 |   |
| Tax exempt investment securities     |   |                         | (106   | ) |   |   | 19 |   |   |   | (87 | ) |
| Federal funds sold                   |   |                         | 5      |   |   |   | (1 | ) |   |   | 4 |   |
| Interest bearing deposits with banks |   |                         | (30    | ) |   |   | 26 |   |   |   | (4 | ) |
| Total interest-earning assets        |   | $                            | 2,392  |   |   | $ | (215 | ) |   |   | 2,177 |   |
|                                 |   |                         |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:        |   |                         |   |   |   |   |   |   |   |   |   |   |
| Interest bearing demand              |   | $                            | 119    |   |   | $ | (62 | ) |   |   | 57 |   |
| Savings and money market             |   |                         | 220    |   |   |   | (108 | ) |   |   | 112 |   |
| Retail time deposits                 |   |                         | 445    |   |   |   | (259 | ) |   |   | 186 |   |
| Wholesale time deposits              |   |                         | (21    | ) |   |   | (10 | ) |   |   | (31 | ) |
| Borrowings                           |   |                         | 153    |   |   |   | 77 |   |   |   | 230 |   |
| Total interest-bearing liabilities   |   | $                            | 916    |   |   | $ | (362 | ) |   |   | 554 |   |
|                                 |   |                         |   |   |   |   |   |   |   |   |   |   |
| Net interest income                  |   |                         |   |   |   |   |   |   |   | $ | 1,623 |   |

----

Index

----

Index

----

Index

|                                                                   |   | Three Months EndedMarch 31, |   |   |   |   |   |   |   |
|------------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                   |   | 2011                        |   |   | 2010   |   |   | $ Chg  |   |   | Chg % |   |
|                                                                   |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   | (Dollars in thousands)      |   |
| Service charges on deposit accounts                                    |   | $                           | 1,051  |   |   | $      | 824    |   |   | $ | 227 |   |   |   | 27.5 | % |
| Other service charges, commissions and fees                            |   |                        | 660    |   |   |   | 403    |   |   |   | 257 |   |   |   | 63.8 |   |
| Brokerage fees                                                         |   |                        | 354    |   |   |   | 222    |   |   |   | 132 |   |   |   | 59.5 |   |
| Mortgage origination fees                                              |   |                        | 268    |   |   |   | 38     |   |   |   | 230 |   |   |   | 605.3 |   |
| Bank owned life insurance                                              |   |                        | 145    |   |   |   | 152    |   |   |   | (7 | ) |   |   | (4.6 | ) |
| Other                                                                  |   |                        | 29     |   |   |   | 21     |   |   |   | 8 |   |   |   | 38.1 |   |
| Total noninterest income                                               |   | $                           | 2,507  |   |   | $      | 1,660  |   |   | $ | 847 |   |   |   | 51.0 | % |
| Noninterest income as a percentage of average assets (annualized) |   |                        | 1.2    | %      |   |   | 1.2    | %      |   |   |   |   |   |   |   |   |

----

Index

|                                                                |   |   | Three Months EndedMarch 31, |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------|--------|--------|-----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                |   |   | 2011                        |   |   |   | 2010   |   |   |   | $ Chg  |   |   |   | % Chg |   |
|                                                                |   |   | (Dollars in thousands)      |   |
| Salaries and employee benefits                                      |   | $      | 4,328                       |   |   | $      | 2,565  |   |   | $      | 1,763  |   |   |   | 68.7 | % |
| Equipment                                                           |   |   | 351                         |   |   |   | 255    |   |   |   | 96     |   |   |   | 37.6 |   |
| Occupancy                                                           |   |   | 445                         |   |   |   | 306    |   |   |   | 139    |   |   |   | 45.4 |   |
| Advertising and marketing                                           |   |   | 164                         |   |   |   | 120    |   |   |   | 44     |   |   |   | 36.7 |   |
| Legal and accounting                                                |   |   | 210                         |   |   |   | 149    |   |   |   | 61     |   |   |   | 40.9 |   |
| Consulting & other professional fees                            |   |   | 179                         |   |   |   | 71     |   |   |   | 108    |   |   |   | 152.1 |   |
| Directors fees and retirement                                       |   |   | 227                         |   |   |   | 139    |   |   |   | 88     |   |   |   | 63.3 |   |
| Telecommunications                                                  |   |   | 145                         |   |   |   | 69     |   |   |   | 76     |   |   |   | 110.1 |   |
| Supplies                                                            |   |   | 95                          |   |   |   | 58     |   |   |   | 37     |   |   |   | 63.8 |   |
| Data processing fees                                                |   |   | 518                         |   |   |   | 481    |   |   |   | 37     |   |   |   | 7.7 |   |
| Loss on sale and write-downs of other real estate owned             |   |   | 402                         |   |   |   | (231   | )      |   |   | 633    |   |   |   | (274.0 | ) |
| Foreclosed asset and collection expenses                            |   |   | 170                         |   |   |   | 171    |   |   |   | (1     | )      |   |   | (0.6 | ) |
| FDIC insurance and other regulatory fees                            |   |   | 293                         |   |   |   | 170    |   |   |   | 123    |   |   |   | 72.4 |   |
| Other operating                                                     |   |   | 871                         |   |   |   | 382    |   |   |   | 489    |   |   |   | 128.0 |   |
| Total noninterest expenses                                          |   | $      | 8,398                       |   |   | $      | 4,705  |   |   | $      | 3,693  |   |   |   | 78.5 | % |
| Noninterest expenses as a percentage of average assets (annualized) |   |   | 3.9                         | %      |   |   | 3.3    | %      |   |   |   |   |   |   |   |   |

----

Index

----

Index

|                                        |   |                   |    |   |        |   |   |                    |   |   |              |   |   |  Minimum Required to |   |
|---------------------------------------------|--------|------------------------|---------|--------|-------------|--------|--------|-------------------------|--------|--------|-------------------|--------|--------|---------------------------|--------|
|                                        |   |                   |    |   |        |   |   |                    |   |   |              |   |   |  Be Well Capitalized |   |
|                                        |   |                   |    |   |        |   |   | For Capital   |   |   | Under Prompt      |   |
|                                        |   |                   |    |   |        |   |   |  Adequacy          |   |   | Corrective Action |   |
|                                        |   |   Actual          |    |   | Purposes    |   |   | Provisions              |   |
|                                        |   |                   |    |   |        |   |   |                    |   |   |              |   |   |                      |   |   |   |   |
|                                        |   |  Amount           |    |   |  Ratio |   |   | Amount                  |   |   | Ratio             |   |   | Amount                    |   |   | Ratio |   |
|                                        |   | (Dollars in thousands) |    |
|                                        |   |                   |    |   |        |   |   |                    |   |   |              |   |   |                      |   |   |   |   |
| Total Capital to Risk Weighted Assets       |   |                   |    |   |        |   |   |                    |   |   |              |   |   |                      |   |   |   |   |
|    Consolidated              |   | $                      | 121,330 |   |        |   | 24.5   | %                       |   | $      | 39,639            |   |   |                      | 8.0    | % |   |   | N/A |   |   |   |   |
|    HeritageBank of the South |   |                   | 89,372  |   |        |   | 18.3   | %                       |   |   | 39,086            |   |   |                      | 8.0    | % |   | $ | 48,858 |   |   |   | 10.0 | %  |
|                                        |   |                   |    |   |        |   |   |                    |   |   |              |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital to Risk Weighted Assets      |   |                   |    |   |        |   |   |                    |   |   |              |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|    Consolidated              |   |                   | 115,222 |   |        |   | 23.3   | %                       |   |   | 19,820            |   |   |                      | 4.0    | % |   |   | N/A |   |   |   | — |   |
|    HeritageBank of the South |   |                   | 83,226  |   |        |   | 17.0   | %                       |   |   | 19,543            |   |   |                      | 4.0    | % |   |   | 29,315 |   |   |   | 6.0 | % |
|                                        |   |                   |    |   |        |   |   |                    |   |   |              |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital to Average Total Assets      |   |                   |    |   |        |   |   |                    |   |   |              |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|    Consolidated              |   |                   | 115,222 |   |        |   | 13.4   | %                       |   |   | 34,326            |   |   |                      | 4.0    | % |   |   | N/A |   |   |   | — |   |
|    HeritageBank of the South |   |                   | 83,226  |   |        |   | 9.9    | %                       |   |   | 33,517            |   |   |                      | 4.0    | % |   |   | 41,896 |   |   |   | 5.0 | % |

----

Index

Management and Market Risk

|   | ● | Limiting the percentage of long-term fixed-rate loans within our portfolio; |
|--------|---------|-----------------------------------------------------------------------------|

|   | ● | Originating a mix of variable-rate and shorter term fixed-rate loans; |
|--------|---------|-----------------------------------------------------------------------|

|   | ● | Originating prime-based home equity lines of credit; |
|--------|---------|------------------------------------------------------|

|   | ● | Managing deposit relationships for stability and a lower cost of funds position; |
|--------|---------|----------------------------------------------------------------------------------|

|   | ●  | Using Federal Home Loan Bank advances and other funding sources to align maturities and repricing terms of funding sources with loans; and |
|--------|---------------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Continuing the origination of consumer loans. |
|--------|---------|-----------------------------------------------|

----

Index

----

Index

|                                           |   | March 31, 2011               |     |
|------------------------------------------------|--------|------------------------------|----------|
|                                           |   | Maturing or Repricing Within |     |
|                                           |   | Zero to Three Months         |     |   | Three Months to One Year |   |   | One to Five Years |   |   | Over Five Years |   |   | Total |   |
|                                           |   | (Dollars in thousands)       |     |
|                                           |   |                         |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Earning assets:                                |   |                         |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term assets                              |   | $                            | 21,800   |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 21,800 |   |
| Investment securities                          |   |                         | 36,045   |   |   |   | 30,329 |   |   |   | 109,022 |   |   |   | 45,407 |   |   |   | 220,803 |   |
| Loans held for sale                            |   |                         | 2,642    |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2,642 |   |
| Loans net of covered loans                     |   |                         | 53,356   |   |   |   | 82,222 |   |   |   | 209,039 |   |   |   | 89,078 |   |   |   | 433,695 |   |
|                                           |   |                         | 113,843  |   |   |   | 112,551 |   |   |   | 318,061 |   |   |   | 134,485 |   |   |   | 678,940 |   |
|                                           |   |                         |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                  |   |                         |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing demand deposits               |   |                         | (135,108 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (135,108 | ) |
| Savings and money market                       |   |                         | (249,780 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (249,780 | ) |
| Time deposits                                  |   |                         | (51,735  | ) |   |   | (130,638 | ) |   |   | (100,693 | ) |   |   | — |   |   |   | (283,066 | ) |
| Other borrowings                               |   |                         | (31,509  | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (31,509 | ) |
| Federal Home Loan Bank advances                |   |                         | —  |   |   |   | (20,000 | ) |   |   | (15,000 | ) |   |   | (25,000 | ) |   |   | (60,000 | ) |
|                                           |   |                         | (468,132 | ) |   |   | (150,638 | ) |   |   | (115,693 | ) |   |   | (25,000 | ) |   |   | (759,463 | ) |
|                                           |   |                         |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate sensitivity gap                  |   | $                            | (354,289 | ) |   | $ | (38,087 | ) |   | $ | 202,368 |   |   | $ | 109,485 |   |   | $ | (80,523 | ) |
| Cumulative interest rate sensitivity gap       |   | $                            | (354,289 | ) |   | $ | (392,376 | ) |   | $ | (190,008 | ) |   | $ | (80,523 | ) |   |   |   |   |
| Interest rate sensitivity gap ratio            |   |                         | (0.24    | ) |   |   | (0.75 | ) |   |   | (2.75 | ) |   |   | (5.38 | ) |   |   |   |   |
| Cumulative interest rate sensitivity gap ratio |   |                         | (0.24    | ) |   |   | (0.37 | ) |   |   | (0.74 | ) |   |   | (0.89 | ) |   |   |   |   |

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Index

|                  |   | Effect   |   |
|-----------------------|--------|----------|--------|
| Market                |   | on Net   |   |
| Rate                  |   | Interest |   |
| Change                |   | Income   |   |
|                  |   |     |   |
| +400                  |   |     | -8.9   | % |
| +300                  |   |     | -11.0  | % |
| +200                  |   |     | -11.1  | % |
| +100                  |   |     | -5.9   | % |
|    -50 |   |     | 2.8    | % |

ITEM 4.   CONTROLS AND PROCEDURES

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Index

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Index

PART II – OTHER INFORMATION

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Index

| Exhibit Number                               |   |                                                                                                                                                             |   Document |   |   | Reference to PriorFiling or ExhibitNumber AttachedHereto |
|---------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|--------|--------|----------------------------------------------------------|
|                                              |   |                                                                                                                                                             |            |   |
| 2.1                                               |   | Plan of Conversion and Reorganization of Heritage MHC                                                                                                            |            | a      |
| 2.2                                               |   | Form of Agreement and Plan of Merger by and among Heritage Financial Group, Heritage MHC and Heritage Financial Group, Inc.                                      |            | a      |
| 3.1                                               |   | Articles of Incorporation of Heritage Financial Group, Inc.                                                                                                      |            | a      |
| 3.2                                               |   | Bylaws of Heritage Financial Group, Inc.                                                                                                                         |            | a      |
|         4 |   | Form of Heritage Financial Group, Inc. Common Stock Certificate                                                                                                  |            | a      |
| 10.1                                              |   | Employment Agreement between O. Leonard Dorminey and HeritageBank                                                                                                |            |   |
| 10.2                                              |   | Employment Agreement between O. Leonard Dorminey and Heritage Financial Group, Inc.                                                                              |            |   |
| 10.3                                              |   | Employment Agreement between Carol W. Slappey and HeritageBank                                                                                                   |            | b      |
| 10.4                                              |   | Deferred Compensation and Excess/Matching Contribution Plans                                                                                                     |            | b      |
| 10.5                                              |   | Supplemental Executive Retirement Plan                                                                                                                           |            | b      |
| 10.6                                              |   | Directors’ Retirement Plan                                                                                                                                 |            | b      |
| 10.7                                              |   | Employee Stock Ownership Plan                                                                                                                                    |            | b      |
| 10.8                                              |   | Purchase and Assumption Agreement dated September 1, 2009, between HeritageBank of the South and Atlantic Coast Federal Bank                                     |            | c      |
| 10.9                                              |   | Definitive Whole-bank Purchase and Assumption Agreement dated December 4, 2009, between HeritageBank of the South and the Federal Deposit Insurance Corporation  |            | d      |
| 10.10                                             |   | Purchase and Assumption Agreement dated February 23, 2010, between HeritageBank of the South and The Park Avenue Bank                                            |            | e      |
| 10.11                                             |   | Employment Agreement between T. Heath Fountain and HeritageBank                                                                                                  |            | f      |
| 10.12                                             |   | Employment Agreement between O. Mitchell Smith and HeritageBank                                                                                                  |            | f      |
| 10.13                                             |   | Definitive Whole-bank Purchase and Assumption Agreement dated February 18, 2011, between HeritageBank of the South and the Federal Deposit Insurance Corporation |            | h      |
| 10.14                                             |   | Employment Agreement between David Durland and HeritageBank                                                                                                      |            | i      |
| 11                       |   | Statement re: computation of per share earnings                                                                                                                  |            | None   |
| 18                       |   | Letter re: change in accounting principles                                                                                                                       |            | None   |
| 19                       |   | Report furnished to security holders                                                                                                                             |            | None   |
| 22                       |   | Published report regarding matters submitted to vote of security holders                                                                                         |            | None   |
| 23                       |   | Consent of Accountants                                                                                                                                           |            | None   |
| 24                       |   | Power of Attorney                                                                                                                                                |            | None   |
| 31.1                                              |   | Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer                                                                                               |            | 31.1   |
| 31.2                                              |   | Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer                                                                                               |            | 31.2   |
| 32                            |   | Section 1350 Certifications                                                                                                                                      |            | 32     |

| a | Filed as an exhibit to the Company’s Registration Statement on Form S-1 (File No. 333-123581) filed on June 22, 2010.                                   |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b | Filed as an exhibit to the Registration Statement of Heritage Financial Group on Form SB-2 (File No. 333-123581)filed on March 25, 2005.                      |
| c | Included as an exhibit to the Form 8-K filed by Heritage Financial Group with the SEC on September 2, 2009.                                                   |
| d | Included as an exhibit to the Form 8-K filed by Heritage Financial Group with the SEC on December 8, 2009.                                                    |
| e | Included as an exhibit to the Form 8-K filed by Heritage Financial Group with the SEC on February 25, 2010.                                                   |
| f | Filed as an exhibit to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-123581) filed on August 9, 2010. |
| h | Included as an exhibit to the Form 8-K filed by Heritage Financial Group, Inc. with the SEC on February 24, 2011.                                             |
| i | Included as an exhibit to the Form 8-K filed by Heritage Financial Group with the SEC on April 21, 2011.                                                      |

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Index

SIGNATURES

|                                                                                |   | HERITAGE FINANCIAL GROUP, INC.                           |   |
|-------------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                                                |   |                                                     |   |
| Date:           May 16, 2011 | By:    | /s/ O. Leonard Dorminey                                  |   |
|                                                                                |   | O. Leonard Dorminey                                      |   |
|                                                                                |   | President and Chief Executive Officer                    |   |
|                                                                                |   |                                                     |   |
| Date:           May 16, 2011 | By:    | /s/ T. Heath Fountain                                    |   |
|                                                                                |   |   T. Heath Fountain                            |   |
|                                                                                |   |   Executive Vice President                     |   |
|                                                                                |   |   Chief Administrative Officer and             |   |
|                                                                                |   |   Chief Financial Officer                      |   |
|                                                                                |   |   (Principal Financial and Accounting Officer) |   |

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