CORNELIA, Ga., Feb. 13 /PRNewswire-FirstCall/ -- Habersham Bancorp (Nasdaq: HABC) reports a fourth quarter loss of $10.2 million or $3.63 per diluted share, compared to fourth quarter earnings of $65,000 or $.02 per diluted share in 2007. The decrease resulted principally from a decrease in net interest income of approximately $2.2 million, additional expense from provisions for loan losses of approximately $8.7 million and a goodwill impairment charge of approximately $3.5 million.

Habersham Bancorp reports a loss of $14.8 million or $5.27 per diluted share for the year ended December 31, 2008 when compared to earnings of $2.9 million or $1.00 per diluted share for the year ended December 31, 2007. The decrease resulted principally from a decrease in net interest income of approximately $7.7 million, additional expense from provisions for loan losses of approximately $16 million and a goodwill impairment charge of approximately $3.5 million.

Decreases in net interest income resulted from: 1) an increase in the total dollar balances of loans on nonaccrual status and 2) the total dollar balances of variable rate loans tied to a decreasing prime interest rate. Non-performing assets increased approximately $54.3 million from December 31, 2007 to December 31, 2008 primarily as a result of increases in nonaccrual loans, other real estate and accruing loans 90 days past due totaling approximately $37.7 million, $15.8 million and $761,000, respectively.

The Company's net interest margins for the fourth quarter and year-to-date of 2008 were 2.07% and 2.81%, respectively, compared to 3.95% and 4.41% for the fourth quarter and year-to-date of 2007, respectively.

Total assets of $494.9 million at December 31, 2008, reflect a decrease of $19.3 million or 3.75% from $514.2 million at December 31, 2007. Decreases in the total loan portfolios and in cash and cash equivalents and in goodwill of approximately $39.5 million, $8.1 million and $3.5 million, respectively, were offset by increases in other real estate, other assets (primarily in income tax accounts), investment securities and in premises and equipment of approximately $15.8 million, $7.5 million, $5.6 million and $3.4 million, respectively.

A decrease in total shareholders' equity of approximately $12.2 million resulted from a year-to-date loss and dividends paid of approximately $14.8 million and $705,000, respectively, offset by proceeds from the issuance of preferred stock at December 31, 2008 of approximately $3 million and an increase in accumulated other comprehensive income of approximately $455,000.

The construction of the Flowery Branch Office was completed during the fourth quarter of 2008 and began operations in November of 2008.

David D. Stovall, President and C.E.O. of Habersham Bancorp, stated, "The past several months in the financial services market in particular and the economy in general, have been plagued with uncertainties. Among these uncertainties is the issue of goodwill of the company and its potential impairment. This particular issue is being dealt with by companies in other segments of the marketplace as well.

"Management of the Company determined that goodwill had become impaired based upon a decrease in valuation of the Company's common stock during the fourth quarter of 2008. Therefore, approximately $3.5 million of the fourth quarter loss is attributable to the non-cash write-off of the Company's total goodwill account."

He added, "Also, during the fourth quarter of 2008, the Company issued $3 million in Preferred Stock to a private investor, to strengthen our capital and our commitment for the soundness of the Bank. Additionally, the Company has a first quarter pending sale of an unrelated company investment which will result in additional Company capital available for Bank use, if necessary, in the amount of $750,000."





    HABERSHAM BANCORP FINANCIAL HIGHLIGHTS
    (Unaudited) (dollar amount in thousands, except per share amounts)

                                 Three Months Ended       Twelve Months Ended
    Summary of Operations            December 31,             December 31,
                                   2008       2007          2008        2007


    Interest income              $ 5,484    $ 8,690       $ 26,135   $ 36,375
    Interest expense               3,387      4,352         14,288     16,847
      Net interest income          2,097      4,338         11,847     19,528

    Provision for loan losses      8,651        595         16,021        675
      Net interest (loss) income
       after provision for
       loan losses                (6,554)     3,743         (4,174)    18,853

    Other income                     852      1,085          3,761      3,773
    Investment securities gains       47          -            363          5
    Other expense                  8,922      4,918         22,638     18,672
      (Loss) earnings before
       income taxes              (14,577)       (90)       (22,688)     3,959

    Income tax benefit (expense)   4,335        155          7,839     (1,020)

    Net (loss) earnings        $ (10,242)      $ 65      $ (14,849)   $ 2,939

    Net (loss) earnings
     per share - basic            $(3.63)     $ .02         $(5.27)     $1.00

    Net (loss) earnings
     per share - diluted          $(3.63)     $ .02         $(5.27)     $1.00

    Weighted average number
     of common shares
       Outstanding             2,818,593  2,864,245      2,818,593  2,942,292

    Weighted average number
     of common and common
     equivalent shares
     outstanding               2,818,593  2,864,245      2,818,593  2,952,528

    Cash dividends declared
     per common share              $ .00      $ .60          $ .25      $ .90



                                            December 31,      December 31,
    Balance Sheet Summary                      2008               2007

    Total Assets                           $ 494,869           $ 514,219
    Loans, net                               310,607             348,251
    Deposits                                 392,888             390,267
    Stockholders' Equity                      41,998              54,182

SOURCE Habersham Bancorp