CORNELIA, Ga., Nov. 5 /PRNewswire-FirstCall/ -- Habersham Bancorp (Nasdaq: HABC) reports a third quarter loss of $4,291,000 or $1.52 per diluted share when compared to third quarter earnings of $855,000 or $.29 per diluted share for the same period in 2007. The decrease resulted principally from a decrease in net interest income of approximately $2,029,000 and additional expense from provision for loan losses of approximately $6,213,000.

For the nine-month period ended September 30, 2008, the Company reports a loss of $4,607,000 or $1.63 per diluted share when compared to year-to-date earnings of $2,874,000 or $.96 per diluted share for the nine-month period ended September 30, 2007. The decrease resulted principally from a decrease in net interest income of approximately $5,441,000 and additional expense from provision for loan losses of approximately $7,290,000.

The 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 $26,249,000 from December 31, 2007 to September 30, 2008 primarily as a result of increases in nonaccrual loans, other real estate, and accruing loans 90 days past due totaling approximately $17,452,000, $8,584,000 and $213,000, respectively.

The Company's net interest margin for the third quarter and first nine months of 2008 was 2.80% and 3.08%, respectively, compared to 4.35% and 4.58% for the third quarter and first nine months of 2007.

Total assets of $500.1 million at September 30, 2008 reflect a decrease of $14.1 million or 2.74% from $514.2 million at December 31, 2007. Decreases in the loan portfolios (net of allowance for loan losses), cash and cash equivalent balances and investment securities of approximately $20.7 million, $7.4 million and $1.1 million, respectively, were offset by increases in other real estate, other assets, and premises and equipment, net, of approximately $8.6 million, $3.8 million and $2.7 million, respectively.

David D. Stovall, President and C. E. O. of Habersham, stated, "Given the uncertainty of the economy and the markets in which we operate, our board of directors and management feel it to be paramount that we remain well capitalized through this troubled economy and aggressively manage our troubled assets. To this end, we made a third quarter loan loss provision in excess of $6 million. We believe that we have identified our troubled assets, and are working to minimize any losses, but this provision gives us added protection, in the event that the economy as a whole continues to deteriorate into 2009. We are also, like many of our counterparts, exploring many avenues of capital protection for the best interest of our shareholders."





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

                                        Three Months          Nine Months
                                            Ended                Ended
    Summary of Operations               September 30,        September 30,
                                        2008      2007       2008       2007

    Interest income                  $  6,212  $  9,295   $ 20,650   $ 27,685
    Interest expense                    3,342     4,396     10,901     12,495
      Net interest income               2,870     4,899      9,749     15,190

    Provision for loan losses           6,293        80      7,370         80
      Net interest (loss) income
       after provision for
       loan losses                     (3,423)    4,819      2,379     15,110

    Other income                          907       931      2,910      2,778
    Investment securities gains            27         -        316          5
    Other expense                       4,589     4,564     13,716     13,844
      (Loss) earnings before
       income taxes                    (7,078)    1,186     (8,111)     4,049

    Income tax benefit (expense)        2,787      (331)     3,504     (1,175)

    Net (loss) earnings              $ (4,291) $    855   $ (4,607)  $  2,874

    Net (loss) earnings per
     share - basic                     $(1.52)     $.29     $(1.63)      $.97

    Net (loss) earnings per
     share - diluted                   $(1.52)     $.29     $(1.63)      $.96

    Weighted average number of
     common shares Outstanding      2,818,593 2,968,593  2,818,593  2,968,593

    Weighted average number of
     common and common
     equivalent shares outstanding  2,818,593 2,968,593  2,818,593  2,982,240
    Cash dividends declared per
     common share                        $.05      $.10       $.25       $.30



                                                    September 30, December 31,
    Balance Sheet Summary                                2008         2007
    Total Assets                                     $  500,115    $  514,219

    Loans, net                                          328,449       348,251

    Deposits                                            387,277       390,267

    Stockholders' Equity                                 47,525        54,182

SOURCE Habersham Bancorp