CORNELIA, Ga., Feb. 6 /PRNewswire-FirstCall/ -- Habersham Bancorp (Nasdaq: HABC) reports fourth quarter earnings of $65,000 or $.02 per diluted share, compared to fourth quarter earnings of $1.2 million or $.39 per diluted share in 2006. An additional expense to the provision for loan losses totaling $595,000 was made during the fourth quarter of 2007.

Year-to-date net earnings for the year ended December 31, 2007 was $2.9 million or $1.00 per diluted share, a decrease of 44.5 % when compared to $5.3 million or $1.77 per diluted share for the year ended December 31, 2006. The decrease was attributable primarily to an increase in nonaccrual loans, which reduced interest income and increased expenses relating to the provision for loan losses. During 2007, nonaccrual loans increased by $10.4 million, or 2068.7%, and net interest income decreased by $1.7 million, or approximately 8.1%. The increase in nonaccrual loans resulted principally from a decline in the 1-4 family real estate market in both construction lending and new mortgages. To maintain an adequate allowance for loan losses, the Company increased the provision for loan losses to $675,000 during 2007. In addition, increases in interest costs outpaced increases in interest earned as variable rate interest loans repriced at lower interest rates more quickly than the rates paid on deposit balances as each responded to decreases in the interest rates set by the Federal Reserve Bank.

Total assets of $514.2 million at December 31, 2007, reflects a decrease of $41.5 million from $555.7 million at December 31, 2006. Management reported that the decrease is due primarily to decreases in cash and cash equivalents and short-term investments in federal funds sold. The federal funds sold balance increased temporarily as a result of a $78.5 million increase in deposit balances at December 31, 2006 that was paid out during January 2007. Increases in other real estate, the loan portfolio, investment securities and premises and equipment totaled approximately $11.0 million (2037.3%), $5.4 million (1.6%), $4.3 million (4.9%) and $3.2 million (24.4%) million, respectively, for 2007. The increase in other real estate properties resulted primarily from foreclosures of construction loans secured by 1-4 family properties located in the metro Atlanta area and surrounding counties. The net increase in the loan portfolio resulted primarily from activity within the commercial lending portfolio.

Expansion efforts for 2007 resulted in the purchase of properties in Hall and Warren counties for new office locations. The Warrenton Office was moved from a downtown location to a new site to improve operational efficiency. Construction on the Hall county Flowery Branch Office began in 2007 with an estimated completion date of 4th quarter 2008. Also, a branch office was placed into operation for the Flowery Branch area during December 2007 in order to provide service during the construction phase of the new building.

A decrease in total shareholders' equity of approximately $1.4 million resulted from a stock repurchase program and dividends paid during 2007 of approximately $2.2 million and $2.6 million, respectively, offset by year-to- date earnings of approximately $2.9 million. The Company repurchased 150,000 shares under the repurchase program in October 2007 and paid an additional $.50 per share dividend during December 2007.





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

                                 Three Months Ended       Twelve Months Ended
                                     December 31,            December 31,
                                 2007          2006           2007       2006
    Earnings Summary
    Interest income            $8,690        $9,115        $36,375    $34,460
    Interest expense            4,352         3,811         16,847     13,218
      Net interest income       4,338         5,304         19,528     21,242

    Provision for loan losses     595            -             675          -
    Net interest income
     after provision
     for loan losses            3,743         5,304         18,853     21,242

    Other income                1,085           870          3,863      3,670
    Investment securities gains
     (loss), net                    -             -              5        (13)
    Other expense               4,918         4,527         18,762     17,194
      Earnings before
       income tax expense         (90)        1,647          3,959      7,705

    Income tax (benefit) expense (155)          483          1,020      2,412

    Net earnings                  $65        $1,164         $2,939     $5,293

    Net earnings per
     share-basic                 $.02          $.39          $1.00      $1.80

    Net earnings
     per share-diluted           $.02          $.39          $1.00      $1.77

    Weighted average number
     of common shares
     outstanding            2,864,245     2,956,559      2,942,292  2,942,737

    Weighted average
     number of common
     and common
     equivalent shares
     outstanding            2,864,245     2,993,861      2,952,528  2,983,048

    Cash dividends declared
     per common share            $.60          $.09           $.90       $.36


    Balance Sheet Summary         December 31, 2007     December 31, 2006

      Total Assets                    $514,219              $555,738
      Loans, net                       348,251               342,816
      Deposits                         390,267               450,629
      Shareholders' Equity              54,182                55,564

SOURCE Habersham Bancorp