GABA Georgia Bancshares Inc (CE)

Georgia Bancshares, Inc., (OTC BB:GABA.OB), the parent company of The Bank of Georgia, today announced a net loss of ($5.6 million) or ($1.66) per share for the six months ended June 30, 2009, compared to net income of $0.2 million or $0.07 per share for the same period in 2008. Total assets were $447.9 million at June 30, 2009, a 14.1% increase compared to $392.7 million at June 30, 2008. Loans decreased 5.5% to $292.0 million at June 30, 2009 compared to $309.0 million at June 30, 2008. Deposits grew 18.6% to $387.4 million at June 30, 2009 compared to $326.8 million at June 30, 2008.

The current economic downturn continues to negatively impact our results. The most significant contributor to our ($5.6 million) loss for the six month period was the expense of $7.2 million in additional provision for loan losses. Our allowance for loan losses at June 30, 2009 totaled $11.0 million or 3.78% of total loans outstanding. Net charge-offs against the allowance for loan losses for the first half of 2009 have totaled $4.1 million as compared to $0.4 million in the same period in 2008. Also contributing to the loss was the write-off of certain investment securities at a loss of ($0.9 million) and the special assessment of $0.2 million for FDIC insurance premiums assessed during the second quarter of 2009. At June 30, 2009 non-performing assets (loans on non-accrual status - $14.2 million plus other real estate owned - $16.8 million) were $31.0 million as compared to $9.7 million at June 30, 2008. During the first half of 2009, $3.8 million of repossessed properties were sold at a loss of ($0.4 million).

The Bank of Georgia’s liquidity position remains strong and deposits have increased over $75.6 million since the beginning of 2009. The Bank of Georgia is considered “adequately capitalized” in regard to regulatory capital levels.

Commenting on the challenging environment in the south-metro Atlanta area, Pat Shepherd, President and Chief Executive Officer, stated, “Although many of our customers continue to be punished by the current real estate market, we do see positive trends beginning to develop and are encouraged by the prospects of improvement.” Concerning the recently issued FDIC enforcement action, “This order is a direct result of the real estate and economic downturn in our market area and I want to assure everyone that we began addressing these issues many months ago. We continue to take steps to protect the bank and its investors from the unforeseen severity of this economic downturn and changes in our regulatory environment. We expect to emerge from these challenging times as a much better bank and will continue serving this community for many, many years to come.”

Both our common and preferred stocks are available for market quotations on the Over The Counter Bulletin Board (OTCBB) under the symbols “GABA.OB” and “GABAP.OB”, respectively.

For more information about Georgia Bancshares, Inc., visit our Investors Relations website at www.georgiabancshares.com.

Based in Peachtree City, GA, Georgia Bancshares, Inc. is a bank holding company that provides traditional bank services to small businesses and consumers through its subsidiary, The Bank of Georgia. The Bank of Georgia opened for business in February 2000, and has nine locations in Peachtree City, Fayetteville, Newnan, Sharpsburg, Tyrone and Fairburn, Georgia. A full-service bank, The Bank of Georgia provides a broad array of services, including checking accounts, money market accounts, certificates of deposit, commercial loans, construction loans, consumer loans (including home equity lines of credit), residential mortgage loans, credit cards, drive-through windows, ATMs, on-line banking, and Visa check cards. For more information about The Bank of Georgia, visit www.bankofgeorgia.com.

Except for the historical information contained herein, the matters discussed in this press release may be deemed to be forward-looking statements that involve risks and uncertainties, including changes in economic conditions, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans, the level of allowance for loan losses, the rate of delinquencies and amounts of charge-offs, and competition. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent our judgment as of the date of this release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Georgia Bancshares, Inc. Financial Highlights (In Thousands, Except Per Share Data)     For the Six Months Ended June 30, 2009 June 30, 2008 Total interest income $ 9,201 $ 11,584 Total interest expense   5,515     6,156   Net interest income 3,686 5,428 Provision for loan losses   7,205     690   Net interest income after provision (3,519 ) 4,738 Total other income 104 926 Total other expense   6,010     5,416   Income before income taxes (9,425 ) 248 Income tax expense   (3,778 )   45   Net earnings $ (5,647 ) $ 203     Per Share Data: Common shares outstanding - end of period 3,398,715 3,162,371 Weighted average shares outstanding 3,398,715 3,056,656 Weighted average diluted shares outstanding 3,398,715 3,228,460 Basic net earnings per share $ (1.66 ) $ 0.07 Diluted net earnings per share $ (1.66 ) $ 0.06 Cash dividends declared (common) $ 0.00 $ 0.10 Cash dividends declared (preferred) $ 0.00 $ 0.11 Book value (common) $ 5.74 $ 8.72   At Period End: Loans, gross $ 292,032 $ 309,015 Allowance for loan losses $ 11,043 $ 4,738 Total assets $ 447,884 $ 392,658 Total deposits $ 387,439 $ 326,805 Shareholders' equity $ 21,791 $ 29,883  

Key Performance Ratios:

Return on average assets (2.79 )% 0.11 % Return on average equity (42.86 )% 1.35 % Net interest margin 2.12 % 3.28 % Dividend payout ratio 0.00 % 317.02 % Total efficiency ratio 152.70 % 82.14 %   Asset Quality Ratios: Non-performing assets / loans & OREO 10.05 % 3.09 % Allowance for loan losses / total loans 3.78 % 1.53 % Allowance for loan losses / non-performing assets 35.58 % 339.46 % Allowance for loan losses / total capital 39.15 % 13.22 % Net charge-offs / average loans 1.35 % 0.14 %   Capital Ratios: (The Bank of Georgia per Call Report) Equity / assets 6.77 % 7.61 % Tier 1 leverage ratio 8.53 % 10.36 % Total risk based capital ratio 9.80 % 11.60 %