’Non-performing assets’ increased 55% from 2nd quarter to 3rd

Georgia Bancshares, Inc., the parent company of The Bank of Georgia, Friday announced a net loss of $700,000 or $0.24 per share for the nine months ended Sept. 30, 2008, compared to a net income of $2.4 million or $0.84 per share for the same period in 2007.

The third quarter 2008 net loss of $900,000 or $0.30 per share was primarily attributable to a $1.3 million addition to the allowance for loan losses made during the quarter, making the total provision for the nine months $2.0 million.

Total assets were $387.1 million at Sept. 30, 2008, a 1.9 percent increase compared to $379.7 million at Sept. 30, 2007. Loans grew 3.9 percent to $306.6 million at Sept. 30, 2008 compared to $294.9 million at Sept. 30, 2007.

In a news release the bank said:

“Regarding the challenges related to the downturn in the residential housing market, The Bank of Georgia has remained proactive in aggressively identifying and dealing with problem credits.

“As mentioned above, our allowance for loan losses at Sept. 30, 2008, totaled $5.2 million or 1.70 percent of total loans to prepare for any further credit issues that may develop.

“Net charge-offs against the allowance for loan losses during the first nine months of 2008 totaled $1.3 million. This compares with $238,000 during the same nine-month period in 2007 and $1.1 million for the entire year 2007.

“At Sept. 30, 2008, non-performing assets (loans on non-accrual plus OREO) were $15.1 million as compared to $9.7 million at the end of the second quarter 2008 [a 55 percent increase]. Loans on non-accrual increased slightly during the third quarter of 2008 to $5.3 million as compared to $4.6 million on June 30, 2008. Other real estate owned (OREO) increased to $9.8 million at Sept. 30, 2008 as compared to $5.1 million at June 30, 2008.

“During the first nine months of 2008, over $3.4 million of repossessed properties have been sold at a cumulative loss of $27,000 when compared to the values established when placed in OREO.”

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, Ga.

For more information about The Bank of Georgia, visit www.bankofgeorgia.com.

The holding company’s board of directors includes the following:

Enrico A. Stanziale, chairman of the board since the company’s formation in 2001, is the former owner and president of Amacor, Inc., a manufacturer of chemical resistant coatings. Stanziale retired from Amacor in 2000 after operating the company since its formation in 1992. Stanziale was the chairman of Fayette County Bank from 1989 until 1997. Stanziale has been a director of The Bank of Georgia since 1999.

Joseph S. "Steve" Black, vice chairman of the board, has been a director since our formation in 2001, serves as the vice chairman of the board of the bank and the holding company. Black has been the president and chief executive officer of Pathway Communities, Inc. (formerly Peachtree Development Corporation), a real estate development company located in Peachtree City, Ga., since 1991. Black formerly served as a director and secretary of Fayette County Bank from 1989 until 1999. He is an executive board member of the Flint River Boy Scouts Council, a member of the Newnan-Coweta Chamber of Commerce, and a life member of the Fayette County Chamber of Commerce. He has been a director of The Bank of Georgia since 1999.

Arlie C. Aukerman, director since the company’s formation in 2001, was the chairman and president of A.C. Aukerman Company, a construction firm located in Lovejoy, Ga., from 1950 until his retirement in 1993. He was a director of Fayette County Bank from 1989 until 1999. Aukerman has been a director of The Bank of Georgia since 1999.

Dale K. Geeslin is a certified public accountant and has been a partner in the CPA firm of Geeslin, Cordle, Johnson & Wetherington, LLP, since May, 1988. Geeslin serves as a director and as secretary of Georgia Bancshares, Inc., and as a director and secretary of The Bank of Georgia.

William Robert Hancock Jr. is a partner in the law firm of Glover & Davis, P.A. in Peachtree City, Ga., and is a partner in F&H Investment Company, a Peachtree City-based real estate firm. Hancock previously served on the advisory board of First Union National Bank, and as chairman of the City of Newnan Development Authority.

Donnie H. Russell, director since 2001, has been the owner and president of Parham Industries, Inc., a manufactured housing sales company, since 1968. Russell is also a director and part-owner of Signal Homes, a manufactured home production company founded in 1997. He has been very active in the community banking market. He was an organizer and director of both Fayette County Bank in Peachtree City and Commerce Bank in Atlanta. Russell has been a director of The Bank of Georgia since 1999.

Ira "Pat" Shepherd, director since 2001, serves as our chief executive officer and president. Shepherd has over 30 years of experience in the financial services industry and was most recently employed as the chief executive officer and president of Fayette County Bank in Peachtree City, where he was employed from 1989 until 1999 when he left to join The Bank of Georgia. He served as the vice president and senior lending officer for Peachtree National Bank from 1986 until 1989 and as the vice president of First National Bank of Newnan from 1970 until 1986. He has lived in the Peachtree City area for over 15 years. He was a former board member of Sales and Marketing of the Mid-West Georgia Homebuilders Association and has served as a member of the Peachtree City Kiwanis Club.

Rick A. Duncan serves as an executive vice-president and as the senior loan officer of The Bank of Georgia. Duncan has over 25 years of banking experience in lending and credit administration, having begun his career with Citizens & Southern National Bank of Clayton County in 1978. Duncan subsequently served as vice-president and commercial loan officer with Tara State Bank in Riverdale, Ga., from 1983 to 1995. He joined Fayette County Bank in Peachtree City in 1995 where he served as senior vice-president of lending and as a director. Fayette County Bank was acquired by RegionsBank in 1998 and Duncan left RegionsBank in May 1999 to join The Bank of Georgia.

Malcolm R. Godwin began his banking career with the Comptroller of the Currency in 1977. He next worked with Wachovia Bank in Atlanta, GA in 1981, where he served as a vice-president until 1989. He then joined Peachtree National Bank in Peachtree City, where he served as senior vice-president and senior lending officer until 1995. Godwin joined Fayette County Bank as a director and as executive vice-president in 1995, He left Fayette County Bank to join The Bank of Georgia in February 1999. Godwin serves The Bank of Georgia as an executive vice-president and director and also serves as a director of Georgia Bancshares, Inc.

Vincent M. Rossetti is president of Ravin Homes, Inc., a residential home building company in Peachtree City, and is the manager of MiRome, LLC, a real estate company that owns and manages office buildings. Rossetti has served on the board of trustees of Peachtree Regional Hospital and as president of the Mid-West Georgia Home Builders ASsociation. He is currently a director of the Fayette County Family YMCA. Rossetti serves as a director of Georgia Bancshares, Inc., and as a director of The Bank of Georgia.

Thomas G. Sellmer, director since 2001, has been the owner of Sellmer Property Management, a real estate management and investment company, since its formation in 1993. Sellmer is also involved in numerous real estate ventures throughout Fayette County. He was the vice president of Southern Screen & Embroidery, Inc. prior to starting Sellmer Property Management. Sellmer has been a director of The Bank of Georgia since 1999.

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