GABA Georgia Bancshares Inc (CE)

Georgia Bancshares, Inc., (OTCBB: GABA.OB), the parent company of The Bank of Georgia, today announced a net loss of ($3.5 million) or ($1.10) per share for the year ended December 31, 2008, compared to net income of $2.1 million or $0.71 per share for the year ended December 31, 2007. Total assets were $385.2 million at December 31, 2008, a 6.25% increase compared to $362.5 million at December 31, 2007. Loans grew 4.43% to $308.6 million at December 31, 2008 compared to $295.5 million at December 31, 2007. Deposits grew 11.29% to $311.8 million at December 31, 2008 compared to $280.1 million at December 31, 2007. Results for 2008 are unaudited and, therefore are subject to change during the course of the upcoming audit.

The loss in 2008 is a direct result of the downturn in the residential housing market. The Bank of Georgia has made a concerted effort to remain proactive in aggressively identifying problem credits. Accordingly, the expense against current earnings for loan losses in 2008 was $6.4 million, increasing our allowance for loan losses at December 31, 2008 to $8.0 million or 2.54% of total loans to prepare for future credit issues that may develop. Net charge-offs against the allowance for loan losses for 2008 totaled $2.9 million compared to $1.1 million in 2007. At December 31, 2008 non-performing assets (loans on non-accrual status plus other real estate owned) were $16.8 million as compared to $5.6 million at the previous year�s end. During 2008, $6.5 million of repossessed properties were sold at a loss of ($0.7 million).

In addition to risk management initiatives, the company implemented several cost cutting measures during 2008 that included the suspension of matching 401k contributions and a reduction in the workforce of approximately 12%.

$2 million of new capital was raised during 2008 through the accelerated exercise of outstanding warrants issued to organizing directors. The Bank of Georgia remains �well capitalized� in regard to regulatory capital levels.

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) � December 31, 2008 December 31, 2007 For the Year Ended (unaudited) (audited) Total interest income $ 21,966 $ 26,666 Total interest expense � 12,130 � � 13,094 � Net interest income 9,836 13,572 Provision for loan losses � 6,382 � � 2,297 � Net interest income after provision 3,454 11,275 Total other income 1,922 1,530 Total other expense � 11,605 � � 9,963 � Income before income taxes (6,229 ) 2,842 Income tax expense (benefit) � (2,767 ) � 756 � Net earnings (loss) $ (3,462 ) $ 2,086 � �

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Per Share Data:

Common shares outstanding - end of period 3,398,715 3,010,023 Weighted average shares outstanding 3,137,308 2,941,814 Weighted average diluted shares outstanding 3,137,308 3,333,045 Basic net earnings per share $ (1.10 ) $ 0.71 Diluted net earnings per share $ (1.10 ) $ 0.63 Cash dividends declared (common) $ 0.30 $ 0.30 Cash dividends declared (preferred) $ 0.33 $ 0.33 Book value (common) $ 7.30 $ 9.11 � At Period End: Loans, gross $ 308,641 $ 295,535 Allowance for loan losses $ 7,959 $ 4,480 Total assets $ 385,164 $ 362,495 Total deposits $ 311,760 $ 280,122 Shareholders' equity $ 27,092 $ 29,718 � Key Performance Ratios: Return on average assets (0.91 )% 0.59 % Return on average equity (11.56 )% 7.20 % Net interest margin 2.95 % 4.31 % Dividend payout ratio (28.25 )% 45.19 % Total efficiency ratio 95.10 % 63.39 % � Asset Quality Ratios: Non-performing assets / loans & OREO 5.26 % 1.88 % Allowance for loan losses / total loans 2.58 % 1.52 % Allowance for loan losses / non-performing assets 47.30 % 600.17 % Allowance for loan losses / total capital 23.81 % 12.54 % Net charge-offs / average loans 0.95 % 0.40 % � Capital Ratios: Equity / assets 7.03 % 8.20 % Tier 1 leverage ratio 8.80 % 9.65 % Total risk based capital ratio 11.10 % 12.05 %