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Atlantic Southern Financial Group, Inc. Reports Net Loss For Second Quarter 2010

MACON, Ga., July 23, 2010 (GLOBE NEWSWIRE) -- Atlantic Southern Financial Group (Nasdaq:ASFN) today reported a net loss of $4.0 million, or $0.96 per diluted share, for the second quarter of 2010 compared to net loss of $23.8 million, or $5.65 per share, in the second quarter of 2009, which included a $19.5 million non-cash charge for impairment of goodwill. The net loss was primarily driven by adding $2.0 million to the allowance for loan losses and paying approximately $1.4 million in FDIC quarterly assessments.

Atlantic Southern's net loss for the first six months of 2010 was $5.7 million, or $1.35 per share compared to the net loss of $23.0 million, or $5.47 per share, for the first six month of 2009 which included the non-recurring charge for goodwill impairment.

The net interest income for the second quarter of 2010 was $3.8 million compared to $4.5 million for the same period a year earlier, which represents a decrease of $700 thousand. The net interest margin was 1.82 percent for the second quarter of 2010 compared to 1.94 percent for the second quarter of 2009. The net interest income for the six months ended June 30, 2010 was $8.2 million compared to $9.9 million for the same period a year earlier, which represents a decrease of $1.7 million. The net interest margin was 1.95 percent for the six months ended June 30, 2010 compared to 2.19 percent for the same period a year earlier. "Uncollected interest on non-accrual loans continued to impact the net interest margin in the second quarter. Our cost of funds has declined, and as credit quality improves over the next several quarters we believe our net interest margin should rebound," Stevens said.

The Company's nonperforming assets increased approximately $13.1 million, or 9.53 percent, to approximately $150.1 million as of June 30, 2010 as compared to $137.0 million as of December 31, 2009. Non-accrual loans decreased approximately $7.0 million from December 31, 2009 to June 30, 2010, largely due to approximately $25.1 million moving to other real estate owned and other assets, $5.7 million in partial charge-offs on non-accrual loans and approximately $4.6 million in pay downs. During the first six months of 2010, there was approximately $28.4 million in loans moved to non-accrual. All non-accrual loans are adequately collateralized based on management's judgment and supported by recent collateral appraisals. Other real estate owned increased $20.7 million from December 31, 2009 to June 30, 2010. This increase is largely due to the addition of $24.3 million in foreclosed properties and $419 thousand in capitalized improvements on several foreclosed properties being offset by the sale of $3.6 million in foreclosed properties, resulting in a loss of $51 thousand on these properties. The Company has written down $350 thousand for several foreclosed properties based upon updated appraisals. The Company continues to actively market and continuously monitor all other real estate owned properties in order to minimize losses. "Management is aggressively dealing with deteriorating loans by provisioning for potential future loan losses related to the real estate downturn. As the economy stabilizes, we believe the loan loss provision expense should moderate. We expect the remainder of 2010 to continue to be challenging, but we remain committed to our strategy of asset reduction, expense control and aggressively attacking problem credits. We have recently reorganized our special assets division to further increase its ability to monitor credit quality and work with troubled borrowers," stated Stevens. 

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