Abington Bancorp, Inc. Announces Earnings for the Third Quarter of 2008

Market Wire, October, 2008

Abington Bancorp, Inc. (the "Company") (NASDAQ: ABBC), the parent holding company for Abington Bank (the "Bank"), reported net income of $2.4 million for the quarter ended September 30, 2008, representing an increase of $305,000 or 14.7% over the comparable 2007 period. Basic and diluted earnings per share increased to $0.11 and $0.10, respectively, for the quarter compared to $0.09 for each for the third quarter of 2007. Additionally, the Company reported net income of $6.0 million for the nine months ended September 30, 2008, representing an increase of $1.1 million or 22.2% over the comparable 2007 period. Basic and diluted earnings per share increased to $0.27 and $0.26, respectively, for the first nine months of 2008 compared to $0.21 for each for the first nine months of 2007.

Mr. Robert W. White, Chairman, President and CEO of the Company, stated, "As a nation, we are experiencing the most severe financial crisis since the 1930s. But with concerns about asset quality continuing to increase within the industry and across the country, our Bank's strong capital position leaves us well positioned for long-term growth. During these times, we, like many institutions, are closely monitoring our loan portfolio. Although we have never invested in subprime loans, our non-performing loans increased during the third quarter, reflecting, in part, the current economic conditions. Even with our resulting provision for loan losses, however, our overall earnings increased as we improved our net interest margin and our net interest income. The Bank expects to continue to perform through this difficult time, however, given the current economic conditions, there is the potential for further increases to our allowance for loan losses over the remainder of this year and into next year. Over the long term, we expect to continue to grow and build shareholder value as we support our community and expand our customer base."

Net interest income was $7.7 million and $22.1 million for the three months and nine months ended September 30, 2008, respectively, representing increases of 8.1% and 19.5%, respectively, over the comparable 2007 periods. The increases in our net interest income were primarily due to decreases in our interest expense. For the three-month period, this decrease in interest expense was partially offset by a decrease in interest income. For the nine-month period, this decrease in interest expense was augmented by an increase in interest income. Our average interest rate spread and net interest margin for the third quarter of 2008 increased to 2.37% and 2.99%, respectively, from 1.92% and 2.89%, respectively, for the third quarter of 2007. Our average interest rate spread and net interest margin for the first nine months of 2008 increased to 2.17% and 2.88%, respectively, from 1.90% and 2.65%, respectively, for the first nine months of 2007.

Interest income for the three months ended September 30, 2008 decreased $888,000 or 6.0% over the comparable 2007 period to $14.0 million. The decrease occurred as growth in the average balance of our total interest-earning assets was offset by a decrease in the average yield earned on our total interest-earning assets. The average balance of our other interest-earning assets decreased $62.5 million, quarter-over-quarter, as these funds were reinvested in mortgage-backed securities and loans. The average balance of our mortgage-backed securities increased $71.7 million to $197.1 million for the third quarter of 2008 from $125.4 million for the third quarter of 2007. The average balance of our loans receivable increased $38.8 million to $699.1 million for the third quarter of 2008 from $660.3 million for the third quarter of 2007. Although the average yield on our mortgage-backed securities increased 48 basis points for the third quarter of 2008 compared to the third quarter of 2007, the average yield on all other categories of interest-earning assets decreased quarter-over-quarter, including an 88 basis point decrease in the average yield on our loans receivable, a 43 basis point decrease in the average yield on our investment securities, and a 212 basis point decrease in the average yield on our other interest-earning assets. These decreases in yield were the result of the current interest rate environment, in which the Federal Reserve Board's Open Market Committee cut the federal funds rate by 300 basis points from September 2007 to September 2008.

Interest income for the nine months ended September 30, 2008 increased $441,000 or 1.1% over the comparable 2007 period to $42.2 million. This increase occurred as growth in the average balance of our total interest-earning assets offset a decrease in the average yield earned on our interest-earning assets. As was the case for the three-month periods, the largest period-over-period growth occurred in mortgage-backed securities and loans. The average balance of our mortgage-backed securities increased $43.8 million to $172.8 million for the first nine months of 2008 from $129.0 million for the first nine months of 2007. The average balance of our loans receivable increased $58.6 million to $695.5 million for the first nine months of 2008 from $637.0 million for the first nine months of 2007. Similar to the three-month period, the average yield on our mortgage-backed securities increased 27 basis points for the first nine months of 2008 compared to the first nine months of 2007, while the average yield on all other categories of interest-earning assets decreased period-over-period, including a 68 basis point decrease in the average yield on our loans receivable, an eight basis point decrease in the average yield on our investment securities, and a 129 basis point decrease in the average yield on our other interest-earning assets.