Abington Bancorp, Inc. Announces Results for the Fourth Quarter of 2008 and Share Repurchase Plan

Market Wire, January, 2009

Abington Bancorp, Inc. (the "Company") (NASDAQ: ABBC), the parent holding company for Abington Bank (the "Bank"), reported a net loss of $3.9 million for the quarter ended December 31, 2008, compared to net income of $2.1 million for the quarter ended December 31, 2007. Basic and diluted loss per share were both $0.18 per share for the fourth quarter of 2008 compared to basic and diluted earnings per share of $0.09 for each for the fourth quarter of 2007. Additionally, the Company reported net income of $2.1 million for the year ended December 31, 2008, compared to net income of $7.1 million for the year ended December 31, 2007. Basic and diluted earnings per share were $0.10 and $0.09, respectively, for 2008 compared to $0.31 and $0.30, respectively, for 2007.

The net loss for the quarter and the decrease in net income for the year were due primarily to our provision for loan losses, which amounted to $8.7 million for the three months ended December 31, 2008 and $9.8 million for the year. Our allowance for loan losses increased to $11.6 million at December 31, 2008 from $1.8 million at December 31, 2007.

The Company also announced today that it will commence a share repurchase program for up to 5% of its outstanding shares, or 1,163,475 shares. The shares may be purchased in the open market or in privately negotiated transactions from time to time depending on market conditions and other factors over a one-year period. Repurchases are expected to commence promptly. The initiation of this share repurchase plan follows the completion of our previous share repurchase plan in January 2009, under which we repurchased 1,221,772 shares or 5% of the then outstanding shares.

Mr. Robert W. White, Chairman, President and CEO of the Company, stated, "The Philadelphia market and the mid-Atlantic region, which had until the second half of 2008 managed to escape the worst effects of the deeper national recession, are now more directly experiencing the impact of the broader financial crisis. In light of this economic reality, we undertook an evaluation of our loan portfolio to determine the potential losses that may now exist within those assets, with particular attention given to our construction loan portfolio. Based on our evaluation, we believed that it was necessary to make significant additions to our allowance for loan losses, but by doing so we believe that we have strengthened our balance sheet going forward. While we are disappointed at the net loss we are reporting for the fourth quarter of 2008, we are pleased to report positive net income for the year, largely as a result of the significant year-over-year increase in our net interest spread and net interest margin. Furthermore, we are encouraged by our strong capital position that has allowed us to absorb our loan losses without affecting our core operations. We remain in a secure position to continue executing our long-term strategy."

Mr. White continued, "With the price of our stock recently trading below our book value, our Board of Directors and our management believe that this is the appropriate time to initiate another stock buyback. We believe that the share repurchase plan approved by the Board at their January meeting will benefit our shareholders by improving the Company's return on equity and earnings per share as well as aid us in managing our strong capital position."

Net interest income was $7.6 million and $29.8 million for the three months and year ended December 31, 2008, respectively, representing increases of 5.6% and 15.6%, respectively, over the comparable 2007 periods. The increases in our net interest income were due to lower interest expense in the 2008 periods which more than offset decreases in interest income. Our average interest rate spread increased to 2.32% for the fourth quarter of 2008 from 1.99% for the fourth quarter of 2007. Over the same period, our net interest margin decreased five basis points to 2.84% for the fourth quarter of 2008 from 2.89% for the fourth quarter of 2007. For the year ended December 31, 2008, both our average interest rate spread and net interest margin increased over 2007. Our average interest rate spread increased to 2.21% for 2008 from 1.94% for 2007 and our net interest margin increased to 2.87% for 2008 from 2.73% for 2007.

Interest income for the three months ended December 31, 2008 decreased $989,000 or 6.6% 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. Most significant was a 103 basis point decrease in the average yield earned on our loans receivable and a 424 basis point decrease in the average yield earned on our other interest-earning assets. The decreases in the yields were primarily the result of the current interest rate environment, reflected by the Federal Reserve Board's Open Market Committee actions to cut the federal funds rate by 400 basis points from December 2007 to December 2008. The decrease in the yield on our other interest-earning assets was also impacted by the decision of the Federal Home Loan Bank of Pittsburgh (the "FHLB") to suspend the dividend on their stock for the fourth quarter of 2008. As of December 31, 2008, we held approximately 146,000 shares of FHLB capital stock on which we received no dividends compared to approximately $139,000 in dividends on FHLB stock in the quarter ended December 31, 2007.