American Community Bancshares 8-K Results of Operations and Financial Condition

PRESS RELEASE

FOR IMMEDIATE RELEASE

For Further Information Contact

American Community Bancshares, Inc.

Mr. Randy P. Helton, President and CEO

Phone: 704-225-8444

AMERICAN COMMUNITY BANCSHARES, INC. ANNOUNCES

A QUARTERLY EARNINGS INCREASE OF ONE HUNDRED

TWENTY-NINE PERCENT

October 22, 2007. Charlotte, North Carolina: American Community Bancshares, Inc. (NASDAQ Stock Market: ACBA), the holding company for American Community Bank, announced unaudited earnings for the three months ended September 30, 2007 of $1,400,000, a 129.1% increase from unaudited earnings for the same period in 2006. Earnings for the third quarter 2007 were positively impacted by a $24.2 million increase in average earning assets. The Company continued to show a solid net interest margin at 4.22% for the quarter ended September 30, 2007 although it decreased slightly from 4.25% in 2006. Diluted earnings per share increased to $0.21 per share for the three months ended September 30, 2007 from $0.09 per share for the same period in 2006. The annualized return on average assets for the three months ending September 30, 2007 was 1.11% with a return on average equity of 10.28% as compared to 0.52% and 4.59%, respectively for the same period in 2006.

Earnings in the third quarter were also positively impacted as the Company recorded a $1,374,000 decrease in its provision for loan losses for the quarter ended September 30, 2007 as compared to the same period in 2006. The provision for loan losses for the third quarter of 2006 was primarily related to losses in the Bank’s discontinued leasing portfolio. Since that time, the leasing portfolio has paid down to a balance of approximately $4.9 million at September 30, 2007 from $10.0 million at September 30, 2006. In addition, nonperforming loans and leases (defined as non-accrual loans and leases plus loans and leases 90 days delinquent and still accruing) decreased 55.2% to a balance of $1.4 million at September 30, 2007 from a balance of $3.1 million at September 30, 2006. Nonperforming loans and leases as a percentage of total loans decreased to 0.37% at September 30, 2007 from 0.84% at September 30, 2006.

Unaudited earnings for the nine months ended September 30, 2007 were $3,908,000 or a 37.1% increase over unaudited earnings for the nine months ended September 30, 2006 of $2,850,000. Earnings per share (diluted) for the nine months ended September 30, 2007 increased to $0.56 compared to $0.40 for the nine months ended September 30, 2006. The annualized return on average assets for the nine months ending September 30, 2007 was 1.06% with a return on average equity of 9.47% as compared to 0.83% and 7.29%, respectively for the same period in 2006.

Randy P. Helton, President and Chief Executive Officer commented, “The third quarter of 2007 showed significant earnings improvement over the same quarter of 2006 as our Bank showed positive increases in our return on assets and return on equity. Despite a challenging bank environment, the Bank continues to have good asset quality and a strong net interest margin. In addition, we continue to effectively manage our capital levels through the repurchase of approximately 475,000 shares of our stock during the third quarter. As always, our employees strive to focus on building long term shareholder value and being an integral part of the communities we serve.”

American Community Bancshares, Inc., headquartered in Charlotte, North Carolina is the holding company for American Community Bank. American Community Bank is a full service community bank headquartered in Monroe, North Carolina with nine North Carolina offices located in two of the fastest growing counties in North Carolina – Mecklenburg and Union. It also has four offices located in York and Cherokee Counties in South Carolina. American Community Bank provides a wide assortment of traditional banking and financial services offered with a high level of personal attention. The website for American Community Bancshares, Inc. iswww.americancommunitybank.com. Its stock is traded on the NASDAQ National Market under the symbol “ACBA”. For more information contact: Stephanie Helms, Shareholder Relations or Dan Ellis, Chief Financial Officer at (704) 225- 8444.

Information in this press release contains “forward-looking statements.” These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates and the effects of competition. Additional factors that could cause actual results to differ materially are discussed in American Community Bancshares’s recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K and its other periodic reports.

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American Community Bancshares, Inc.
(Amounts in thousands except share and per share data)
(Unaudited) Consolidated Balance Sheet
	September 30, 2007			June 30, 2007			March 31, 2007			December 31, 2006 (a)			September 30, 2006
Assets
Cash and due from banks	$	15,684		$	17,989		$	17,977		$	19,950		$	15,268
Interest-earning deposits with banks		5,484			11,481			14,381			17,295			11,357
Investment securities		79,043			74,012			59,946			65,192			66,239
Loans		373,309			381,415			375,395			370,431			368,020
Allowance for loan losses		(5,374	)		(5,543	)		(5,472	)		(5,628	)		(5,987	)
Net loans		367,935			375,872			369,923			364,803			362,033
Accrued interest receivable		2,922			2,615			2,751			2,938			2,811
Bank premises and equipment		8,746			8,927			9,046			9,105			9,286
Foreclosed real estate		25			25			25			195			283
Non-marketable equity securities at cost		2,119			2,119			1,819			1,879			2,187
Goodwill		9,838			9,838			9,838			9,838			9,838
Other assets		3,232			2,803			3,302			3,463			4,112
Total assets	$	495,028		$	505,681		$	489,008		$	494,658		$	483,414
Liabilities and Stockholders’ Equity
Deposits
Non-interest bearing	$	54,805		$	58,453		$	62,414		$	61,735		$	58,806
Interest bearing		342,574			349,013			333,576			339,402			327,758
Total deposits		397,379			407,466			395,990			401,137			386,564
Borrowings		43,533			40,984			34,934			37,085			41,556
Accrued expenses and other liabilities		1,649			1,272			1,797			1,368			1,480
Total liabilities		442,561			449,722			432,721			439,590			429,600
Total stockholders’ equity		52,467			55,959			56,287			55,068			53,814
Total liabilities and stockholders’ equity	$	495,028		$	505,681		$	489,008		$	494,658		$	483,414
Ending shares outstanding		6,502,288			6,961,236			7,020,343			7,008,081			6,963,663
Book value per share	$	8.07		$	8.04		$	8.02		$	7.86		$	7.73
Average Balances:
Loans	$	372,407		$	373,741		$	369,191		$	360,877		$	361,216
Earning assets		460,577			460,615			444,022			450,244			436,391
Total assets		501,961			496,220			487,791			491,385			474,706
Interest-bearing deposits		346,820			341,627			331,231			332,523			312,189
Stockholders’ equity		54,041			56,236			55,752			54,599			53,364

(a) Derived from audited consolidated financial statements, except average balance data

American Community Bancshares, Inc.
Consolidated Income Statements
(Amounts in thousands except share and per share data)
(Unaudited)
Three months ended	September 30, 2007			June 30, 2007			March 31, 2007			December 31, 2006			September 30, 2006
Total interest income	$	9,070		$	8,921		$	8,698		$	8,754		$	8,320
Total interest expense		4,225			4,001			3,899			3,898			3,646
Net interest income		4,845			4,920			4,799			4,856			4,674
Provision for loan losses		156			231			183			143			1,530
Net interest income after provision for loan loss		4,689			4,689			4,616			4,713			3,144
Non-interest income
Service charges on deposit accounts		617			608			581			615			615
Mortgage banking operations		70			93			80			81			84
Realized gains on sale of securities		2			—			17			—			35
Gain (loss) on economic hedge		138			(67	)		11			—			—
Other		134			88			118			99			128
Total non-interest income		961			722			807			795			862
Non-interest expense
Salaries and employee benefits		1,768			1,743			1,658			1,577			1,513
Occupancy and equipment		560			564			565			570			560
Other than temporary impairment		—			—			76			—			—
Other		1,121			1,175			1,103			1,114			1,032
Total non-interest expense		3,449			3,482			3,402			3,261			3,105
Income before income taxes		2,201			1,929			2,021			2,247			901
Provision for income taxes		801			707			735			822			290
Net income	$	1,400		$	1,222		$	1,286		$	1,425		$	611
Net income per share
Basic	$	0.21		$	0.18		$	0.18		$	0.20		$	0.09
Diluted	$	0.21		$	0.17		$	0.18		$	0.20		$	0.09
Weighted average number of shares outstanding
Basic		6,635,709			6,978,724			7,008,971			6,993,838			6,929,474
Diluted		6,799,753			7,140,680			7,176,577			7,191,755			7,173,914
Return on average equity		10.28	%		8.81	%		9.36	%		10.35	%		4.59	%
Return on average assets		1.11	%		1.00	%		1.05	%		1.15	%		0.52	%
Net interest margin		4.22	%		4.28	%		4.38	%		4.28	%		4.25	%
Efficiency ratio		59.40	%		61.72	%		60.68	%		56.91	%		56.09	%
Allowance for loan losses to total loans		1.44	%		1.45	%		1.46	%		1.52	%		1.63	%
Net charge-offs to avg loans (annualized)		0.35	%		0.17	%		0.37	%		0.60	%		0.63	%
Nonperforming loans to total loans		0.37	%		0.40	%		0.41	%		0.57	%		0.84	%
Nonperforming assets to total assets		0.29	%		0.31	%		0.32	%		0.47	%		0.71	%