U.S.
      SECURITIES AND EXCHANGE COMMISSION





WASHINGTON,
      D. C. 20549





FORM
      10-Q





T
      QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934


For
      the
      quarterly period ended September 30, 2007











o
      TRANSITION REPORT UNDER
      SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934


For
      the
      transition period from _____ to _____





Commission
      file number 0-13153





HABERSHAM
                BANCORP(Exact
                name of registrant as specified in its
                charter)





Georgia
            58-1563165(State
                or other jurisdiction ofincorporation
                or organization)
            (I.R.S.
                EmployerIdentification
                No.)





Highway
                441 N.   P.O. Box 1980,   Cornelia,
                Georgia
            30531(Address
                of principal executive offices)
            (Zip
                code)





(706)
                778-1000(Issuer’s
                telephone number, including area code)(Former
                name, former address and former fiscal year, if
                changed since last report)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.


Yes
                T
            No
                o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act. (Check one)





Large
                accelerated filer o
            Accelerated
                filer o
            Non-accelerated
                filer T





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
                o
            No
                T





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date:





2,818,593
      shares, common stock, $1.00 par value, as of
      November 13, 2007







1





Item
                1.
            Financial
                Statements





HABERSHAM
      BANCORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE SHEETS


(dollars
      in thousands)





ASSETS
            
            SEPTEMBER30,
                2007
            
            
            DECEMBER 31,
                2006(unaudited)
            
            
            (audited)Cash
                and due from banks
            
            $
            13,502
            
            
            $
            26,119Federal
                funds sold
            
            
            6,647
            
            
            
            64,399Total
                cash and cash equivalents
            
            
            20,149
            
            
            
            90,518Investment
                securities available for sale (cost of $89,617 at September 30, 2007
                and
                $86,178 at December 31, 2006)
            
            
            88,253
            
            
            
            84,982Investment
                securities held to maturity (estimated fair value of $2,757 at September
                30, 2007 and $3,368 at December 31, 2006)
            
            
            2,696
            
            
            
            3,289Other
                investments
            
            
            3,409
            
            
            
            3,365Loans
                held for sale
            
            
            1,188
            
            
            
            3,183Loans
            
            
            354,138
            
            
            
            346,261Less
                allowance for loan losses
            
            
            (2,867
            )
            
            
            (3,445
            )Loans,
                net
            
            
            351,271
            
            
            
            342,816Goodwill
            
            
            3,550
            
            
            
            3,550Other
                assets
            
            
            35,521
            
            
            
            24,035TOTAL
                ASSETS
            
            $
            506,037
            
            
            $
            555,738LIABILITIESNoninterest-bearing
                deposits
            
            $
            46,336
            
            
            $
            47,286Time
                deposits, $100,000 and over
            
            
            115,259
            
            
            
            176,651Other
                interest-bearing deposits
            
            
            229,467
            
            
            
            226,692Total
                deposits
            
            
            391,062
            
            
            
            450,629Short-term
                borrowings
            
            
            790
            
            
            
            779Federal
                funds purchased and securities sold under repurchase
                agreements
            
            
            12,703
            
            
            
            5,874Federal
                Home Loan Bank Advances
            
            
            38,000
            
            
            
            38,000Other
                liabilities
            
            
            6,095
            
            
            
            4,892TOTAL
                LIABILITIES
            
            
            448,650
            
            
            
            500,174STOCKHOLDERS’
                EQUITYCommon
                Stock, $1.00 par value, 10,000,000 shares authorized; 2,968,593 shares
                issued and outstanding at September 30, 2007 and December 31,
                2006
            
            
            2,969
            
            
            
            2,969Additional
                paid-in capital
            
            
            15,531
            
            
            
            15,531Retained
                earnings
            
            
            39,760
            
            
            
            37,777Accumulated
                other comprehensive(loss)income
            
            
            (873
            )
            
            
            (713
            )TOTAL
                STOCKHOLDERS’ EQUITY
            
            
            57,387
            
            
            
            55,564TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            506,037
            
            
            $
            555,738





See notes to unaudited condensed consolidated financial
      statements.




2




HABERSHAM
      BANCORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF EARNINGS


(Uaudited)
      For the Three-Month and Nine-Month Periods Ended September 30, 2007 and
      2006


(dollars
      in thousands, except per share amounts)


Three
                Months ended
            
            
            Nine
                Months endedSeptember 30,
            
            
            September 30,2007
            
            
            2006
            
            
            2007
            
            
            2006INTEREST
                INCOMELoan
                interest and fees on loans
            
            $
            8,123
            
            
            $
            7,979
            
            
            $
            24,194
            
            
            $
            21,956Taxable
                investment securities
            
            
            769
            
            
            
            763
            
            
            
            2,286
            
            
            
            2,130Tax
                exempt securities
            
            
            276
            
            
            
            266
            
            
            
            821
            
            
            
            714Federal
                funds sold
            
            
            68
            
            
            
            59
            
            
            
            211
            
            
            
            368Other
            
            
            59
            
            
            
            56
            
            
            
            173
            
            
            
            177TOTAL
                INTEREST INCOME
            
            
            9,295
            
            
            
            9,123
            
            
            
            27,685
            
            
            
            25,345INTEREST
                EXPENSETime
                deposits, $100,000 and over
            
            
            1,570
            
            
            
            1,088
            
            
            
            4,248
            
            
            
            2,726Other
                deposits
            
            
            2,118
            
            
            
            1,847
            
            
            
            6,238
            
            
            
            5,104Short-term
                and other borrowings, primarily FHLB advances
            
            
            708
            
            
            
            537
            
            
            
            2,009
            
            
            
            1,577TOTAL
                INTEREST EXPENSE
            
            
            4,396
            
            
            
            3,472
            
            
            
            12,495
            
            
            
            9,407NET
                INTEREST INCOME
            
            
            4,899
            
            
            
            5,651
            
            
            
            15,190
            
            
            
            15,938Provision
                for loan losses
            
            
            80
            
            
            
            -
            
            
            
            80
            
            
            
            -NET
                INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
            
            
            4,819
            
            
            
            5,651
            
            
            
            15,110
            
            
            
            15,938NONINTEREST
                INCOMEMortgage
                origination income
            
            
            207
            
            
            
            212
            
            
            
            605
            
            
            
            604Service
                charges on deposits
            
            
            245
            
            
            
            240
            
            
            
            712
            
            
            
            647Other
                service charges and commissions
            
            
            65
            
            
            
            67
            
            
            
            190
            
            
            
            200Investment
                securities (losses) gains, net
            
            
            -
            
            
            
            (7
            )
            
            
            5
            
            
            
            (13
            )Gain
                on sale of premises and equipment
            
            
            2
            
            
            
            15
            
            
            
            2
            
            
            
            33Gain
                on sale of land
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            42Other
                income
            
            
            412
            
            
            
            437
            
            
            
            1,269
            
            
            
            1,274Total
                noninterest income
            
            
            931
            
            
            
            964
            
            
            
            2,783
            
            
            
            2,787NONINTEREST
                EXPENSESalary
                and employee benefits
            
            
            2,541
            
            
            
            2,485
            
            
            
            7,915
            
            
            
            7,214Occupancy
            
            
            609
            
            
            
            573
            
            
            
            1,813
            
            
            
            1,660Computer
                services
            
            
            157
            
            
            
            139
            
            
            
            450
            
            
            
            421General
                and administrative expense
            
            
            1,257
            
            
            
            1,144
            
            
            
            3,666
            
            
            
            3,372Total
                noninterest expense
            
            
            4,564
            
            
            
            4,341
            
            
            
            13,844
            
            
            
            12,667EARNINGS
                BEFORE INCOME TAXES
            
            
            1,186
            
            
            
            2,274
            
            
            
            4,049
            
            
            
            6,058Income
                tax expense
            
            
            331
            
            
            
            741
            
            
            
            1,175
            
            
            
            1,929NET
                EARNINGS
            
            $
            855
            
            
            $
            1,533
            
            
            $
            2,874
            
            
            $
            4,129Net
                earnings per common share – Basic
            
            $
            .29
            
            
            $
            .52
            
            
            $_.97
            
            
            $
            1.41Net
                earnings per common share – Diluted
            
            $
            .29
            
            
            $
            .51
            
            
            $
            .96
            
            
            $
            1.39Weighted
                average number of common shares outstanding
            
            
            2,968,593
            
            
            
            2,949,207
            
            
            
            2,968,593
            
            
            
            2,938,080Weighted
                average number of common and common equivalent shares
                outstanding
            
            
            2,968,593
            
            
            
            2,993,256
            
            
            
            2,982,240
            
            
            
            2,979,394Dividends
                per share
            
            $
            .10
            
            
            $
            .09
            
            
            $
            .30
            
            
            $
            .27





See
      notes
      to unaudited condensed consolidated financial statements.





3




HABERSHAM
      BANCORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(Unaudited)
      For the Three- and Nine-Month Periods Ended September 30, 2007 and
      2006


(dollars
      in thousands)





Three
                Months ended
            
            
            Nine
                Months endedSeptember 30,
            
            
            September 30,2007
            
            
            2006
            
            
            2007
            
            
            2006NET
                EARNINGS
            
            $
            855
            
            
            $
            1,533
            
            
            $
            2,874
            
            
            $
            4,129OTHER
                COMPREHENSIVE INCOME (LOSS):Unrealized
                holding (losses) gains on investment securities available for sale
                arising
                during the period
            
            
            1,263
            
            
            
            1,503
            
            
            
            (163
            )
            
            
            (216
            )Unrealized
                holding gains (losses) on derivative financial instruments classified
                as
                cash flow hedges, arising during the period
            
            
            (80
            )
            
            
            (92
            )
            
            
            (75
            )
            
            
            7Reclassification
                adjustment for (gains) losses on  investment securities
                available for sale
            
            
            -
            
            
            
            7
            
            
            
            (5
            )
            
            
            13Total
                other comprehensive income (loss), before tax
            
            
            1,183
            
            
            
            1,418
            
            
            
            (243
            )
            
            
            (196
            )INCOME
                TAXES RELATED TO OTHER COMPREHENSIVE INCOME:Unrealized
                holding (losses) gains on investment securities available for sale
                arising
                during the period
            
            
            (429
            )
            
            
            (511
            )
            
            
            56
            
            
            
            73Unrealized
                holding gains (losses) on derivative financial instruments classified
                as
                cash flow hedges, arising during the period
            
            
            27
            
            
            
            31
            
            
            
            25
            
            
            
            (2
            )Reclassification
                adjustment for (gains) losses on investment securities available
                for
                sale
            
            
            -
            
            
            
            (2
            )
            
            
            2
            
            
            
            (4
            )Total
                income taxes related to other comprehensive income(loss)
            
            
            (402
            )
            
            
            (482
            )
            
            
            83
            
            
            
            67Total
                other comprehensive (loss) income, net of tax
            
            
            781
            
            
            
            936
            
            
            
            (160
            )
            
            
            (129
            )Total
                comprehensive (loss) income
            
            $
            1,636
            
            
            $
            2,469
            
            
            $
            2,714
            
            
            $
            4,000




See
      notes
      to unaudited condensed consolidated financial statements.




4




HABERSHAM
      BANCORP AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


(Unaudited)
      For the Nine-Month Periods Ended September 30, 2007 and 2006


(dollars
      in thousands)





Nine
                MonthsEnded
                September 30,2007
            
            
            2006CASH
                FLOWS PROVIDED BY OPERATING ACTIVITIES
            
            $
            4,019
            
            
            $
            7,020CASH
                FLOWS FROM INVESTING ACTIVITIES,Investment
                securities available for sale:Proceeds
                from maturity
            
            
            5,232
            
            
            
            5,245Proceeds
                from sales and calls
            
            
            2,787
            
            
            
            1,053Purchases
            
            
            (11,518
            )
            
            
            (18,832
            )Investment
                securities held to maturity:Proceeds
                from maturity
            
            
            593
            
            
            
            24Proceeds
                from call
            
            
            -
            
            
            
            80Other
                investments:Proceeds
                from sale
            
            
            -
            
            
            
            553Purchases
            
            
            (44
            )
            
            
            (543
            )Net
                (increase) decrease in loans
            
            
            (14,568
            )
            
            
            (27,698
            )Purchases
                of premises and equipment
            
            
            (3,527
            )
            
            
            (2,168
            )Proceeds
                from sale of premises and equipment
            
            
            31
            
            
            
            209Net
                additions of other real estate
            
            
            (18
            )
            
            
            2Proceeds
                from sale of other real estate
            
            
            261
            
            
            
            3,269Net
                cash (used by) provided by investing activities
            
            
            (20,771
            )
            
            
            (38,806
            )CASH
                FLOWS FROM FINANCING ACTIVITIES,Net
                increase (decrease) in deposits
            
            
            (59,567
            )
            
            
            (2,536
            )Net
                increase (decrease) in short-term borrowings
            
            
            12
            
            
            
            12Net
                (decrease) increase in federal funds purchased and securities sold
                under
                repurchase agreements
            
            
            6,829
            
            
            
            (861
            )Proceeds
                from FHLB advances
            
            
            -
            
            
            
            8,000Repayment
                of FHLB advances
            
            
            -
            
            
            
            (12,300
            )Issuance
                of common stock
            
            
            -
            
            
            
            646Cash
                dividends paid
            
            
            (891
            )
            
            
            (794
            )Net
                cash (used by) provided by financing activities
            
            
            (53,617
            )
            
            
            (7,833
            )Decrease
                (increase) in cash and cash equivalents
            
            
            (70,369
            )
            
            
            (39,619
            )CASH
                AND CASH EQUIVALENTS:  BEGINNING OF PERIOD
            
            
            90,518
            
            
            
            52,866CASH
                AND CASH EQUIVALENTS:  END OF PERIOD
            
            $
            20,149
            
            
            $
            13,247SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:Other
                real estate acquired through loan foreclosures
            
            $
            6,034
            
            
            $
            1,016Change
                in components of other comprehensive income
            
            
            (160
            )
            
            
            (129
            )





See
      notes
      to unaudited condensed consolidated financial statements.





5




HABERSHAM
      BANCORP AND SUBSIDIARIES


Notes
      to
      Unaudited Condensed Consolidated Financial Statements





1.
            Basis
                of Presentation





The
      condensed consolidated financial statements contained in this report are
      unaudited but reflect all adjustments, consisting only of normal recurring
      accruals, which are, in the opinion of management, necessary for a fair
      presentation of the results of the interim periods reflected.  Certain
      information and note disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in the
      United States of America have been condensed or omitted pursuant to applicable
      rules and regulations of the Securities and Exchange Commission.  The
      results of operations for the interim periods reported herein are not
      necessarily indicative of results to be expected for the full year.





The
      condensed consolidated financial statements included herein should be read
      in
      conjunction with the Company's 2006 consolidated financial statements and notes
      thereto, included in the Company's Annual Report on Form 10-K for the fiscal
      year ended December 31, 2006.





2.
            Accounting
                Policies





Reference
      is made to the accounting policies of the Company described in the notes to
      the
      consolidated financial statements contained in the Company's Annual Report
      on
      Form 10-K for the fiscal year ended December 31, 2006.  The Company
      has consistently followed those policies in preparing this report.





In
      February 2007, the Financial Accounting Standard Board issued SFAS No. 159,
      *The Fair Value Option for Financial Assets and Financial Liabilities*
      (SFAS 159), which permits entities to choose to measure financial instruments
      and certain other instruments at fair value.  SFAS 159 is effective as
      of the beginning of fiscal years that begin after November 15, 2007; however,
      it
      includes an early adoption provision allowing entities to adopt within 120
      days
      of their most recent fiscal year-end.  The Company has decided not to
      implement SFAS 159 until January of 2008.





3.
            Other
                Comprehensive Income





Other
      comprehensive income for the Company consists of items recorded directly in
      equity under Statement of Financial Accounting Standards (“SFAS”) No. 115,
“Accounting for Certain Investments in Debt and Equity Securities” in addition
      to the net of tax fair value of cash flow hedges.  Investment
      securities classified as available for sale are carried at fair value with
      the
      related unrealized gain or loss, net of deferred income taxes included as a
      separate component of stockholders’ equity.  At September 30, 2007,
      fair value of the available for sale investment securities decreased
      approximately $168,000 when compared to the fair value at December 31,
      2006.  The corresponding equity component of unrealized gain and loss
      on available for sale securities, net of tax, also decreased approximately
      $111,000.  These changes were the results of movements in the bond
      market as it responds to interest rate changes in the market.  At
      September 30, 2007, fair value of the cash flow hedges decreased approximately
      $75,000 when compared to the fair value at December 31, 2006.  The
      corresponding equity component of unrealized holding gains on derivative
      financial instruments classified as cash flow hedges, net of tax, also decreased
      approximately $49,000.




6





4.
            Net
                Earnings Per Share





Basic
      net
      earnings per share is based on the weighted average number of common shares
      outstanding during the period.  Diluted net earnings per share
      includes the effect of potential common shares outstanding during the
      period.  The average market price during the period is used to compute
      equivalent shares.





The
      reconciliation of the amounts used in the computation of both basic net earnings
      per share and diluted net earnings per share for the three- and nine-month
      periods ended September 30, 2007 and 2006, is as follows:




Three
                Months ended
            
            
            Nine
                Months endedSeptember
                30,
            
            
            September
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006Net
                earnings
            
            $
            854,776
            
            
            $
            1,532,890
            
            
            $
            2,873,560
            
            
            $
            4,129,389Weighted
                average common shares outstanding
            
            
            2,968,593
            
            
            
            2,949,207
            
            
            
            2,968,593
            
            
            
            2,938,080Shares
                issued from assumed exercise of common stock equivalents
            
            
            -
            
            
            
            44,049
            
            
            
            3,647
            
            
            
            41,314Weighted
                average number of common and  common equivalent shares
                outstanding
            
            
            2,968,593
            
            
            
            2,993,256
            
            
            
            2,982,240
            
            
            
            2,979,394Earnings
                per share:Basic
            
            $
            .29
            
            
            $
            .52
            
            
            $_.97
            
            
            $
            1.41Diluted
            
            $
            .29
            
            
            $
            .51
            
            
            $_.96
            
            
            $
            1.39




5.
            Commitments





Habersham
      Bank entered into a construction contract in 2007 with the business interest
      of
      a director to build its Flowery Branch, Georgia, building.  The
      construction cost of this twenty thousand plus square foot building is estimated
      to be approximately $3.2 million and is expected to be completed during the
      fourth quarter of 2008.





September
      19, 2007, Habersham Bancorp announced that the Board of Directors had approved
      an open-ended program to repurchase up to 150,000 shares of the company’s
      outstanding stock.  The Board’s authorization permits the company to
      repurchase shares in the open market or through privately negotiated
      transactions.  An investment banker will execute the share repurchase
      program for the Company.  Habersham Bancorp purchased all of the
      150,000 shares approved for the repurchase program of the company’s outstanding
      stock at the end of October.  The repurchased shares totaling $2,190,
      000 are held as treasury stock. Habersham Bancorp's capital ratios ( Tier 1,
      Total Capital and Leverage ratios) remained above the minimum requirements
      after this transaction.




7





Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations.





HABERSHAM
      BANCORP AND SUBSIDIARIES





**Organization**





Habersham
      Bancorp (the “Company”) owns all of the outstanding stock of Habersham Bank
      ("Habersham Bank") and The Advantage Group, Inc.  Habersham Bank owns
      all of the outstanding stock of Advantage Insurers, Inc. (“Advantage
      Insurers”).  Advantage Insurers offers a full line of property,
      casualty and life insurance products.  Advantage Insurers does not
      comprise a significant portion of the financial position, results of operations,
      or cash flows of the Company and as a result, management’s discussion and
      analysis, which follows relates primarily to Habersham Bank.





The
      Company’s continuing primary business is the operation of banks in rural and
      suburban communities in Habersham, White, Cherokee, Warren, Gwinnett, Stephens
      and Forsyth counties in Georgia.  The Company’s primary source of
      revenue is providing loans to businesses and individuals in its market
      area.





**Executive
      Summary**





Habersham
      Bancorp reported third quarter earnings of $855,000 or $.29 per diluted share,
      a
      decrease of 44.23% when compared to third quarter earnings of $1.5 million
      or
      $.51 per diluted share in 2006.  Year-to-date earnings for the
      nine-month period ended September 30, 2007, was $2.9 million or $.96 per diluted
      share, a decrease of 30.40%, when compared to year-to-date earnings of $4.1
      million or $1.39 per diluted share for the same period in
      2006.   The Company’s total assets decreased $49.7 million, or
      8.94%, to $506.0 million at September 30, 2007 from $555.7 million at December
      31, 2006.





The
      Company’s primary source of income is interest income from loans and investment
      securities. Its profitability depends largely on net interest income, which
      is
      the difference between the interest received on interest-earning assets and
      the
      interest paid on deposits, borrowings, and other interest-bearing
      liabilities.  Net interest income for the third quarter and for the
      nine-month period ended September 30, 2007 was approximately $4.9 million and
      $15.2 million, respectively, compared to third quarter and for the nine-month
      period ended September 30, 2006 of approximately $5.7 million and $15.9 million,
      respectively.





The
      net
      interest margin for the third quarter and first nine months of 2007 was 4.35%
      and 4.58%, respectively compared to 5.32% and 5.11%, for the same periods in
      2006. Two factors which impact the net interest margin are average interest
      bearing assets and average interest-bearing liabilities, which increased
      approximately $28.7 million and $41.2 million, respectively, when comparing
      the
      third quarter of 2007 to the third quarter of 2006 and $29.7 million and $38.0
      million, respectively, when comparing the first nine months of 2007 to the
      first
      nine months of 2006.





Total
      net
      income consists of net interest income plus other noninterest income less
      noninterest expense.  Decreases in non-interest income of
      approximately $33,000 and increases in noninterest expense of approximately
      $223,000 factored into net income, when comparing third quarter 2007 to third
      quarter 2006.   Decreases in noninterest income and increases in
      noninterest expense totaled approximately $4,000 and $1,177,000, respectively,
      when comparing first nine months of 2007 to the same period in
      2006.  Decreases in non-interest income within the other income
      category for the third quarter and the nine month periods ended September 30,
      2007 as compared to the same periods in 2006 were approximately $25,000 and
      $5,000, respectively.   The decrease within the other income
      category resulted primarily from the loss on rental income of approximately
      $23,000 and $110,000 for the third quarter and the first nine months of 2007,
      respectively.   Other decreases in profit from sale of other real
      estate , merchant fee income and in various other income accounts of totaled
      approximately $21,000, $13,000, and $6,000, respectively, for the third quarter
      of 2007, offset by increases in trust services fees and mastermoney card income
      of approximately $30,000 and  $8,000, respectively.  Other
      decreases in merchant fee income and profit from sale of other real estate
      totaled approximately $48,000 and $14,000, respectively, for the first nine
      months of 2007, offset by increases in trust services fees, mastermoney card
      income, and in various other income accounts of approximately $66,000, $27,000,
      and $74,000, respectively.





8




Increases
      in all categories of other non-interest expense occurred during the third
      quarter and the nine month periods ended September 30,
      2007.   Personnel costs, occupancy costs and computer service
      expenses increased approximately 9.72%, 9.22% and 6.89%, respectively for the
      first nine months of 2007 over the first nine months of 2006 as a result
      primarily of the expansion into the Forsyth County market with the opening
      of a
      new office in Cumming, Georgia in January 2007.  General and
      administrative expenses, including outside services, advertising &
marketing, office supplies and other expenses, for the third quarter and first
      nine months of 2007 over the same period of 2006 increased approximately 9.88%
      and 8.72%, respectively.





At
      December 31, 2006,  Habersham Bank had excess cash received from a
      short-term deposit invested in cash and due from banks and in federal funds
      sold.





During
      the third quarter of 2007, Habersham Bancorp’s Board of Directors approved an
      open-ended program to repurchase up to 150,000 shares of the company’s
      outstanding common stock in the open market or through privately negotiated
      transactions.  No shares of the company’s common stock had been
      acquired as of September 30, 2007, however subsequent to September 30, 2007,
      the
      150,000 shares were purchased at a price of $2,190,000.





**Forward
      Looking Statements**





Certain
      statements contained in this Quarterly Report on Form 10-Q and the exhibits
      hereto which are not statements of historical fact constitute forward-looking
      statements within the meaning of the Private Securities Litigation Reform Act
      (the “Act”).  In addition, certain statements in future filings by the
      Company with the Securities and Exchange Commission, in press releases, and
      in
      oral and written statements made by or with the approval of the Company which
      are not statements of historical fact constitute forward-looking statements
      within the meaning of the Act.  Examples of forward-looking statements
      include, but are not limited to:  (1) projections of revenues,
      income or loss, earnings or loss per share, the payment or non-payment of
      dividends, capital structure and other financial items; (2) statements of
      plans and objectives of the Company or its management or Board of Directors,
      including those relating to products or services; (3) statements of future
      economic performance; and (4) statements of assumptions underlying such
      statements.  Words such as “believes,” “anticipates,” “expects,”
“intends,” “targeted,” and similar expressions are intended to identify
      forward-looking statements but are not the exclusive means of identifying such
      statements.





Forward-looking
      statements involve risks and uncertainties which may cause actual results to
      differ materially from those in such statements.  Factors that could
      cause actual results to differ from those discussed in the forward-looking
      statements include, but are not limited to:  (1) the strength of
      the U.S. economy in general and the strength of the local economies in which
      operations are conducted; (2) the effects of and changes in trade, monetary
      and fiscal policies and laws, including interest rate policies of the Board
      of
      Governors of the Federal Reserve System; (3) inflation, interest rate,
      market and monetary fluctuations; (4) the timely development of and
      acceptance of new products and services and perceived overall value of these
      products and services by users; (5) changes in consumer spending, borrowing
      and saving habits; (6) risks involved in making and integrating
      acquisitions and expanding into new geographic markets; (7) the ability to
      increase market share and control expenses; (8) the effect of changes in
      laws and regulations (including laws and regulations concerning taxes, banking,
      securities and insurance) with which the Company and its subsidiaries must
      comply; (9) the effect of changes in accounting policies and practices, as
      may
      be adopted by the regulatory agencies as well as the Financial Accounting
      Standards Board; (10) changes in the Company’s organization, compensation
      and benefit plans; (11) the costs and effects of litigation and of
      unexpected or adverse outcomes in such litigation; and (12) the success of
      the Company at managing the risks involved in the foregoing.





Such
      forward-looking statements speak only as of the date on which such statements
      are made, and the Company undertakes no obligation to update any forward-looking
      statement to reflect events or circumstances after the date on which such
      statement is made or to reflect the occurrence of unanticipated
      events.





**Material
      Changes in Financial Condition**





The
      Company’s total assets decreased $49.7 million, or 8.94%, to $506.0 million at
      September 30, 2007 from $555.7 million at December 31, 2006.   At
      December 31, 2006, Habersham Bank had excess cash received from short-term
      deposits invested in cash and due from banks and in federal funds
      sold.  Excess cash of approximately $70.7 million was drawn down with
      the pay out of the deposited funds during the first quarter of
      2007.  Excluding the reduction of these funds of approximately $70.7
      million, increases in other assets, in the total loan portfolio and in the
      total
      investment securities of approximately $11.5 million, $8.5 million and $2.7
      million, respectively, were offset by decreases in the loans held for sale
      portfolio of approximately $2.0 million.  The increase in other assets
      primarily resulted from foreclosure activity of approximately $5.8 million,
      the
      purchase of land for expansion efforts into new markets totaling approximately
      $2.5 million and the purchase of bank owned life insurance for approximately
      $2.8 million.





9




Other
      assets include other real estate foreclosed properties, fixed assets,
      investments in life insurance policies and other various asset
      accounts.  Increases in foreclosed properties in other real estate,
      life insurance, fixed assets, and other various asset accounts totaled
      approximately $5.8 million, $2.8 million, $2.6 million, and $306,000,
      respectively. Other
      real estate owned increased during the first nine months of 2007 as a result
      of
      the twenty-eight foreclosures of real estate secured loans offset by sales
      and
      write downs. Upon board approval for a Senior Executive Retirement Plan
      (“SERP”) for five of the Company’s key employees to be funded by the purchase of
      bank owned life insurance policies, Habersham Bank made this investment and
      obtained the policies during 2007.  The increase in fixed assets
      resulted primarily from the purchase of land in the Flowery Branch area of
      Hall
      County to further the expansion efforts of Habersham Bank totaling approximately
      $2.5 million and the purchase of land in Warren County in order to move into
      a
      branch building totaling approximately $88,000.





Loan
      growth totaled approximately $8.5
      million for the first nine months of 2007.  Increases in the real
      estate secured portfolio and the commercial lending portfolio of approximately
      $13.4 million and $2.3 million, respectively, were offset by approximately
      $6.0
      million in foreclosures of real estate secured loans and by decreases in the
      consumer lending portfolio of approximately $1.2 million.





During
      the first nine months of 2007, purchases of investment securities available
      for
      sale totaled approximately $11.5 million, offset by maturities and calls of
      approximately $8.0 million. The purchases consisted of approximately $5.4
      million in U.S. government-sponsored enterprise bonds, $2.6 million in mortgage
      backed securities and $3.5 million in municipal bonds. The maturities and calls
      consisted of approximately $2.3 million in U.S. government-sponsored enterprise
      bonds, $3.8 million in mortgage backed securities and $1.9 million in municipal
      bonds.  The unrealized loss on the investment securities available for
      sale portfolio increased approximately $168,000 during the nine month period
      ending September 30, 2007.  During the first nine months of 2007,
      maturities and calls of investment securities held to maturity totaled
      approximately $593,000.





Total
      deposits decreased approximately $59.6 million when comparing balances at
      September 30, 2007 to December 31, 2006 balances, with approximately $58.6
      million of the decrease occurring in interest bearing deposits and approximately
      $1.0 million of the decrease occurring in non-interest bearing demand
      deposits.   Borrowings increased when comparing September 30,
      2007 balances to December 31, 2006, approximately $6.8 million as a result
      of
      increased activity in repurchase sweep accounts.





**Material
      Changes in Results of Operations**





Net
      interest income is the largest single source of income for the
      Company.  Management strives to attain a level of earning asset growth
      while providing a net yield on earning assets that will cover overhead and
      other
      costs and provide a reasonable return to our stockholders.  Net
      interest income is affected by interest income from loans, investment securities
      and federal funds sold offset by interest paid on deposits and
      borrowings.  The following table compares the weighted average tax
      equivalent yields for loans, investment securities and federal funds sold and
      the weighted average rates for deposits and borrowings for the third quarters
      and the first nine months of 2007 and 2006.





10




Three
                Months ended
            
            
            Nine
                Months ended2007
            
            
            2006
            
            
            2007
            
            
            2006INTEREST
                YIELDS EARNED:Loans
            
            
            8.91
            %
            
            
            9.47
            %
            
            
            9.08
            %
            
            
            8.98
            %Investment
                securities
            
            
            5.35
            %
            
            
            5.23
            %
            
            
            5.29
            %
            
            
            5.08
            %Federal
                funds sold
            
            
            4.81
            %
            
            
            5.43
            %
            
            
            4.91
            %
            
            
            4.86
            %INTEREST
                RATES PAID:Deposits
            
            
            4.23
            %
            
            
            3.69
            %
            
            
            4.15
            %
            
            
            3.40
            %Borrowings
            
            
            5.13
            %
            
            
            4.88
            %
            
            
            5.03
            %
            
            
            4.66
            %





Total
      interest income for the third quarter of 2007 increased approximately $172,000
      or 1.89%, when compared to the third quarter of 2006. Increases in the
      average balances for the third quarter of 2007 in loans and federal funds sold
      of approximately $27.3 million and $1.3 million, respectively, were offset
      by a
      decrease in average quarter balances in investment securities of approximately
      $200,000 when comparing the third quarters of 2007 and 2006. Total interest
      income for the first nine months of 2007 increased approximately $2.3 million
      or
      9.23% when compared to the same period in 2006.  Increases in the
      average balances for the first nine months of 2007 in loans and investment
      securities of approximately $29.3 million and $4.5 million, respectively, were
      offset by decreases in the average balances in federal funds sold for the first
      nine months of 2007 of approximately $4.4 million when comparing the first
      nine
      months of 2007 and 2006.  See table above to compare yields earned on
      loans, investment securities and federal funds sold.





Total
      interest expense for the third quarter of 2007 increased approximately $900,000
      or 26.61% when compared to the third quarter of 2006. Increases in the
      average balances for the third quarter of 2007 in deposits and other borrowings
      totaled approximately $30.0 million and $11.2 million, respectively, when
      compared to the third quarter of 2006.  Total interest expense for the
      first nine months of 2007 increased approximately $3.1 million or 32.83% when
      compared to the first nine months of 2006.  Increases in the average
      balance for the first nine months of 2007 in deposits and other borrowings
      totaled approximately $29.9 million and $8.1 million, respectively, when
      compared to the first nine months of 2006.  See table above to compare
      interest rates paid on deposits and other borrowings.





Net
      interest income decreased approximately $800,000 or 13.31%, for the third
      quarter of 2007 and decreased approximately $700,000 or 4.69% for the first
      nine
      months of 2007 when compared to the same periods in 2006 as a result of the
      items discussed above.





The
      net
      interest margin of the Company, net interest income divided by average earning
      assets, was 4.35% for the third quarter of 2007 compared to 5.32% for the third
      quarter of 2006, and was 4.58% for the first nine months of 2007 compared to
      5.11% for the first nine months of 2006.





Noninterest
      income decreased $33,000 or 3.42% for the third quarter of 2007 over the same
      period in 2006 and decreased $4,000 or .14% for the first nine months of 2007
      over the same period in 2006. Increases in service charges on deposits for
      the third quarter and first nine months of 2007 totaled approximately $5,000
      and
      $65,000, respectively.   Mortgage origination income decreased
      approximately $5,000 and increased approximately $1,000, compared to the third
      quarter and first nine months of 2006.   Increased average
      balances in the deposit portfolio and average volume of activity in the mortgage
      held for sale portfolio are reflected in these increases.





Other
      income decreased $25,000 for the third quarter of 2007 and decreased $5,000
      for
      the first nine months of 2007 compared to the same periods in
      2006. Decreases for the third quarter in miscellaneous income, in rental
      income and in profit from other real estate totaling approximately $26,000,
      $21,000 and $23,000, respectively, were offset by increases in trust fees,
      master money fees, and commissions on investment sales totaling approximately
      $30,000,
      $8,000  and  $7,000,  respectively.  Decreases
      for the first nine months of 2007 in rental income, profit from sale of other
      real estate and merchant fee income totaling approximately $110,000, $48,000
      and
      $14,000, respectively, were offset by increases in various other income
      accounts, trust services fees and mastermoney card income accounts of
      approximately $74,000, $66,000, and $27,000, respectively.  The
      decrease in rental income results from the sale of a multi-family rental
      property during the third quarter of 2006.





11




Noninterest
      expense increased $223,000 or 5.14% for the third quarter of 2007 over the
      same
      period in 2006, with increases in salary and employee benefits, occupancy and
      computer services of approximately $56,000, $36,000 and $18,000,
      respectively.  Noninterest expense increased $1.2 million or 9.29% for
      the first nine months of 2007 over the same period in 2006, with increases
      in
      salary and employee benefits, occupancy and computer services of approximately
      $701,000, $153,000 and $29,000, respectively.   Salary and
      employee benefits increased primarily due to annual salary adjustments and
      the
      additional staffing of a new branch in Cumming which opened in January
      2007.  Occupancy expenses also increased for the third quarter of 2007
      and the first nine months of 2007 over the same periods in 2006 due to expenses
      related the new branch in Cumming. The increase in computer service expense
      is related to additional costs to provide computer service to the Cumming
      location.  The general and administrative expenses increase of $113,000 for
      the third quarter of 2007 consists primarily of increases in other expenses,
      outside services and advertising and marketing expenses of approximately
      $60,000, $53,000 and $18,000, respectively, offset by decreases in office
      supplies and in loss of other real estate of approximately $11,000 and $8,000,
      respectively.  The general and administrative expenses increase of
      $294,000 for the first nine months of 2007 consists primarily of increases
      in
      other expenses, outside services, advertising & marketing expense and office
      supplies of approximately $196,000, $90,000, $60,000 and $8,000, respectively,
      offset by a decrease in loss of other real estate of approximately
      $60,000.  Increased activity in fraudulent check activity resulted in
      increased expense of approximately $74,000 and $86,000 in other expenses for
      the
      third quarter and first nine months of 2007.  Outside services include
      FDIC insurance, legal and professional services, insurance, director fees and
      State of Georgia Department of Banking fees.





Income
      tax expense for the three months ended September 30, 2007 and 2006 was $331,000
      and $741,000, respectively.  Income tax expense for the first nine
      months ended September 30, 2007 and 2006 was $1.2 million and $1.9 million,
      respectively.  The effective tax rate for the third quarter of 2007
      and 2006 was 27.91% and 32.59%, respectively. The effective tax rate for the
      nine months ended September 30, 2007 and 2006 was 29.02% and 31.84%,
      respectively.  Tax-exempt income on investment securities in municipal
      bonds was 20.28% of pre-tax income for the first nine months of 2007 when
      compared to 11.79% for the first nine months of 2006.





**Asset
      Quality**





The
      allowance for loan losses represents a reserve for probable losses in the loan
      portfolio and is evaluated periodically.  The determination of the
      allowance for loan losses is subjective and based on consideration of a number
      of factors and assumptions. The methodology used to analyze the adequacy of
      the
      Allowance for Loans and Lease Losses consists of assigning allocated general
      reserve where deemed appropriate based on Internal Watch List
      relationships.  Reserves for these loans are weighted with emphasis on
      the degree of identified risk.  Reviews for these credits include an
      analysis of the borrower’s financial position, an assessment of the value of
      pledged collateral and their past performance showing their ability to properly
      service the debt as well as an assessment of their anticipated future financial
      condition.  These credits are assigned one of two risk ratings: Watch
      or Substandard.  Loans assigned a risk rating of substandard will have
      a loan loss allowance allocation based on FAS 114, which defines loans impaired
      as “when based on current information and events, if it is probable that the
      creditor will be unable to collect all interest and principal payments due
      according to the contractual terms of the loan agreement.” If a loan is
      considered impaired, but adequately collateralized there should be no allocation
      assigned to the loan within the allowance for loan losses
      analysis.  All non-accrual loans are considered
      impaired. Additions to non-accrual loans at September 30, 2007, consisted
      primarily of real estate secured loans and were adequately collateralized with
      real estate and other pledged collateral.





The
      allowance for loan losses also represents risks associated with lending varies
      with the creditworthiness of the borrower, the type of loan (consumer,
      commercial, or real estate) and its maturity. Cash flows adequate to support
      a
      repayment schedule are an element considered for all loans.  Real
      estate loans are impacted by market conditions regarding the value of the
      underlying property used as collateral.  Commercial loans are also
      impacted by the management of the business as well as economic conditions.
      The
      Company also makes unsecured loans from time to time. The risk to the Company
      is
      greater for unsecured loans as the ultimate repayment of the loan is only
      dependent on the borrower’s ability to pay.  The balance of unsecured
      loans at September 30, 2007 was $9.8 million which does not pose a significant
      risk to the Company.





12




At
      September 30, 2007 and December 31, 2006, the ratio of the allowance for loan
      losses to total loans was .81% and .99%, respectively.  An estimate,
      based upon the loan loss reserve methodology for Habersham Bank, is calculated
      each month to determine the status of the allowance.  This estimate
      includes calculations for allocated and unallocated general
      reserves.   A provision for loan losses of $80,000 was charged to
      expense for the quarter ended September 30, 2007.   No provision
      for loan losses was charged to expense for the quarter ended September 30,
      2006.





Net
      charge-offs for the first nine months of 2007 totaled $687,556 compared to
      net
      charge-offs of $455,177 for the first nine months of 2006 as detailed
      below:








September
                30, 2007
            
            
            September
                30, 2006Charge-offs:Commercial
            
            $
            50,282
            
            
            $
            254,672Real
                Estate
            
            
            529,399
            
            
            
            165,721Consumer
            
            
            190,550
            
            
            
            178,764Total
                Charge-offs
            
            
            770,231
            
            
            
            599,157Recoveries:Commercial
            
            
            1,150
            
            
            
            21,567Real
                Estate
            
            
            20,150
            
            
            
            15,099Consumer
            
            
            61,375
            
            
            
            107,314Total
                Recoveries
            
            
            82,675
            
            
            
            143,980Net
                Charge-offs
            
            $
            687,556
            
            
            $
            455,177





During
      2007, real estate charge-offs consisted primarily of sixteen loans (thirteen
      secured with vacant lots and three for 1-4 family residential spec construction)
      for an average charge off amount of approximately $26,401.  These
      properties are located within the greater Atlanta area in Dawson, Fulton and
      Gwinnett counties.  Two other real estate charge-offs were
      collateralized with rental property in Habersham and Stephens counties totaled
      approximately $107,000.





Nonperforming
      assets consist of non-accrual loans, accruing loans 90 days past due,
      restructured loans and other real estate owned. The following summarizes
      non-performing assets:





September
                30, 2007
            
            
            December
                31, 2006Accruing
                loans 90 days past due
            
            $
            328,256
            
            
            $
            37,585Non-accrual
                loans
            
            
            6,376,063
            
            
            
            502,233Other
                real estate
            
            
            6,353,363
            
            
            
            537,975Restructured
                loans
            
            
            -
            
            
            
            52,560Total
                non-performing assets
            
            $
            13,057,682
            
            
            $
            1,130,353





Nonperforming
      assets increased $11.9 million or 1055.19% from December 31, 2006 to September
      30, 2007.  See the discussion that follows within this section for a
      description of the assets that comprised this increase.





13




Loans
      classified as 90 days past due increased $290,671 or 773.37% from December
      31,
      2006 to September 30, 2007.  The increase is the net result of the
      following changes:





Balance
                at December 31, 2006
            
            $
            37,585New
                loans classified to 90 days past due status
            
            
            466,527Payments
                received
            
            
            (129,282
            )Charge-off
            
            
            (46,574
            )Balance
                at September 30,  2007
            
            $
            328,256The
                following summarizes accruing loans 90 days past due at September
                31,
                2007:Real
                estate secured loans
            
            $
            280,669Residential
                loans
            
            
            41,894Commercial
                loans
            
            
            5,693Total
                accruing loans 90 days past due
            
            $
            328,256





Impaired
      loans consist of loans on non-accrual status.  The increase is the net
      result of the following changes:





Balance
                at December 31, 2006
            
            $
            502,233Loans
                reclassified to non-accrual status in 2007
            
            
            15,545,413Payments
                received on non-accrual loans during 2007
            
            
            (3,489,351
            )Non-accrual
                loans charged-off during 2007
            
            
            (593,972
            )Non-accrual
                loans reclassified to other real estate
            
            
            (5,443,246
            )Non-accrual
                loans reclassified to accrual status in 2007
            
            
            (145,014
            )Balance
                at September 30, 2007
            
            $
            6,376,063





Additions
      to loans on non-accrual status consisted of fifty-two real estate secured loans
      totaling $15.4 million, four commercial loans totaling $85,368 and thirteen
      consumer loans totaling $89,363.  Payments received on non-accrual
      loans include the payoff of a $2.5 million loan secured with lake
      property.  At September 30, 2007, non-accrual loans consist of fifteen
      loans for construction of 1-4 family residential housing, five loans secured
      by
      1-4 family residential properties, three commercial loans and five consumer
      loans totaling approximately $6.1 million, $167,533, $39,191 and $41,273,
      respectively.  The appraised value for the construction housing was
      approximately $6.1 million. The interest income recognized on such loans
      for the nine-month periods ended September 30, 2007 and 2006 was not
      material.





The
      Company’s other real estate consists of thirty properties totaling approximately
      $6.4 million at September 30, 2007 and six properties totaling $538,000 at
      December 31, 2006.  The increase in other real estate during the first
      nine months of 2007 was the result of the foreclosure of ten residential spec
      construction properties, sixteen vacant lots and two rental properties totaling
      approximately $3.0 million, $2.8 million and $305,000, respectively, offset
      by
      sales of approximately $237,000.





At
      September 30, 2007, the Company’s other real estate consisted of the
      following:





1-4
                Family / spec residential properties
            
            $
            2,857,536Rental
                residential properties
            
            
            273,844Commercial
                properties
            
            
            399,500Lots
            
            
            2,822,483Total
            
            $
            6,353,363





Our
      Other
      Real Estate Owned (“OREO”) procedures provide that a foreclosure appraisal be
      obtained which provides a fair market value and a disposition (quick sale)
      value.  The disposition value is the valuation used to place the
      property into OREO.  Any difference between the disposition value and
      the loan balance is recommended for charge off.  Once the property is
      in OREO, the property is listed with a realtor to begin sales
      efforts.





14




**Liquidity
      and Capital Resources**





Liquidity
      management involves the matching of the cash flow requirements of customers,
      either depositors withdrawing funds or borrowers needing loans, and the ability
      of the Company to meet those requirements.





The
      Company's liquidity program is designed and intended to provide guidance in
      funding the credit and investment activities of the Company while at the same
      time ensuring that the deposit obligations of the Company are met on a timely
      basis.  In order to permit active and timely management of assets and
      liabilities, these accounts are monitored regularly in regard to volume, mix,
      and maturity.





The
      Company’s liquidity position depends primarily upon the liquidity of its assets
      relative to its need to respond to short-term demand for funds caused by
      withdrawals from deposit accounts and loan funding
      commitments.  Primary sources of liquidity are scheduled repayments on
      the Company’s loans and interest on and maturities of its investment
      securities.  Sales of investment securities available for sale
      represent another source of liquidity to the Company.  The Company may
      also utilize its cash and due from banks and federal funds sold to meet
      liquidity requirements as needed.





The
      Company also has the ability, on a short-term basis, to purchase federal funds
      from other financial institutions up to $30.0 million.  At September
      30, 2007, the Company had no federal funds purchased.  Presently, the
      Company has made arrangements with commercial banks for short-term advances
      under a repurchase agreement line of credit of $9.5 million of which none was
      advanced at September 30, 2007. The Company has approximately $12.7 million
      outstanding in commercial sweep accounts at September 30, 2007.  In
      addition, the Company has a total available line of $38.0 million, subject
      to
      available collateral, from the Federal Home Loan Bank (FHLB).  At
      September 30, 2007, the Bank has utilized all of its available line with the
      FHLB.





Habersham
      Bank's liquidity policy requires that the ratio of cash and certain short-term
      investments to net withdrawable deposit accounts be at least 20%.  The
      Bank’s liquidity ratios at September 30, 2007 and 2006 were 20.40% and 22.57%,
      respectively.





At
      September 30, 2007 Habersham Bancorp and Habersham Bank were required to have
      minimum Tier 1 and total capital ratios of 4% and 8%,
      respectively.  Additionally, the Company and the Bank are required to
      maintain a leverage ratio (Tier 1 capital to average assets) of at least
      4%.  The Company’s and the Bank’s ratios at September 30, 2007
      follow:





Habersham
            
            HabershamBank
            
            BancorpTier
                1
            
            
            12.80
            %
            
            
            13.59
            %Total
                Capital
            
            
            13.52
            %
            
            
            14.31
            %Leverage
            
            
            10.18
            %
            
            
            10.81
            %








Item
                3.
            Quantitative
                and Qualitative Disclosures About Market
                Risk.





As
      of
      September 30, 2007 there were no substantial changes in the composition of
      the
      Company’s market-sensitive assets and liabilities or their related market values
      from that reported as of December 31, 2006.  The foregoing disclosures
      related to the market risk of the Company should be read in conjunction with
      the
      Company’s audited consolidated financial statements, related notes and
      management’s discussion and analysis of financial condition and results of
      operations for the year ended December 31, 2006 included in the Company’s 2006
      Annual Report on Form 10K.





Item
                4.
            Controls
                and Procedures





As
      of the
      end of the period covered by this report, the Company’s management, including
      the Company’s Chief Executive Officer and Chief Financial Officer, reviewed and
      evaluated the effectiveness of the design and operation of the Company’s
      disclosure controls and procedures pursuant to Exchange Act Rule
      13a-15.  Based upon that evaluation, the Company’s Chief Executive
      Officer and Chief Financial Officer concluded that the Company’s disclosure
      controls and procedures are effective in timely alerting them to material
      information relating to the Company, (including its consolidated subsidiaries)
      that is required to be included in the Company’s periodic filings with the
      Securities and Exchange Commission.





15




There
      have not been any changes in the Company’s internal control over financial
      reporting or, to the Company’s knowledge, in other factors, during the fiscal
      quarter to which this report relates that have materially affected, or are
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting.




16





PART
      II





OTHER
      INFORMATION





Item
                1.
            Legal
                proceedings.


None





Item
                1.A.
            Risk
                Factors.





In
      addition to the other information set forth in this report, you should carefully
      consider the factors discussed in Part I. “Item 1.A. Risk Factors” in the
      Company’s Annual Report on Form 10-K for the year ended December 31, 2006, which
      could materially affect its business, financial condition or future
      results.  The risks described in the Annual Report of Form 10-K are
      not the only risks facing the Company.  Additional risks and
      uncertainties not currently known to management or that management currently
      deems to be immaterial also may materially adversely affect the Company’s
      business, financial condition and/or operating results.








Item
                2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds





Issuer
      Purchases of Equity Securities





The
      following table sets forth information regarding the Company's purchases of
      its
      common stock on a monthly basis during the third quarter of 2007.





Period
            
            Total
                Number of Shares Purchased
            
            
            Average
                Price Paid Per Share
            
            
            Total
                Number of Shares (or Units) Purchased as Part of Publicly Announced
                Plans
                or Programs 1
            
            
            Maximum
                Number (or Appropriate Dollar Value) of Shares (or Units) that May
                Yet Be
                Purchased Under the Plans or ProgramsJuly
                1 through July 30, 2007
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0August
                1 through August 31, 2007
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0September
                1 through September  30, 2007
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0Total
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0







The
      Company does have a publicly announced stock repurchase plan and did not
      repurchase any of its shares of common stock during the period covered by this
      report.





Item
                3.
            Defaults
                upon senior securities.


None





Item
                4.
            Submission
                of matters to a vote of security
                holders.


None





Item
                5.
            Other
                information.


None





17




Item
                6.
            Exhibits





(a)
      The
      registrant submits herewith as exhibits to this report on Form 10-Q the exhibits
      required by Item 601 of Regulation S-K, subject to Rule 12b-32 under the
      Securities Exchange Act of 1934.




31.1           Certification
        of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of
        2002.
 
 31.2           Certification
        of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of
        2002.
  32             
        Certification of Chief Executive Officer and Chief Financial Officer Pursuant
        to
        Section 906 of the Sarbanes-Oxley Act of 2002.





18





SIGNATURES





In
      accordance with the requirements of the Exchange Act, the registrant has caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





HABERSHAM
      BANCORP


(Registrant)





Date
                November 13, 2007
            /S/
                Annette BanksChief
                Financial Officer(for
                the Registrant and as the Registrant’s principal financial and accounting
                officer)






19