CSNC Cardinal State Bank (MM)

DURHAM, N.C., July 17 /PRNewswire-FirstCall/ -- Cardinal State Bank (NASDAQ:CSNC), a North Carolina state chartered bank headquartered in Durham, North Carolina, announced today that its net income for the six months ended June 30, 2007 totaled $524,000, compared to net income of $435,000 for the comparable period of 2006. Basic and diluted income per share were $.23 in the 2007 period, compared to $.19 in the 2006 period. For the second quarter ended June 30, 2007, net income and basic and diluted income per share were $215,000 and $.09, respectively, compared to $358,000 and $.16 for the second quarter of 2006. Total assets as of June 30, 2007 were $192.8 million, compared to $175.8 million at June 30, 2006, an increase of $17.0 million or 9.7%. Fueling the growth in total assets was an increase of $15.3 million or 10.3% in total deposits which increased to $163.4 million at June 30, 2007 from $148.1 million at June 30, 2006. During the same period, total loans decreased to $151.5 million from $152.0 million, a decrease of $.5 million or .3%. "While our overall growth in the balance sheet was good, we were disappointed in the decrease in our loan portfolio," said John W. Mallard, Jr., President and CEO of Cardinal State Bank. "We continue to see pressures on our net interest margin in addition to slowing loan growth. On a positive note our asset quality has improved both in terms of non-performing assets and net loan charge-offs. Our merger with Yadkin Valley Financial Corporation is progressing on schedule. We anticipate closing of the transaction in the fourth quarter of 2007 pending shareholder and regulatory approval." Cardinal State Bank is a full-service community bank. Founded in 2001, the Bank has three offices in Durham: Homestead Market, Independence Park and Westgate Drive and one office in Hillsborough at 100 S. Churton Street. This news release may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements regarding certain of Cardinal State Bank's goals and expectations with respect to earnings, earnings per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (ii) statements preceded by, followed by or that include the words "may", "could", "should", "would", "believe", "anticipate", "estimate", "expect", "intend", "plan", "projects", "outlook" or similar expressions. These statements are based upon the current beliefs and expectations of Cardinal State Bank's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond Cardinal State Bank's control). CARDINAL STATE BANK ($000's Except Per Share Data) As of or For The As of or For The Three Months Ended Six Months Ended June 30 June 30 2007 2006 2007 2006 Income Statement: Interest Income $3,318 3,099 $6,576 5,850 Interest Expense 1,688 1,377 3,329 2,576 Net Interest Income 1,630 1,722 3,247 3,274 Loan Loss Provision (11) 123 (253) 368 Net Interest Income After Provision 1,641 1,599 3,500 2,906 Other Income 166 181 291 297 Other Expense (1) 1,592 1,422 3,267 2,768 Income Before Taxes 215 358 524 435 Income Taxes -- -- -- -- Net Income $215 358 $524 435 (1) Includes stock option expense $36 60 $81 137 Income Per Share: Basic .09 .16 .23 .19 Diluted .09 .16 .23 .19 Average Shares Outstanding (000's): Basic 2,263 2,262 2,263 2,261 Diluted 2,293 2,262 2,278 2,261 Balance Sheet Data: Total Assets $192,772 175,780 -- -- Total Deposits 163,391 148,081 -- -- Total Loans 151,513 152,045 -- -- Loan Loss Reserve 1,667 1,983 -- -- Total Shareholders' Equity 20,901 19,664 -- -- Asset Quality: Non-Performing Assets 677 893 -- -- Non-Performing Assets To Total Assets (%) .35 .51 -- -- Net Loan Charge-Offs 20 66 1 67 Net Loan Charge-Offs To Average Loans (%) .05 .17 .00 .09 Performance Ratios: Return On Average Assets (%) .45 .82 .56 .51 Return On Average Equity (%) 4.14 7.34 5.11 4.51 Net Interest Margin (%) 3.54 4.08 3.57 4.00 DATASOURCE: Cardinal State Bank CONTACT: John W. Mallard, Jr., President and Chief Executive Officer of Cardinal State Bank, +1-919-403-2833,

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