CSNC Cardinal State Bank (MM)

DURHAM, N.C., Dec. 28 /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 nine months ended September 30, 2007 totaled $2,083,000, compared to net income of $673,000 for the comparable period of 2006. Basic and diluted income per share were $.92 and $.90, respectively, in the 2007 period, compared to $.30 for both basic and diluted income per share in the 2006 period. For the third quarter ended September 30, 2007, net income and basic and diluted income per share were $1,559,000, $.69 and $.66, respectively, compared to $238,000, $.11 and $.11 for the third quarter of 2006. Total assets at September 30, 2007 were $199.7 million, compared to $180.1 million at September 30, 2006, an increase of $19.6 million or 10.9%. Fueling the growth in total assets was an increase of $16.3 million or 10.7% in total deposits which increased to $168.2 million at September 30, 2007 from $151.9 million at September 30, 2006. During the same period, total loans increased to $154.9 million from $151.8 million, an increase of $3.1 million or 2.1%. "While our overall growth in the balance sheet was good, we were disappointed in the increase 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 softening in overall loan demand. Our merger with Yadkin Valley Financial Corporation is progressing and we anticipate closing of the transaction in the first quarter of 2008 pending shareholder and regulatory approval." Mallard further noted, "We have reached resolution of our accounting issues relative to the recording of a liability for post retirement benefits and have recorded our deferred tax asset, the net effect of which was positive to our financial position. These items are reflected in our financial results discussed above and following below. We have satisfied the NASDAQ Capital Market filing requirements through our recent filing of the Bank's Form 10-QSB for the third quarter ended September 30, 2007." 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 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 Nine Months Ended September 30 September 30 2007 2006(1) 2007 2006(1) Income Statement: Interest Income $3,312 3,186 $9,888 9,036 Interest Expense 1,751 1,503 5,080 4,079 Net Interest Income 1,561 1,683 4,808 4,957 Loan Loss Provision 76 41 (177) 409 Net Interest Income After Provision 1,485 1,642 4,985 4,548 Other Income 117 120 408 417 Other Expense(2) 1,709 1,524 4,976 4,292 Income Before Taxes (107) 238 417 673 Income Taxes (Benefit)(3) (1,666) -- (1,666) -- Net Income $1,559 238 $2,083 673 (1) Restated for recognition of post retirement benefits. (2) Includes merger related expense of $219 in the 2007 periods. (3) Recognition of deferred tax asset. Income Per Share: Basic .69 .11 .92 .30 Diluted .66 .11 .90 .30 Average Shares Outstanding (000's): Basic 2,270 2,263 2,265 2,262 Diluted 2,351 2,263 2,303 2,262 Balance Sheet Data: Total Assets $199,701 180,149 -- -- Total Deposits 168,182 151,926 -- -- Total Loans 154,890 151,754 -- -- Loan Loss Reserve 1,743 1,971 -- -- Total Shareholder's Equity 21,388 18,711 -- -- Asset Quality: Non-Performing Assets 1,100 1,208 -- -- Non-Performing Assets To Total Assets (%) .55 .67 -- -- Net Loan Charge-Offs -- 54 1 121 Net Loan Charge-Offs To Average Loans (%) -- .14 .00 .11 Performance Ratios: Return On Average Assets (%) 3.20 .53 1.46 .52 Return On Average Equity (%) 31.27 5.06 14.30 4.91 Net Interest Margin (%) 3.32 3.87 3.49 3.96 DATASOURCE: Cardinal State Bank CONTACT: John W. Mallard, Jr., President and Chief Executive Officer, Cardinal State Bank, +1-919-403-2833,

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