CSNC Cardinal State Bank (MM)

DURHAM, N.C., Feb. 12 /PRNewswire-FirstCall/ -- Cardinal State Bank (NASDAQ:CSNC), a North Carolina state chartered bank headquartered in Durham, North Carolina, announced today that the Securities and Exchange Commission has declared a required Registration Statement pertaining to its proposed merger with Yadkin Valley Financial Corporation and Yadkin Valley Bank and Trust Company effective. As a result, Cardinal is in the process of mailing the Proxy Statement for the Special Meeting of Shareholders to be held March 19, 2008 for the purpose of shareholder consideration of the pending merger. The Bank also announced its unaudited financial results for 2007. Net income for 2007 totaled $1,493,000 compared to net income of $886,000 for 2006. Basic and diluted income per share were $.66 and $.64, respectively, compared to $.39 for both basic and diluted income per share in 2006. Results for 2007 include $2,039,000 in income tax benefits and $934,000 in merger expenses. For the fourth quarter of 2007, a net loss of $589,000 was experienced, compared to net income of $213,000 in 2006. Total assets at December 31, 2007 were $198.1 million, compared to $189.5 million at December 31, 2006, an increase of $8.6 million or 4.6%. Fueling the growth in total assets was an increase of $9.3 million or 5.8% in total deposits which increased to $170.2 million at December 31, 2007 from $160.9 million at December 31, 2006. During the same period, total loans decreased to $153.6 million from $154.4 million. "We are excited about the progress we have made with our merger with Yadkin Valley. The last regulatory hurdle has been achieved," said John W. Mallard, Jr., President and CEO of Cardinal State Bank. "Assuming a favorable response from our shareholders at the Special Meeting, we anticipate closing of the transaction prior to the end of the first quarter. We are looking forward to joining forces with Yadkin Valley's fine organization." 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 Years Ended December 31 December 31 2007 2006 2007 2006 Income Statement: Interest Income $3,253 3,308 $13,141 12,344 Interest Expense 1,781 1,635 6,861 5,714 Net Interest Income 1,472 1,673 6,280 6,630 Loan Loss Provision 400 68 223 477 Net Interest Income After Provision 1,072 1,605 6,057 6,153 Other Income 114 107 522 524 Other Expense (1) 2,148 1,499 7,125 5,791 Income (Loss) Before Taxes (962) 213 (546) 886 Income Taxes (373) -- (2,039) -- Net Income (Loss) $ (589) 213 $ 1,493 886 (1) Includes merger expenses $ 715 -- $ 934 -- Income (Loss) Per Share: Basic (.26) .09 .66 .39 Diluted (.25) .09 .64 .39 Average Shares Outstanding (000's): Basic 2,282 2,263 2,269 2,262 Diluted 2,353 2,263 2,315 2,262 Balance Sheet Data: Total Assets $198,132 189,496 -- -- Total Deposits 170,186 160,912 -- -- Total Loans 153,578 154,432 -- -- Loan Loss Reserve 1,978 1,921 -- -- Total Shareholders' Equity 20,824 18,968 -- -- Asset Quality: Non-Performing Assets 1,548 1,173 -- -- Non-Performing Assets To Total Assets (%) .78 .62 -- -- Net Loan Charge-Offs 165 117 166 238 Net Loan Charge-Offs To Average Loans (%) .43 .31 .11 .16 Performance Ratios: Return On Average Assets (%) (1.15) .45 .77 .50 Return On Average Equity (%) (10.87) 4.46 7.47 4.79 Net Interest Margin (%) 3.01 3.64 3.36 3.87 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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