CSNC Cardinal State Bank (MM)

DURHAM, N.C., Jan. 18 /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 fourth quarter ended December 31, 2006 totaled $231,000, compared to net income of $130,000 for the fourth quarter of 2005, an increase of 77.7%. For the year ended December 31, 2006, net income amounted to $960,000, compared to $739,000 for the year ended December 31, 2005, an increase of 29.9%. In compliance with current accounting regulations, which became effective January 1, 2006, results for the 2006 periods include $44,000 and $246,000, respectively, in stock option expense. Total assets as of December 31, 2006 were $189.5 million, compared to $163.9 million at December 31, 2005, an increase of $25.6 million or 15.6%. Similar gains were experienced in loans and deposits. Total loans were $154.4 million, an increase of $20.2 million or 15.1%, over the $134.2 million reported for the same period in 2005. Total deposits were $160.9 million, an increase of $24.0 million or 17.5% over year-end 2005 deposits of $136.9 million. "The fourth quarter of 2006 was another good quarter for Cardinal State Bank," said John W. Mallard, Jr., President and CEO of Cardinal State Bank. "Coupled with results for the first nine months of the year, we achieved record annual earnings and also experienced strong balance sheet growth. The Hillsborough community continues to respond favorably after our opening in the latter portion of the year. We remain excited about our future in this community. Despite continued pressure on our net interest margin, increased regulatory assessments and auditing/accounting costs, we remain optimistic about 2007 and beyond." 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 2006 2005 2006 2005 Income Statement: Interest Income $3,308 2,523 $12,344 8,760 Interest Expense 1,635 1,056 5,714 3,329 Net Interest Income 1,673 1,467 6,630 5,431 Loan Loss Provision 68 165 477 336 Net Interest Income After Provision 1,605 1,302 6,153 5,095 Other Income 107 110 524 430 Other Expense (1) 1,481 1,282 5,717 4,786 Income Before Taxes 231 130 960 739 Income Taxes -- -- -- -- Net Income $231 130 $960 739 (1) Includes stock option expense $44 -- $246 -- Income Per Share: Basic .10 .06 .42 .33 Diluted .10 .06 .42 .32 Average Shares Outstanding (000's): Basic 2,263 2,261 2,262 2,261 Diluted 2,263 2,276 2,262 2,285 Balance Sheet Data: Total Assets $189,496 163,898 -- -- Total Deposits 160,912 136,896 -- -- Total Loans 154,432 134,235 -- -- Loan Loss Reserve 1,921 1,682 -- -- Total Shareholders' Equity 20,298 19,075 -- -- Asset Quality: Non-Performing Assets 1,173 444 -- -- Non-Performing Assets To Total Assets (%) .62 .27 -- -- Net Loan Charge-Offs 117 5 238 44 Net Loan Charge-Offs To Average Loans (%) .31 .02 .16 .04 Performance Ratios: Return On Average Assets (%) .48 .32 .54 .50 Return On Average Equity (%) 4.52 2.72 4.85 3.93 Net Interest Margin (%) 3.64 3.77 3.87 3.79 DATASOURCE: Cardinal State Bank CONTACT: John W. Mallard, Jr., President and Chief Executive Officer of Cardinal State Bank, +1-919-403-2833, or Web site: http://www.cardinalstatebank.com/

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