CSNC Cardinal State Bank (MM)

DURHAM, N.C., Jan. 19 /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 year ended December 31, 2005 was a record $739,000, compared to net income of $302,000 for 2004, an increase of 144.7%. For the three months ended December 31, 2005, net income amounted to $130,000, compared to $181,000 for the fourth quarter of 2004. Total assets stood at $163,898,000 at December 31, 2005, compared to $135,439,000 at December 31, 2004, an increase of $28,459,000 or 21.0%. Similar gains were experienced in deposits and loans which increased to $136,896,000 and $134,235,000, respectively, from $109,348,000 and $110,798,000. "We are very pleased with our record earnings and growth in our balance sheet in 2005" said John W. Mallard, Jr., President and CEO of Cardinal State Bank. "Loan demand in the fourth quarter of 2005 was exceptional which impacted our short-term earnings due to increased loan loss provisions to match the growth in our loan portfolio. However, this loan growth further strengthened our positive outlook for 2006. Our asset quality remains strong and we are anticipating further improvements in profitability." Mallard further noted: "We have recently occupied additional leased space in our Administration/Operations location which officially became our corporate headquarters effective January 1, 2006. We are continuing negotiations to purchase an additional branch location outside of Durham. We remain highly optimistic about our prospects in 2006 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. 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 2005 2004 2005 2004 Income Statement: Interest Income $2,523 1,707 $8,760 5,786 Interest Expense 1,056 536 3,329 1,927 Net Interest Income 1,467 1,171 5,431 3,859 Loan Loss Provision 165 77 336 358 Net Interest Income After Provision 1,302 1,094 5,095 3,501 Other Income 110 125 430 414 Other Expense 1,282 1,038 4,786 3,613 Income Before Taxes 130 181 739 302 Income Taxes -- -- -- -- Net Income $ 130 181 $ 739 302 Income Per Share: Basic .06 .08 .33 .16 Diluted .06 .08 .32 .16 Average Shares Outstanding (000's): Basic 2,261 2,261 2,261 1,891 Diluted 2,276 2,261 2,285 1,891 Balance Sheet Data: Total Assets $163,898 135,439 -- -- Total Deposits 136,896 109,348 -- -- Total Loans 134,235 110,798 -- -- Loan Loss Reserve 1,682 1,390 -- -- Total Shareholders' Equity 19,075 18,343 -- -- Asset Quality: Non-Performing Loans 444 102 -- -- Non-Performing Loans To Total Assets (%) .27 .08 -- -- Net Loan Charge-Offs 5 16 44 35 Net Loan Charge-Offs To Average Loans (%) .02 .06 .04 .04 Performance Ratios: Return On Average Assets(%) .32 .56 .50 .26 Return On Average Equity(%) 2.72 3.93 3.93 2.06 Net Interest Margin(%) 3.77 3.75 3.79 3.45 First Call Analyst: FCMN Contact: DATASOURCE: Cardinal State Bank CONTACT: John W. Mallard, Jr., President and Chief Executive Officer of Cardinal State Bank, +1-919-403-2833, or

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