CSNC Cardinal State Bank (MM)

DURHAM, N.C., April 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 first quarter ended March 31, 2006 totaled $77,000, compared to net income of $206,000 for the first quarter of 2005. The difference in the year-to-year comparison is due to strong loan growth during the first quarter of 2006, which led to a loan loss provision of $245,000, compared to a provision of $49,000 for the first quarter of 2005, an increase of $196,000. Excluding the required provision for loan losses and expense for stock options, Cardinal State Bank's net income for the first quarter of 2006 was $399,000, compared to net income of $255,000 for the first quarter of 2005, an increase of 56.5%. Total assets as of March 31, 2006 were $171.6 million, compared to $142.2 million at March 31, 2005, an increase of $29.4 million or 20.7%. Similar gains were experienced in loans and deposits. Total loans were $149.6 million, an increase of $39.6 million or 36.0%, over the $110.0 million reported for the same period in 2005. Total deposits were $144.5 million, an increase of $28.6 million or 24.7% over first quarter 2005 deposits of $115.9 million. "The story for our Bank during the first quarter of 2006 is strong loan growth," said John W. Mallard, Jr., President and CEO of Cardinal State Bank. "Under the leadership of Steve Anderson, our commercial lending officers are doing a great job of developing relationships and growing our loan portfolio without sacrificing quality. The impact this has had on our net income for the quarter is a trade-off we can live with as we continue to grow. These loans will provide positive income in subsequent quarters. It is important to note that the provision is simply a safeguard, as our loan quality continues to be exceptional." To a lesser extent, net income for the first quarter of 2006 was impacted by accounting for stock options. Under new accounting guidelines, we began to expense stock options on January 1, 2006. The impact on net income in the first quarter of 2006 was $77,000 in additional expense. 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 Three Months Ended March 31 2006 2005 Income Statement: Interest Income $2,751 1,889 Interest Expense 1,199 648 Net Interest Income 1,552 1,241 Loan Loss Provision 245 49 Net Interest Income After Provision 1,307 1,192 Other Income 116 100 Other Expense (1) 1,346 1,086 Income Before Taxes 77 206 Income Taxes -- -- Net Income $77 206 (1) Includes stock option expense $77 -- Income Per Share: Basic .03 .09 Diluted .03 .09 Average Shares Outstanding (000's): Basic 2,261 2,261 Diluted 2,261 2,290 Balance Sheet Data: Total Assets $171,645 142,221 Total Deposits 144,464 115,910 Total Loans 149,644 110,032 Loan Loss Reserve 1,927 1,431 Total Shareholders' Equity 19,228 18,544 Asset Quality: Non-Performing Loans 547 197 Non-Performing Loans To Total Assets (%) .32 .14 Net Loan Charge-Offs 1 8 Net Loan Charge-Offs To Average Loans (%) -- .03 Performance Ratios: Return On Average Assets (%) .19 .59 Return On Average Equity (%) 1.61 4.50 Net Interest Margin (%) 3.92 3.69 DATASOURCE: Cardinal State Bank CONTACT: John W. Mallard, Jr., President and Chief Executive Officer, Cardinal State Bank, +1-919-403-2833,

Copyright