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FOR IMMEDIATE RELEASE
Columbia, SC (October 25, 2007) - Carolina National Corporation (NASDAQ:CNCP),
parent of Carolina National Bank and Trust Company, announced today that total
assets grew by 16.2% from $196.2 million on September 30, 2006, to $228.0
million on September 30, 2007.
Growth in assets is attributable primarily to the growth of gross loans to
$204.5 million, an increase of 16.1% for September 30, 2007 compared to
September 30, 2006. Deposits also increased from $163.7 million at September 30,
2006 to $194.3 million at September 30, 2007, an increase of 18.7%.
Roger Whaley, president and CEO of Carolina National, said, "We are pleased with
our increase in both the deposit and loan base for the past twelve months. We
believe it demonstrates that we are experiencing true core growth within our
consumer and small business customer base." Carolina National management
believes that its pending merger with First National Bancshares, Inc., which
still requires regulatory and shareholder approval and is anticipated to be
completed during the first quarter of 2008, will bring additional resources,
making the resulting company even more appealing to its targeted small business
and consumer segments in the market.
Despite the growth in assets, loans and deposits, net income for the quarter and
nine months ended September 30, 2007 declined $274,000 and $345,000,
respectively, when compared to the same periods of 2006. The decline in net
income for the periods is due primarily to strategic infrastructure expense and
non-recurring merger related expenses. Other contributors to the reduction of
net income were the net interest margin which decreased by 45 basis points in
the third quarter of 2007 and nonperforming assets which grew in the third
quarter to 1.29% of total assets or $2.96 million.
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Carolina National Bank
October 25, 2007
"Based on our evaluation, the company expects minimal losses on the
non-performing assets," said Whaley. "There were no charged-off loans in the
third quarter of the year and the bank has raised its reserve for loan losses
since December 31, 2006 from $2.4 million to $2.6 million to cover estimated
losses. We have adequate capital and loan loss reserve to support our assets."
Carolina National is expanding its presence in the Midlands through the
construction of a new branch in Lexington, SC, which is anticipated to open in
the second quarter of 2008.
Unaudited Unaudited Audited
September 30, 2007 September 30, 2006 December 31, 2006
------------------ ------------------ -----------------
Condensed Balance Sheet ($s in thousands)
Assets
Cash equivalents .............................................. $ 21,188 $ 18,112 $ 12,036
Investment Securities ......................................... 1,276 644 644
Loans, net .................................................... 201,880 173,932 192,350
Other Assets .................................................. 3,682 3,493 3,882
-------- -------- --------
Total Assets ................................................ $228,026 $196,181 $208,912
======== ======== ========
Liabilities
Deposits ...................................................... $194,328 $163,690 $175,582
Other Liabilities ............................................. 1,669 2,330 2,737
-------- -------- --------
Total Liabilities ........................................... $195,997 $166,020 $178,319
-------- -------- --------
Equity
Shareholders' Equity .......................................... $ 32,209 $ 30,161 $ 30,593
-------- -------- --------
Total Liabilities and
Shareholders' Equity ................................. $228,026 $196,181 $208,912
======== ======== ========
Unaudited Unaudited
September 30, 2007 September 30, 2006
------------------ ------------------
Year To Date Income Statement ($s in thousands)
Net Interest Income ............................................................ $6,410 $5,849
Provision for Loan Losses ...................................................... 209 340
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Net Interest Income after
Provision for Loan Losses ............................................. 6,201 5,509
------ ------
Noninterest Income ............................................................. 284 300
Noninterest Expense ............................................................ 4,539 3,461
Income Tax Expense ............................................................. 703 830
------ ------
Net Income ............................................................ $1,173 $1,518
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Carolina National Bank
October 25, 2007
Unaudited Unaudited
September 30, 2007 September 30, 2006
------------------ ------------------
Quarter To Date Income Statement ($s in thousands)
Net Interest Income ............................................................ $2,118 $2,062
Provision for Loan Losses ...................................................... 118 89
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Net Interest Income after
Provision for Loan Losses ............................................. 2,000 1,973
------ ------
Noninterest Income ............................................................. 101 93
Noninterest Expense ............................................................ 1,704 1,212
Income Tax Expense ............................................................. 142 325
------ ------
Net Income ............................................................ $ 255 $ 529
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ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
In connection with the proposed merger, First National has filed a preliminary
joint proxy statement/prospectus on a Form S-4 registration statement with the
Securities and Exchange Commission (the "SEC") on October 9, 2007. INVESTORS AND
SHAREHOLDERS OF BOTH COMPANIES ARE ADVISED TO READ THE PRELIMINARY JOINT PROXY
STATEMENT/PROSPECTUS AND ANY APPLICABLE AMENDMENTS OR SUPPLEMENTS AS THEY BECOME
AVAILABLE BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION.
Shareholders may obtain a free copy of the final joint proxy
statement/prospectus (when available), as well as other filings containing
information about First National and Carolina National at the SEC's internet
site (http://www.sec.gov). Free copies of the final joint proxy
statement/prospectus and each company's filings with the SEC may also be
obtained from the respective companies. Free copies of First National's filings
may be obtained by directing a request to First National Bancshares, Inc., 215
N. Pine Street, Spartanburg, South Carolina, 29302, Attention: Jerry L. Calvert.
Free copies of Carolina National's filings may be obtained by directing a
request to Carolina National Corporation, 1350 Main Street, Columbia, South
Carolina 29201, Attention: Roger B. Whaley.
PARTICIPANTS IN THE SOLICITATION
First National, Carolina National, and their respective directors and executive
officers may be soliciting proxies from their respective shareholders in favor
of the merger. Information regarding First National's directors and executive
officers is available in its 2007 definitive proxy statement (form type DEF 14A)
available at www.sec.gov. Information regarding Carolina National's directors
and executive officers is available in its 2007 definitive proxy statement (form
type DEF 14A) available at www.sec.gov. More recent information regarding the
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Carolina National Bank
October 25, 2007
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, is contained in the
preliminary joint proxy statement/prospectus filed with the SEC which may be
found at the SEC's internet site (http://www.sec.gov/Archives/edgar/data/1095274
/000104746907007458/0001047469-07-007458-index.htm) and other relevant materials
to be filed with the SEC when they become available.