Exhibit 99
News Release
Date: Thursday, May 30 2002
Contact: J. W. Davis, President and CEO
MountainBank Financial Corporation (828) 693-7376
Leon Moore, Chairman, President and CEO
Cardinal Bankshares Corporation (540) 745-4191
Release Date: For Immediate Release
CARDINAL BANKSHARES CORPORATION AND MOUNTAINBANK FINANCIAL
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CORPORATION ANNOUNCE AGREEMENT IN PRINCIPLE TO MERGE
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FLOYD, VA. and HENDERSONVILLE, N.C. / May 29 / PR Newswire / -- The
Boards of Directors of Cardinal Bankshares Corporation (OTCBB: CDBK) and
MountainBank Financial Corporation (OTCBB: MBFC) announced today that they have
entered into a letter of intent whereby Cardinal Bankshares Corporation and
MountainBank Financial Corporation would merge in a stock transaction valued at
approximately $36.9 million. The merger transaction is subject to execution of a
definitive merger agreement, the approval of the shareholders of both companies,
and to receipt of required state and federal bank regulatory approvals. Subject
to those contingencies, it is expected that the transaction will be consummated
during the fourth quarter of 2002. The resulting company would be the eighth
largest publicly traded bank holding company headquartered in North Carolina,
with total assets in excess of $835 million and 20 banking offices. The
transaction is expected to be structured as a tax free reorganization whereby
Cardinal shareholders will receive a combination of MountainBank Financial
common and convertible preferred stock valued at $24.00 per Cardinal share, with
the actual number of shares to be issued for each Cardinal share to be based on
the market value of MountainBank Financial's common stock immediately prior to
consummation of the merger.
Cardinal Bankshares Corporation, headquartered in Floyd, Virginia, has
approximately $185 million in assets. It is the bank holding company for Bank of
Floyd, which operates five banking offices in Floyd, Christiansburg, Hillsville,
Roanoke and Willis, Virginia.
MountainBank Financial Corporation, parent company of MountainBank
headquartered in Hendersonville, N.C., has approximately $650 million in assets
and currently operates 15 banking offices in nine western North Carolina
counties and a mortgage subsidiary headquartered in Greenwood, South Carolina.
Upon consummation of the transaction, Bank of Floyd will become a
wholly owned subsidiary of MountainBank Financial Corporation and will continue
to operate under its existing charter and name. Mr. Leon Moore, Cardinal's
Chairman, President and CEO, will continue in his current position as Bank of
Floyd's Chairman, President and CEO and will become a Director of MountainBank
Financial Corporation.
Mr. Moore commented on the announcement stating, "We are very excited
with this opportunity to become a part of such a growing and dynamic
organization as MountainBank. We believe that the combination of our two
companies will provide our shareholders and staff with significant benefits and
opportunities for growth while still providing the same personalized service
that our customers have grown to expect from Bank of Floyd over the years. We
look forward to joining MountainBank and together expanding our brand of banking
in Southwest Virginia."
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J. W. Davis, President and Chief Executive Officer of MountainBank
Financial Corporation, stated, "Cardinal Bankshares Corporation is a very
profitable, well managed banking company with whom we are proud to form a
strategic alliance. Leon Moore is recognized throughout Virginia as an industry
leader and strong proponent of community banking. His vision and values are
compatible with those of MountainBank, and we are gratified to be moving forward
as his financial partner."
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This joint press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 regarding
MountainBank Financial Corporation ("MFC"), Cardinal BankShares Corporation
("Cardinal") and their proposed merger. Those statements include, but are not
limited to: (1) statements about the benefits of the proposed merger (including
future financial and operating results, cost savings, and enhanced revenues),
(2) statements regarding MFC's and Cardinal's plans, objectives, expectations
and intentions and other statements that are not historical facts; and (3) other
statements identified by words such as "believes," "expects," "anticipates,"
"estimates," "intends," "plans," "targets," "projects," "would be," and similar
expressions. These statements are based upon the current beliefs and
expectations of MFC's and Cardinal's management and they are subject to
significant risks and uncertainties. Actual or future results or events may
differ from those set forth in the forward-looking statements.
The following risks and other factors, among others, could cause actual
results or events to differ materially from the anticipated results, events or
other expectations expressed in the forward-looking statements: (1) that the
businesses of MFC and Cardinal will not be integrated successfully or that the
process of integrating their businesses may be more difficult, time-consuming or
costly than expected; (2) that expected revenue synergies and cost savings from
the merger may not be fully realized or may not be realized within the expected
time frame; (3) that revenues following the merger may be lower than expected;
(4) that deposit attrition, operating costs, customer loss and business
disruption following the merger, including without limitation difficulties in
maintaining relationships with employees, may be greater than expected; (5) that
required governmental approvals of the merger will not be obtained on its
proposed terms and schedule; (6) that Cardinal's or MFC's stockholders will not
approve the merger; (7) that competitive pressures among depository and other
financial institutions may increase significantly and have an effect on pricing,
spending, third-party relationships and revenues; (8) that the strength of the
United States economy in general, and of the local economies in which the
combined company will operate, may be different than expected, which could
result in, among other things, a deterioration in credit quality or a reduced
demand for credit and have a negative effect on the combined company's loan
portfolio and allowance for loan losses; (9) that there will be changes in the
U.S. legal and regulatory framework; and (10) that there will be adverse
conditions in the stock market, the public debt market and other capital markets
(including changes in interest rate conditions) which would negatively affect
the combined company's business and operating results.
Additional factors that could cause MFC's and Cardinal's results to
differ materially from those described in the forward-looking statements can be
found in reports (such as Annual Reports on Form 10-K or 10-KSB, Quarterly
Reports on Form 10-Q or 10-QSB and Current Reports on Form 8-K) filed by MFC and
Cardinal with the Securities and Exchange Commission and which are available,
without charge, at the SEC's Internet site (http://www.sec.gov). All subsequent
written and oral forward-looking statements concerning the proposed merger or
other matters attributable to MFC and Cardinal or any person acting on their
behalf are expressly qualified in their entirety by the cautionary statements
above. MFC and Cardinal do not undertake any obligation to update any
forward-looking statement to reflect circumstances or events that occur after
the date the forward-looking statements are made.
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The proposed merger will be submitted to the stockholders of Cardinal
and MFC for their consideration and approval. MFC will file a registration
statement, a prospectus (which will be combined with Cardinal's and MFC's joint
proxy statements) and other related documents with the SEC concerning the
proposed merger. The joint proxy statement/prospectus and other relevant
materials, as well as any amendments or supplements to those documents and any
other filings containing information about Cardinal or MFC, will contain
important information, and Cardinal's and MFC's stockholders are urged to read
those documents when they become available and before making any voting or
investment decision with respect to the proposed merger. You will be able to
obtain a free copy of the joint proxy statement/prospectus and other relevant
materials (when they become available), and any other documents filed by MFC or
Cardinal, at the SEC's Internet site (http://www.sec.gov). In addition, you may
obtain copies of the joint proxy statement/prospectus, any SEC filings that will
be incorporated by reference in the joint proxy statement/prospectus, and any
other documents filed with the SEC by MFC, without charge, by directing a
request to the President, MountainBank Financial Corporation, 201 Wren Drive,
Hendersonville, N.C. 28792, telephone (828 693-7376). You may obtain copies of
any documents filed with the SEC by Cardinal, without charge, by directing a
request to the President, Cardinal BankShares Corporation, 101 Jacksonville
Circle, Floyd, Virginia 24091, telephone (540) 745-4191).
MFC and Cardinal, and their respective directors and executive
officers, may be deemed to be participants in the solicitation of proxies from
the stockholders of Cardinal and MFC in favor of the proposed merger.
Information about MFC's directors and executive officers and their ownership of
MFC's capital stock is contained in the proxy statement distributed by MFC in
connection with its 2002 annual meeting of stockholders which was filed with the
SEC on May 15, 2002. Information about Cardinal's directors and executive
officers and their ownership of Cardinal's capital stock is contained in the
proxy statement distributed by Cardinal in connection with its 2002 annual
meeting of stockholders which was filed with the SEC on April 9, 2002.
Additional information regarding the interests of those participants in the
proposed merger may be obtained by reading the joint proxy statement/prospectus
regarding the merger when it becomes available.
This press release does not constitute an offer of any securities for
sale. Any offer will be made only by the joint proxy statement/prospectus.
SOURCE: Cardinal Bankshares Corporation and MountainBank Financial
Corporation
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