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Carolina Alliance Bank and Pinnacle Bank Announce Merger

SPARTANBURG, S.C. and GREENVILLE, S.C., March 24, 2015 (GLOBE NEWSWIRE) -- Carolina Alliance Bank ("CAB") (OTCQX:CRLN), PBSC Financial Corporation ("PBSC"), and PBSC's wholly-owned subsidiary, Pinnacle Bank of South Carolina ("Pinnacle Bank"), jointly announced today that they have signed a definitive merger agreement. The proposed combination will create a full-service community bank serving customers principally in upstate South Carolina and western North Carolina. The combined bank will have eight banking offices located in Spartanburg, Greenville, Easley, Powdersville, Anderson, and Seneca, SC and Asheville and Hendersonville, NC as well as loan and lease production offices in Spartanburg, SC and Charlotte, NC. All of the offices will operate as Carolina Alliance Bank. The bank will be headquartered in Spartanburg, SC, with senior management personnel operating from Spartanburg, Asheville, and Greenville. Based on December 31, 2014 reported results, on a pro forma combined basis, the bank would have approximately $567 million in assets, $461 million in loans, and $461 million in deposits, as well as a very strong capital position of approximately $67 million. The transaction is expected to close in the fourth quarter of 2015, subject to receipt of regulatory approvals and the approval of the shareholders of each institution.



Shareholders of PBSC will be able to elect to receive either $12.00 per share of cash or 1.0909 shares of CAB common stock for each share of PBSC common stock held, provided the overall allocation of stock is 80% (subject to adjustment). The stock portion of the consideration is subject to adjustment depending upon the average price of CAB common stock prior to the closing of the merger. Based on the closing price of $11.50 for CAB shares on March 23, 2015, the transaction would result in an aggregate value of $23.3 million.

As a result of the transaction, PBSC's shareholders are expected to own approximately 26% of the combined bank, and CAB's shareholders are expected to own approximately 74%. Cost savings of 6% to 8% of the combined bank's non-interest expenses are expected to be achieved. The transaction is expected to be immediately accretive to CAB's earnings per share.

David Barnett, President and CEO of PBSC and Pinnacle Bank will join CAB's senior management team and will be President of the Greenville and South Carolina Western Region. Three members of the PBSC Board of Directors will join the CAB Board of Directors.

According to John Poole, CEO of Carolina Alliance, "Both Carolina Alliance and Pinnacle Bank are young, healthy, and growing banks. Merging these financially sound institutions is a natural fit to bridge our Spartanburg and western upstate offices. Both banks share a philosophy of serving customers with seasoned local bankers and local decision-making. We also serve the local communities in which we operate." Mr. Barnett noted, "We have known the bankers at Carolina Alliance for years. We started our respective banks with the vision that local communities deserve to have access to experienced knowledgeable bankers offering consultative financial advice. Our philosophy has always been about communities and service. This combination allows us to serve our existing communities - and new ones - with an even greater focus on that philosophy."

According to Terry Cash, Chairman of Carolina Alliance, "Combining these two financially strong institutions enhances the capacity of each bank to serve customers. Pinnacle will become a key part of the platform we have been building to support our long-term growth goals. The merger with Forest Commercial Bank last year created a much stronger institution than the two banks were individually. We expect the same will be the case when we integrate these two great organizations." Rick Sumerel, Chairman of PBSC and Pinnacle Bank, stated, "This combination provides a unique opportunity for our shareholders to continue their investment in a locally managed community bank. Our community and our shareholders will continue to be represented by the same great bankers working together with a great expanded team."

Carolina Alliance was advised in the transaction by FIG Partners, LLC as financial advisor and Nelson Mullins Riley & Scarborough LLP as legal counsel. PBSC was advised by SunTrust Robinson Humphrey as financial advisor and Bryan Cave LLP as legal counsel.

About Carolina Alliance

Carolina Alliance Bank is a state-chartered bank with its deposits insured (up to applicable limits) by the FDIC. It began operations in 2007 and is headquartered in Spartanburg, South Carolina. At December 31, 2014, it had assets of $428.5 million and shareholders' equity of $53.3 million. Operating from six offices throughout the upstate of South Carolina and western North Carolina, it is a full-service commercial bank providing business and personal banking products and services, as well as wealth management services through its affiliations with Mahon and Ryan and LPL Financial. The common stock of Carolina Alliance Bank is traded over the counter on through OTC Markets Group (OTCQX:CRLN). For further information, visit www.carolinaalliancebank.com.

About Pinnacle

Pinnacle Bank's focus is on providing exceptional consultative service and products to area businesses and individuals. Headquartered in Greenville, South Carolina, the bank opened for business in 2005 and serves upstate South Carolina from offices in Greenville, Powdersville, and Easley. At December 31, 2014, it had assets of $154.4 million and shareholders' equity of $20.2 million. For further information, visit www.pinnaclebanksc.com.

Additional Information About the Merger

In connection with the proposed merger, the entities will prepare a joint proxy statement/offering circular for the shareholder meetings of CAB and PBSC. It is anticipated that the joint proxy statement/offering circular and other relevant materials (when they become available) will be mailed to shareholders in the second quarter of 2015.

Shareholders are urged to read the joint proxy statement/offering circular and the other relevant materials when they become available before voting on the merger.

Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties, and other factors, such as an economic downturn, competitive pressures among depository and other financial institutions, the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in the banks' loan portfolios, and changes in the U.S. legal and regulatory framework, including the effect of recent financial reform legislation on the banking industry, any of which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.

Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by CAB nor PBSC or any person that the future events, plans, or expectations contemplated by such entities will be achieved. All subsequent written and oral forward-looking statements concerning CAB nor PBSC or any person acting on their behalf is expressly qualified in its entirety by the cautionary statements above. Neither CAB nor PBSC undertakes any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, to reflect circumstances or events that occur after the date the forward-looking statements are made.

CONTACT: Carolina Alliance Bank John S. Poole (864) 542-2615 John D. Kimberly (828) 255-5711 Pinnacle Bank David Barnett (864) 233-8275

Source:Carolina Alliance Bank