Carolina Alliance Bank and Forest Commercial Bank Announce Merger

Carolina Alliance Bank and Forest Commercial Bank Announce Merger

SPARTANBURG, S.C. & ASHEVILLE, N.C.--(BUSINESS WIRE)-- Carolina Alliance Bank ("CAB") (OTCBB: CRLN and OTCQB: CRLN) and Forest Commercial Bank ("FCB") 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 three full-service offices located in Spartanburg, SC, Asheville, NC, and Hendersonville, NC; a loan production office in Charlotte, NC; and a proposed branch office to be located in Seneca, SC. All of the offices will operate as Carolina Alliance Bank. The bank will be headquartered in Spartanburg, SC, with senior management personnel operating from both Spartanburg and Asheville. On a combined basis, the bank will have approximately $385 million in assets, approximately $277 million in loans, approximately $314 million in deposits, and a very strong capital position of approximately $50 million. The transaction is expected to close in the first quarter of 2014, subject to receipt of regulatory approvals and the approval of the shareholders of each institution.

Under the terms of the merger agreement, shareholders of FCB will receive 0.755 newly issued shares of CAB in exchange for each outstanding FCB share. As a result of the transaction, FCB's shareholders are expected to own approximately 40% of the combined bank, and CAB's shareholders are expected to own approximately 60%. The transaction, net of one-time transaction costs, is expected to be accretive to earnings immediately. Cost savings of 8% to 10% of the combined bank's non-interest expenses are expected to be achieved.

John S. Poole will remain Chief Executive Officer of Carolina Alliance Bank, and John D. Kimberly, President and Chief Executive Officer of Forest Commercial Bank, will become President of the bank. R. Lamar Simpson, Treasurer and Chief Financial Officer of CAB, will retain his position. Terry Cash will remain Chairman of CAB, and W. Louis ("Lou") Bissette, Jr., Chairman of FCB, will become Vice Chairman of the bank. The Board of CAB will be restructured, and initially will consist of 15 members: nine members from the existing CAB Board and six members from the existing FCB Board, including the aforenamed individuals.

According to Mr. Poole, "Both Carolina Alliance and Forest Commercial are young, healthy, and growing banks. Merging these financially sound institutions seems to be such a natural fit. Both banks are committed to seasoned local bankers, making local decisions, and serving the local communities in which we operate. The core values which both Carolina Alliance and Forest Commercial share, will guide our operation as we grow throughout the markets we serve." Mr. Kimberly noted "We are very excited about the growth opportunities created by what both parties consider to be a merger of equals. We have gotten to know each other over the past several years and often noted the similarities of the banks' financial statistics and operating philosophies. The merger creates a larger and stronger financial institution better able to compete in today's challenging environment, with a significantly higher lending limit, expanded product offerings, and the ability to generate efficiencies which should increase profitability." Mr. Kimberly then added, "Since there is no market overlap and since we both are growing, we anticipate little, if any, loss of personnel in either of the banks as a result of the merger."

According to Mr. Cash, "Both banks are merging from positions of strength, and the combined institution will be even stronger. Both banks have superior credit quality and high capital levels, which give the combined bank greater capacity to serve customers' needs and to expand in ways which may not have been feasible for the banks individually." Mr. Bissette commented on the value of the transaction for the banks' shareholders by saying that "The merger creates efficiencies and opportunities for earnings growth and this should produce greater per share value than either bank would achieve on a stand-alone basis. The merger also increases shares outstanding and market capitalization, creating additional liquidity in the banks' shares, which in my opinion is a tremendous benefit. This strategic merger particularly offers Forest Commercial the opportunity to gain the size and scale we've desired since our founding."

Carolina Alliance was advised in the transaction by FIG Partners, LLC as financial advisor and Nelson Mullins Riley & Scarborough LLP as legal counsel. Forest Commercial was advised by Banks Street Partners, LLC as financial advisor and Wyrick Robbins Yates & Ponton 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 January 2007 and is headquartered in Spartanburg, South Carolina.At June 30, 2013, it had assets of $242.8 million and shareholders' equity of $31.9 million.Operating from a single office in downtown Spartanburg, 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.Carolina Alliance has also filed regulatory applications to establish a branch office in Seneca, South Carolina.The common stock of Carolina Alliance Bank is traded over the counter on the OTC Bulletin Board (OTCBB: CRLN) and on OTC Markets Group (OTCQB: CRLN). For further information,

About Forest Commercial

Forest Commercial Bank was founded for the purpose of helping businesses, professional firms, and individuals achieve their financial goals.Headquartered in Asheville, North Carolina, the bank opened for business in March 2008 and serves western North Carolina from offices in Asheville and Hendersonville and a loan production office in Charlotte.At June 30, 2013, it had assets of $143.0 million and shareholders' equity of $19.3 million. For further information,

Additional Information About the Merger

In connection with the proposed merger, the banks will prepare a joint proxy statement/offering circular for the shareholder meetings of CAB and FCB. 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 fourth quarter of 2013.

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 a continued downturn in the economy, 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 the banks or any person that the future events, plans, or expectations contemplated by the banks will be achieved.All subsequent written and oral forward-looking statements concerning the banks or any person acting on their behalf is expressly qualified in its entirety by the cautionary statements above.Neither CAB nor FCB 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.

Carolina Alliance Bank
John S. Poole, 864-542-2615
Forest Commercial Bank
John D. Kimberly, 828-255-5711

KEYWORDS:   United States  North America  North Carolina


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