Cardinal Bancshares' second quarter earnings decrease to $210 thousand.

LEXINGTON, Ky.--(BUSINESS WIRE)--August 17, 1995--Cardinal Bancshares, Inc. (NASDAQ National Market: CARD), a diversified banking and financial services company, today reported lower earnings for the quarter ended June 30, 1995, compared to the same period in the prior year.

Net income for the second quarter of 1995 decreased 17 percent to $210 thousand, or 14 cents per share on a fully diluted basis. The company reported earnings of $254 thousand (or 17 cents per share) for 1994's second quarter. Return on assets (ROA) was 0.14 percent in the 1995 second quarter versus 0.20 percent in the 1994 period, and return on equity (ROE) was 2.21 percent and 2.64 percent, respectively.

For the first half of 1995, earnings totaled $711 thousand, or 46 cents per fully diluted share, versus $286 thousand, or 19 cents per share, for the first six months of 1994. ROA was 0.24 percent for the 1995 six-month period and 0.11 percent for the 1994 six-month period, and ROE was 3.81 percent and 1.47 percent, respectively.

Chairman and Chief Executive Officer James S. Mahan III said that while fee income grew 37 percent and net interest income was boosted 27 percent by a larger loan portfolio and wider net interest margins for the second quarter, costs associated with the significant growth of three subsidiaries during the past year contributed to expected increases in non-interest expense.

"Over the past year, our Cardinal Credit finance subsidiary has expanded its loans nearly three fold to $23 million. The reception for the Jefferson Banking Company in Louisville has been tremendous. Since it opened in the fourth quarter of 1994, their assets have grown to more than $60 million. Work toward the formal start of our Internet bank, Security First Network Bank, continues on schedule toward its anticipated third quarter opening," Mahan said.

As a result, second quarter expenses for these three entities were $829 thousand higher than the year-earlier quarter. For the six-month period, expenses related to these entities were $1.8 million higher than the year-ago period.

Overall credit quality for the bank remained above industry standards, with a 0.25 percent level of non-performing loans to assets and loan charge-offs for the quarter totaling only 0.09 percent of average loans outstanding. Mahan said that Security First is currently testing its Internet banking software, and anticipates the bank will begin operations late in the third quarter. As previously announced, the planned spin-off of the entity, which will be submitted to Cardinal shareholders for their approval, is expected to take place sometime in the fourth quarter.

Immediately subsequent to the spin-off, Cardinal shareholders would own approximately 25% of Security First common stock on a fully diluted basis after giving effect to planned employee and director stock option plans that would cover 30% of Security First common stock. In addition, as a result of a combined $3 million investment in Security First, Wachovia Corporation, Huntington Bancshares and Area Bancshares would own approximately 25% of the common stock on a fully diluted basis. Five Paces Software, Inc., the Georgia software company that owns and licenses the Internet banking technology expected to be offered by Security First, would receive approximately 20% of Security First common stock on a fully diluted basis in exchange for all the rights to the software and technology developed. Area Bancshares, Huntington and Wachovia also would pay, in aggregate, an additional $2.0 million for a license of the Five Paces Software Internet banking technology.

Cardinal Bancshares, Inc., a $642 million bank holding company, owns and operates HNB Bank based in Harlan, Ky., with offices in Irvine and Cumberland, Ky.; The Vine Street Trust Company, located in Lexington, Ky.; Jefferson Banking Company in Louisville, Ky.; First Security Network Bank in Pineville, Ky,: Alliance Bank in Somerset, Ky., with offices in London, Corbin, Barbourville, Williamsburg, Monticello and Russell Springs, Ky.; First & Peoples Bank in Springfield, Ky.; VST Financial, based in Atlanta, Ga.; and Cardinal Credit Corporation, based in Lexington, Ky., with 20 offices throughout Kentucky.

More financial information follows. -0-

                        Cardinal Bancshares, Inc.
                     Selected Financial Information
         (000's omitted, except for shares and per share data)

                          For the Three Months  At or for the Six Months
                             Ended June 30           Ended June 30
                            1995       1994         1995       1994
Income Statement
  Interest income        $   13,513 $    8,963   $   25,715 $   17,069
  Interest expense            6,617      3,545       12,229      6,907
  Net interest income         6,896      5,418       13,486     10,162
  Loan loss provision           532        387          867        676
  Non-interest income           916        733        1,808      1,333
  Non-interest expense        6,971      5,374       13,300     10,360
  Pretax income                 309        390        1,125        459
  Income tax                     99        136          414        173
  Net income             $      210 $      254   $      711 $       286

End of Period Balance Sheet
  Loans                                          $  424,893 $  323,519
  Securities                                        146,027    142,789
  Earning assets                                    595,078    471,488
  Loan loss reserve                                   5,597      4,264
  Goodwill                                            6,119      5,088
  Assets                                            642,376    505,040
  Deposits                                          549,832    431,563
  Debt                                               47,182     31,547
  Equity                                             38,741     37,552

Performance Ratios
  Return on average assets    0.14%      0.20%        0.24%      0.11%
  Return on average equity    2.21%      2.64%        3.81%      1.47%
  Net Interest margin         4.70%      4.58%        4.77%      4.34%
  Efficiency ratio           89.23%     87.37%       86.97%     90.13%
  Non-interest expense/
     Avg. assets              4.49%      4.26%        4.43%      4.13%

Per Share Data
  Primary EPS            $    0.14  $    0.17    $    0.47  $    0.19
  Fully diluted EPS      $    0.14  $    0.17    $    0.46  $    0.19
  Dividends per share    $    0.20  $    0.20    $    0.40  $    0.40
  Book value per share   $   27.40  $   27.32    $   27.40  $   27.32
  Outstanding shares
    - June 30            1,413,940  1,374,370    1,413,940  1,374,370
  Average shares
    - primary            1,517,858  1,495,303    1,517,858  1,495,303
  Average shares
    - fully diluted      1,542,547  1,483,271    1,533,841  1,483,271

                    Cardinal Bancshares, Inc.
                  Selected Financial Information
       (000's omitted, except for shares and per share data)

                            Three Months           Six Months
                            Ended June 30         Ended June 30
                           1995       1994       1995       1994
Average Balance Sheet
  Loans                  $416,642   $318,610   $402,298   $307,713
  Securities              147,495    144,922    143,362    145,693
  Earning assets          586,650    473,703    564,912    468,139
  Assets                  620,670    504,062    600,431    501,863
  Deposits                482,736    392,704    464,500    392,493
  Borrowings               45,380     23,204     44,179     18,216
  Demand deposits          48,063     44,950     45,748     47,330
  Total equity             38,048     38,524     37,345     38,886

Credit Quality
  Nonaccrual loans       $    855   $    890   $    855   $    890
  90 days past due            772         52          0         52
  Other real estate owned       0        338          0        338
     Total nonperforming
      assets             $  1,627   $  1,280   $  1,627   $  1,280
  Net charge-offs
   (recoveries)          $    376   $     (8)  $    484   $     12

Non-performing loans/Loans   0.38%      0.29%      0.38%      0.29%
Non-performing loans/Loans   0.25%      0.25%      0.25%      0.25%
Non-performing assets/Assets 0.09%      0.00%      0.12%      0.00%
Non-performing loans/Loans   1.30%      1.30%      1.30%      1.30%

CONTACT: Cardinal Bancshares, Inc., Lexington

Jack Brown, 606/255-8300