North State Bancorp Reports 1st Quarter Earnings

RALEIGH, N.C., May 13, 2011 /PRNewswire/ -- North State Bancorp (OTCBB: NSBC the "Company"), the holding company for North State Bank, reported net income for the quarter ended March 31, 2011 of $204,000, which is $310,000 less than the $514,000 earned in the period ended March 31, 2010.  Diluted earnings per share were $0.03 for the quarter ended March 31, 2011 compared to $0.07 for 2010. 

Total assets for the Company as of March 31, 2011, were $649.6 million compared to $701.1 million as of March 31, 2010, a decrease of $51.5 million.  Total deposits and total loans as of March 31, 2011, were $577.7 million and $480.2 million, respectively, compared to total deposits and total loans at March 31, 2010, of $628.1 million and $518.4 million, respectively.  The reduction in total assets and total deposits is the result of the Company's efforts to eliminate non-core fundings, specifically brokered and internet deposits, which decreased $23.4 million over the twelve-month period ended March 31, 2011.  Core deposits, which primarily includes demand deposit and money market accounts for our customers, increased by $25.0 million for the same period.  These changes in deposit mix resulted in a ratio of non-interest bearing deposits to total deposits of 23.7%, one of the highest in the state of North Carolina.  

The primary reason for the decrease in earnings was higher costs associated with the disposition of Other Real Estate Owned (an increase of $235,000) in the first quarter of 2011 and the inclusion of gains from the sale of securities (an increase of $232,000) in the quarter ended March 31, 2010.  Higher non-interest expenses, principally personnel expenses, were related to our mortgage division which we purchased on February 15, 2010.  The higher personnel expenses were essentially offset by gross revenues from the mortgage division which increased $583,000 for the quarter ended March 31, 2011.  

North State Bank remains well capitalized with capital ratios in excess of regulatory minimums to be considered well capitalized, the highest regulatory capital rating.    

"The community banking industry continues to struggle through the greatest recession in 75 years.  We continue to work with our customers who are honorably struggling while also being mindful of our responsibilities to keep North State Bank on sound footings," Larry D. Barbour, president and CEO, shared in remarks on the Company's financial results.  "It was a year of challenges for nearly everyone I know.  While our results are not what we would want them to be, we were profitable for fiscal 2010 and the first quarter of 2011 and that, in and of itself, shows the core strength of our Company and staff, our customer niches, and our market area."  

"Despite the headwinds in the economy" Mr. Barbour continued, "we remain optimistic about our ability to offer unique value to our customers.  We believe this will remain the way we differentiate our Company from the competition."

Founded in 2000, North State Bank is a full-service community bank, serving Wake and New Hanover Counties through seven full-service offices.

North State Bancorp is listed on the OTC electronic bulletin board under the symbol "NSBC."

www.northstatebank.com

This news release contains forward-looking statements. The actual results might differ materially from those projected in the forward-looking statements for various reasons, including changes in real estate values and the real estate market, economic conditions, regulatory changes, changes in interest rates, substantial changes in financial markets, our ability to manage growth, and  loss of deposits and loan demand to other savings and financial institutions. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company's SEC filings, including its periodic reports under the Securities Exchange Act of 1934, as amended, copies of which are available upon request from the Company.

(1) Excludes nonaccrual loans 

(2) We define core earnings as operating income before securities gains (losses); loan loss reserves; foreclosed asset valuation write-downs and expense net of rental income; and taxes.  Core earnings is considered a non-GAAP financial measure.  Core earnings do not represent, and should not be considered as, an alternative to net income, as determined in accordance with GAAP. Our definition of core earnings might not be comparable to similarly titled measures by other companies.  We believe that the presentation of core earnings is useful to investors because it provides important information of our operating performance exclusive of non-recurring expenses of loan loss reserves and foreclosed asset expense and write-downs as well as taxes and non-recurring income from security gains.

SOURCE North State Bancorp