North State Bancorp Reports 1st Quarter Earnings

Company reports profitability for the 1st Quarter.

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May 13, 2011, 04:44 ET

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.

North State Bancorp
Selected Financial Information and Other Data (Unaudited)
			As of or for the Three Months Ended
			March 31,
			2011		2010
		(Dollars in thousands, except per share)
Earnings Summary:
	Total interest income		$ 7,080		$ 7,600
	Total interest expense		1,482		2,157
	Net interest income		5,598		5,443
	Provision for loan losses		1,015		1,250
	Net interest income after provision for loan losses		4,583		4,193
	Noninterest income		743		586
	Noninterest expense		5,002		3,903
	Income before income taxes		324		876
	Income taxes		120		362
	Net income		$ 204		$ 514

Share and Per Share Data:
	Earnings per share - basic		$ 0.03		$ 0.07
	Earnings per share - diluted		$ 0.03		$ 0.07
	Tangible book value per share		$ 5.06		$ 5.04
	Weighted average shares outstanding:
	Basic		7,427,976		7,257,980
	Diluted		7,433,773		7,319,626

Financial Condition Period End:
	Cash, federal funds sold and due from banks		$ 104,284		$ 113,746
	Investment securities		30,270		23,059
	Loans - held for sale		11,848		21,778
	Loans		480,165		518,362
	Less allowance for loan losses		9,346		7,921
	Other assets		32,363		32,042
	Total assets		$ 649,584		$ 701,066

	Deposits		$ 577,706		$ 628,050
	Other borrowings		31,787		33,225
	Other liabilities		2,378		3,003
	Shareholders' equity		37,713		36,788
	Total liabilities and shareholders' equity		$ 649,584		$ 701,066

Financial Condition Average Balances:
	Cash, federal funds sold and due from banks		$ 85,139		$ 110,995
	Investment securities		15,754		24,268
	Loans - held for sale		28,674		4,852
	Loans		494,770		521,461
	Less allowance for loan losses		9,709		8,335
	Other assets		31,382		31,043
	Total assets		$ 646,010		$ 684,284

	Deposits		$ 574,230		$ 610,815
	Other borrowings		31,705		33,346
	Other liabilities		2,120		2,884
	Shareholders' equity		37,955		37,239
	Total liabilities and shareholders' equity		$ 646,010		$ 684,284

Performance Ratios:
	Return on average assets		0.13%		0.30%
	Return on average equity		2.18%		5.60%
	Net interest margin (1)		3.78%		3.46%
	Efficiency ratio		78.88%		64.74%

Asset Quality Ratios:
	Net loan charge-offs to average loans		0.32%		0.37%
	Nonaccrual loans to period-end loans		4.69%		3.31%
	Nonperforming assets to total assets		4.21%		3.13%
	Ratio of allowance for loan losses to nonaccrual loans		0.42	x	0.46	x
	Allowance for loan losses to period-end loans		1.95%		1.53%

Other Data:
	Average equity to average assets		5.88%		5.44%
	Total shareholders' equity to assets		5.81%		5.25%
	Number of offices:
	Full service banking offices		7		7
	Loan production offices		-		1
	Number of employees (FTEs)		115		104

Core Earnings (2):
	GAAP stated earnings		$ 204		$ 514
	Net gains on sale of investment securities		-		(232)
	Provision for loan losses		1,015		1,250
	Foreclosed asset expense net of rental income		491		327
	Taxes		120		362
	Non-GAAP core earnings before tax		$ 1,830		$ 2,221

(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