North State Bancorp Reports First Quarter 2010 Earnings

RALEIGH, N.C., April 29 /PRNewswire-FirstCall/ -- North State Bancorp (OTC Bulletin Board: NSBC the "Company"), the holding company for North State Bank, reported net income for first quarter 2010 of $514,000 compared to $833,000 for first quarter 2009, a decrease of $319,000 or 38.3%.   Net income results for both quarters include gains on security sales—$232,000 or $143,000 net of taxes for the quarter ended March 31, 2010, and $464,000 or $285,000 net of taxes for the same period in 2009.  The year-to-year decrease in earnings for first quarter 2009 is principally a result of prudently increasing reserves for possible loan losses (loan loss provision increased by $365,000 or 41%); higher FDIC insurance premiums prompted by the FDIC's need to increase the insurance fund to cover losses from problem banks and expenses related to foreclosed real estate.  Diluted earnings per share were $.07 for first quarter 2010 compared to $.11 for first quarter 2009. Net interest income increased $330,000 or 6.5% from $5.1 million for first quarter 2009 to $5.4 million in 2010.   

Total assets for the Company as of March 31, 2010, were $701.1 million compared to $720.6 million as of March 31, 2009, a decrease of $19.6 million.  Total deposits and total loans as of March 31, 2010, were $628.1 million and $518.4 million, respectively, compared to total deposits and total loans as of March 31, 2009, of $642.6 million and $549.6 million, respectively.  The reduction in total assets and total deposits is the result of the Company's intentional continuing efforts to reduce non-core fundings, which decreased $48.3 million in a year-to-year comparison from March 31, 2009, to March 31, 2010.  Core deposits, which primarily include demand deposit, money market and time deposit accounts for our customers, increased by $34.9 million over the same period.  This is evidenced by our non-interest bearing deposits representing 18.6% of total deposits at quarter end.  The reduction in total loans is a result of both the Company's intense focus on only banking customers who seek a mutually beneficial banking relationship, as well as the impact of the recession on overall loan demand.  

Larry D. Barbour, president and CEO stated, "We are pleased to report positive earnings in a difficult economy, one that has as much uncertainty as any I have experienced in my thirty-eight year banking career.  Despite the economy, North State Bank remains committed to expanding relationships with current customers, as well as pursuing new customers who seek a mutually beneficial banking relationship.

"Our focus is on three major activities: core deposit growth, solid core earnings and strong asset quality.  At the same time, we are thinking strategically, as evidenced by the recent acquisition of Affiliated Mortgage Company which is now North State Bank Mortgage.  The acquisition was immediately accretive to earnings, and enables North State Bank to offer value-added mortgage services to existing and new customers.

"It has been a year since we created CommunityPLUS, a division of North State Bank specifically focused on serving the needs of community association management firms.  Since forming this division, deposits held in these accounts have increased dramatically – from $112 million at December 31, 2008 to $184.0 million as of March 31, 2010, or 64.3%.  

"This is just one example of our focus on serving our chosen niches of customers as we prepare to be well-positioned to take advantage of an improving economy following this deep recession."

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.

SOURCE North State Bancorp