North State Bancorp (NSBC) 8-K Results of Operations and Financial Condition

Exhibit 99.1

FOR RELEASE: JULY 18, 2012

For more information, contact:

Kirk Whorf, Executive Vice President and Chief Financial Officer

kwhorf@northstatebank.com; 919-645-2707

Larry D. Barbour, President and Chief Executive Officer

919-855-9925

NORTH STATE BANCORP REPORTS

2ND QUARTER EARNINGS

Company reports solid earnings for quarter

RALEIGH, NC … North State Bancorp (OTCBB: NSBC the “Company”), the holding company for North State Bank, reported net income for the quarter ended June 30, 2012 of $583,000, which is $472,000 more than the $111,000 earned for the same period ended June 30, 2011.  Higher non-interest income of $1.9 million, an increase of $1.1 million, excluding securities gains, over the same period in 2011, resulting from expanded mortgage banking activities accounted for the increase while net interest income was steady from the prior period.  These higher fees were partially offset by higher personnel expenses of $2.8 million, an increase of $507,000 over the same period ended June 30, 2011.  Diluted earnings per share were $0.08 for the quarter ended June 30, 2012 compared to $0.01 for 2011.  For the six month period ended June 30, 2012, net income was $819,000, an increase of $505,000 from net income of $314,000 reported for the six month period ended June 30, 2011.

Total assets for the Company as of June 30, 2012 were $677.5 million compared to $638.3 million as of June 30, 2011, an increase of $39.2 million.  Total deposits and total loans as of June 30, 2012, were $607.8 million and $482.8 million, respectively, compared to total deposits and total loans at June 30, 2011, of $566.9 million and $482.7 million, respectively.

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

“While we continue to have challenges as a business and an industry, I am very proud to report these results.  They are the result of our strategic thinking which laid the groundwork for improving financial results.  We have continued to grow core deposits which have increased $37.8 million so far this year.  These deposits are heavily weighted in non-interest bearing accounts and when combined with stable loan outstandings have allowed us to maintain our net interest income and net interest margin. We are not out of these challenging times but we are seeing improvement in earnings and asset quality.” Larry D. Barbour, president and CEO shared in remarks on the Company’s financial results.

Mr. Barbour continued “We remain a well-capitalized bank with strong liquidity funded by a loyal base of core deposits and we remain confident about our future as troubled loans and loan loss reserves decrease.”

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

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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						As of or for the Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
	(Dollars in thousands, except per share)
Earnings Summary:
Total interest income	$	6,594		$	6,734		$	13,044		$	13,814
Total interest expense		1,069			1,349			2,180			2,831
Net interest income		5,525			5,385			10,864			10,983
Provision for loan losses		1,363			1,418			2,894			2,433
Net interest income after provision for loan losses		4,162			3,967			7,970			8,550
Noninterest income		1,910			1,165			3,327			1,908
Noninterest expense		5,192			4,950			10,112			9,952
Income before income taxes		880			182			1,185			506
Income taxes		297			71			366			192
Net income	$	583		$	111		$	819		$	314
Share and Per Share Data:
Earnings per share - basic	$	0.08		$	0.01		$	0.11		$	0.04
Earnings per share - diluted	$	0.08		$	0.01		$	0.11		$	0.04
Tangible book value per share	$	5.32		$	5.11		$	5.32		$	5.11
Weighted average shares outstanding:
Basic		7,427,976			7,427,976			7,427,976			7,427,976
Diluted		7,427,976			7,431,682			7,427,976			7,432,884
Financial Condition Period End:
Cash, federal funds sold and due from banks	$	49,040		$	71,150		$	49,040		$	71,150
Investment securities		21,021			17,261			21,021			17,261
Loans - held for sale		88,188			47,182			88,188			47,182
Loans		482,825			482,721			482,825			482,721
Less allowance for loan losses		8,355			9,944			8,355			9,944
Other assets		44,829			29,967			44,829			29,967
Total assets	$	677,548		$	638,337		$	677,548		$	638,337
Deposits	$	607,809		$	566,874		$	607,809		$	566,874
Other borrowings		27,235			30,719			27,235			30,719
Other liabilities		2,877			2,612			2,877			2,612
Shareholders' equity		39,627			38,132			39,627			38,132
Total liabilities and shareholders' equity	$	677,548		$	638,337		$	677,548		$	638,337
Financial Condition Average Balances:
Cash, federal funds sold and due from banks	$	81,071		$	82,137		$	79,629		$	83,628
Investment securities		14,863			31,024			10,902			23,431
Loans - held for sale		61,969			25,706			55,153			27,182
Loans		478,647			476,060			484,162			485,363
Less allowance for loan losses		9,435			9,421			9,757			9,560
Other assets		43,417			30,812			40,927			31,093
Total assets	$	670,532		$	636,318		$	661,016		$	641,137
Deposits	$	601,290		$	564,146		$	592,074		$	569,160
Other borrowings		27,249			31,755			27,345			31,730
Other liabilities		1,967			2,333			2,082			2,227
Shareholders' equity		40,026			38,084			39,515			38,020
Total liabilities and shareholders' equity	$	670,532		$	636,318		$	661,016		$	641,137
Performance Ratios:
Return on average assets		0.35	%		0.07	%		0.25	%		0.10	%
Return on average equity		5.86	%		1.17	%		4.17	%		1.67	%
Net interest margin (1)		3.61	%		3.70	%		3.61	%		3.74	%
Efficiency ratio		69.83	%		75.57	%		71.26	%		77.20	%
Asset Quality Ratios:
Net loan charge-offs to average loans		0.45	%		0.17	%		0.92	%		0.50	%
Nonaccrual loans to period-end loans		3.52	%		5.54	%		3.52	%		5.54	%
Nonperforming assets to total assets		3.70	%		4.68	%		3.70	%		4.68	%
Ratio of allowance for loan losses to nonaccrual loans		0.49	x		0.37	x		0.49	x		0.37	x
Allowance for loan losses to period-end loans		1.73	%		2.06	%		1.73	%		2.06	%
Other Data:
Average equity to average assets		5.97	%		5.99	%		5.98	%		5.93	%
Total shareholders' equity to assets		5.85	%		5.97	%		5.85	%		5.97	%
Number of offices:
Full service banking offices		7			7			7			7
Number of employees (FTEs)		122			112			122			112
Core Earnings (2):
GAAP stated earnings	$	583		$	111		$	819		$	314
Less net gains on sale of investment securities		-			329			106			329
Provision for loan losses		1,363			1,418			2,894			2,433
Forecosed asset expense net of rental income		100			561			242			1,052
Taxes		297			71			366			192
Non-GAAP core earnings before tax	$	2,343		$	1,832		$	4,215		$	3,662

(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.