1
Press Release - December 9, 2005 For Immediate Release
1st State Bancorp, Inc. For more information contact:
James C. McGill
(336) 227 - 8861
1st State Bancorp, Inc. announces earnings
Burlington, North Carolina 1st State Bancorp, Inc. (Nasdaq: FSBC)
1st State Bancorp, Inc. (Nasdaq: FSBC), the parent holding company for 1st State
Bank, has reported earnings for the quarter and year ended September 30, 2005.
Net income for the quarter ended September 30, 2005 was $907,000 or basic and
diluted earnings per share of $0.33 and $0.31, respectively. These results
compare with net income of $954,000 or basic and diluted earnings per share of
$0.34 and $0.32, respectively, reported in the prior year's quarter. The
decrease in earnings during the quarter ended September 30, 2005 was due in part
to the Company's increased loan loss provision. The Company recorded a loan loss
provision of $156,000 for the quarter ended September 30, 2005 compared to
$60,000 for the same period last year.
Net interest income increased to $3.2 million for the quarter ended September
30, 2005 from $3.0 million in the prior year's quarter. The increased net
interest income results primarily from higher net interest margins. This
improvement results primarily from increased interest income from the recent
rise in short term rates by the Federal Reserve Board.
Net income for the year ended September 30, 2005 was $3,381,000 or basic and
diluted earnings per share of $1.21 and $1.14, respectively. These results
compare with net income of $3,464,000 or basic and diluted earnings of $1.23 and
$1.17, respectively. The decrease in earnings was due in part to the Company's
increased loan loss provision. The Company recorded a loan loss provision of
$1,046,000 for the year ended September 30, 2005 compared to $240,000 in the
prior year. Net interest income increased to $12.5 million for the current year
compared to $11.5 million in the prior year.
Nonperforming assets totaled $2.8 million a September 30, 2005 compare with $4.0
million at September 30, 2004. The allowance for loan losses was $4,292,000 at
year-end which represents 1.82% of loans held for investment compared to 1.68%
at September 30, 2004. The increase in the provision for loan losses took into
account, among other factors, this year's net chargeoffs of $710,000 and the
creation of a specific reserve of $900,000 on a credit that has been identified
as a potential loan problem.
At September 30, 2005, 1st State Bancorp, Inc. had total assets of $368 million,
deposits of $273 million and stockholders' equity of $66.2 million. The book
value per share of common stock was $22.85 per share at September 30, 2005.
As announced on June 29, 2005, 1st State Bancorp, Inc. executed a definitive
merger agreement with Capital Bank Corporation, headquartered in Raleigh, North
Carolina whereby the Company will be merged with and into Capital Bank. The
transaction is expected to be completed in January 2006, subject to approval of
shareholders of both companies and regulators and other normal and customary
closing conditions.
2
1st State Bancorp, Inc., through its subsidiary 1st State Bank, currently
services its customers from seven full service banking offices in Alamance
County.
Statements contained in this release, which are not historical facts, are
forward-looking statements as defined in the Private Litigation Reform Act of
1995. Such forward-looking statements are subject to risks and uncertainties
which could cause actual results to differ materially from those currently
anticipated due to a number of factors which include the effects of future
economic conditions, governmental fiscal and monetary policies, legislative and
regulatory changes, the risks of changes in interest rates, the effects of
competition, and including without limitation to other factors that could cause
actual results to differ materially as discussed in documents filed by the
Company with the Securities and Exchange Commission from time to time.
3
1st State Bancorp, Inc. (Nasdaq: FSBC - News)
---- ----
Summary of Financial Highlights
Selected Financial Data: Sep 30, Sep 30,
(in thousands - unaudited) 2005 2004
Total assets $367,839 $377,714
Loans receivable, net 231,667 231,763
Loans held for sale 1,010 930
Investment securities 110,515 119,612
Cash and cash equivalents 8,016 9,854
Deposit accounts 272,825 262,734
Advances from Federal Home Loan Bank 25,000 44,000
Dividend payable 290 296
Total stockholders' equity 66,235 65,914
Selected Operating Data: Three months ended Year ended
(in thousands - unaudited) 9/30/2005 9/30/2004 9/30/2005 9/30/2004
Interest income 5,024 4,235 18,658 16,342
Interest expense 1,784 1,199 6,122 4,793
Net interest income 3,240 3,036 12,536 11,549
Provision for loan losses 156 60 1,046 240
Net interest income after
provision for loan losses 3,084 2,976 11,490 11,309
Non-interest income 487 539 2,121 2,341
Non-interest expense 2,126 2,048 8,330 8,280
Income before taxes 1,445 1,467 5,281 5,370
Income tax expense 537 513 1,900 1,906
Net income 908 954 3,381 3,464
4
Per Share Data: Three months ended Year ended
(unaudited) 9/30/2005 9/30/2004 9/30/2005 9/30/2004
Basic earnings per share $0.33 $0.34 $1.21 $1.23
Diluted earnings per share 0.31 0.32 1.14 1.17
Average shares outstanding - basic 2,792,167 2,827,413 2,805,440 2,818,510
Average shares outstanding - diluted 2,975,190 2,968,525 2,966,346 2,966,711
Cash dividends per share $0.10 $0.10 $0.40 $0.40
Book value at September 30 $22.85 $22.25
Shares outstanding at September 30 2,898,637 2,962,323
Interest Margin Three months ended Year ended
(% of average assets - unaudited) 9/30/2005 9/30/2004 9/30/2005 9/30/2004
Yield on interest earning assets 5.74% 4.75% 5.32% 4.72%
Cost of interest bearing liabilities 2.55% 1.66% 2.18% 1.69%
Interest rate spread 3.19% 3.09% 3.14% 3.03%
Net interest income as a percentage of
average interest earning assets 3.70% 3.41% 3.57% 3.34%
Asset Quality Sep 30, Sep 30,
( unaudited) 2005 2004
Allowance for loan losses to
gross loans held for investment 1.82% 1.68%
Nonperforming assets to total assets 0.77% 1.05%