NS Newsletter02.05

REPORT FOR NORTH STATE BANCORP SHAREHOLDERS | SUMMER 2006
MESSAGE FROM THE PRESIDENT
I am pleased to share information
about our performance at North
State Bank as we continue to make
significant progress in becoming a
high-performing bank that creates
value for our shareholders, as is
evident from our second quarter
results.
For the quarter ended June 30,
2006, North State Bancorp (the
“Company”), the holding company
for North State Bank, reported
net income of $751,000 or $0.24
per diluted share, compared to
$599,000 or $0.19 per diluted
share for second quarter 2005, an
increase of 25.4%. For the six
months ended as of the same
date,
the
Company
reported
net
income
of
$1.4 million, compared to net income of $1.0 million as of June 30,
2005, an increase of 40%. Earnings per diluted share for the six
months ended June 30 for 2006 and 2005 were, respectively, $0.46
and $0.34.
Total deposits for the Company at June 30, 2006, were $374.8 million
and total loans were $321.0 million, compared to total deposits of
$313.8 million and total loans of $260.8 million for second quarter
2005, increases of 19.4% and 23.1%, respectively.
Total assets for North State Bancorp as of June 30, 2006, were
$423.2 million, compared to $350.5 million at June 30, 2005, an
increase of 20.7%.
These numbers are a positive reflection of our progress at North
State. Other recent developments include:
• Opening a loan production office in Wilmington. The office
is located at 1908 Eastwood Road, Suite 321, in Lumina
Station. I recently visited with Phil Whittingon, our market
executive, and his assistant, Sandy Coniglio, and they
reported prospects are looking good. We appreciate our
advisory board members who have agreed to be part of
helping to bring relationship banking to the Wilmington
area.
• Opening our full-service Wake Forest office mid-August.
Our loan production office there has been open since
September 2003. Expanding into the full-service facility will
increase our ability to meet the banking needs of this
growing area.
• Announcing our move into downtown Raleigh.
Downtown Raleigh has experienced a resurgence, and we
anticipate that it will continue to be a hub of activity. We
recently announced our agreement to lease 3,700 square
feet on the 12th floor of the Capital Club building at the
corner of Martin and Salisbury Streets. This area is a vital
one to attorneys, one of the key niche markets we serve,
and we plan to acquire new banking relationships with
many of the firms in that area.
• Netting $140,000 for Hospice of Wake County at Summer
Salute, bringing the three-year total to $355,000. We
presented Hospice with the donation in July and thanked
them for all they contribute to our community. Thanks also
go to all of you who made this year’s event such a success.
• Expanding our staff in two important areas. Adding Bill
Wiley as senior vice president and Chief Risk
Officer/Internal Auditor, and JoAnn Bratton as assistant
vice president and Accounting Manager. Both have
extensive experience and will be tremendous assets to our
bank.
Our operating results so far this year are impressive, and we believe
there is more to look forward to as we continue to plan for the future.
It is hard to believe that it was only a short six years ago on June 1
that we first opened for business. Thank you to those who have
contributed to the growth of this bank. If you know people who are
not banking with us and would enjoy a relationship with a bank like
North State, please encourage them to come and talk with us.
Very cordially,
Larry D. Barbour
President and CEO
"Our operating results so
far this year are
impressive, and we believe
there is more to look
forward to as we continue
to plan for the future."
BUILDING RELATIONSHIPS IN WILMINGTON
the opportunity to move back to Wilmington came up, he
jumped at the chance, and so far it’s been like a homecoming.
Joining him in his efforts is his assistant, Sandy Coniglio. Sandy
has been in the banking industry in Wilmington for more than
20 years.
According to Phil, “A lot of the names and faces have remained
the same, but the area has also grown a whole lot, traffic is
heavier –– the market is really strong. It’s exciting to be back and
to be able to do business as a community banker. It’s all about
forming and maintaining relationships, and I’m excited to be
able to do that here.”
(l to r) Larry Barbour, president and CEO; Phil Whittington, senior vice
president and Wilmington market executive; and Sandy Coniglio, assistant to
the market executive.
Wilmington, North Carolina,
is a dynamic market.
Recently conducted research showed New Hanover County has
246 attorneys, 491 physicians, 108 dentists, 83 accountants, 225
churches, and 26 property management companies. With a loan
production office at Lumina Station near the waterway, and a
staff with a combined total of 40 years experience in the
Wilmington market, we are poised to experience tremendous
growth.
“I just can’t stop smiling,” laughed Phillip “Phil” T. Whittington,
senior vice president and Wilmington market executive.
“Coming back to this area and knowing the potential for what
we can accomplish is amazing.”
Whittington has named five advisory board members so far:
Mike Stonestreet, president of Century 21/Sweyer/CAMS, a
property management firm; Mike Head, president of CEPCO,
also a property management firm; Alan Toll, attorney and
partner with Stevens, McGhee, Morgan, Lennon and Toll, LLP;
Lionel Yow, attorney and partner with Yow Fox & Mannen; and
Dr. Kenneth White of Wilmington Plastic Surgery Specialists.
“A good part of our success will come from the support of our
advisory board. I am looking forward to working with each of
these leaders who have agreed to offer their time, experience,
and insight.”
We are quietly becoming the place
to bank in Wake County . . .
and Wilmington.
A long-time resident of Wilmington, Phil spent more than 14
years there while working in the banking industry as a personal
banker, branch manager, and commercial lender. He has been in
Raleigh with North State Bank for the past three years, but when
A NEW LOOK
We have a new logo! After much thought, we decided to recreate our logo in order to
have it reflect our strong feelings toward the state we serve. We kept some of the same
elements from our first logo but accomplished our goal by adding a touch of longleaf
pine, the state tree of North Carolina. We unveiled the new logo at our annual meeting
to much applause, and since then have been transitioning all of our stationery and
marketing materials to reflect the new look.
Our logo redesign will soon be followed by an update and redesign of our website:
www.northstatebank.com. Along with the update, we will add new, convenient
features for our customers and website visitors. Plans call for the new site to be up
and running by this fall. We’ll include more about it in the next newsletter.
S E C O N D Q UA R T E R R E P O R T 2 0 0 6
GETTING TO KNOW…
WILLIAM “BILL” H. WILEY
“Risk management is everyone’s
responsibility.” That is the belief of Bill
Wiley, North State’s senior vice president
and Chief Risk Officer/Internal Auditor.
“I really want to work with all the
employees so they see that risk
management is not just the responsibility
of the chief risk officer. From a teller
who makes a conscious effort to lock up
the teller drawer before leaving the
window to the CFO who buys
investments each week –– we all deal with
risks every day, and we need to think proactively.”
Bill is a Certified Bank Auditor with more than 20 years of experience
in internal bank auditing. He is enjoying the challenges of his role.
According to Bill, “There are three distinct, but related, aspects to my
position. First is risk management, which includes helping the bank
with strategic planning and advising on forward-thinking practices as
it relates to new or changing risks we face. Second is the auditing
component, where I evaluate our key processes to ensure our internal
controls are effective––what works and what needs improvement.
Third is the regulatory component, where my goal is to help ensure
that we comply with applicable laws and regulations and respond
appropriately when they change. Each area is important to our
success, and they correlate nicely so that I am often working in more
than one aspect at any particular moment. I enjoy what I am doing and
look forward to helping the bank achieve its objectives through sound,
profitable growth.”
Born in Georgia, Bill grew up in a military family, moving all around
before settling in Cary, NC as a senior in high school. He remained in
the area and graduated from North Carolina State University. He has
served on the Bedford Family YMCA Board of Directors, the
Triangle Chapter of the Institute of Internal Auditors, and the United
Way. He and his wife, Ruth, reside in Raleigh. They have three grown
children and two grandchildren.
SUMMARY BALANCE SHEET
As of June 30, 2006
(in thousands)
ASSETS
Cash, due from banks
Interest earning deposits with banks
Federal funds sold
Investment securities available
for sale at fair value
Loans less allowance ($4,162)
Other assets
Total assets
$
14,824
1,092
37,111
42,061
316,833
11,245
$ 423,166
LIABILITIES AND SHAREHOLDERS’ EQUITY
Demand deposits
$ 117,429
Interest-bearing deposits
257,379
Total deposits
374,808
Other borrowings
22,237
Other liabilities
3,004
Total liabilities
$ 400,049
SHAREHOLDERS’ EQUITY
Total shareholders’ equity
Total liabilities and shareholders’ equity
$ 23,117
$ 423,166
SUMMARY STATEMENT OF INCOME AND EXPENSE
For the quarter and six months ended June 30, 2006
(in thousands except for per share data )
Quarter
$ 6,353
2,701
3,652
223
Year-to-date
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after
provision for loan losses
Noninterest income
Noninterest expenses
Net income before income taxes
Income tax expense
Net income
3,429
295
2,527
1,197
446
$
751
$
6,764
580
5,049
2,295
853
1,442
Earnings per diluted share
$
$
0.46
0.24
$
12,218
5,078
7,140
376
SIGNIFICANT RATIOS
For the quarter ended June 30, 2006
Return on average assets
Return on average equity
Efficiency ratio
Nonperforming loans
Ratio of allowance for loan losses to
nonperforming and nonaccrual loans
Allowance for loan
losses to loans
0.78%
13.33%
64.02%
$14,000
297.3x
1.30%
The information as of and for the quarter and six months ended June 30, 2006, as presented is unaudited.
This newsletter contains forward-looking statements. The actual results might differ materially from those
projected in the forward-looking statements for various reasons, including our ability to manage growth, our
limited operating history, substantial changes in financial markets, regulatory changes, changes in interest
rates, loss of deposits and loan demand to other savings and financial institutions, and changes in real estate
values and the real estate market. 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.
PRSRT STD
US Postage
PAID
Raleigh, NC
Permit No. 2214
P.O. Box 18367
Raleigh, NC 27619
Please call Kirk Whorf at 919-645-2707 or
email him at [email protected] to
update your mailing address.
SEE THE VIDEO
ON OUR WEBSITE!
At this year’s annual meeting we
premiered our Leading the Way video.
The video focuses on the aspects of
business we do best, stated from the
perspective of our customers. Hear firsthand how we are leading the way in
relationship banking. Visit our website at
www.northstatebank.com and click on
the “Watch our video” link on the left.
North State Bank / Raleigh 919-787-9696
NSB AND NCSU
www.northstatebank.com
In Memory of Our Friend
This fall, we are taking advantage of
opportunities to support North Carolina
State University, Raleigh’s hometown
university, while spreading the word about
North State Bank.
The E. Carroll Joyner Visitor Center and
Advancement Services Building (on campus
facing Western Boulevard) is slated to open
this September. To benefit NC State
University and to honor Carroll Joyner, a
long-time North State Bank customer and
supporter, we’re proud to donate funds to
purchase furnishings for the Visitor Center’s
boardroom. For supporting the Visitor
Center, North State Bank will be recognized
on a plaque to be displayed in the rotunda of
the building.
You can also see some familiar faces if you
purchase a football program at Wolfpack
games this fall. Look for our “North State
Bank Backs the Pack” ad featuring bank
employees who are alumni.
Go Pack!
Kit Boney
1936-2006
On July 28, North State Bank lost a dear
friend. Katherine “Kit” Boney will always
be remembered for her love for others and
her leadership in this community. Kit was a
strong advocate for Hospice of Wake County
and played a major part in the success of
North State Bank's Summer Salute for
Hospice of Wake County. Her life was an
inspiration to many and her memory will live
on here at North State Bank.
SUMMER KICKED OFF WITH A PARTY FOR HOSPICE!
The North State Bank Summer Salute for Hospice of Wake
County raised $140,000 this year, bringing the three-year total to
$355,000. “Those who plan this event, those who sponsor it,
those who attend, and those who contribute bring such a passion
for Hospice of Wake County,” commented Larry Barbour, president and CEO for North State Bank. “So many have been
impacted by the people and the services at Hospice of Wake
County, and we feel blessed to have them as part of our community. We look forward to many more years of hosting Summer
Salute and supporting such a great organization.”
Summer Salute was held at North Ridge Country Club on
Saturday, June 3rd. Party-goers danced to The Embers, strolled
on the boardwalk, and had commemorative photos taken while
enjoying the kick-off to summer.
Contributions were raised through sponsorships, ticket sales, a
raffle, an auction, and donations. Messages in a Bottle were also
purchased by those who wished to honor someone touched by
hospice care. Hospice will use the money raised to fund their
indigent care programs and the Reflections Program for
Children.
Take a look at the photos to see how much fun everyone had this
year!
Pictured (l to r): Dr. William Dunlap, founder of Hospice of Wake County and member of Hospice Board of
Directors; Steve Salisbury, Senior Vice President of North State Bank and Summer Salute committee co-chair;
John Thoma, CEO of Hospice of Wake County; The Honoroable Jeanette Hyde, former U.S. Ambassador to
Barbados and Summer Salute committee co-chair; and Larry Barbour, President and CEO of North State Bank.
THANK YOU TO OUR SPONSORS!
$15,000 DIAMOND CIRCLE
North State Bank
$5,000 GOLD CIRCLE
Barton Development Group
Caddell Communications*
Professional Property Management (PPM)
Red Star Oil Co.
Sonscape Communications, Inc.*
Wakefield Hotels, LLC / Hema & Nick Shah/
Gail & Hal Perry
Wake Nephrology Associates, P.A.
$2,500 SILVER CIRCLE
A.E. Finley Foundation, Inc.
Agri-Supply Co.
Mr. & Mrs. Max Barbour
Charleston Management Corporation
Custom Brick Company, Inc.
1st American Builders
HRW, Inc.
Jeanette & Wallace Hyde
Kane Realty Corporation
Dr. & Mrs. Leland Garrett, Jr.
Metro Magazine*
St. Lawrence Homes, Inc.
Steel Dynamics, Inc.
Jean & Jay Street
Wyrick, Robbins, Yates & Ponton, LLP
Young Moore & Henderson, P.A.
$1,500 BRONZE CIRCLE
Marlene & Sam Adams / Marlene Adams RE, LLC
ADS Printing*
Baker Roofing Company
Marsha & Forrest Ball
Martha & Rolly Bannister
Diane, Larry & Leslie Barbour
Bill Kennedy/Leo Daughtry*
Ann & Bob Denlinger
Engineered Construction Co.
Jolly's Jewelers*
Lynda & Johnny McConnell
Raleigh Medical Group
Stancil & Company
Judy & Tom Stephenson
Tingen Construction
$500 SUNSHINE CIRCLE
AA&D Transportation, Inc.
John D. Adams, CPA
Air-Glide Heating & Cooling
Ammons Pittman
GMAC Realtors
James P. Baker, Jr. in Memory of
Barbara Reynolds Baker
Mark Black
Wade Brantley
Aaron Lindeen
C. Delaine Bradsher / Bradsher & Bunn
Mel Broughton III
CityScape Builders
Mary Lynne Courtney
Barbara & Scott Doolittle
Duty Tire, Inc.
Dr. David Fajgenbaum
RS Fincher & Co., LLC
Prudy & Ron Frederick
Garner Family Practice
John P. Goodson
Debra & Kenneth Goetze
Ice Occasions of North Carolina*
Jerry Smith Builders, Inc.
Jones Insurance Agency
Jordan Law Offices, P.A.
K.L. Mobley Equipment
Jim Massengill
Stephen F. Kenney
Logan Trading Company*
Mid-Atlantic Securities
Nova Development Corporation
Pediatric Urology of North Carolina
Brigadier General (Retired) Gary H. Pendleton
& Laura Pendleton
PipeLine Utilities
Susan & Charles Rouse
Rural Plumbing & Heating
Shackleton CPA & Consulting, P.A.
Senator & Mrs. Fred Smith
SunDial Homes, LLC
Lisa & Charles Tew
Tri-Arc Food
Thomas Judy & Tucker, P.A.
Triangle Auto Sales
Dr. & Mrs. George Venters
York Properties, Inc.
Thomas Judy & Tucker, PA
* In-Kind Donation
To get involved with Summer Salute 2007 as a sponsor or volunteer, or to attend, contact
Prudy Frederick at North State (919-645-2726; [email protected]).
THANK YOU TO
THE PLANNING COMMITTEE!
2006 COMMITTEE CO-CHAIRS
The Honorable Jeanette Hyde, Former U.S.
Ambassador and Member of the
North State Bancorp Board of Directors
Mr. Steve Salisbury, Senior Vice President and
Raleigh City Executive for North State Bank
2006 COMMITTEE MEMBERS
Marsha Ball
Leslie Barbour
Kit Boney
Hannah Broughton
Sloane Browning
Susan Caddell
Laura Carter
Michele Castillo
Alec Donaldson
William Dunlap, MD
Rick Dupree
Donna Emory
Prudy Frederick
Jeanette Hagwood
Jeanette Hyde
K Keener
Beth Millwood
Gail Perry
Judy Stephenson
Robin Temple
Sandra Temple
Paige Watkins
Virginia Watson
Andrew Wheeler
Tecca Wright
Save the date for
Summer Salute 2007
Saturday, June 2nd at
North Ridge Country Club