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 $19.5 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 continuing efforts to reduce non-core fundings, which decreased $42.3 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 account for our customers, increased by $27.8 million, or 6.7%, over the same period. The reduction in total loans is a result of both the Company’s focus on banking customers who seek a mutually beneficial banking relationship, as well as the impact of the recession on overall loan demand.

 

We were proud to report earnings for first quarter. But there is a story behind the numbers—one we believe reveals the true fabric of our company:   

 

•  North State Bank is well-capitalized and, moreover, has a plan for deploying capital to grow the bank in the right way—sound, smart, profitable growth, not growth for growth’s sake.  

 

•  Asset quality continues to challenge earnings.  These are tough times.  People—including many of our customers—are struggling and may continue to do so for some time to come.  The key is to work with them in a mutually beneficial relationship.   

 

•  If ever a time called for strong leadership, commitment and passion—this is it.  We are grateful we focused on leadership at all levels of our organization before we even opened our doors for business and we continue that focus today.  It prepared us for today’s challenges.  Our people have a deep understanding of our customers and what they are trying to accomplish, as well as knowledge of our Bank and what we are trying to accomplish.  That is a strong combination.  

 

•  Core earnings are strong, especially given the impact of the recession, giving us the opportunity to build capital and, at the same time, reserve against potential problem loans if and when they surface.

 

  We are celebrating our 10th anniversary in business. While one day we would have been seen as a young company, in the fast-paced world of today, ten years is a long time.  But, we’re just getting started.  While we look back on our progress, at the same time, we look forward to what is in front of us—more challenges, more opportunities, and greater success.  Many thanks go to those who have been with us all along and also to those who have joined us on our journey.   As always, we thank you, our shareholders and customers, for your continued support.