EX-99
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firststate10-04ex99.txt

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PRESS RELEASE - OCTOBER 25, 2004                  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, 2004.

Net income for the quarter ended September 30, 2004 was $954,000 or basic and
diluted earnings per share of $0.34 and $0.32, respectively. These results
compare with net income of $952,000 or basic and diluted earnings per share of
$0.34 and $0.32, respectively, reported in the prior year's quarter.

Net interest income increased to $3.0 million for the quarter ended September
30, 2004 from $2.9 million in the prior year's quarter. The increased net
interest income results from growth in earning assets and higher net interest
margins. The Company saw a decrease in non-interest income of $ 376,000
primarily from decreased mortgage banking income and decreased loan originations
and sales. Operating expenses decreased $185,000 or 8.3% over the prior year.

Net income for the year ended September 30, 2004 decreased 11.6% to $3,464,000,
from net income of $3,920,000 earned in the year ended September 30, 2003. Basic
and diluted earnings per share decreased to $1.23 and $1.17 per share,
respectively, for the current year, from $1.39 and $1.33 per share,
respectively, for the prior year. The decrease in earnings resulted from
slightly lower net interest income and lower non-interest income which were
offset somewhat by lower operating expenses and lower income taxes. Non-interest
income decreased $1.1 million from a decline in mortgage originations and
refinance volumes and the fee income generated from this activity.

"Our fourth quarter results were the strongest quarter this year," said James C.
McGill, President and CEO. "We were pleased with the slight increase in the
Company's net interest margin this quarter. Our credit quality and loan loss
reserves remain strong, and the ratio of our allowance for loan losses to gross
loans remains at 1.68%."

At September 30, 2004, 1st State Bancorp, Inc. had total assets of $378 million,
deposits of $263 million and stockholders' equity of $65.9 million. The book
value per share of common stock was $22.25 per share at September 30, 2004.

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.


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1st State Bancorp, Inc. (Nasdaq: FSBC) Summary of Financial Highlights Selected Financial Data: Sep 30, Sep 30, (in thousands - unaudited) 2004 2003 -------------- ------------- Total assets $377,714 $362,640 Loans receivable, net 231,763 225,725 Loans held for sale 930 645 Investment securities 119,612 111,171 Cash and cash equivalents 9,854 9,359 Deposit accounts 262,734 262,712 Advances from Federal Home Loan Bank 44,000 31,500 Dividend payable 296 297 Total stockholders' equity 65,914 62,701
Selected Operating Data: Three months ended Year ended (in thousands - unaudited) -------------------------------- ------------------------------- 9/30/2004 9/30/2003 9/30/2004 9/30/2003 ----------- ----------- ----------- ----------- Interest income $4,235 $4,122 $16,342 $17,209 Interest expense 1,199 1,267 4,793 5,592 Net interest income 3,036 2,855 11,549 11,617 Provision for loan losses 60 60 240 240 Net interest income after provision for loan losses 2,976 2,795 11,309 11,377 Non-interest income 540 916 2,341 3,455 Non-interest expense 2,049 2,234 8,280 8,669 Income before taxes 1,467 1,477 5,370 6,163 Income tax expense 513 525 1,906 2,243 Net income 954 952 3,464 3,920
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Per Share Data: Three months ended Year ended (unaudited) -------------------------------- -------------------------------- 9/30/2004 9/30/2003 9/30/2004 9/30/2003 ----------- ----------- ----------- ----------- Basic earnings per share $ 0.34 $ 0.34 $ 1.23 $ 1.39 Diluted earnings per share 0.32 0.32 1.17 1.33 Average shares outstanding - basic 2,827,413 2,808,409 2,818,510 2,811,200 Average shares outstanding - diluted 2,968,525 2,944,793 2,966,711 2,938,598 Cash dividends per share $0.10 $0.10 $0.40 $0.38 Book value at September 30 $22.25 $21.10 Shares outstanding at September 30 2,962,323 2,971,977 Interest Margin Three months ended Year ended (% of average assets - unaudited) -------------------------------- -------------------------------- 9/30/2004 9/30/2003 9/30/2004 9/30/2003 ----------- ----------- ----------- ----------- Yield on interest earning assets 4.75% 4.90% 4.72% 5.25% Cost of interest bearing liabilities 1.66% 1.87% 1.69% 2.11% Interest rate spread 3.09% 3.03% 3.03% 3.14% Net interest income as a percentage of average interest earning assets 3.41% 3.40% 3.34% 3.54% Asset Quality Sep 30, Sep 30, (unaudited) 2004 2003 ----------- ---------- Allowance for loan losses to gross loans held for investment 1.68% 1.68% Nonperforming assets to total assets 1.05% 1.17%

The following information was filed by 1St State Bancorp Inc on Tuesday, October 26, 2004 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

View differences made from one year to another to evaluate 1St State Bancorp Inc's financial trajectory

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