State Bancorp, Inc. Reports Second Quarter 2010 Results

During the quarter, the Company realized some gains on the portion of its securities portfolio which was beginning to experience faster prepayment speeds on bonds with market prices in the 106 to 108 range. Management determined that this unusually attractive pricing was not sustainable as the underlying bonds were prepaying at par and consequently it was appropriate to capture the profit before it evaporated.

Quality loan demand remains modest in our markets. During the quarter we originated approximately $41 million in new loans; unfortunately these new loans were essentially negated by an almost equal amount of prepayments, sales and regular amortization. The Company has ample capital and liquidity to lend and continues to actively seek new credit opportunities of an acceptable quality.

We remain convinced that our aggressive balance sheet management strategies have been timely and appropriate. The Company is well positioned with its strong capital base along with ample liquid resources to prosper when economic conditions begin to recover some level of normalcy. We enjoy a unique opportunity to grow our core business going forward once economic conditions improve to a level which fosters meaningful commercial loan demand.

Economic recovery, however, remains elusive as national and regional unemployment levels continue to be stubbornly high. Corporate hiring remains seriously constrained by lackluster consumer demand and persistent uncertainty on the direction of economic policy and costs. Growing idle cash positions on many corporate and household balance sheets only confirms the lack of final demand and the reluctance of key decision makers to spend or invest capital. Consequently, the risk of continued downward price pressure is heightened and interest rates are expected to remain at these historic lows well into 2011. There is little opportunity for a meaningful recovery in our economy while millions remain unemployed and policy makers pursue what appears to be an anti-business agenda.

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