State Bancorp, Inc. Reports Second Quarter 2010 Results
The Company's second quarter 2010 average interest-earning asset yield was 4.95%, unchanged from the comparable period in 2009. The average yield on loans increased 14 basis points in the second quarter of 2010 to 5.44%. This improvement was due in part to the significant decline in non-accrual loans recorded in 2010 but was offset by a 64 basis point decline in the average yield on the Company's securities portfolio to 3.85% in the second quarter of 2010 versus 2009. The securities portfolio, which had an unrealized positive pre-tax mark to fair value of $11 million at June 30, 2010 and an estimated weighted average life of two years, decreased by $20 million to $369 million at June 30, 2010 versus the comparable 2009 date and also decreased by $36 million from March 31, 2010.
Contributing to the Company's lower funding costs in 2010 was a 35 basis point reduction in the Company's average cost of interest-bearing liabilities to 1.10% in the second quarter of 2010 versus 1.45% in the second quarter of 2009. The lower cost of funds resulted from growth in demand deposit balances (up $40 million or 12%) coupled with the Company's ongoing management of deposit rates during the past year as deposit pricing continues to ease in local markets. Total deposits decreased by $38 million to $1.4 billion at June 30, 2010 versus June 30, 2009 but remained stable compared to March 31, 2010. Also contributing to the reduction in 2010 funding costs was the Company's December 2009 exchange of its high-cost $10 million, 8.25% subordinated notes, which were due to mature in 2013, for newly issued common stock. The provision for loan losses was $5.5 million in the second quarter of 2010, representing an increase of $2.0 million versus the comparable 2009 period.
Net gains on sales of securities were $2.5 million in the second quarter of 2010 compared to $447 thousand for the same period last year and $256 thousand in the first quarter of 2010.
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