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State Bancorp, Inc. Reports Second Quarter 2010 Results

Forward-Looking Statements and Risk Factors

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "is confident that," and similar expressions are intended to identify forward-looking statements. The forward-looking statements involve risk and uncertainty and a variety of factors that could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, changes in: market interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, the quality and composition of the loan or investment portfolios, demand for loan products, demand for financial services in the Company's primary trade area, litigation, tax and other regulatory matters, accounting principles and guidelines, other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing and services and those risks detailed in the Company's periodic reports filed with the SEC. Investors are encouraged to access the Company's periodic reports filed with the SEC for financial and business information regarding the Company at www.statebankofli.com . The Company undertakes no obligation to publish revised events or circumstances after the date hereof.

Financial Highlights Follow

 
STATE BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)
(in thousands, except per share data)
         
  Three Months Six Months
  2010 2009 2010 2009
Interest Income:        
Interest and fees on loans $15,074 $14,745 $30,696 $29,636
Federal funds sold and securities purchased under agreements to resell  2  5  2  6
Securities available for sale:        
Taxable  3,785  4,367  8,155  9,199
Tax-exempt  27  17  54  51
Dividends on Federal Home Loan Bank and other restricted stock  28  28  63  39
Total interest income  18,916  19,162  38,970  38,931
         
Interest Expense:        
Deposits  2,549  3,391  5,130  7,370
Temporary borrowings  16  29  48  64
Senior unsecured debt  281  280  561  283
Subordinated notes  --  231  --  462
Junior subordinated debentures  182  212  358  453
Total interest expense  3,028  4,143  6,097  8,632
         
Net interest income  15,888  15,019  32,873  30,299
Provision for loan losses  5,450  3,500  7,700  13,500
Net interest income after provision for loan losses  10,438  11,519  25,173  16,799
         
Non-Interest Income:        
Service charges on deposit accounts  455  596  905  1,186
Other-than-temporary impairment losses on securities  --  --  --  (4,000)
Net gains on sales of securities  2,525  447  2,781  682
Income from bank owned life insurance  104  264  246  372
Other operating income  302  239  616  603
Total non-interest income  3,386  1,546  4,548  (1,157)
Income before operating expenses  13,824  13,065  29,721  15,642
         
Operating Expenses:        
Salaries and other employee benefits  6,598  5,960  12,594  11,297
Occupancy  1,391  1,448  2,810  2,949
Equipment  269  297  573  602
Marketing and advertising  453  475  906  750
FDIC and NYS assessment  684  1,276  1,356  2,314
Other operating expenses  1,786  2,078  3,938  3,784
Total operating expenses  11,181  11,534  22,177  21,696
         
Income (Loss) Before Income Taxes  2,643  1,531  7,544  (6,054)
Provision (benefit) for income taxes  984  459  2,868  (2,033)
         
Net Income (Loss)  1,659  1,072  4,676  (4,021)
         
Preferred dividends and accretion  518  514  1,036  1,029
Net Income (Loss) Attributable to Common Stockholders $1,141 $558 $3,640 ($5,050)
         
Net Income (Loss) per Common Share - Basic $0.07 $0.04 $0.22 ($0.35)
Net Income (Loss) per Common Share - Diluted $0.07 $0.04 $0.22 ($0.35)
 
 
STATE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2010 and 2009 (unaudited)
(in thousands, except share and per share data)
     
  2010 2009
Assets:    
Cash and due from banks $64,593 $86,198
Securities purchased under agreements to resell  --  5,000
Total cash and cash equivalents 64,593 91,198
Securities available for sale - at estimated fair value  369,125  389,536
Federal Home Loan Bank and other restricted stock  5,473  5,336
Loans (net of allowance for loan losses of $31,259 in 2010 and $27,954 in 2009)  1,069,765  1,087,024
Loans held for sale  319  11,620
Bank premises and equipment - net  6,227  6,503
Bank owned life insurance  30,839  30,270
Net deferred income taxes  25,325  20,237
Receivable - securities sales  23,626  --
Prepaid FDIC assessment  6,486  --
Other assets  13,107  14,558
     
Total Assets $1,614,885 $1,656,282
     
Liabilities:    
Deposits:    
Demand $381,434 $341,698
Savings  566,970  616,379
Time  440,437  468,954
Total deposits  1,388,841  1,427,031
Other temporary borrowings  3,000  3,000
Senior unsecured debt  29,000  29,000
Subordinated notes  --  10,000
Junior subordinated debentures  20,620  20,620
Payable - securities purchases  7,996  4,158
Other accrued expenses and liabilities  12,477  13,654
Total Liabilities  1,461,934  1,507,463
     
Commitments and Contingent Liabilities    
     
Stockholders' Equity:    
Preferred stock, $0.01 par value, authorized 250,000 shares; 36,842 shares issued and outstanding; liquidation preference of $36,842  36,131  35,908
Common stock, $0.01 par value, authorized 50,000,000 shares in 2010 and 20,000,000 shares in 2009; issued 17,479,978 shares in 2010 and 15,586,700 shares in 2009; outstanding 16,656,959 shares in 2010 and 14,599,048 shares in 2009  175  156
Warrant  1,057  1,057
Surplus  178,450  167,433
Retained deficit  (55,442)  (44,141)
Treasury stock (823,019 shares in 2010 and 987,652 shares in 2009)  (13,872)  (16,646)
Accumulated other comprehensive income (net of taxes of $4,247 in 2010 and $3,326 in 2009)  6,452  5,052
Total Stockholders' Equity  152,951  148,819
     
Total Liabilities and Stockholders' Equity $1,614,885 $1,656,282
 
 
STATE BANCORP, INC.
SELECTED FINANCIAL DATA
For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)
(dollars in thousands, except share and per share data)
         
  Three Months Six Months
  2010 2009 2010 2009
Selected Average Balances (1):        
Total assets $1,655,895 $1,653,838 $1,637,379 $1,638,569
Loans - net of unearned income $1,112,155 $1,116,045 $1,106,830 $1,116,980
Investment securities $397,547 $390,919 $406,072 $393,228
Deposits $1,428,089 $1,407,766 $1,406,995 $1,406,587
Stockholders' equity $152,855 $148,929 $152,027 $151,141
         
Financial Performance Ratios:        
Return on average assets 0.40% 0.26% 0.58%  (0.49)%
Return on average common stockholders' equity 3.96% 2.00% 6.39%  (8.91)%
Net interest margin 4.16% 3.88% 4.33% 3.96%
Operating efficiency ratio 66.45% 70.87% 63.71% 66.33%
Operating expenses as a % of average assets 2.71% 2.80% 2.73% 2.67%
         
Capital Ratios (2):        
Tier I leverage ratio 8.93% 8.98% 8.93% 8.98%
Tier I risk-based capital ratio 12.02% 11.48% 12.02% 11.48%
Total risk-based capital ratio 13.28% 13.52% 13.28% 13.52%
Tangible common equity ratio (3) 7.17% 6.75% 7.17% 6.75%
         
Asset Quality Summary:        
Non-accrual loans (2) $7,367 $34,602 $7,367 $34,602
Non-accrual loans/total loans (2) 0.67% 3.07% 0.67% 3.07%
Allowance for loan losses/non-accrual loans (2) (4) 444% 122% 444% 122%
Allowance for loan losses/total loans (2) (4) 2.84% 2.51% 2.84% 2.51%
Net (recoveries) charge-offs ($279) $1,443 $5,152 $4,214
Net (recoveries) charge-offs (annualized)/average loans (0.10)% 0.52% 0.94% 0.76%
         
Common Share Data:        
Average common shares outstanding 16,288,409 14,356,607 16,213,144 14,346,083
Period-end common shares outstanding 16,656,959 14,599,048 16,656,959 14,599,048
Tangible book value per common share (2) $6.95 $7.66 $6.95 $7.66
Cash dividends per common share $0.05 $0.05 $0.10 $0.10
         
(1) Weighted daily average balance for period noted.        
(2) At period end.        
(3) The ratio of tangible common equity to tangible assets, or TCE ratio, is calculated by dividing total common stockholders' equity by total assets, after reducing both amounts by intangible assets. The TCE ratio is not required by GAAP or by applicable bank regulatory requirements, but is a metric used by management to evaluate the adequacy of our capital levels. Since there is no authoritative requirement to calculate the TCE ratio, our TCE ratio is not necessarily comparable to similar capital measures disclosed or used by other companies in the financial services industry. Tangible common equity and tangible assets are non-GAAP financial measures and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. With respect to the calculation of the actual unaudited TCE ratio as of June 30, 2010, reconciliations of tangible common equity to GAAP total common stockholders' equity and tangible assets to GAAP total assets are set forth below:
         
Total stockholders' equity $152,951 Total assets   $1,614,885
Less: preferred stock  (36,131) Less: intangible assets  --
Less: warrant  (1,057) Tangible assets $1,614,885
Total common stockholders' equity 115,763      
Less: intangible assets  --      
Tangible common equity $115,763      
         
(4) Excluding loans held for sale.        
 
 
STATE BANCORP, INC.
NET INTEREST INCOME ANALYSIS
For the Three Months Ended June 30, 2010 and 2009 (unaudited)
(dollars in thousands)
             
  2010 2009
   Average  Balance (1)   Interest  Average  Yield/Cost  Average  Balance (1)   Interest  Average  Yield/Cost
Assets:            
Interest-earning assets:            
Securities (2) $397,547 $3,818 3.85% $390,919 $4,379 4.49%
Federal Home Loan Bank and other restricted stock  5,552  28  2.02  5,952  28 1.89
Securities purchased under agreements to resell  3,549  2  0.23  13,077  5 0.15
Interest-bearing deposits  14,936  6 0.16  28,930  15 0.21
Loans (3)  1,112,155  15,084 5.44  1,116,045  14,756 5.30
Total interest-earning assets  1,533,739 $18,938 4.95%  1,554,923 $19,183 4.95%
Non-interest-earning assets  122,156      98,915    
Total Assets $1,655,895     $1,653,838    
             
Liabilities and Stockholders' Equity:            
Interest-bearing liabilities:            
Savings deposits $607,217 $942 0.62% $622,900 $1,199 0.77%
Time deposits  442,458 1,607 1.46  445,114  2,192 1.98
Total savings and time deposits  1,049,675  2,549 0.97  1,068,014  3,391 1.27
Federal funds purchased  --  --  --  --  --  --
Securities sold under agreements to repurchase  --  --  --  1,099  1 0.36
Other temporary borrowings  4,791  16 1.34  16,945  28 0.66
Senior unsecured debt  29,000  281 3.89  29,000  280 3.87
Subordinated notes  --  --  --  10,000  231 9.27
Junior subordinated debentures  20,620  182 3.54  20,620  212 4.12
Total interest-bearing liabilities  1,104,086  3,028 1.10  1,145,678  4,143 1.45
Demand deposits  378,415      339,753    
Other liabilities  20,539      19,478    
Total Liabilities  1,503,040      1,504,909    
Stockholders' Equity  152,855      148,929    
Total Liabilities and Stockholders' Equity $1,655,895     $1,653,838    
Net interest income/margin    15,910 4.16%    15,040 3.88%
Less tax-equivalent basis adjustment    (22)      (21)  
Net interest income   $15,888     $15,019  
             
(1) Weighted daily average balance for period noted.            
(2) Interest on securities includes the effects of tax-equivalent basis adjustments, using a 34% tax rate. Tax-equivalent basis adjustments were $12 and $10 in 2010 and 2009, respectively.
(3) Interest on loans includes the effects of tax-equivalent basis adjustments, using a 34% tax rate. Tax-equivalent basis adjustments were $10 and $11 in 2010 and 2009, respectively.
 
 
STATE BANCORP, INC.
NET INTEREST INCOME ANALYSIS
For the Six Months Ended June 30, 2010 and 2009 (unaudited)
(dollars in thousands)
             
             
  2010 2009
   Average Balance (1)   Interest  Average Yield/Cost  Average Balance (1)   Interest  Average Yield/Cost
Assets:            
Interest-earning assets:            
Securities (2) $406,072 $8,223 4.08% $393,228 $9,252 4.74%
Federal Home Loan Bank and other restricted stock  5,817  63  2.18  5,716  39 1.38
Securities purchased under agreements to resell  1,785  2  0.23  9,862  6 0.12
Interest-bearing deposits  13,038  10 0.15  21,905  21 0.19
Loans (3)  1,106,830  30,716 5.60  1,116,980  29,671 5.36
Total interest-earning assets  1,533,542 $39,014 5.13%  1,547,691 $38,989 5.08%
Non-interest-earning assets  103,837      90,878    
Total Assets $1,637,379     $1,638,569    
             
Liabilities and Stockholders' Equity:            
Interest-bearing liabilities:            
Savings deposits $600,592 $1,921 0.65% $600,589 $2,433 0.82%
Time deposits  433,562 3,209 1.49  472,896  4,937 2.11
Total savings and time deposits  1,034,154  5,130 1.00  1,073,485  7,370 1.38
Federal funds purchased  88  --  --  453  1 0.45
Securities sold under agreements to repurchase  --  --  --  1,740  4 0.46
Other temporary borrowings  12,122  48 0.80  17,232  59 0.69
Senior unsecured debt  29,000  561 3.90  14,740  283 3.87
Subordinated notes  --  --  --  10,000  462 9.32
Junior subordinated debentures  20,620  358 3.50  20,620  453 4.43
Total interest-bearing liabilities  1,095,984  6,097 1.12  1,138,270  8,632 1.53
Demand deposits  372,841      333,102    
Other liabilities  16,527      16,056    
Total Liabilities  1,485,352      1,487,428    
Stockholders' Equity  152,027      151,141    
Total Liabilities and Stockholders' Equity $1,637,379     $1,638,569    
Net interest income/margin    32,917 4.33%    30,357 3.96%
Less tax-equivalent basis adjustment    (44)      (58)  
Net interest income   $32,873     $30,299  
             
(1) Weighted daily average balance for period noted.        
(2) Interest on securities includes the effects of tax-equivalent basis adjustments, using a 34% tax rate. Tax-equivalent basis adjustments were $24 and $23 in 2010 and 2009, respectively.
(3) Interest on loans includes the effects of tax-equivalent basis adjustments, using a 34% tax rate. Tax-equivalent basis adjustments were $20 and $35 in 2010 and 2009, respectively.
CONTACT:  State Bancorp, Inc.
          Brian K. Finneran, Chief Financial Officer
            516-465-2251
            bfinneran@statebankofli.com
          Anthony J. Morris, Chief Marketing &
           Corporate Planning Officer
            516-495-5098
            amorris@statebankofli.com

State Bancorp, Inc. Logo

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