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State Bancorp, Inc. Reports Third Quarter 2010 Results

Performance Highlights

  • Net Interest Margin: Net interest margin was 4.16% in the third quarter of 2010 versus 4.06% in the third quarter of 2009 and 4.16% in the second quarter of 2010;  
  • Capital: The Company's Tier I leverage capital ratio was 9.33% at September 30, 2010 versus 9.25% at September 30, 2009 and 8.93% at June 30, 2010. The Company's tangible common equity ratio (non-GAAP financial measure) was 7.11% at September 30, 2010 versus 7.17% at both September 30, 2009 and June 30, 2010;
  • Loan Loss Provision: The third quarter 2010 provision for loan losses decreased by $500 thousand to $2.5 million versus the third quarter of 2009 and decreased by $3.0 million versus the second quarter of 2010;
  • Asset Quality: Non-accrual loans totaled $9 million or 0.8% of loans outstanding at September 30, 2010 versus $35 million or 3.1% of loans outstanding at September 30, 2009 and $7 million or 0.7% of loans outstanding at June 30, 2010. Net loan charge-offs of $1.3 million were recorded in the third quarter of 2010 versus $1.6 million in the third quarter of 2009 and net loan recoveries of $279 thousand in the second quarter of 2010. The allowance for loan losses totaled $32 million at September 30, 2010, $29 million at September 30, 2009 and $31 million at June 30, 2010. The foregoing allowance balances represented 2.9%, 2.7%, and 2.8% of total loans, respectively, at such dates. The allowance for loan losses as a percentage of non-accrual loans, excluding non-accrual loans categorized as held for sale, was 357%, 116%, and 444% at September 30, 2010, September 30, 2009 and June 30, 2010, respectively. The Company held no other real estate owned during any of these reporting periods;
  • Operating Efficiency: Total operating expenses for the third quarter of 2010 decreased by 6.9% to $10.6 million from the $11.3 million reported in the third quarter of 2009 and decreased by 5.6% versus the second quarter of 2010. The Company's operating efficiency ratio improved to 60.7% in 2010 from 66.6% in the comparable 2009 period. The Company's efficiency ratio was 66.5% in the second quarter of 2010;
  • Loans: Loans outstanding at September 30, 2010 were unchanged at $1.1 billion versus September 30, 2009 and were up 1% versus June 30, 2010;
  • Core Deposits: Core deposits totaled $979 million at September 30, 2010 versus $899 million at September 30, 2009 and $948 million at June 30, 2010. Core deposits represented 71% of total deposits in the quarter ended September 2010, 69% of total deposits for the quarter ended September 2009 and 68% for the quarter ended June 2010. Demand deposits decreased by 7% to $336 million at September 30, 2010 versus $363 million at September 30, 2009 and declined by 12% from $381 million at June 30, 2010. Demand deposits represented 24% of total deposits at September 30, 2010, 28% at September 30, 2009 and 27% at June 30, 2010;
  • Performance Ratios: Return on average assets and return on average common stockholders' equity were 0.78% and 9.09%, respectively, in the third quarter of 2010 and 0.47% and 5.01%, respectively, in the comparable 2009 period. For the second quarter of 2010, return on average assets and return on average common stockholders' equity were 0.40% and 3.96%.

Earnings Summary for the Quarter Ended September 30, 2010

The Company recorded net income of $3.2 million during the third quarter of 2010 versus net income of $1.9 million in the comparable 2009 period. Net interest income increased by $422 thousand or 2.7% to $16.0 million in the third quarter of 2010 versus 2009. This increase resulted from a 10 basis point expansion of the Company's net interest margin to 4.16% in 2010. The improved margin resulted from a reduction in funding costs during the third quarter of 2010 versus 2009. 

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