State Bancorp, Inc. Reports Third Quarter 2010 Results
The Company's third quarter 2010 average interest-earning asset yield was 4.93% versus 5.09% in the comparable 2009 period. The average yield on loans increased 11 basis points in the third quarter of 2010 to 5.56%. This improvement was due in part to the significant decline in non-accrual loans recorded in 2010 but was offset by a 79 basis point decline in the average yield on the Company's securities portfolio to 3.45% in the third quarter of 2010 versus 2009. The securities portfolio, which had an unrealized positive pre-tax mark to fair value of $9 million at September 30, 2010 and an estimated weighted average life of 2.4 years, increased by $31 million to $426 million at September 30, 2010 versus the comparable 2009 date and also increased by $57 million from June 30, 2010.
Contributing to the Company's lower funding costs in 2010 was a 36 basis point reduction in the Company's average cost of interest-bearing liabilities to 1.07% in the third quarter of 2010 versus 1.43% in the third quarter of 2009. The lower cost of funds resulted from growth in savings account balances in 2010 (up $107 million or 20%) 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 increased by $78 million to $1.4 billion at September 30, 2010 versus September 30, 2009 but remained stable compared to June 30, 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 $2.5 million in the third quarter of 2010, representing a decline of $500 thousand versus the comparable 2009 period. The third quarter 2010 provision for loan losses exceeded net charge-offs by $1.2 million.
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