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State Bancorp, Inc. Reports Third Quarter 2010 Results

The Company's capital ratios exceeded all regulatory requirements at September 30, 2010. The Company's tangible common equity to tangible assets ratio (non-GAAP financial measure) was 7.11% at September 30, 2010 versus 7.17% at both September 30, 2009 and June 30, 2010.

The Company did not repurchase any of its common stock during the first nine months of 2010. Under the Board of Directors' existing authorization, up to 512,348 shares may be repurchased from time to time as conditions warrant. The Company does not presently anticipate repurchasing any of its shares in the immediate future.

Corporate Information

State Bancorp, Inc. is the holding company for State Bank of Long Island. In addition to its seventeen branches located in Nassau, Suffolk, Queens and Manhattan, the Bank maintains its corporate headquarters in Jericho. The Bank has built a reputation for providing high-quality personal service to meet the needs of our diverse customer base which includes commercial real estate owners and developers, small to middle market businesses, professional service firms, municipalities and consumers. The Bank maintains a web site at www.statebankofli.com with corporate, investor and branch banking information.

Non-GAAP Disclosure

This press release includes a non-GAAP financial measure of our tangible common equity. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by generally accepted accounting principles in the United States (GAAP). The Company believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and the Company's marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP.

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.

STATE BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2010 and 2009 (unaudited)
(in thousands, except per share data)
         
  Three Months Nine Months
  2010 2009 2010 2009
Interest Income:        
Interest and fees on loans $15,426 $15,398 $46,122 $45,034
Federal funds sold and securities purchased under agreements to resell  --  --  2  6
Securities held to maturity - taxable  41  --  41  --
Securities available for sale - taxable  3,472  4,126  11,627  13,325
Securities available for sale - tax-exempt  25  15  79  66
Dividends on Federal Home Loan Bank and other restricted stock  25  35  88  74
Total interest income  18,989  19,574  57,959  58,505
         
Interest Expense:        
Deposits  2,471  3,218  7,601  10,588
Temporary borrowings  21  25  69  89
Senior unsecured debt  280  280  841  563
Subordinated notes  --  231  --  693
Junior subordinated debentures  188  213  546  666
Total interest expense  2,960  3,967  9,057  12,599
         
Net interest income  16,029  15,607  48,902  45,906
Provision for loan losses  2,500  3,000  10,200  16,500
Net interest income after provision for loan losses  13,529  12,607  38,702  29,406
         
Non-Interest Income:        
Service charges on deposit accounts  467  504  1,372  1,690
Other-than-temporary impairment losses on securities  --  --  --  (4,000)
Net gains on sales of securities  733  486  3,514  1,168
Income from bank owned life insurance  107  182  353  554
Other operating income  713  622  1,329  1,225
Total non-interest income  2,020  1,794  6,568  637
Income before operating expenses  15,549  14,401  45,270  30,043
         
Operating Expenses:        
Salaries and other employee benefits  5,959  5,926  18,553  17,223
Occupancy  1,349  1,392  4,159  4,341
Equipment  302  307  875  909
Marketing and advertising  377  --  1,283  750
FDIC and NYS assessment  697  657  2,053  2,971
Other operating expenses  1,872  3,059  5,810  6,843
Total operating expenses  10,556  11,341  32,733  33,037
         
Income (Loss) Before Income Taxes  4,993  3,060  12,537  (2,994)
Provision (benefit) for income taxes  1,783  1,119  4,651  (914)
         
Net Income (Loss)  3,210  1,941  7,886  (2,080)
         
Preferred dividends and accretion  517  515  1,553  1,544
Net Income (Loss) Attributable to Common Stockholders $2,693 $1,426 $6,333 ($3,624)
         
Net Income (Loss) per Common Share - Basic $0.17 $0.10 $0.39 ($0.25)
Net Income (Loss) per Common Share - Diluted $0.17 $0.10 $0.39 ($0.25)
     
STATE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2010 and 2009 (unaudited)
(in thousands, except share and per share data)
     
  2010 2009
Assets:    
Cash and due from banks $37,026 $35,992
Securities held to maturity (estimated fair value of $22,000 in 2010)  22,000  --
Securities available for sale - at estimated fair value  404,160  395,022
Federal Home Loan Bank and other restricted stock  7,273  8,036
Loans (net of allowance for loan losses of $32,488 in 2010 and $29,401 in 2009)  1,081,075  1,078,794
Loans held for sale  --  9,302
Bank premises and equipment - net  6,357  6,562
Bank owned life insurance  30,946  30,452
Net deferred income taxes  24,326  18,453
Receivable - securities sales  13,393  --
Prepaid FDIC assessment  5,963  --
Other assets  12,758  13,851
     
Total Assets $1,645,277 $1,596,464
     
Liabilities:    
Deposits:    
Demand $336,251 $363,047
Savings  642,648  536,011
Time  406,808  408,904
Total deposits  1,385,707  1,307,962
Other temporary borrowings  43,000  63,000
Senior unsecured debt  29,000  29,000
Subordinated notes  --  10,000
Junior subordinated debentures  20,620  20,620
Other accrued expenses and liabilities  12,701  14,323
Total Liabilities  1,491,028  1,444,905
     
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  36,188  35,962
Common stock, $0.01 par value, authorized 50,000,000 shares in 2010 and 20,000,000 shares in 2009; issued 17,483,809 shares in 2010 and 15,615,889 shares in 2009; outstanding 16,660,790 shares in 2010 and 14,632,874 shares in 2009  175  156
Warrant  1,057  1,057
Surplus  178,820  167,690
Retained deficit  (53,582)  (43,445)
Treasury stock (823,019 shares in 2010 and 983,015 shares in 2009)  (13,872)  (16,568)
Accumulated other comprehensive income (net of taxes of $3,597 in 2010 and $4,415 in 2009)  5,463  6,707
Total Stockholders' Equity  154,249  151,559
     
Total Liabilities and Stockholders' Equity $1,645,277 $1,596,464
                   
STATE BANCORP, INC.  
SELECTED FINANCIAL DATA  
For the Three and Nine Months Ended September 30, 2010 and 2009 (unaudited)  
(dollars in thousands, except share and per share data)  
                   
  Three Months   Nine Months    
  2010   2009   2010   2009    
Selected Average Balances (1):                  
Total assets $1,627,183   $1,622,824   $1,633,943   $1,633,263    
Loans - net of unearned income $1,100,592   $1,121,278   $1,104,728   $1,118,428    
Investment securities $407,254   $388,060   $406,470   $391,486    
Deposits $1,391,822   $1,382,761   $1,401,882   $1,398,558    
Stockholders' equity $154,712   $150,076   $152,932   $150,782    
                   
Financial Performance Ratios:                  
Return on average assets 0.78 % 0.47 % 0.65 %  (0.17) %  
Return on average common stockholders' equity 9.09 % 5.01 % 7.31 %  (4.26) %  
Net interest margin 4.16 % 4.06 % 4.27 % 3.99 %  
Operating efficiency ratio 60.70 % 66.60 % 62.71 % 66.42 %  
Operating expenses as a % of average assets 2.57 % 2.77 % 2.68 % 2.70 %  
                   
Capital Ratios (2):                  
Tier I leverage ratio 9.33 % 9.25 % 9.33 % 9.25 %  
Tier I risk-based capital ratio 12.03 % 11.95 % 12.03 % 11.95 %  
Total risk-based capital ratio 13.29 % 13.70 % 13.29 % 13.70 %  
Tangible common equity ratio (3) 7.11 % 7.17 % 7.11 % 7.17 %  
                   
Asset Quality Summary:                  
Non-accrual loans (2) $9,107   $34,656   $9,107   $34,656    
Loans 90 days or more past due and still accruing (2) 1   7   1   7    
Total non-performing loans (2) $9,108   $34,663   $9,108   $34,663    
Non-accrual loans/total loans (2) 0.82 % 3.10 % 0.82 % 3.10 %  
Non-performing loans/total loans (2) 0.82 % 3.10 % 0.82 % 3.10 %  
Allowance for loan losses/non-accrual loans (2) (4) 357 % 116 % 357 % 116 %  
Allowance for loan losses/non-performing loans (2) (4) 357 % 116 % 357 % 116 %  
Allowance for loan losses/total loans (2) (4) 2.92 % 2.65 % 2.92 % 2.65 %  
Net charge-offs $1,271   $1,553   $6,423   $5,767    
Net charge-offs (annualized)/average loans 0.46 % 0.55 % 0.78 % 0.69 %  
                   
Common Share Data:                  
Average common shares outstanding 16,303,237   14,375,032   16,243,505   14,355,838    
Period-end common shares outstanding 16,660,790   14,632,874   16,660,790   14,632,874    
Tangible book value per common share (2) $7.02   $7.83   $7.02   $7.83    
Cash dividends per common share $0.05   $0.05   $0.15   $0.15    
                   
(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 September 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 $154,249   Total assets       $1,645,277    
Less: preferred stock  (36,188)   Less: intangible assets    --    
Less: warrant  (1,057)   Tangible assets     $1,645,277    
Total common stockholders' equity 117,004                
Less: intangible assets  --                
Tangible common equity $117,004                
                   
(4) Excluding loans held for sale.                  
             
STATE BANCORP, INC.
NET INTEREST INCOME ANALYSIS
For the Three Months Ended September 30, 2010 and 2009 (unaudited)
(dollars in thousands)
             
  2010 2009
   Average    Average  Average    Average
   Balance (1)   Interest  Yield/Cost  Balance (1)   Interest  Yield/Cost
Assets:            
Interest-earning assets:            
Securities (2) $407,254 $3,542 3.45% $388,060 $4,146 4.24%
Federal Home Loan Bank and other restricted stock  5,764  25  1.72  5,769  35 2.41
Interest-bearing deposits  15,848  7 0.18  10,677  3 0.11
Loans (3)  1,100,592  15,436 5.56  1,121,278  15,409 5.45
Total interest-earning assets  1,529,458 $19,010 4.93%  1,525,784 $19,593 5.09%
Non-interest-earning assets  97,725      97,040    
Total Assets $1,627,183     $1,622,824    
             
Liabilities and Stockholders' Equity:            
Interest-bearing liabilities:            
Savings deposits $617,206 $894 0.57% $589,269 $1,145 0.77%
Time deposits  420,366 1,577 1.49  439,151  2,073 1.87
Total savings and time deposits  1,037,572  2,471 0.94  1,028,420  3,218 1.24
Other temporary borrowings  9,467  21 0.88  12,630  25 0.79
Senior unsecured debt  29,000  280 3.83  29,000  280 3.83
Subordinated notes  --  --  --  10,000  231 9.16
Junior subordinated debentures  20,620  188 3.62  20,620  213 4.10
Total interest-bearing liabilities  1,096,659  2,960 1.07  1,100,670  3,967 1.43
Demand deposits  354,250      354,341    
Other liabilities  21,562      17,737    
Total Liabilities  1,472,471      1,472,748    
Stockholders' Equity  154,712      150,076    
Total Liabilities and Stockholders' Equity $1,627,183     $1,622,824    
Net interest income/margin    16,050 4.16%    15,626 4.06%
Less tax-equivalent basis adjustment    (21)      (19)  
Net interest income   $16,029     $15,607  
             
(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 $11 and $9 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 $10 in 2010 and 2009, respectively.
             
STATE BANCORP, INC.
NET INTEREST INCOME ANALYSIS
For the Nine Months Ended September 30, 2010 and 2009 (unaudited)
(dollars in thousands)
             
  2010 2009
   Average    Average  Average    Average
   Balance (1)   Interest  Yield/Cost  Balance (1)   Interest  Yield/Cost
Assets:            
Interest-earning assets:            
Securities (2) $406,470 $11,763 3.87% $391,486 $13,398 4.58%
Federal Home Loan Bank and other restricted stock  5,799  88  2.03  5,734  74 1.73
Securities purchased under agreements to resell  1,183  2  0.23  6,538  6 0.12
Interest-bearing deposits  13,985  18 0.17  18,122  24 0.18
Loans (3)  1,104,728  46,152 5.59  1,118,428  45,080 5.39
Total interest-earning assets  1,532,165 $58,023 5.06%  1,540,308 $58,582 5.08%
Non-interest-earning assets  101,778      92,955    
Total Assets $1,633,943     $1,633,263    
             
Liabilities and Stockholders' Equity:            
Interest-bearing liabilities:            
Savings deposits $606,191 $2,815 0.62% $596,774 $3,578 0.80%
Time deposits  429,115 4,786 1.49  461,524  7,010 2.03
Total savings and time deposits  1,035,306  7,601 0.98  1,058,298  10,588 1.34
Federal funds purchased  59  --  --  300  1 0.45
Securities sold under agreements to repurchase  --  --  --  1,154  4 0.46
Other temporary borrowings  11,227  69 0.82  15,681  84 0.72
Senior unsecured debt  29,000  841 3.88  19,546  563 3.85
Subordinated notes  --  --  --  10,000  693 9.27
Junior subordinated debentures  20,620  546 3.54  20,620  666 4.32
Total interest-bearing liabilities  1,096,212  9,057 1.10  1,125,599  12,599 1.50
Demand deposits  366,576      340,260    
Other liabilities  18,223      16,622    
Total Liabilities  1,481,011      1,482,481    
Stockholders' Equity  152,932      150,782    
Total Liabilities and Stockholders' Equity $1,633,943     $1,633,263    
Net interest income/margin    48,966 4.27%    45,983 3.99%
Less tax-equivalent basis adjustment    (64)      (77)  
Net interest income   $48,902     $45,906  
             
(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 $34 and $31 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 $30 and $46 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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