- Quarterly Net Income of $2.9 Million - Up 74% Versus
2010
- Quarterly Net Interest Margin of
4.32%
- Tangible Common Equity Ratio at
7.62%
- Core Deposits of $1.0 Billion – Up 8% Versus
2010
State Bancorp, Inc. (the "Company") (Nasdaq:STBC), parent company
of State Bank of Long Island (the "Bank"), today reported net
income of $2.9 million and earnings per diluted common share of
$0.14 for the second quarter of 2011 compared with net income of
$1.7 million, and $0.07 per diluted common share, a year ago. The
74% increase in 2011 second quarter earnings was primarily
attributable to a $4.4 million decrease in the provision for loan
losses and a $495 thousand increase in net interest income as the
result of a wider net interest margin. Core operating expenses
declined by 8.6% to $10.2 million in the second quarter of 2011
resulting in an improvement of the Company's operating efficiency
ratio to 58.8% (non-GAAP financial measure). Core operating
expenses exclude merger-related expenses of $1.4 million, primarily
legal fees, associated with the Company's previously announced
transaction with Valley National Bancorp ("Valley"). Partially
offsetting these improvements, net gains on the sales of securities
declined by $2.5 million in the second quarter of 2011 compared to
2010. Excluding the merger-related expenses, second quarter net
income was $3.7 million and earnings per diluted common share was
$0.19 (non-GAAP financial measure). For the six month period ended
June 30, 2011, the Company recorded net income of $5.9 million and
earnings per diluted common share of $0.29, compared with net
income of $4.7 million, and $0.22 per diluted common share, in the
June 2010 year-to-date period. Excluding merger-related expenses,
June 2011 year-to-date net income was $6.7 million and diluted
earnings per common share was $0.34 (non-GAAP financial
measure).
Commenting on the second quarter 2011 results, President and CEO
Thomas M. O'Brien stated, "The Company produced strong results
across its business lines this quarter. Notwithstanding the
persistently low interest rate environment, the net interest margin
expanded to an impressive 4.32% driven by the Company's
concentration on appropriate risk adjusted pricing on both sides of
the balance sheet.
"Solid core deposit funding expanded by 8% from the prior year
and now represents 73% of total deposits. As a result of the
Company's expense management focus, further improvement in the
overall core operating efficiency has been achieved. Since the high
water mark of $51.9 million in 2007, management has successfully
reduced the Company's annualized run rate of operating expenses by
$11.5 million or 22% based on results for the first six months of
2011.
"The Company's credit quality remains strong and the strategic
importance of the aggressive problem asset disposition strategies
employed throughout 2008 and 2009 is vividly demonstrated by the
Company's now modest level of problem loans, an allowance for loan
losses at 2.43% of total loans, and the quarterly loan loss
provision declining to $1.1 million. Company management's early
identification and aggressive credit remediation actions have
served to positively distinguish its performance. When viewed
against the Company's strong quarterly and year to date financial
results as well as the credit factors noted above, we continue to
feel very pleased with the significant business turnaround and
profitability improvements that were brought about by the decisions
made and the strategies executed here at the Company.
"The combined financial strength, expanded distribution channels
and increased array of new commercial and consumer products that
will result from the upcoming merger with Valley will create a
significantly enhanced competitive force in our core markets.
Together with Valley, the combined company will have over $16
billion in assets and more than $1.5 billion in equity capital. We
are delighted that the Office of the Comptroller of the Currency
(OCC) and the Federal Reserve Bank of New York have already granted
regulatory approval for the proposed merger. A fourth quarter 2011
closing is anticipated. Both companies have been working together
diligently to effect a smooth and seamless transition for our
customers."
Performance and Other Highlights
- Net Interest Margin: Net interest margin was 4.32% in the
second quarter of 2011 versus 4.16% in the second quarter of 2010
and 4.17% in the first quarter of 2011;
- Capital Strength: The Company's Tier I leverage capital ratio
was 10.07% at June 30, 2011 versus 8.93% at June 30, 2010 and
10.09% at March 31, 2011. The Company's tangible common equity
ratio (non-GAAP financial measure) was 7.62% at June 30, 2011
versus 7.17% at June 30, 2010 and 7.60% at March 31, 2011;
- Loan Loss Provision: The provision for loan losses decreased by
$4.4 million in the second quarter of 2011 versus the second
quarter of 2010 and declined by $800 thousand versus the first
quarter of 2011;
- Asset Quality: Non-accrual loans totaled $12 million or 1.0% of
loans outstanding at both June 30, 2011 and March 31, 2011 versus
$15 million or 1.3% of loans outstanding at December 31, 2010 and
$7 million or 0.7% of loans outstanding at June 30, 2010. Net loan
charge-offs of $958 thousand were recorded in the second quarter of
2011 versus net loan charge-offs of $7 million in the first quarter
of 2011 and net loan recoveries of $278 thousand in the second
quarter of 2010. The allowance for loan losses totaled $28 million
at both June 30, 2011 and March 31, 2011 versus $33 million at
December 31, 2010 and $31 million at June 30, 2010. The foregoing
allowance balances represented 2.4%, 2.4%, 2.9% 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 239%, 231%, 223% and 444% at
those same dates, respectively. The Company held no other real
estate owned during any of these reporting periods;
- Operating Efficiency: Excluding merger-related expenses of
$1.4 million, second quarter total operating expenses declined by
8.6% versus the second quarter of 2010 and increased by 2.2% versus
the first quarter of 2011 (non-GAAP financial measure). Excluding
merger-related expenses, the Company's second quarter 2011
operating efficiency ratio was 58.8% (non-GAAP financial measure).
The Company's efficiency ratio was 59.7% in the first quarter of
2011. When the merger related charges are included, total operating
expenses for the second quarter of 2011 increased by 3.5% to $11.6
million from the $11.2 million reported in the second quarter of
2010 and increased by 15.8% versus the first quarter of 2011. The
Company's operating efficiency ratio was 66.7% in the second
quarter of 2011 versus 66.5% in the comparable 2010 period;
- Loans: Loans outstanding increased by 4% to $1.14 billion
compared to the second quarter of 2010 and were unchanged from the
first quarter of 2011;
- Core Deposits: Core deposits totaled $1.02 billion at June 30,
2011 versus $948 million at June 30, 2010 and $977 million at March
31, 2011. Core deposits represented 73%, 68% and 73% of total
deposits at June 30, 2011, June 30, 2010 and March 31, 2011,
respectively. Demand deposits totaled $382 million at June 30,
2011, $381 million at June 30, 2010 and $376 million at March 31,
2011 and represented 27%, 27% and 28% of total deposits at those
respective dates;
- Performance Ratios: Return on average assets and return on
average common stockholders' equity were 0.71% and 7.70%,
respectively, in the second quarter of 2011 and 0.40% and 3.96%,
respectively, in the comparable 2010 period.
As previously announced, on April 28, 2011, the Company entered
into a merger agreement with Valley, providing for the merger of
the Company with and into Valley, with Valley as the surviving
entity. In connection with the merger, Valley has filed with the
SEC a Registration Statement on Form S-4 that includes a Proxy
Statement of the Company and a Prospectus of Valley, as well as
other relevant documents concerning the proposed transaction. The
Registration Statement has not yet become effective. The merger is
subject to the approval of the Company's stockholders, approvals
from applicable banking regulators and other customary
conditions. The Office of the Comptroller of the Currency and
the Federal Reserve Bank of New York have granted their approval of
the merger. The Company anticipates the closing of the merger will
take place in the fourth quarter of 2011.
Earnings Summary for the Quarter Ended June 30,
2011
The Company recorded net income of $2.9 million during the
second quarter of 2011 versus net income of $1.7 million in the
comparable 2010 period. When compared to the second quarter of
2010, the provision for loan losses declined by $4.4 million and
net interest income increased by $495 thousand to $16.4 million in
the second quarter of 2011. Net gains on sales of securities
decreased by $2.5 million and total operating expenses increased by
$390 thousand in 2011.
The growth in net interest income resulted from a 16 basis point
expansion of the Company's net interest margin to 4.32% in 2011.
The improved margin resulted from a 26 basis point reduction in
funding costs during the second quarter of 2011 versus 2010, due
principally to lower rates paid on savings and time deposits. The
Company's second quarter 2011 average interest-earning asset yield
was 4.91%, down four basis points from the comparable 2010 period.
The average yield on loans increased by five basis points in the
second quarter of 2011 to 5.49%. This improvement was offset by a
41 basis point decline in the average yield on the Company's
securities portfolio to 3.44% in 2011 versus 2010. The securities
portfolio decreased by $13 million to $356 million at June 30, 2011
versus the comparable 2010 date. The securities portfolio totaled
$332 million at March 31, 2011. At June 30, 2011 the securities
portfolio had an unrealized pre-tax gain of $7 million and an
estimated weighted average life of 4.0 years.
The Company's average cost of interest-bearing liabilities
declined 26 basis points to 0.84% in the second quarter of 2011
versus 1.10% in the second quarter of 2010. The Company's lower
funding cost resulted from ongoing management of deposit rates as
deposit pricing has continued to ease in local markets. Total
deposits increased by $12 million to $1.4 billion at June 30, 2011
versus June 30, 2010 and by $62 million compared to March 31,
2011.
The provision for loan losses was $1.1 million in the second
quarter of 2011, representing reductions of $4.4 million versus the
comparable 2010 period and $800 thousand versus the first quarter
of 2011. The reduction in the provision from 2010 primarily
resulted from a lower level of watch list loans (consisting of
criticized loans, classified loans and those loans requiring
special attention but not warranting categorization as either
criticized or classified) along with the general improvement in
credit conditions in 2011.
Second quarter 2011 core operating expenses decreased by $967
thousand or 8.6% to $10.2 million compared to the second quarter of
2010 (non-GAAP financial measure). This decrease was due to cost
reductions achieved in several expense categories, most notably
salaries and other employee benefits, marketing and advertising,
FDIC and NYS assessment and credit and collection. Salaries and
other employee benefits declined by $357 thousand in the second
quarter of 2011 versus 2010 primarily as the result of a reduction
in staff count in 2011 and a decline in the Company's defined
contribution plan expense. Marketing and advertising expenses
declined by $248 thousand in 2011 due to a reduction in spending
related to brand building. In addition, we experienced
year-over-year reductions in expenses in occupancy (down $44
thousand), FDIC and NYS assessment (down $131 thousand) and credit
and collection (down $63 thousand). Total operating expenses,
inclusive of $1.4 million in merger-related charges, increased by
$390 thousand or 3.5% to $11.5 million in 2011 from the comparable
2010 period.
The Company recorded income tax expense of $1.8 million in the
second quarter of 2011 versus $1.0 million in the comparable period
a year ago.
Earnings Summary for the Six Months Ended June 30,
2011
The increase in net income in the first six months of 2011 to
$5.9 million from $4.7 million in the comparable 2010 period
resulted from a $4.7 million decrease in the provision for loan
losses and a $617 thousand decline in total operating expenses in
2011. Partly offsetting the foregoing improvements were reductions
in net interest income (down $888 thousand) and non-interest income
(down $2.5 million).
The decrease in the provision for loan losses in 2011 versus the
comparable 2010 period was primarily due to a reduction in watch
list loans in 2011.
Total operating expenses decreased by $617 thousand or 2.8% to
$21.6 million in 2011, primarily due to a $487 thousand reduction
in salaries and other employee benefits expenses coupled with
decreases of $393 thousand in marketing and advertising, $203
thousand in FDIC and NYS assessment and $164 thousand in credit and
collection costs.
The decrease in net interest income was due to a nine basis
point narrowing of the Company's net interest margin to 4.24% in
2011 from 4.33% a year ago coupled with a $12 million reduction in
average interest-earning assets in 2011, primarily securities.
The decrease in non-interest income in 2011 resulted principally
from a $2.7 million reduction in net gains on sales of
securities.
The Company recorded income tax expense of $3.6 million in the
first half of 2011 versus $2.9 million in the comparable 2010
period.
Asset Quality
Non-accrual loans totaled $12 million or 1.0% of total loans
outstanding at June 30, 2011 versus $7 million or 0.7% of total
loans outstanding at June 30, 2010 and $12 million or 1.0% of total
loans outstanding at March 31, 2011. Non-accrual loans categorized
as held for sale, previously written down to estimated fair value,
amounted to $319 thousand at June 30, 2010. There were no
nonaccrual loans categorized as held for sale at June 30, 2011 or
March 31, 2011. The increase in non-accrual loans at June 30, 2011
compared to June 30, 2010 resulted primarily from a number of
various additions to non-accrual, partially offset by strategic
commercial loan sales, settlements and charge-offs. The allowance
for loan losses as a percentage of total non-accrual loans,
excluding non-accrual loans categorized as held for sale, amounted
to 239% at June 30, 2011 versus 444% at June 30, 2010 and 231% at
March 31, 2011.
Total accruing loans delinquent 30 days or more amounted to $33
million or 2.88% of loans outstanding at June 30, 2011 versus $28
million or 2.57% of loans outstanding at June 30, 2010 and $26
million or 2.30% of loans outstanding as of March 31, 2011.
Watch list loans totaled $134 million at June 30, 2011, $172
million at June 30, 2010 and $145 million at March 31, 2011.
Classified loans were $65 million at June 30, 2011, $70 million at
June 30, 2010 and $63 million at March 31, 2011. The allowance for
loan losses as a percentage of total classified loans was 42%, 45%
and 44%, respectively, at the same dates.
At June 30, 2011 and March 31, 2011, the Company had $27 million
in troubled debt restructurings ("TDRs"), primarily consisting of
two classified, partially secured commercial and industrial
("C&I") loans each with a principal balance of $10 million and
a classified $6.5 million secured land loan in Roslyn, New York.
Each of the borrowers requested and was granted interest rate or
other concessions. These credits have been on the Company's watch
list since 2009 and 2008, respectively, are fully advanced and
performing at June 30, 2011 in accordance with their revised
terms. The Company had TDRs amounting to $7 million at June
30, 2010.
As of June 30, 2011, the Company's allowance for loan losses
amounted to $28 million or 2.4% of period-end loans outstanding.
The allowance as a percentage of loans outstanding was 2.8% at June
30, 2010 and 2.4% at March 31, 2011.
The Company recorded net loan charge-offs of $958 thousand in
the second quarter of 2011 versus net loan recoveries of $278
thousand in the second quarter of 2010 and net loan charge-offs of
$7 million in the first quarter of 2011. As a percentage of average
total loans outstanding, these net amounts represented, on an
annualized basis, 0.3% for the second quarter of 2011, (0.1)% for
the second quarter of 2010 and 2.6% for the first quarter of
2011.
The Company has held no other real estate owned since 2005.
Capital
Total stockholders' equity, inclusive of the preferred stock and
a common stock warrant issued to the U.S. Treasury under the
Capital Purchase Program, was $161 million at June 30, 2011
compared to $153 million at June 30, 2010 and $157 million at March
31, 2010. The increase in stockholders' equity versus June 30, 2010
is largely reflective of net income earned in the past twelve
months.
Cash dividends of $0.10 per share, totaling $1.7 million, were
paid to the Company's stockholders during the first six months of
2011.
The Company's return on average common stockholders' equity was
8.09% for the first six months of 2011 versus 6.39% in the June
2010 year-to-date period.
The Company has $20 million in outstanding trust preferred
securities that qualify as Tier I capital. During 2011, the
weighted average cost of the Company's trust preferred securities
was 3.49% versus 3.50% a year ago.
The Bank's Tier I leverage, Tier I risk-weighted and total
risk-weighted capital ratios were 9.91%, 12.54% and 13.80%,
respectively, at June 30, 2011. Each of these ratios exceeds the
regulatory guidelines for a "well capitalized" institution, the
highest regulatory capital category.
The Company's capital ratios exceeded all regulatory
requirements at June 30, 2011. The Company's tangible common equity
to tangible assets ratio (non-GAAP financial measure) was 7.62% at
June 30, 2011 versus 7.17% at June 30, 2010 and 7.60% at March 31,
2011.
The Company did not repurchase any of its common stock during
the first six months of 2011. 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 non-GAAP financial measures of
tangible common equity ratio, core operating expenses and core
operating efficiency ratio. 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: the failure of the Company and Valley to satisfy the
closing conditions in the merger agreement, 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.
Additional Information and Where to Find It
On April 28, 2011, the Company entered into an Agreement and
Plan of Merger with Valley, providing for the merger of the Company
with and into Valley, with Valley as the surviving entity.
In connection with the merger, Valley has filed with the SEC a
Registration Statement on Form S-4 that includes a Proxy Statement
of the Company and a Prospectus of Valley, as well as other
relevant documents concerning the proposed transaction. A
definitive Proxy Statement will be mailed to stockholders of the
Company after the Registration Statement is declared
effective. The Registration Statement has not yet become
effective. Stockholders are urged to read the Registration
Statement and the Proxy Statement/Prospectus regarding the merger
and any other relevant documents filed with the SEC, as well as any
amendments or supplements to those documents, because they will
contain important information. You can obtain a free copy of the
Proxy Statement/Prospectus, as well as other filings containing
information about the Company and Valley at the SEC's Internet site
(http://www.sec.gov). You can also obtain these documents, free of
charge, from the Company by accessing the Company's website at
www.statebankofli.com under the tab "Investor Relations" and then
under the heading "Financial Information" and subheading "SEC
Filings."
The Company and Valley and certain of their directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of the Company in
connection with the proposed merger. Information about the
directors and executive officers of the Company is set forth in the
proxy statement for the Company's 2011 annual meeting of
stockholders, as filed with the SEC on a Schedule 14A on March 25,
2011. Information about the directors and executive officers of
Valley is set forth in the proxy statement for Valley's 2011 annual
meeting of stockholders, as filed with the SEC on a Schedule 14A on
March 11, 2011. Additional information regarding the
interests of those participants and other persons who may be deemed
participants in the transaction may be obtained by reading the
Proxy Statement/Prospectus. You may obtain free copies of this
document as described in the preceding paragraph.
Financial Highlights Follow
STATE BANCORP,
INC. |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
For the Three and Six Months
Ended June 30, 2011 and 2010 (unaudited) |
(in thousands, except per share
data) |
|
|
|
|
|
|
Three Months |
Six Months |
|
2011 |
2010 |
2011 |
2010 |
Interest Income: |
|
|
|
|
Interest and fees on loans |
$15,639 |
$15,074 |
$30,719 |
$30,696 |
Federal funds sold and securities purchased
under agreements to resell |
-- |
2 |
-- |
2 |
Securities held to maturity - taxable |
217 |
-- |
433 |
-- |
Securities available for sale - taxable |
2,744 |
3,779 |
5,354 |
8,145 |
Securities available for sale -
tax-exempt |
10 |
27 |
22 |
54 |
Dividends on Federal Home Loan Bank and other
restricted stock |
25 |
28 |
58 |
63 |
Interest on balances due from
banks |
14 |
6 |
18 |
10 |
Total interest income |
18,649 |
18,916 |
36,604 |
38,970 |
|
|
|
|
|
Interest Expense: |
|
|
|
|
Deposits |
1,792 |
2,549 |
3,669 |
5,130 |
Temporary borrowings |
14 |
16 |
32 |
48 |
Senior unsecured debt |
281 |
281 |
561 |
561 |
Junior subordinated debentures |
179 |
182 |
357 |
358 |
Total interest expense |
2,266 |
3,028 |
4,619 |
6,097 |
|
|
|
|
|
Net interest income |
16,383 |
15,888 |
31,985 |
32,873 |
Provision for loan losses |
1,100 |
5,450 |
3,000 |
7,700 |
Net interest income after provision for
loan losses |
15,283 |
10,438 |
28,985 |
25,173 |
|
|
|
|
|
Non-Interest Income: |
|
|
|
|
Service charges on deposit accounts |
416 |
455 |
858 |
905 |
Net gains on sales of securities |
31 |
2,525 |
113 |
2,781 |
Income from bank owned life insurance |
64 |
104 |
164 |
246 |
Other operating income |
448 |
302 |
959 |
616 |
Total non-interest income |
959 |
3,386 |
2,094 |
4,548 |
Income before operating expenses |
16,242 |
13,824 |
31,079 |
29,721 |
|
|
|
|
|
Operating Expenses: |
|
|
|
|
Salaries and other employee benefits |
6,241 |
6,598 |
12,107 |
12,594 |
Occupancy |
1,347 |
1,391 |
2,769 |
2,810 |
Equipment |
330 |
269 |
654 |
573 |
Marketing and advertising |
205 |
453 |
513 |
906 |
FDIC and NYS assessment |
553 |
684 |
1,153 |
1,356 |
Credit and collection |
112 |
175 |
209 |
373 |
Data processing |
258 |
258 |
520 |
520 |
Merger-related expenses |
1,357 |
-- |
1,357 |
-- |
Other operating expenses |
1,168 |
1,353 |
2,278 |
3,045 |
Total operating expenses |
11,571 |
11,181 |
21,560 |
22,177 |
|
|
|
|
|
Income Before Income
Taxes |
4,671 |
2,643 |
9,519 |
7,544 |
Provision for income taxes |
1,790 |
984 |
3,602 |
2,868 |
|
|
|
|
|
Net Income |
2,881 |
1,659 |
5,917 |
4,676 |
|
|
|
|
|
Preferred dividends and accretion |
521 |
518 |
1,042 |
1,036 |
Net Income Attributable to
Common Stockholders |
$2,360 |
$1,141 |
$4,875 |
$3,640 |
|
|
|
|
|
Net Income per Common Share -
Basic |
$0.15 |
$0.07 |
$0.30 |
$0.22 |
Net Income per Common Share -
Diluted |
$0.14 |
$0.07 |
$0.29 |
$0.22 |
|
|
STATE BANCORP,
INC. |
CONSOLIDATED BALANCE
SHEETS |
June 30, 2011 and 2010
(unaudited) |
(in thousands, except share and
per share data) |
|
|
|
|
2011 |
2010 |
Assets: |
|
|
Cash and non-interest-bearing balances due
from banks |
$23,788 |
$39,875 |
Interest-bearing balances due from banks |
54,382 |
24,718 |
Securities held to maturity (estimated fair
value of $21,895 in 2011) |
22,000 |
-- |
Securities available for sale - at estimated
fair value |
333,602 |
369,125 |
Federal Home Loan Bank and other restricted
stock |
5,402 |
5,473 |
Loans (net of allowance for loan losses of
$27,731 in 2011 and $31,259 in 2010) |
1,115,487 |
1,069,765 |
Loans held for sale |
-- |
319 |
Bank premises and equipment - net |
5,871 |
6,227 |
Bank owned life insurance |
30,654 |
30,839 |
Net deferred income taxes |
19,926 |
25,325 |
Receivable - securities sales |
-- |
23,626 |
Prepaid FDIC assessment |
4,482 |
6,486 |
Other assets |
10,542 |
13,107 |
|
|
|
Total Assets |
$1,626,136 |
$1,614,885 |
|
|
|
Liabilities: |
|
|
Deposits: |
|
|
Demand |
$381,701 |
$381,434 |
Savings |
639,330 |
566,970 |
Time |
379,776 |
440,437 |
Total deposits |
1,400,807 |
1,388,841 |
Other temporary borrowings |
3,000 |
3,000 |
Senior unsecured debt |
29,000 |
29,000 |
Junior subordinated debentures |
20,620 |
20,620 |
Payable - securities purchases |
-- |
7,996 |
Other accrued expenses and
liabilities |
11,388 |
12,477 |
Total Liabilities |
1,464,815 |
1,461,934 |
|
|
|
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 |
36,367 |
36,131 |
Common stock, $0.01 par value, authorized
50,000,000 shares; issued 17,678,750 shares in 2011 and 17,479,978
shares in 2010; outstanding 16,966,158 shares in 2011 and
16,656,959 shares in 2010 |
177 |
175 |
Warrant |
1,057 |
1,057 |
Surplus |
179,543 |
178,450 |
Retained deficit |
(48,108) |
(55,442) |
Treasury stock (712,592 shares in 2011 and
823,019 shares in 2010) |
(12,012) |
(13,872) |
Accumulated other comprehensive income
(net of taxes of $2,828 in 2011 and $4,247 in 2010) |
4,297 |
6,452 |
Total Stockholders' Equity |
161,321 |
152,951 |
|
|
|
Total Liabilities and
Stockholders' Equity |
$1,626,136 |
$1,614,885 |
|
|
STATE BANCORP,
INC. |
SELECTED FINANCIAL
DATA |
For the Three and Six Months
Ended June 30, 2011 and 2010 (unaudited) |
(dollars in thousands, except
share and per share data) |
|
|
|
|
|
|
Three Months |
Six Months |
|
2011 |
2010 |
2011 |
2010 |
Selected Average Balances
(1): |
|
|
|
|
Total assets |
$1,633,335 |
$1,655,895 |
$1,613,499 |
$1,637,379 |
Loans - net of unearned income |
$1,142,608 |
$1,112,155 |
$1,141,074 |
$1,106,830 |
Investment securities |
$346,880 |
$397,547 |
$355,344 |
$406,072 |
Deposits |
$1,408,478 |
$1,428,089 |
$1,387,905 |
$1,406,995 |
Stockholders' equity |
$160,284 |
$152,855 |
$158,921 |
$152,027 |
|
|
|
|
|
Financial Performance
Ratios: |
|
|
|
|
Return on average assets |
0.71% |
0.40% |
0.74% |
0.58% |
Return on average common stockholders'
equity |
7.70% |
3.96% |
8.09% |
6.39% |
Net interest margin |
4.32% |
4.16% |
4.24% |
4.33% |
Operating efficiency ratio |
66.66% |
66.45% |
63.26% |
63.71% |
Core operating efficiency ratio (2) |
58.84% |
66.45% |
59.28% |
63.71% |
Operating expenses as a % of average
assets |
2.84% |
2.71% |
2.69% |
2.73% |
|
|
|
|
|
Capital Ratios (3): |
|
|
|
|
Tier I leverage ratio |
10.07% |
8.93% |
10.07% |
8.93% |
Tier I risk-based capital ratio |
12.74% |
12.02% |
12.74% |
12.02% |
Total risk-based capital ratio |
14.00% |
13.28% |
14.00% |
13.28% |
Tangible common equity ratio (4) |
7.62% |
7.17% |
7.62% |
7.17% |
|
|
|
|
|
Common Share Data: |
|
|
|
|
Average common shares outstanding |
16,538,060 |
16,288,409 |
16,491,491 |
16,213,144 |
Period-end common shares outstanding |
16,966,158 |
16,656,959 |
16,966,158 |
16,656,959 |
Tangible book value per common share (3) |
$7.30 |
$6.95 |
$7.30 |
$6.95 |
Cash dividends per common share |
$0.05 |
$0.05 |
$0.10 |
$0.10 |
|
|
|
|
|
(1) Weighted daily average balance for period
noted. |
|
|
|
|
|
|
|
|
|
(2) Core operating expenses are
calculated by subtracting merger-related expenses from total
operating expenses. The core operating efficiency ratio is
calculated by dividing core operating expenses by the sum of fully
taxable equivalent ("FTE") net interest income and non-interest
income, excluding net securities gains and losses. The core
operating efficiency ratio is not required by GAAP or by applicable
bank regulatory requirements, but is a metric used by management to
evaluate the level of operating expenses. Since there is no
authoritative requirement to calculate this ratio, our ratio is not
necessarily comparable to similar efficiency measures disclosed or
used by other companies in the financial services industry. Core
operating expenses and the core operating efficiency ratio 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 core operating expenses and the actual unaudited core operating
efficiency ratio as of June 30, 2011, the reconciliation of core
operating expenses to GAAP total operating expenses and the
calculation of the core operating efficiency ratio are set forth
below: |
Core Operating Expenses |
QTD 6/30/11 |
YTD 6/30/11 |
Total operating expenses |
$ 11,571 |
$ 21,560 |
Less: merger-related expenses |
(1,357) |
(1,357) |
Core operating expenses |
$ 10,214 |
$ 20,203 |
|
|
|
Core Operating Efficiency
Ratio |
QTD 6/30/11 |
YTD 6/30/11 |
Core operating expenses |
$ 10,214 |
$ 20,203 |
FTE net interest income |
16,397 |
32,014 |
|
|
|
FTE non-interest income |
992 |
2,179 |
Less: net gains on sales of securities |
(31) |
(113) |
Non-interest income excluding net securities
gains |
961 |
2,066 |
|
|
|
|
58.84% |
59.28% |
(3) At period end. |
|
|
|
|
|
|
|
|
|
(4) 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, 2011,
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 |
$161,321 |
|
Total assets |
$1,626,136 |
Less: preferred stock |
(36,367) |
|
Less: intangible assets |
-- |
Less: warrant |
(1,057) |
|
Tangible assets |
$1,626,136 |
Total common stockholders' equity |
123,897 |
|
|
|
Less: intangible assets |
-- |
|
|
|
Tangible common equity |
$123,897 |
|
|
|
|
|
STATE BANCORP,
INC. |
ASSET QUALITY
ANALYSIS |
(unaudited) |
(dollars in thousands) |
|
|
Three Months Ended |
|
|
June 30, 2011 |
March 31, 2011 |
December 31, 2010 |
September 30, 2010 |
June 30, 2010 |
Non-Performing Assets
(1): |
|
|
|
|
|
Non-accrual loans: |
|
|
|
|
|
Commercial and industrial - general
purpose |
$ 4,667 |
$ 5,319 |
$ 11,017 |
$ 3,556 |
$ 1,931 |
Commercial and industrial -
owner-occupied mortgage |
275 |
-- |
-- |
-- |
-- |
Real estate - commercial mortgage |
5,613 |
5,651 |
1,684 |
1,963 |
477 |
Real estate - residential mortgage |
969 |
899 |
973 |
2,217 |
174 |
Real estate - residential
construction |
-- |
-- |
1,078 |
1,078 |
4,536 |
Loans to individuals |
65 |
94 |
104 |
293 |
249 |
Total non-accrual loans |
11,589 |
11,963 |
14,856 |
9,107 |
7,367 |
|
|
|
|
|
|
Loans 90 days or more past due and still
accruing: |
|
|
|
|
|
Loans to individuals |
1 |
1 |
1 |
1 |
9 |
Total loans 90 days or more past due and
still accruing |
1 |
1 |
1 |
1 |
9 |
|
|
|
|
|
|
Total non-performing loans |
11,590 |
11,964 |
14,857 |
9,108 |
7,376 |
Other real estate owned |
-- |
-- |
-- |
-- |
-- |
Total non-performing assets |
$ 11,590 |
$ 11,964 |
$ 14,857 |
$ 9,108 |
$ 7,376 |
|
|
|
|
|
|
Total non-accrual loans/total loans |
1.01% |
1.04% |
1.31% |
0.82% |
0.67% |
Total non-performing loans/total loans |
1.01% |
1.04% |
1.31% |
0.82% |
0.67% |
|
|
|
|
|
|
Troubled Debt Restructurings
(2): |
$ 26,994 |
$ 27,017 |
$ 27,047 |
$ 7,260 |
$ 6,949 |
|
|
|
|
|
|
Provision and Allowance for
Loan Losses: |
|
|
|
|
|
Balance at beginning of period |
$ 27,589 |
$ 33,078 |
$ 32,488 |
$ 31,259 |
$ 25,531 |
Charge-offs |
(1,042) |
(7,629) |
(2,151) |
(1,261) |
(151) |
Recoveries |
84 |
240 |
41 |
(10) |
429 |
Net charge-offs |
(958) |
(7,389) |
(2,110) |
(1,271) |
278 |
Provision for loan losses |
1,100 |
1,900 |
2,700 |
2,500 |
5,450 |
Balance at end of period |
$ 27,731 |
$ 27,589 |
$ 33,078 |
$ 32,488 |
$ 31,259 |
|
|
|
|
|
|
Allowance for loan losses/non-accrual loans
(1) (3) |
239% |
231% |
223% |
357% |
444% |
Allowance for loan losses/non-performing
loans (1) (3) |
239% |
231% |
223% |
357% |
443% |
Allowance for loan losses/total loans (1)
(3) |
2.43% |
2.40% |
2.92% |
2.92% |
2.84% |
|
|
|
|
|
|
Net Charge-Offs
(Recoveries): |
|
|
|
|
|
Commercial and industrial - general
purpose |
$ 697 |
$ 5,690 |
$ 1,030 |
$ 175 |
$ (145) |
Real estate - commercial mortgage |
-- |
1,273 |
(15) |
(13) |
(35) |
Real estate - residential mortgage |
235 |
136 |
(6) |
-- |
(3) |
Real estate - commercial construction |
-- |
-- |
900 |
-- |
-- |
Real estate - residential construction |
-- |
278 |
-- |
1,088 |
(99) |
Loans to individuals |
26 |
12 |
201 |
21 |
4 |
Total net charge-offs (recoveries) |
$ 958 |
$ 7,389 |
$ 2,110 |
$ 1,271 |
$ (278) |
|
|
|
|
|
|
Net charge-offs (recoveries)
(annualized)/average loans |
0.34% |
2.63% |
0.75% |
0.46% |
(0.10)% |
|
|
|
|
|
|
Delinquencies and Non-Accrual
Loans as a % of Total Loans (1): |
|
|
|
|
|
Loans 30 - 59 days past due |
0.99% |
2.27% |
0.18% |
2.73% |
1.70% |
Loans 60 - 89 days past due |
1.89% |
0.03% |
2.10% |
1.17% |
0.87% |
Loans 90 days or more past due and still
accruing |
0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
Total accruing past due loans |
2.88% |
2.30% |
2.28% |
3.90% |
2.57% |
Non-accrual loans |
1.01% |
1.04% |
1.31% |
0.82% |
0.67% |
Total delinquent and non-accrual
loans |
3.89% |
3.34% |
3.59% |
4.72% |
3.24% |
|
|
|
|
|
|
(1) At period end. |
|
(2) Troubled debt restructurings
on non-accrual status included here and also included in total
non-accrual loans are $56, $76, $104 and $300 at June 30,
2011, March 31, 2011, December 31, 2010 and September 30, 2010,
respectively. |
|
(3) Excluding loans held for
sale. |
|
|
|
STATE BANCORP,
INC. |
NET INTEREST INCOME
ANALYSIS |
For the Three Months Ended June
30, 2011 and 2010 (unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
2011 |
2010 |
|
Average Balance (1) |
Interest |
Average Yield/Cost |
Average Balance (1) |
Interest |
Average Yield/Cost |
Assets: |
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
Securities (2) |
$346,880 |
$2,976 |
3.44% |
$397,547 |
$3,818 |
3.85% |
Federal Home Loan Bank and other restricted
stock |
5,409 |
25 |
1.85 |
5,552 |
28 |
2.02 |
Securities purchases under agreements to
resell |
110 |
-- |
-- |
3,549 |
2 |
0.23 |
Interest-bearing deposits |
28,428 |
14 |
0.20 |
14,936 |
6 |
0.16 |
Loans (3) |
1,142,608 |
15,648 |
5.49 |
1,112,155 |
15,084 |
5.44 |
Total interest-earning assets |
1,523,435 |
$18,663 |
4.91% |
1,533,739 |
$18,938 |
4.95% |
Non-interest-earning assets |
109,900 |
|
|
122,156 |
|
|
Total Assets |
$1,633,335 |
|
|
$1,655,895 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity: |
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
Savings deposits |
$618,155 |
$555 |
0.36% |
$607,217 |
$942 |
0.62% |
Time deposits |
412,418 |
1,237 |
1.20 |
442,458 |
1,607 |
1.46 |
Total savings and time deposits |
1,030,573 |
1,792 |
0.70 |
1,049,675 |
2,549 |
0.97 |
Federal funds purchased |
77 |
-- |
-- |
-- |
-- |
-- |
Other temporary borrowings |
3,165 |
14 |
1.77 |
4,791 |
16 |
1.34 |
Senior unsecured debt |
29,000 |
281 |
3.89 |
29,000 |
281 |
3.89 |
Junior subordinated debentures |
20,620 |
179 |
3.48 |
20,620 |
182 |
3.54 |
Total interest-bearing liabilities |
1,083,435 |
2,266 |
0.84 |
1,104,086 |
3,028 |
1.10 |
Demand deposits |
377,905 |
|
|
378,415 |
|
|
Other liabilities |
11,711 |
|
|
20,539 |
|
|
Total Liabilities |
1,473,051 |
|
|
1,503,040 |
|
|
Stockholders' Equity |
160,284 |
|
|
152,855 |
|
|
Total Liabilities and Stockholders'
Equity |
$1,633,335 |
|
|
$1,655,895 |
|
|
Net interest rate spread |
|
|
4.07% |
|
|
3.85% |
Net interest income/margin |
|
16,397 |
4.32% |
|
15,910 |
4.16% |
Less tax-equivalent basis adjustment |
|
(14) |
|
|
(22) |
|
Net interest income |
|
$16,383 |
|
|
$15,888 |
|
|
|
|
|
|
|
|
(1) Weighted daily average
balance for period noted. |
(2) Interest on securities
includes the effects of tax-equivalent basis adjustments of $5 and
$12 in 2011 and 2010, respectively. |
(3) Interest on loans includes
the effects of tax-equivalent basis adjustments of $9 and $10 in
2011 and 2010, respectively. |
|
|
STATE BANCORP,
INC. |
NET INTEREST INCOME
ANALYSIS |
For the Six Months Ended June
30, 2011 and 2010 (unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
2011 |
2010 |
|
Average Balance (1) |
Interest |
Average Yield/Cost |
Average Balance (1) |
Interest |
Average Yield/Cost |
Assets: |
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
Securities (2) |
$355,344 |
$5,820 |
3.30% |
$406,072 |
$8,223 |
4.08% |
Federal Home Loan Bank and other restricted
stock |
5,480 |
58 |
2.13 |
5,817 |
63 |
2.18 |
Securities purchases under agreements to
resell |
55 |
-- |
-- |
1,785 |
2 |
0.23 |
Interest-bearing deposits |
19,821 |
18 |
0.18 |
13,038 |
10 |
0.15 |
Loans (3) |
1,141,074 |
30,737 |
5.43 |
1,106,830 |
30,716 |
5.60 |
Total interest-earning assets |
1,521,774 |
$36,633 |
4.85% |
1,533,542 |
$39,014 |
5.13% |
Non-interest-earning assets |
91,725 |
|
|
103,837 |
|
|
Total Assets |
$1,613,499 |
|
|
$1,637,379 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity: |
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
Savings deposits |
$630,374 |
$1,127 |
0.36% |
$600,592 |
$1,921 |
0.65% |
Time deposits |
393,903 |
2,542 |
1.30 |
433,562 |
3,209 |
1.49 |
Total savings and time deposits |
1,024,277 |
3,669 |
0.72 |
1,034,154 |
5,130 |
1.00 |
Federal funds purchased |
39 |
-- |
-- |
88 |
-- |
-- |
Other temporary borrowings |
5,022 |
32 |
1.28 |
12,122 |
48 |
0.80 |
Senior unsecured debt |
29,000 |
561 |
3.90 |
29,000 |
561 |
3.90 |
Junior subordinated debentures |
20,620 |
357 |
3.49 |
20,620 |
358 |
3.50 |
Total interest-bearing liabilities |
1,078,958 |
4,619 |
0.86 |
1,095,984 |
6,097 |
1.12 |
Demand deposits |
363,628 |
|
|
372,841 |
|
|
Other liabilities |
11,992 |
|
|
16,527 |
|
|
Total Liabilities |
1,454,578 |
|
|
1,485,352 |
|
|
Stockholders' Equity |
158,921 |
|
|
152,027 |
|
|
Total Liabilities and Stockholders'
Equity |
$1,613,499 |
|
|
$1,637,379 |
|
|
Net interest rate spread |
|
|
3.99% |
|
|
4.01% |
Net interest income/margin |
|
32,014 |
4.24% |
|
32,917 |
4.33% |
Less tax-equivalent basis adjustment |
|
(29) |
|
|
(44) |
|
Net interest income |
|
$31,985 |
|
|
$32,873 |
|
|
|
|
|
|
|
|
(1) Weighted daily average
balance for period noted. |
(2) Interest on securities
includes the effects of tax-equivalent basis adjustments of $11 and
$24 in 2011 and 2010, respectively. |
(3) Interest on loans includes
the effects of tax-equivalent basis adjustments of $18 and $20 in
2011 and 2010, respectively. |
CONTACT: 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
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