NEW HYDE PARK, N.Y., July 25, 2007 (PRIME NEWSWIRE) -- State Bancorp, Inc. (Nasdaq:STBC), parent company of State Bank of Long Island, today reported net income for the second quarter of 2007 of $930 thousand versus $3.0 million a year ago. Diluted earnings per common share were $0.06 in the second quarter of 2007 and $0.27 in the comparable 2006 period. The reduction in net income in 2007 is primarily attributable to the previously announced employee Voluntary Exit Window program, which resulted in a one-time, after-tax charge of $2.2 million ($3.1 million pre-tax) during the second quarter reflecting termination costs associated with program participants. The other primary factor negatively impacting second quarter net income was a reduction in net interest income resulting from a lower net interest margin versus 2006. Net interest margin improved by 14 basis points to 3.82% when compared to the first quarter of 2007. Year-to-date net income was $2.7 million, or $0.19 per diluted share, compared to $5.7 million or $0.51 per diluted share in 2006.
Second Quarter Performance Highlights
-- Average loans and leases outstanding increased by 8% to $1.0
billion versus 2006;
-- Average core deposits totaled $961 million or 68% of total
deposits in the second quarter of 2007 versus $1 billion or 66%
of total deposits in 2006;
-- Provision for loan and lease losses declined by $188 thousand
(23%) in the second quarter of 2007 versus 2006 and by $947
thousand (60%) versus the first quarter of 2007;
-- Non-accrual loans and leases totaled $9 million (0.9% of loans
and leases outstanding) at June 30 and March 31, 2007 versus $3
million (0.4% of loans and leases outstanding) at June 30, 2006;
-- Net interest margin declined to 3.82% in the second quarter of
2007 from 4.17% in the comparable 2006 period but increased from
3.68% in the first quarter of 2007;
-- Returns on average assets and stockholders' equity were 0.22% and
3.46%, respectively, in the second quarter of 2007 and 0.70% and
20.36% in 2006, respectively;
-- Tier I leverage capital ratio increased to 7.06% in the second
quarter of 2007 versus 4.24% in 2006;
-- Total operating expenses increased by $2.1 million or 16.8% to
$14.6 million in the second quarter of 2007 versus 2006,
primarily attributable to Voluntary Exit Window program charges
of $3.1 million in 2007. Excluding this non-recurring charge,
total operating expenses would have declined by $1.0 million
(8.5%) in the second quarter of 2007;
-- Opening of new Manhattan office announced; and
-- Additions to executive management team announced.
Commenting on the 2007 performance, President and CEO Thomas M. O'Brien stated, "The impact of the one-time costs of the Voluntary Exit Window program on the second quarter results was anticipated and previously communicated. Although the cost of the program was not insignificant in the short-term, its long-term benefits will improve both operational and cost efficiencies.
"The Company, much like most of the banking industry, continues to be challenged by competitive and economic pressures. Despite these operating challenges, we are encouraged by recent developments taking place within the Company. As recently announced, several additions and promotions were made within our management team. This group of energized, highly knowledgeable, and experienced commercial bankers will be at the forefront in re-engineering our strategic plan and implementing exciting new initiatives over the next several quarters with the goal of producing growth in high-quality loans, increased core deposits and reductions in operating expenses. Additionally, we are enthusiastic about our recently announced branch expansion into the Manhattan market currently scheduled for the fourth quarter of 2007.
"As I take the reins of CEO of the Company, our focus will be on increasing our core customer base which includes small and middle-market businesses, professional service firms, and commercial real estate owners, developers and operators by utilizing our key strengths to deliver high-performance banking to them. Recent and future developments will contribute toward execution of that plan. As we carefully expand to build revenue, we will also continue a vigorous focus on the Company's expense base in order to bring our operating efficiency ratio to a level consistent with those found in high performance peers. In building this strategy, I must remind our stockholders that 2007 will continue to be transitional in nature and that the positive results of some financial initiatives will not be immediate. There are obviously circumstances when investment must lead revenue production. We remain deeply committed to a strategy focused on delivering superior, responsive service to our customers and building long-term, sustainable earnings and value to our stockholders."
Earnings Summary for the Quarter Ended June 30, 2007
Net interest income decreased by $1.2 million (down 7.2%) to $15.0 million in the second quarter of 2007 versus 2006 as the result of a 35 basis point decline in the Company's net interest margin to 3.82% in 2007. The decline in the Company's net interest margin was due primarily to the interest rate environment prevailing in 2007, characterized by higher short term rates, intense competition on both loan and deposit pricing and relative lack of slope in the yield curve. Partially offsetting the narrower margin was a 1% increase in average interest-earning assets, primarily loans and leases. Growth in commercial loans, commercial mortgages, and leases resulted in an 8% increase in average loans and leases outstanding to $1.0 billion during the second quarter of 2007 versus 2006. The average investment portfolio declined by 4% to $516 million in the second quarter, principally due to a decline in government agency securities. Funding the overall growth in interest-earning assets were increases in stockholders equity and average borrowings of $49 million and $126 million, respectively. Borrowings consisted primarily of Federal Home Loan Bank overnight and short-term advances. Average total deposits decreased by $92 million (6%) during the second quarter of 2007 primarily due to reductions in savings deposits and retail CDs. Average core deposit balances (demand, savings, money fund and super NOW deposits) declined by $44 million during the second quarter of 2007 to $961 million at an average cost of 2.02%.
The Company's fully taxable equivalent (FTE) net interest margin narrowed to 3.82% in the second quarter of 2007 from 4.17% a year ago. This decline resulted from a 43 basis point increase in the Company's cost of funds, principally due to competitive liability pricing pressure combined with a shift in the funding mix from core deposits to borrowings and CDs. This higher cost of funds was offset somewhat by an 8 basis point increase in the Company's earning asset yield to a weighted average rate of 7.07% in the second quarter of 2007. The higher asset yield resulted primarily from the impact of higher rates and growth in loans and leases from the comparable 2006 period. The 14 basis point improvement in net interest margin compared to the first quarter of 2007 resulted from higher asset yields on loans and securities coupled with a 24 basis point reduction in the cost of interest-bearing deposits in the second quarter.
The provision for loan and lease losses decreased by $188 thousand to $627 thousand during the second quarter of 2007 versus 2006 as a result of lower net charge-offs in the second quarter of 2007.
Non-interest income totaled $1.4 million in the second quarters of 2007 and 2006. A reduction in service charges on deposit accounts was largely offset by improvements in Bank Owned Life Insurance income (higher crediting rate in the second quarter of 2007) and other operating income. Service charges on deposits decreased by 12.7% primarily due to reductions in deposit-related fees and overdraft charges resulting from a lower level of chargeable overdrafts in the second quarter of 2007. Other operating income increased by 6.5% during the second quarter of 2007 versus 2006 as the result of growth in several categories, most notably sweep account fees.
Total operating expenses increased by $2.1 million or 16.8% to $14.6 million during the second quarter of 2007 when compared to last year. The primary reason for this increase was a $3.0 million increase in salaries and other employee benefits expenses, partially offset by a $1.3 million reduction in legal expenses. Excluding the impact of the Voluntary Exit Window program, salaries and other employee benefits expenses would have declined by 1.5% in 2007. As reported in the Company's Form 8-K filing with the Securities and Exchange Commission ("SEC") on June 5, 2007, the Company announced that eighteen eligible employees with twenty or more consecutive years of service elected to participate in the Voluntary Exit Window program. The participants each received a lump sum cash incentive payment and certain special termination benefits, which resulted in the Company recording a one-time expense of $3.1 million in 2007. The reduction in legal expenses is primarily related to the settlement of the Island Mortgage Network ("IMN") litigation. As reported in the Company's Form 8-K filing with the SEC on January 30, 2007, the Company entered into a final settlement agreement with HSA Residential Mortgage Services of Texas ("RMST") in connection with the previously reported warehouse lender litigation related to IMN. The financial impact of the settlement was recorded by the Company during the fourth quarter of 2006. No IMN-related legal expenses were recorded in the second quarter of 2007. Expenses associated with an appeal of the January 2006 IMN trial verdict are included in the results for 2006 and account for the decrease in legal expenses in the second quarter year-to-year comparison. Occupancy expenses increased by 8.6% due to higher rental, utility and building depreciation costs. Marketing and advertising expenses increased by 31.3% as the result of ongoing corporate branding efforts. Credit and collection costs increased by 31.5% due to higher costs associated with loan collection efforts and increased credit report expenses. Other operating expenses increased by 4.0% to $1.4 million during the second quarter of 2007 principally as the result of a real estate tax refund in 2006 resulting from a successful certiorari proceeding.
Income tax expense decreased by $1.0 million in the second quarter of 2007 versus the comparable period a year ago. The Company's effective tax rate was 27.5% in the second quarter of 2007 and 31.8% in 2006.
Earnings Summary for the Six months Ended June 30, 2007
Net income for the first six months of 2007 was $2.7 million versus $5.7 million in 2006. A 5.1% reduction in net interest income, lower non-interest income and increases in the provision for loan and lease losses and total operating expenses were the primary factors for the decline in 2007 year-to-date net income.
The $1.6 million reduction in net interest income was due to a 37 basis point decline in the Company's net interest margin to 3.75% in 2007. The provision for loan and lease losses increased by $794 thousand in 2007 versus the comparable 2006 period as the result of higher net charge-offs and an increase in non-performing assets in 2007. Non-interest income decreased by 4.2% to $2.8 million, principally due to reductions in deposit service charges and other operating income. Total operating expenses increased by $2.0 million in the first half of 2007 compared with 2006. The increase was mainly due to a $4.4 million increase in salaries and other employee benefits expenses, $3.1 million of which was the result of the 2007 Voluntary Exit Window program. Somewhat offsetting this increase was a reduction of $3.4 million in legal expenses in connection with the IMN litigation in 2007. The Company's effective tax rate was 30.3% and 31.6% in 2007 and 2006, respectively.
Allowance for Loan and Lease Losses
As of June 30, 2007, the Company's allowance for loan and lease losses amounted to $16 million or 1.66% of period-end loans and leases outstanding. The allowance as a percentage of loans and leases outstanding was 1.62% at March 31, 2007, 1.67% at December 31, 2006 and 1.74% at June 30, 2006. The allowance as a percentage of non-accrual loans and leases amounted to 192% at June 30, 2007 versus 179% at March 31, 2007, 754% at December 31, 2006 and 479% at June 30, 2006.
Net charge-offs for the second quarter of 2007 and 2006 were $229 thousand and $595 thousand, respectively. As a percentage of average total loans and leases outstanding, these charge-off totals represented 0.09% and 0.26% in 2007 and 2006, respectively. Net charge-offs for the first quarter of 2007 were $1.9 million or 0.79% of total loans and leases outstanding. Based upon historical trends, inherent risk in the loan and lease portfolio, and the uncertain nature of the current economy, management anticipates incurring loan and lease charge-offs during the normal course of business.
Non-performing Assets
Non-performing assets are defined by the Company as non-accrual loans and leases and other real estate owned ("OREO"). Non-accrual loans and leases totaled $9 million (0.9% of loans and leases outstanding) at June 30, 2007, versus $2 million (0.2% of loans and leases outstanding) at December 31, 2006 and $3 million (0.4% of loans and leases outstanding) at June 30, 2006. The increase in non-accrual loans and leases at June 30, 2007 versus year-end 2006 and June 30, 2006 resulted from the addition of one commercial loan relationship to non-accrual status during the first quarter of 2007. While this long-term relationship had been on the Bank's internal watch list for deteriorating credit conditions, the borrower abruptly ceased operations at the end of the first quarter of 2007 and subsequently filed for bankruptcy. The Bank is pursuing its secured claims through the bankruptcy court. The Company held no OREO at June 30, 2007, December 31, 2006 or June 30, 2006.
Capital
Total stockholders' equity was $108 million at June 30, 2007 and $60 million at June 30, 2006. The increase in stockholders' equity is primarily due to the Company's sale of 2.25 million shares of its common stock in December 2006, which increased capital by $36 million. The Company currently has outstanding $20 million in trust preferred securities that qualify as Tier I capital. During the first six months of 2007, the weighted average rate on the Company's trust preferred securities was 8.51% versus 7.94% a year ago. The Company also has $10 million of 8.25% subordinated notes outstanding which qualify as Tier II capital.
The Company's capital ratios exceed all regulatory requirements at June 30, 2007. State Bank of Long Island's Tier I leverage, Tier I risk-weighted and total risk-weighted capital ratios were 7.40%, 10.70% and 11.95%, respectively, at June 30, 2007. Each of these ratios is in excess of the regulatory guidelines for a "well capitalized" institution, the highest regulatory capital category.
The Company declared a $0.15 per share cash dividend on its common stock during the first six months of 2007, which was paid on April 9 to holders of record as of March 23, 2007. The Company also recently announced a change to its cash dividend schedule to a quarterly declaration during the first month of each calendar quarter. Since the Company recorded a net loss in 2005 following the issuance of the IMN jury verdict, the quarterly cash dividend has been on an irregular schedule due to advance approvals required from the New York State Banking Department, the Bank's primary regulator, for the Bank to pay dividends to the Company. Based on the new dividend schedule, the Board of Directors of the Company declared a cash dividend of $0.15 per share at its July 24, 2007 meeting. The cash dividend will be paid on September 10, 2007 to stockholders of record on August 17, 2007.
The Company did not repurchase any of its common stock during the first half of 2007. Under the Board of Directors' existing authorization, an additional 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. (Nasdaq:STBC) is the holding company for State Bank of Long Island, the largest independent commercial bank headquartered on Long Island. In addition to its sixteen branch locations throughout Nassau, Suffolk and Queens Counties, the Bank owns Jericho, N.Y.-based Studebaker-Worthington Leasing Corp., a nationwide provider of business equipment leasing. The Bank also maintains a lending facility in Jericho. State Bank has built a reputation for providing high-quality personal service to meet the needs of commercial, small business, municipal and consumer markets throughout Long Island and Queens. The Company maintains a web site at www.statebankofli.com with corporate, investor and branch banking information.
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 and lease or investment portfolios, demand for loan and lease 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/corporate. The Company undertakes no obligation to publish revised events or circumstances after the date hereof.
Financial Highlights Follow
STATE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2007 and 2006 (unaudited)
Three Months Six Months
--------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------
INTEREST INCOME:
Interest and
fees on loans
and leases $20,796,748 $19,263,087 $41,138,404 $37,099,801
Federal funds
sold and
securities
purchased
under
agreements to
resell 807,068 1,279,734 2,067,709 1,955,269
Securities held
to maturity:
Taxable 10,614 99,645 80,541 225,313
Securities
available for
sale:
Taxable 6,019,071 6,366,118 11,867,008 11,602,030
Tax-exempt 130,977 138,909 263,152 291,942
Dividends 29,750 19,125 59,500 38,250
Dividends on
Federal Home
Loan Bank
and other
restricted
stock 70,042 31,683 96,654 68,264
---------------------------------------------------------------------
Total interest
income 27,864,270 27,198,301 55,572,968 51,280,869
---------------------------------------------------------------------
INTEREST EXPENSE:
Deposits 10,448,516 10,429,844 22,775,299 18,694,684
Temporary
borrowings 1,683,319 65,907 1,789,810 448,492
Subordinated
notes 228,894 55,982 460,079 55,982
Junior
subordinated
debentures 459,382 442,000 914,373 857,220
---------------------------------------------------------------------
Total interest
expense 12,820,111 10,993,733 25,939,561 20,056,378
---------------------------------------------------------------------
Net interest
income 15,044,159 16,204,568 29,633,407 31,224,491
PROVISION FOR
LOAN AND
LEASE LOSSES 627,000 814,998 2,201,000 1,406,664
---------------------------------------------------------------------
Net interest
income after
provision for
loan and
lease losses 14,417,159 15,389,570 27,432,407 29,817,827
--------------------------------------------------------------------
NON-INTEREST
INCOME:
Service charges
on deposit
accounts 548,284 628,055 1,138,605 1,254,475
Net security
losses (15,048) (24,298) (34,449) (59,293)
Income from
bank owned
life insurance 281,869 250,510 560,005 482,625
Other operating
income 615,645 578,235 1,123,073 1,230,762
---------------------------------------------------------------------
Total
non-interest
income 1,430,750 1,432,502 2,787,234 2,908,569
---------------------------------------------------------------------
Income before
operating
expenses 15,847,909 16,822,072 30,219,641 32,726,396
---------------------------------------------------------------------
OPERATING
EXPENSES:
Salaries and
other employee
benefits 10,081,193 7,040,637 17,587,332 13,189,968
Occupancy 1,324,027 1,219,423 2,641,519 2,460,749
Equipment 339,877 299,741 652,955 607,128
Legal 333,361 1,668,942 480,791 3,858,091
Marketing and
advertising 469,146 357,321 917,897 694,586
Credit and
collection 293,580 223,327 504,960 373,546
Audit and
assessment 285,455 282,049 576,842 558,513
Other operating
expenses 1,439,529 1,384,720 3,018,670 2,607,591
---------------------------------------------------------------------
Total operating
expenses 14,566,168 12,476,160 26,380,966 24,350,172
---------------------------------------------------------------------
INCOME BEFORE
INCOME TAXES 1,281,741 4,345,912 3,838,675 8,376,224
PROVISION FOR
INCOME TAXES 351,928 1,382,780 1,162,162 2,646,745
---------------------------------------------------------------------
NET INCOME $929,813 $2,963,132 $2,676,513 $5,729,479
=====================================================================
STATE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2007 and 2006 (unaudited)
2007 2006
---------------------------------------------------------------------
ASSETS:
Cash and due from banks $47,769,109 $42,657,403
Federal funds sold -- 12,000,000
Securities purchased under
agreements to resell 5,000,000 --
---------------------------------------------------------------------
Total cash and cash equivalents 52,769,109 54,657,403
Securities held to maturity
(estimated fair value -
$7,308,746 in 2006) -- 7,359,236
Securities available for sale
- at estimated fair value 517,168,268 519,918,187
---------------------------------------------------------------------
Total securities 517,168,268 527,277,423
Federal Home Loan Bank and
other restricted stock 7,153,643 1,708,343
Loans and leases (net of
allowance for loan and lease
losses of $16,436,057 in 2007
and $16,403,016 in 2006) 975,955,915 927,919,659
Bank premises and equipment -
net 5,585,623 6,325,443
Bank owned life insurance 28,451,022 27,362,561
Net deferred income taxes 26,286,443 40,123,139
Receivable - securities sales 8,019,280 21,648,230
Other assets 27,954,318 24,567,464
---------------------------------------------------------------------
TOTAL ASSETS $1,649,343,621 $1,631,589,665
=====================================================================
LIABILITIES:
Deposits:
Demand $322,646,649 $322,944,923
Savings 613,914,390 658,094,508
Time 405,253,673 446,690,808
---------------------------------------------------------------------
Total deposits 1,341,814,712 1,427,730,239
Federal funds purchased 22,500,000 --
Other borrowings 119,045,777 10,081,021
Subordinated notes 10,000,000 10,000,000
Junior subordinated debentures 20,620,000 20,620,000
Payable - securities purchases 8,024,754 16,621,811
Accrued legal expenses 912,503 76,929,543
Other accrued expenses and
liabilities 18,772,147 9,809,968
---------------------------------------------------------------------
Total Liabilities 1,541,689,893 1,571,792,582
---------------------------------------------------------------------
COMMITMENTS AND CONTINGENT
LIABILITIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
authorized 250,000 shares; 0
shares issued -- --
Common stock, $5.00 par value,
authorized 20,000,000 shares;
issued 14,855,628 shares in
2007 and 12,137,650 shares in
2006; outstanding 13,867,976
shares in 2007 and 11,149,998
shares in 2006 74,278,140 60,688,250
Surplus 85,115,203 57,609,773
Retained deficit (31,532,267) (34,541,825)
Treasury stock (987,652 shares
in 2007 and 2006) (16,646,426) (16,646,426)
Accumulated other
comprehensive loss (net of
taxes of ($2,344,939) in 2007
and ($4,024,665) in 2006) (3,560,922) (7,312,689)
---------------------------------------------------------------------
Total Stockholders' Equity 107,653,728 59,797,083
---------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,649,343,621 $1,631,589,665
=====================================================================
STATE BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
For the Three and Six Months Ended June 30, 2007 and 2006 (unaudited)
(dollars in thousands, except share and per share data)
Three Months Six Months
----------------------- -----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
SELECTED AVERAGE
BALANCES (a):
Total assets $1,699,492 $1,686,199 $1,716,226 $1,651,752
Loans and leases
- net of
unearned income $1,001,232 $923,656 $997,989 $913,353
Investment
securities $515,824 $536,007 $518,647 $538,018
Deposits $1,421,649 $1,514,027 $1,485,449 $1,472,088
Stockholders'
equity $107,684 $58,380 $107,024 $58,512
FINANCIAL
PERFORMANCE
RATIOS:
Return on average
assets 0.22% 0.70% 0.31% 0.70%
Return on average
stockholders'
equity 3.46% 20.36% 5.04% 19.75%
Net interest
margin (FTE) 3.82% 4.17% 3.75% 4.12%
Operating
efficiency ratio 87.13% 69.80% 80.15% 70.33%
CAPITAL RATIOS:
Tier I leverage
ratio 7.06% 4.24% 7.06% 4.24%
Tier I risk-based
capital ratio 10.20% 6.18% 10.20% 6.18%
Total risk-based
capital ratio 12.30% 8.29% 12.30% 8.29%
ASSET QUALITY
SUMMARY:
Non-accrual loans
and leases $8,565 $3,428 $8,565 $3,428
Other real
estate owned -- -- -- --
---------- ---------- ---------- ----------
Total
non-performing
assets $8,565 $3,428 $8,565 $3,428
========== ========== ========== ==========
Non-accrual loans
and leases/total
loans and leases 0.86% 0.36% 0.86% 0.36%
Allowance for
loan and lease
losses/non-
accrual loans
and leases 191.90% 478.50% 191.90% 478.50%
Allowance for
loan and lease
losses/total
loans and leases 1.66% 1.74% 1.66% 1.74%
Net charge-offs $229 $595 $2,177 $721
Net charge-offs
(annualized)/
average loans
and leases 0.09% 0.26% 0.44% 0.16%
COMMON SHARE DATA:
Average common
shares
outstanding (b) 13,693,084 11,126,883 13,620,968 11,104,768
Period-end common
shares
outstanding 13,867,976 11,149,998 13,867,976 11,149,998
Basic earnings
per common
share $0.07 $0.27 $0.20 $0.52
Diluted earnings
per common share $0.06 $0.27 $0.19 $0.51
Book value per
share $7.76 $5.36 $7.76 $5.36
Cash dividends
per share -- $0.15 $0.15 $0.15
(a) Weighted daily average balance for period noted.
(b) Amount used for earnings per common share computation.
STATE BANCORP, INC. AND SUBSIDIARIES
NET INTEREST INCOME ANALYSIS
For the Six Months Ended June 30, 2007 and 2006 (unaudited)
(dollars in thousands)
2007 2006
-------------------------- ------------------------
Average Average Average Average
Balance Yield/ Balance Yield/
(a) Interest Cost (a) Interest Cost
-------------------------- ------------------------
ASSETS:
Interest-
earning
assets:
Securities(b) $518,647 $12,342 4.80% $538,018 $12,248 4.59%
Federal Home
Loan Bank
and other
restricted
stock 4,420 97 4.43 2,289 68 5.99
Federal
funds
sold 12,372 318 5.18 14,114 340 4.86
Securities
purchased
under
agreements
to resell 66,519 1,750 5.31 69,782 1,615 4.67
Interest-
bearing
deposits 1,485 36 4.89 984 23 4.71
Loans and
leases (c) 997,989 41,199 8.32 913,353 37,170 8.21
-------------------------- ------------------------
Total
interest-
earning
assets 1,601,432 $55,742 7.02% 1,538,540 $51,464 6.75%
-------------------------- ------------------------
Non-interest-
earning
assets 114,794 113,212
---------- ----------
Total Assets $1,716,226 $1,651,752
========== ==========
LIABILITIES
AND
STOCKHOLDERS'
EQUITY:
Interest-
bearing
liabilities:
Savings
deposits $631,657 $9,601 3.07% $684,475 $8,750 2.58%
Time deposits 535,127 13,174 4.96 460,630 9,945 4.35
--------------------------- ------------------------
Total savings
and time
deposits 1,166,784 22,775 3.94 1,145,105 18,695 3.29
--------------------------- ------------------------
Federal funds
purchased 5,801 159 5.53 3,920 92 4.73
Other borrowed
funds 59,359 1,632 5.54 14,691 356 4.89
Subordinated
notes 10,000 460 9.28 1,271 56 8.88
Junior
subordinated
debentures 20,620 914 8.94 20,620 857 8.38
--------------------------- ------------------------
Total interest-
bearing
liabilities 1,262,564 $25,940 4.14% 1,185,607 $20,056 3.41%
--------------------------- ------------------------
Demand
deposits 318,665 326,983
Other
liabilities 27,973 80,650
---------- ----------
Total
Liabilities 1,609,202 1,593,240
Stockholders'
Equity 107,024 58,512
---------- ----------
Total
Liabilities
and
Stockholders'
Equity $1,716,226 $1,651,752
========== ==========
Net interest
income/margin
(FTE) $29,802 3.75% $31,408 4.12%
==== ====
Less tax-
equivalent
basis
adjustment (169) (184)
------- -------
Net interest
income $29,633 $31,224
======= =======
(a) Weighted daily average balance for period noted.
(b) Interest on securities includes the effects of tax-equivalent
basis adjustments, using a 34% tax rate. Tax-equivalent basis
adjustments were $108 and $113 in 2007 and 2006, respectively.
(c) Interest on loans and leases includes the effects of
tax-equivalent basis adjustments, using a 34% tax rate.
Tax-equivalent basis adjustments were $61 and $71 in 2007 and
2006, respectively.
STATE BANCORP, INC. AND SUBSIDIARIES
NET INTEREST INCOME ANALYSIS
For the Three Months Ended June 30, 2007 and 2006 (unaudited)
(dollars in thousands)
2007 2006
-------------------------- ------------------------
Average Average Average Average
Balance Yield/ Balance Yield/
(a) Interest Cost (a) Interest Cost
-------------------------- ------------------------
ASSETS:
Interest-
earning
assets:
Securities (b) $515,824 $6,224 4.84% 536,007 $6,662 4.99%
Federal Home
Loan Bank and
other
restricted
stock 6,839 70 4.11 1,720 32 7.46
Federal funds
sold 142 2 4.94 27,645 335 4.86
Securities
purchased
under
agreements
to resell 60,901 805 5.30 76,165 944 4.97
Interest-
bearing
deposits 1,538 19 4.96 936 11 4.71
Loans and
leases (c) 1,001,232 20,827 8.34 923,656 19,298 8.38
-------------------------- ------------------------
Total
interest-
earning
assets 1,586,476 $27,947 7.07% 1,566,129 $27,282 6.99%
-------------------------- ------------------------
Non-interest-
earning
assets 113,016 120,070
---------- ----------
Total Assets $1,699,492 $1,686,199
========== ==========
LIABILITIES
AND
STOCKHOLDERS'
EQUITY:
Interest-
bearing
liabilities:
Savings
deposits $638,714 $4,848 3.04% $675,696 $4,596 2.73%
Time deposits 460,628 5,600 4.88 509,443 5,834 4.59
-------------------------- ------------------------
Total savings
and time
deposits 1,099,342 10,448 3.81 1,185,139 10,430 3.53
-------------------------- ------------------------
Federal funds
purchased 10,176 140 5.52 676 9 5.34
Other borrowed
funds 112,164 1,544 5.52 3,156 57 7.24
Subordinated
notes 10,000 229 9.19 2,527 56 8.89
Junior
subordinated
debentures 20,620 459 8.93 20,620 442 8.60
-------------------------- ------------------------
Total
interest-
bearing
liabilities 1,252,302 $12,820 4.11% 1,212,118 $10,994 3.64%
-------------------------- ------------------------
Demand
deposits 322,307 328,888
Other
liabilities 17,199 86,813
--------- ---------
Total
Liabilities 1,591,808 1,627,819
Stockholders'
Equity 107,684 58,380
--------- ---------
Total
Liabilities
and
Stockholders'
Equity $1,699,492 $1,686,199
========== ==========
Net interest
income/margin
(FTE) $15,127 3.82% $16,288 4.17%
==== ====
Less tax-
equivalent
basis
adjustment (83) (83)
------- -------
Net interest
income $15,044 $16,205
======= =======
(a) Weighted daily average balance for period noted.
(b) Interest on securities includes the effects of tax-equivalent
basis adjustments, using a 34% tax rate. Tax-equivalent basis
adjustments were $53 and $49 in 2007 and 2006, respectively.
(c) Interest on loans and leases includes the effects of
tax-equivalent basis adjustments, using a 34% tax rate.
Tax-equivalent basis adjustments were $30 and $34 in 2007 and
2006, respectively.