- Quarterly Net Income of $7.1 million - Up 122% Versus 2010
- Quarterly Net Interest Margin of 4.23%
- Tangible Common Equity Ratio at 8.03%
- Core Deposits of $1.0 Billion – Up 3% Since Third Quarter 2010
JERICHO, N.Y., Oct. 19, 2011 (GLOBE NEWSWIRE) -- State Bancorp, Inc. (the "Company") (Nasdaq:STBC), parent company of State Bank of Long Island (the "Bank"), today reported net income of $7.1 million, and $0.40 per diluted common share, for the third quarter of 2011 compared with net income of $3.2 million, and $0.17 per diluted common share, a year ago. The 122% increase in 2011 third quarter earnings was primarily attributable to a $3.5 million credit to the provision for loan losses, a $308 thousand increase in net interest income principally the result of a wider net interest margin, and a $200 thousand increase in net gains on the sale of securities. Core operating expenses declined by 10.4% to $9.5 million in the third quarter of 2011 resulting in an improvement of the Company's operating efficiency ratio to 55.0% (non-GAAP financial measures). Core operating expenses exclude merger-related expenses of $154 thousand, primarily legal fees, associated with the Company's previously announced transaction with Valley National Bancorp ("Valley"). Partially offsetting these improvements was non-interest income, excluding net gains on the sales of securities, which declined by $495 thousand in the third quarter of 2011 compared to 2010. Excluding merger-related expenses, second quarter net income was $7.2 million and $0.40 per diluted common share (non-GAAP financial measure). For the nine month period ended September 30, 2011, the Company recorded net income of $13.0 million, and $0.69 per diluted common share, compared with net income of $7.9 million, and $0.39 per diluted common share, in the September 2010 year-to-date period. Excluding merger-related expenses, September 2011 year-to-date net income was $14.0 million or $0.74 per diluted common share (non-GAAP financial measure).
Commenting on the third quarter 2011 results, President and CEO Thomas M. O'Brien stated, "The Company benefited from several events in the third quarter which combined to produce these impressive quarterly results. There is, however, no more significant benefit than seeing the effects of our successful long term strategies produce record quarterly earnings and a very strong balance sheet. Almost two full years ago the Company commenced execution of its strategy to rid the balance sheet of its portfolio of poorly performing loans and to reduce excessive debt leverage at the holding company. These actions combined to produce the ingredients necessary to deliver consistent profits in each quarter since the end of 2009. In addition, during this quarter, the Company was paid-in-full on a previously classified $10 million loan and a $4 million previously non-performing loan. The loss reserves previously set aside for these particular credits proved unnecessary and when combined with continued overall loan portfolio improvements, the loan loss provision was, in fact, a $3.5 million credit. More important than this non-recurring benefit, the Company's quarterly operating expenses declined even further to $9.6 million while the net interest margin remained strong at 4.23%, and loan growth of 2% was realized which is even more impressive when the $14 million classified portfolio reductions referenced above are taken into consideration.
That said, overall economic conditions remain a cause for management concern. Economic activity and consumer sentiment turned distinctly negative during the third quarter of 2011 from the more positive tone evident earlier in the year. Financial markets were jolted early in the third quarter by the volatile economic events in the Eurozone countries. Additionally, U.S. consumers and businesses are wary of the implications from the large structural federal budget deficits and the lack of a common sense strategy to provide economic growth and jobs. Unfortunately, until political posturing and slogans are replaced by sound economic policies and a job growth agenda, the critically important measures of consumer and business confidence in our future prospects will remain constrained."
Performance and Other Highlights
- Net Interest Margin: Net interest margin was 4.23% in the third quarter of 2011 versus 4.16% in the third quarter of 2010 and 4.32% in the second quarter of 2011;
- Capital Strength: The Company's Tier I leverage capital ratio was 10.80% at September 30, 2011 versus 9.33% at September 30, 2010 and 10.07% at June 30, 2011. The Company's tangible common equity ratio (non-GAAP financial measure) was 8.03% at September 30, 2011 versus 7.11% at September 30, 2010 and 7.62% at June 30, 2011;
- Loan Loss Provision: A $3.5 million credit to the provision for loan losses was recorded in the third quarter of 2011 versus a $2.5 million provision in the third quarter of 2010 and a $1.1 million provision in the second quarter of 2011;
- Asset Quality: Non-accrual loans totaled $12 million or 1.0% of loans outstanding at both September 30, 2011 and June 30, 2011 versus $15 million or 1.3% of loans outstanding at December 31, 2010 and $9 million or 0.8% of loans outstanding at September 30, 2010. Net loan charge-offs of $764 thousand were recorded in the third quarter of 2011 versus net loan charge-offs of $958 thousand in the second quarter of 2011 and net charge-offs of $1.3 million in the third quarter of 2010. The allowance for loan losses totaled $23 million, or 2.0% of total loans, at September 30, 2011 versus $28 million, or 2.4% of total loans, at June 30, 2011, $33 million, or 2.9% of total loans, at December 31, 2010 and $32 million, or 2.9% of total loans, at September 30, 2010. The allowance for loan losses as a percentage of non-accrual loans, excluding non-accrual loans categorized as held for sale, was 202%, 239%, 223% and 357% 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 $154 thousand, third quarter total operating expenses declined by 10.4% versus the third quarter of 2010 and decreased by 7.4% versus the second quarter of 2011 (non-GAAP financial measure). Excluding merger-related expenses, the Company's third quarter 2011 operating efficiency ratio was 55.0% (non-GAAP financial measure). The Company's second quarter 2011 efficiency ratio was 58.8%, excluding merger-related expenses (non-GAAP financial measure). When the merger-related charges are included, total operating expenses for the third quarter of 2011 decreased by 9.0% to $9.6 million from $10.6 million reported in the third quarter of 2010 and declined by 17.0% versus the second quarter of 2011. The Company's operating efficiency ratio was 55.9% in the third quarter of 2011 versus 60.7% in the comparable 2010 period;
- Loans: Loans outstanding increased by 4% to $1.16 billion compared to the third quarter of 2010 and increased by 2% from the second quarter of 2011;
- Core Deposits: Core deposits, consisting of demand and savings deposits, totaled $1.01 billion at September 30, 2011 versus $979 million at September 30, 2010 and $1.02 billion at June 30, 2011. Core deposits represented 73%, 71% and 73% of total deposits at September 30, 2011, September 30, 2010 and June 30, 2011, respectively. Demand deposits totaled $382 million at September 30, 2011, $336 million at September 30, 2010 and $382 million at June 30, 2011 and represented 28%, 24% and 27% of total deposits at those respective dates;
- Performance Ratios: Return on average assets and return on average common stockholders' equity were 1.75% and 20.67%, respectively, in the third quarter of 2011 and 0.78% and 9.09%, 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 and is subject to the satisfaction of 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 September 30, 2011
The Company recorded net income of $7.1 million during the third quarter of 2011 versus net income of $3.2 million in the comparable 2010 period. The increase primarily reflects a $3.5 million credit to the provision for loan losses in the third quarter of 2011 versus a $2.5 million provision in the comparable 2010 period. In addition, when compared to the third quarter of 2010, net interest income increased by $308 thousand to $16.3 million, net gains on sales of securities increased by $200 thousand and total operating expenses declined by $948 thousand in the third quarter of 2011.
The growth in net interest income resulted from a $4 million increase in average interest-earning assets and a seven basis point expansion of the Company's net interest margin to 4.23% in 2011 versus 2010. The improved margin resulted from a 22 basis point reduction in funding costs during the third quarter of 2011 versus 2010, due principally to lower rates paid on savings and time deposits. The Company's third quarter 2011 average interest-earning asset yield was 4.81%, down 12 basis points from the comparable 2010 period. The average yield on loans declined by 11 basis points to 5.45% in the third quarter of 2011 versus 2010. The Company's securities portfolio experienced a 26 basis point reduction in average yield to 3.19% in 2011 versus 2010. The securities portfolio decreased by $101 million to $325 million at September 30, 2011 versus the comparable 2010 date. The securities portfolio totaled $356 million at June 30, 2011. At September 30, 2011 the securities portfolio had an unrealized pre-tax gain of $7 million and an estimated weighted average life of 3.3 years.
The Company's average cost of interest-bearing liabilities declined 22 basis points to 0.85% in the third quarter of 2011 versus 1.07% in the third quarter of 2010. The Company's lower funding cost resulted from ongoing management of deposit rates. Deposit pricing has continued to ease in local markets as a result of the lack of meaningful economic expansion. Total deposits decreased by $2 million to $1.4 billion at September 30, 2011 versus September 30, 2010 and by $17 million compared to June 30, 2011.
A $3.5 million credit to the provision for loan losses was recorded in the third quarter of 2011, representing reductions of $6.0 million versus the comparable 2010 period and $4.6 million versus the second quarter of 2011. The third quarter 2011 credit to the provision 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) and the payment of two impaired loans requiring an allowance allocation. During the third quarter of 2011, the Company was paid in full on a $10 million troubled debt restructuring ("TDR") and a $4 million non-accrual loan.
Third quarter 2011 core operating expenses decreased by $1.1 million or 10.4% to $9.5 million compared to the third quarter of 2010 (non-GAAP financial measure). This decrease was due to cost reductions achieved in several expense categories, most notably occupancy, marketing and advertising, FDIC and NYS assessment, consulting and credit and collection. Occupancy expense declined by $147 thousand in the third quarter of 2011 versus 2010 primarily as the result of a branch closing in August 2011. Marketing and advertising expenses declined by $227 thousand in 2011 due to a reduction in media spending. In addition, year-over-year reductions in expenses were recorded in FDIC and NYS assessment (down $343 thousand), consulting costs (down $100 thousand) and credit and collection (down $128 thousand). Total operating expenses, inclusive of $154 thousand in merger-related charges, decreased by $948 thousand or 9.0% to $9.6 million in 2011 from the comparable 2010 period.
Reflecting the increase in income before income taxes, the Company recorded income tax expense of $4.8 million in the third quarter of 2011 versus $1.8 million in the comparable period a year ago.
Earnings Summary for the Nine Months Ended September 30, 2011
The increase in net income in the first nine months of 2011 to $13.0 million from $7.9 million in the comparable 2010 period resulted from a $10.7 million reduction in the provision for loan losses and a $1.6 million decline in total operating expenses in 2011. Partly offsetting the foregoing improvements were reductions in net interest income (down $580 thousand) and non-interest income (down $2.7 million).
The reduction 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, including the previously noted full recovery on the $10 million TDR in the third quarter of 2011.
Total operating expenses decreased by $1.6 million or 4.8% to $31.2 million in 2011, primarily due to reductions in salaries and other employee benefits expenses ($449 thousand), marketing and advertising ($620 thousand), FDIC and NYS assessment ($546 thousand), consulting ($507 thousand) and credit and collection costs ($292 thousand).
The decrease in net interest income was due to a $6 million reduction in average interest-earning assets (primarily securities) coupled with a three basis point narrowing of the Company's net interest margin to 4.24% in 2011 from 4.27% a year ago.
The decrease in non-interest income in 2011 resulted principally from a $2.5 million reduction in net gains on sales of securities.
Reflecting the increase in income before income taxes, the Company recorded income tax expense of $8.4 million in the first nine months of 2011 versus $4.7 million in the comparable 2010 period.
Asset Quality
Non-accrual loans totaled $12 million or 1.0% of total loans outstanding at September 30, 2011 versus $9 million or 0.8% of total loans outstanding at September 30, 2010 and $12 million or 1.0% of total loans outstanding at June 30, 2011. The increase in non-accrual loans at September 30, 2011 compared to September 30, 2010 resulted primarily from a number of various additions to non-accrual, partially offset by strategic commercial loan sales, settlements, payments and charge-offs. The allowance for loan losses as a percentage of total non-accrual loans amounted to 202% at September 30, 2011 versus 357% at September 30, 2010 and 239% at June 30, 2011.
Total accruing loans delinquent 30 days or more amounted to $25 million or 2.14% of loans outstanding at September 30, 2011 versus $43 million or 3.90% of loans outstanding at September 30, 2010 and $33 million or 2.88% of loans outstanding as of June 30, 2011.
Watch list loans totaled $121 million at September 30, 2011, $164 million at September 30, 2010 and $134 million at June 30, 2011. Classified loans were $51 million at September 30, 2011, $63 million at September 30, 2010 and $65 million at June 30, 2011. The balance of the watch list at each period represents loans that are not classified but requiring some degree of heightened monitoring. The allowance for loan losses as a percentage of total classified loans was 46%, 52% and 42%, respectively, at the same dates.
At September 30, 2011, the Company had $17 million in TDRs, primarily consisting of one classified, partially secured commercial and industrial ("C&I") loan 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 September 30, 2011 in accordance with their revised terms. The Company had TDRs amounting to $7 million at September 30, 2010 and $27 million at June 30, 2011.
As of September 30, 2011, the Company's allowance for loan losses amounted to $23 million or 2.0% of period-end loans outstanding. The allowance as a percentage of loans outstanding was 2.9% at September 30, 2010 and 2.4% at June 30, 2011.
The Company recorded net loan charge-offs of $764 thousand in the third quarter of 2011 versus net charge-offs of $1.3 million in the third quarter of 2010 and net loan charge-offs of $958 thousand in the second quarter of 2011. As a percentage of average total loans outstanding, these net amounts represented, on an annualized basis, 0.3% for the third quarter of 2011, 0.5% for the third quarter of 2010 and 0.3% for the second 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 $167 million at September 30, 2011 compared to $154 million at September 30, 2010 and $161 million at June 30, 2011. The increase in stockholders' equity versus September 30, 2010 is largely reflective of net income earned in the past twelve months.
Cash dividends of $0.15 per share, totaling $2.5 million, were paid to the Company's stockholders during the first nine months of 2011.
The Company's return on average common stockholders' equity was 12.45% for the first nine months of 2011 versus 7.31% in the September 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 3.48% versus 3.54% a year ago.
The Bank's Tier I leverage, Tier I risk-weighted and total risk-weighted capital ratios were 10.50%, 13.08% and 14.33%, respectively, at September 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 September 30, 2011. The Company's tangible common equity to tangible assets ratio (non-GAAP financial measure) was 8.03% at September 30, 2011 versus 7.11% at September 30, 2010 and 7.62% at June 30, 2011.
The Company did not repurchase any of its common stock during the first nine 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 sixteen 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 Nine Months Ended September 30, 2011 and 2010 (unaudited) | ||||
| (in thousands, except per share data) | ||||
| Three Months | Nine Months | |||
| 2011 | 2010 | 2011 | 2010 | |
| Interest Income: | ||||
| Interest and fees on loans | $15,887 | $15,426 | $46,606 | $46,122 |
| Federal funds sold and securities purchased under agreements to resell | -- | -- | -- | 2 |
| Securities held to maturity - taxable | 216 | 41 | 649 | 41 |
| Securities available for sale - taxable | 2,449 | 3,464 | 7,803 | 11,609 |
| Securities available for sale - tax-exempt | 7 | 25 | 29 | 79 |
| Dividends on Federal Home Loan Bank and other restricted stock | 23 | 25 | 81 | 88 |
| Interest on balances due from banks | 18 | 8 | 36 | 18 |
| Total interest income | 18,600 | 18,989 | 55,204 | 57,959 |
| Interest Expense: | ||||
| Deposits | 1,793 | 2,471 | 5,462 | 7,601 |
| Temporary borrowings | 10 | 21 | 42 | 69 |
| Senior unsecured debt | 280 | 280 | 841 | 841 |
| Junior subordinated debentures | 180 | 188 | 537 | 546 |
| Total interest expense | 2,263 | 2,960 | 6,882 | 9,057 |
| Net interest income | 16,337 | 16,029 | 48,322 | 48,902 |
| (Credit) provision for loan losses | (3,500) | 2,500 | (500) | 10,200 |
| Net interest income after (credit) provision for loan losses | 19,837 | 13,529 | 48,822 | 38,702 |
| Non-Interest Income: | ||||
| Service charges on deposit accounts | 392 | 467 | 1,250 | 1,372 |
| Net gains on sales of securities | 933 | 733 | 1,046 | 3,514 |
| Other operating income | 400 | 820 | 1,523 | 1,682 |
| Total non-interest income | 1,725 | 2,020 | 3,819 | 6,568 |
| Income before operating expenses | 21,562 | 15,549 | 52,641 | 45,270 |
| Operating Expenses: | ||||
| Salaries and other employee benefits | 5,997 | 5,959 | 18,104 | 18,553 |
| Occupancy | 1,202 | 1,349 | 3,971 | 4,159 |
| Equipment | 279 | 302 | 933 | 875 |
| Marketing and advertising | 150 | 377 | 663 | 1,283 |
| FDIC and NYS assessment | 354 | 697 | 1,507 | 2,053 |
| Data processing | 234 | 280 | 754 | 800 |
| Merger-related expenses | 154 | -- | 1,511 | -- |
| Other operating expenses | 1,238 | 1,592 | 3,725 | 5,010 |
| Total operating expenses | 9,608 | 10,556 | 31,168 | 32,733 |
| Income Before Income Taxes | 11,954 | 4,993 | 21,473 | 12,537 |
| Provision for income taxes | 4,827 | 1,783 | 8,429 | 4,651 |
| Net Income | 7,127 | 3,210 | 13,044 | 7,886 |
| Preferred dividends and accretion | 521 | 517 | 1,563 | 1,553 |
| Net Income Attributable to Common Stockholders | $6,606 | $2,693 | $11,481 | $6,333 |
| Net Income per Common Share - Basic (1) | $0.39 | $0.17 | $0.68 | $0.39 |
| Net Income per Common Share - Diluted | $0.40 | $0.17 | $0.69 | $0.39 |
| (1) For the three and nine months ended September 30, 2011, this calculation includes unvested share-based payment awards under the two class method. | ||||
| STATE BANCORP, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| September 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 | 22,286 | 20,686 |
| Interest-bearing balances due from banks | 61,673 | 16,340 |
| Securities held to maturity (estimated fair value of $19,530 in 2011 and $22,000 in 2010) | 22,000 | 22,000 |
| Securities available for sale - at estimated fair value | 302,568 | 404,160 |
| Federal Home Loan Bank and other restricted stock | 4,402 | 7,273 |
| Loans (net of allowance for loan losses of $23,467 in 2011 and $32,488 in 2010) | 1,138,954 | 1,081,075 |
| Bank premises and equipment - net | 5,527 | 6,357 |
| Bank owned life insurance | 30,755 | 30,946 |
| Net deferred income taxes | 15,532 | 24,326 |
| Receivable - securities sales | -- | 13,393 |
| Prepaid FDIC assessment | 4,180 | 5,963 |
| Other assets | 9,809 | 12,758 |
| Total Assets | $1,617,686 | $1,645,277 |
| Liabilities: | ||
| Deposits: | ||
| Demand | $381,710 | $336,251 |
| Savings | 626,317 | 642,648 |
| Time | 375,684 | 406,808 |
| Total deposits | 1,383,711 | 1,385,707 |
| Other temporary borrowings | 2,000 | 43,000 |
| Senior unsecured debt | 29,000 | 29,000 |
| Junior subordinated debentures | 20,620 | 20,620 |
| Payable - securities purchases | 3,990 | -- |
| Other accrued expenses and liabilities | 10,990 | 12,701 |
| Total Liabilities | 1,450,311 | 1,491,028 |
| 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 | 36,427 | 36,188 |
| Common stock, $0.01 par value, authorized 50,000,000 shares; issued 17,672,684 shares in 2011 and 17,483,809 shares in 2010; outstanding 16,960,092 shares in 2011 and 16,660,790 shares in 2010 | 177 | 175 |
| Warrant | 1,057 | 1,057 |
| Surplus | 179,941 | 178,820 |
| Retained deficit | (42,418) | (53,582) |
| 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 $2,766 in 2011 and $3,597 in 2010) | 4,203 | 5,463 |
| Total Stockholders' Equity | 167,375 | 154,249 |
| Total Liabilities and Stockholders' Equity | $1,617,686 | $1,645,277 |
| STATE BANCORP, INC. | |||||
| SELECTED FINANCIAL DATA | |||||
| For the Three and Nine Months Ended September 30, 2011 and 2010 (unaudited) | |||||
| (dollars in thousands, except share and per share data) | |||||
| Three Months | Nine Months | ||||
| 2011 | 2010 | 2011 | 2010 | ||
| Selected Average Balances (1): | |||||
| Total assets | $1,619,595 | $1,627,183 | $1,615,554 | $1,633,943 | |
| Loans - net of unearned income | $1,157,684 | $1,100,592 | $1,146,672 | $1,104,728 | |
| Investment securities | $333,009 | $407,254 | $347,817 | $406,470 | |
| Deposits | $1,390,348 | $1,391,822 | $1,388,728 | $1,401,882 | |
| Stockholders' equity | $164,249 | $154,712 | $160,717 | $152,932 | |
| Financial Performance Ratios: | |||||
| Return on average assets | 1.75% | 0.78% | 1.08% | 0.65% | |
| Return on average common stockholders' equity | 20.67% | 9.09% | 12.45% | 7.31% | |
| Net interest margin | 4.23% | 4.16% | 4.24% | 4.27% | |
| Operating efficiency ratio | 55.88% | 60.70% | 60.79% | 62.71% | |
| Core operating efficiency ratio (2) | 54.98% | 60.70% | 57.84% | 62.71% | |
| Operating expenses as a % of average assets | 2.35% | 2.57% | 2.58% | 2.68% | |
| Capital Ratios (3): | |||||
| Tier I leverage ratio | 10.80% | 9.33% | 10.80% | 9.33% | |
| Tier I risk-based capital ratio | 13.45% | 12.03% | 13.45% | 12.03% | |
| Total risk-based capital ratio | 14.71% | 13.29% | 14.71% | 13.29% | |
| Tangible common equity ratio (4) | 8.03% | 7.11% | 8.03% | 7.11% | |
| Common Share Data: | |||||
| Average common shares outstanding | 16,553,250 | 16,303,237 | 16,512,303 | 16,243,505 | |
| Period-end common shares outstanding | 16,960,092 | 16,660,790 | 16,960,092 | 16,660,790 | |
| Tangible book value per common share (3) | $7.66 | $7.02 | $7.66 | $7.02 | |
| Cash dividends per common share | $0.05 | $0.05 | $0.15 | $0.15 | |
| (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 September 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 9/30/11 | YTD 9/30/11 | |||
| Total operating expenses | $9,608 | $31,168 | |||
| Less: merger-related expenses | (154) | (1,511) | |||
| Core operating expenses | $9,454 | $29,657 | |||
| Core Operating Efficiency Ratio | QTD 9/30/11 | YTD 9/30/11 | |||
| Core operating expenses | $9,454 | $29,657 | |||
| FTE net interest income | 16,350 | 48,364 | |||
| FTE non-interest income | 1,777 | 3,956 | |||
| Less: net gains on sales of securities | (933) | (1,046) | |||
| Non-interest income excluding net securities gains | 844 | 2,910 | |||
| 54.98% | 57.84% | ||||
| (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 September 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 | $167,375 | Total assets | $1,617,686 | ||
| Less: preferred stock | (36,427) | Less: intangible assets | -- | ||
| Less: warrant | (1,057) | Tangible assets | $1,617,686 | ||
| Total common stockholders' equity | 129,891 | ||||
| Less: intangible assets | -- | ||||
| Tangible common equity | $129,891 | ||||
| STATE BANCORP, INC. | |||||
| ASSET QUALITY ANALYSIS | |||||
| (unaudited) | |||||
| (dollars in thousands) | |||||
| Three Months Ended | |||||
|
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
December 31, 2010 |
September 30, 2010 |
|
| Non-Performing Assets (1): | |||||
| Non-accrual loans: | |||||
| Commercial and industrial - general purpose | $4,223 | $4,667 | $5,319 | $11,017 | $3,556 |
| Commercial and industrial - owner-occupied mortgage | -- | 275 | -- | -- | -- |
| Real estate - commercial mortgage | 6,643 | 5,613 | 5,651 | 1,684 | 1,963 |
| Real estate - residential mortgage | 690 | 969 | 899 | 973 | 2,217 |
| Real estate - residential construction | -- | -- | -- | 1,078 | 1,078 |
| Loans to individuals | 84 | 65 | 94 | 104 | 293 |
| Total non-accrual loans | 11,640 | 11,589 | 11,963 | 14,856 | 9,107 |
| Loans 90 days or more past due and still accruing: | |||||
| Loans to individuals | 1 | 1 | 1 | 1 | 1 |
| Total loans 90 days or more past due and still accruing | 1 | 1 | 1 | 1 | 1 |
| Total non-performing loans | 11,641 | 11,590 | 11,964 | 14,857 | 9,108 |
| Other real estate owned | -- | -- | -- | -- | -- |
| Total non-performing assets | $11,641 | $11,590 | $11,964 | $14,857 | $9,108 |
| Total non-accrual loans/total loans | 1.00% | 1.01% | 1.04% | 1.31% | 0.82% |
| Total non-performing loans/total loans | 1.00% | 1.01% | 1.04% | 1.31% | 0.82% |
| Total non-performing assets/total assets | 0.72% | 0.71% | 0.76% | 0.93% | 0.55% |
| Troubled Debt Restructurings (2): | $16,992 | $26,994 | $27,017 | $27,047 | $7,260 |
| (Credit) Provision and Allowance for Loan Losses: | |||||
| Balance at beginning of period | $27,731 | $27,589 | $33,078 | $32,488 | $31,259 |
| Charge-offs | (1,151) | (1,042) | (7,629) | (2,151) | (1,261) |
| Recoveries | 387 | 84 | 240 | 41 | (10) |
| Net charge-offs | (764) | (958) | (7,389) | (2,110) | (1,271) |
| (Credit) provision for loan losses | (3,500) | 1,100 | 1,900 | 2,700 | 2,500 |
| Balance at end of period | $23,467 | $27,731 | $27,589 | $33,078 | $32,488 |
| Allowance for loan losses/non-accrual loans (1) (3) | 202% | 239% | 231% | 223% | 357% |
| Allowance for loan losses/non-performing loans (1) (3) | 202% | 239% | 231% | 223% | 357% |
| Allowance for loan losses/total loans (1) (3) | 2.02% | 2.43% | 2.40% | 2.92% | 2.92% |
| Net Charge-Offs (Recoveries): | |||||
| Commercial and industrial - general purpose | $307 | $697 | $5,690 | $1,030 | $175 |
| Commercial and industrial - owner-occupied mortgage | 105 | -- | -- | -- | -- |
| Real estate - commercial mortgage | 90 | -- | 1,273 | (15) | (13) |
| Real estate - residential mortgage | 252 | 235 | 136 | (6) | -- |
| Real estate - commercial construction | -- | -- | -- | 900 | -- |
| Real estate - residential construction | -- | -- | 278 | -- | 1,088 |
| Loans to individuals | 10 | 26 | 12 | 201 | 21 |
| Total net charge-offs | $764 | $958 | $7,389 | $2,110 | $1,271 |
| Net charge-offs (annualized)/average loans | 0.26% | 0.34% | 2.63% | 0.75% | 0.46% |
| Delinquencies and Non-Accrual Loans as a % of Total Loans (1): | |||||
| Loans 30 - 59 days past due | 1.12% | 0.99% | 2.27% | 0.18% | 2.73% |
| Loans 60 - 89 days past due | 1.02% | 1.89% | 0.03% | 2.10% | 1.17% |
| 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 | 2.14% | 2.88% | 2.30% | 2.28% | 3.90% |
| Non-accrual loans | 1.00% | 1.01% | 1.04% | 1.31% | 0.82% |
| Total delinquent and non-accrual loans | 3.14% | 3.89% | 3.34% | 3.59% | 4.72% |
| (1) At period end. | |||||
| (2) Troubled debt restructurings on non-accrual status included here and also included in total non-accrual loans are $55, $56, $76, $104 and $300 at September 30, 2011, 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 September 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) | $333,009 | $2,676 | 3.19% | $407,254 | $3,542 | 3.45% |
| Federal Home Loan Bank and other restricted stock | 4,587 | 23 | 1.99 | 5,764 | 25 | 1.72 |
| Interest-bearing deposits | 38,504 | 18 | 0.19 | 15,848 | 7 | 0.18 |
| Loans (3) | 1,157,684 | 15,896 | 5.45 | 1,100,592 | 15,436 | 5.56 |
| Total interest-earning assets | 1,533,784 | $18,613 | 4.81% | 1,529,458 | $19,010 | 4.93% |
| Non-interest-earning assets | 85,811 | 97,725 | ||||
| Total Assets | $1,619,595 | $1,627,183 | ||||
| Liabilities and Stockholders' Equity: | ||||||
| Interest-bearing liabilities: | ||||||
| Savings deposits | $635,868 | $621 | 0.39% | $617,206 | $894 | 0.57% |
| Time deposits | 370,939 | 1,172 | 1.25 | 420,366 | 1,577 | 1.49 |
| Total savings and time deposits | 1,006,807 | 1,793 | 0.71 | 1,037,572 | 2,471 | 0.94 |
| Other temporary borrowings | 2,185 | 10 | 1.82 | 9,467 | 21 | 0.88 |
| Senior unsecured debt | 29,000 | 280 | 3.83 | 29,000 | 280 | 3.83 |
| Junior subordinated debentures | 20,620 | 180 | 3.46 | 20,620 | 188 | 3.62 |
| Total interest-bearing liabilities | 1,058,612 | 2,263 | 0.85 | 1,096,659 | 2,960 | 1.07 |
| Demand deposits | 383,541 | 354,250 | ||||
| Other liabilities | 13,193 | 21,562 | ||||
| Total Liabilities | 1,455,346 | 1,472,471 | ||||
| Stockholders' Equity | 164,249 | 154,712 | ||||
| Total Liabilities and Stockholders' Equity | $1,619,595 | $1,627,183 | ||||
| Net interest rate spread | 3.96% | 3.86% | ||||
| Net interest income/margin | 16,350 | 4.23% | 16,050 | 4.16% | ||
| Less tax-equivalent basis adjustment | (13) | (21) | ||||
| Net interest income | $16,337 | $16,029 | ||||
| (1) Weighted daily average balance for period noted. | ||||||
| (2) Interest on securities includes the effects of tax-equivalent basis adjustments of $4 and $11 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 Nine Months Ended September 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) | $347,817 | $8,496 | 3.27% | $406,470 | $11,763 | 3.87% |
| Federal Home Loan Bank and other restricted stock | 5,179 | 81 | 2.09 | 5,799 | 88 | 2.03 |
| Securities purchases under agreements to resell | 37 | -- | -- | 1,183 | 2 | 0.23 |
| Interest-bearing deposits | 26,117 | 36 | 0.18 | 13,985 | 18 | 0.17 |
| Loans (3) | 1,146,672 | 46,633 | 5.44 | 1,104,728 | 46,152 | 5.59 |
| Total interest-earning assets | 1,525,822 | $55,246 | 4.84% | 1,532,165 | $58,023 | 5.06% |
| Non-interest-earning assets | 89,732 | 101,778 | ||||
| Total Assets | $1,615,554 | $1,633,943 | ||||
| Liabilities and Stockholders' Equity: | ||||||
| Interest-bearing liabilities: | ||||||
| Savings deposits | $632,225 | $1,748 | 0.37% | $606,191 | $2,815 | 0.62% |
| Time deposits | 386,164 | 3,714 | 1.29 | 429,115 | 4,786 | 1.49 |
| Total savings and time deposits | 1,018,389 | 5,462 | 0.72 | 1,035,306 | 7,601 | 0.98 |
| Federal funds purchased | 26 | -- | -- | 59 | -- | -- |
| Other temporary borrowings | 4,066 | 42 | 1.38 | 11,227 | 69 | 0.82 |
| Senior unsecured debt | 29,000 | 841 | 3.88 | 29,000 | 841 | 3.88 |
| Junior subordinated debentures | 20,620 | 537 | 3.48 | 20,620 | 546 | 3.54 |
| Total interest-bearing liabilities | 1,072,101 | 6,882 | 0.86 | 1,096,212 | 9,057 | 1.10 |
| Demand deposits | 370,339 | 366,576 | ||||
| Other liabilities | 12,397 | 18,223 | ||||
| Total Liabilities | 1,454,837 | 1,481,011 | ||||
| Stockholders' Equity | 160,717 | 152,932 | ||||
| Total Liabilities and Stockholders' Equity | $1,615,554 | $1,633,943 | ||||
| Net interest rate spread | 3.98% | 3.96% | ||||
| Net interest income/margin | 48,364 | 4.24% | 48,966 | 4.27% | ||
| Less tax-equivalent basis adjustment | (42) | (64) | ||||
| Net interest income | $48,322 | $48,902 | ||||
| (1) Weighted daily average balance for period noted. | ||||||
| (2) Interest on securities includes the effects of tax-equivalent basis adjustments of $15 and $34 in 2011 and 2010, respectively. | ||||||
| (3) Interest on loans includes the effects of tax-equivalent basis adjustments of $27 and $30 in 2011 and 2010, respectively. | ||||||