UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: SEPTEMBER 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
STATE BANCORP, INC.
-------------------
(Exact name of registrant as specified in its charter)
NEW YORK 11-2846511
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
699 HILLSIDE AVENUE, NEW HYDE PARK, NEW YORK 11040
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
(516) 437-1000
---------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
As of October 28, 1999, there were 6,987,578 shares of Common Stock outstanding.
<PAGE>
STATE BANCORP, INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION Page
----
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - September 30, 1999 and December 31, 1998
(Unaudited) 1.
Consolidated Statements of Income for the Three and Nine Months Ended
September 30, 1999 and 1998 (Unaudited) 2.
Consolidated Statements of Cash Flows for the Nine Months Ended September 30,
1999 and 1998 (Unaudited) 3.
Consolidated Statements of Stockholders' Equity and Comprehensive Income
for the Nine Months Ended September 30, 1999 and 1998 (Unaudited) 4.
Notes to Unaudited Consolidated Financial Statements 5.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None N/A
Item 2. Changes in Securities - None N/A
Item 3. Defaults upon Senior Securities - None N/A
Item 4. Submission of Matters to a Vote of Security Holders - None N/A
Item 5. Other Information - None N/A
Item 6. Exhibits and Reports on Form 8-K - None N/A
SIGNATURES 16.
<PAGE>
- -----------------------------------------------------
ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------------------------------
- -----------------------------------------------------
STATE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (UNAUDITED)
- -----------------------------------------------------
- -----------------------------------------------------
ASSETS: 1999 1998
- ----------------------------------------------------- ----------- -------------
CASH AND DUE FROM BANKS $16,591,462 $19,274,435
SECURITIES:
HELD TO MATURITY (ESTIMATED FAIR VALUE -
$1,239,581 IN 1999 AND $2,526,401 IN 1998) 1,231,835 2,516,035
AVAILABLE FOR SALE - AT ESTIMATED FAIR VALUE 406,381,567 279,338,611
------------- -------------
TOTAL SECURITIES 407,613,402 281,854,646
LOANS - NET OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
($6,960,709 IN 1999 AND $5,788,440 IN 1998) 458,940,675 414,847,940
BANK PREMISES AND EQUIPMENT - NET 3,597,219 3,878,013
OTHER ASSETS 19,061,420 12,838,476
- -------------------------------------------------- ------------- -------------
TOTAL ASSETS $905,804,178 $732,693,510
- -------------------------------------------------- ============= =============
- --------------------------------------------------
LIABILITIES:
- --------------------------------------------------
DEPOSITS:
DEMAND $139,811,432 $125,327,460
SAVINGS 173,175,797 195,614,058
TIME 365,995,622 276,079,430
------------- -------------
TOTAL DEPOSITS 678,982,851 597,020,948
FEDERAL FUNDS PURCHASED 12,700,000 -
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 100,484,875 34,529,000
OTHER SHORT-TERM BORROWINGS 50,000,000 35,000,000
ACCRUED EXPENSES, TAXES AND OTHER LIABILITIES 5,950,997 5,285,670
- -------------------------------------------------- ------------- -------------
TOTAL LIABILITIES 848,118,723 671,835,618
- -------------------------------------------------- ------------- -------------
- --------------------------------------------------
STOCKHOLDERS' EQUITY:
- --------------------------------------------------
PREFERRED STOCK, $.01 PAR VALUE, AUTHORIZED
250,000 SHARES - -
COMMON STOCK, $5.00 PAR VALUE, AUTHORIZED
20,000,000 SHARES; ISSUED 7,064,170 SHARES IN 1999
AND 6,988,940 SHARES IN 1998; OUTSTANDING 6,973,527
SHARES IN 1999 AND 6,902,866 SHARES IN 1998 35,320,850 32,966,700
SURPLUS 29,344,989 24,236,479
RETAINED EARNINGS 3,269,969 4,866,852
TREASURY STOCK (488,375) (188,375)
ACCUMULATED OTHER COMPREHENSIVE INCOME (9,235,104) (364,710)
UNEARNED COMPENSATION (526,874) (659,054)
- -------------------------------------------------- ------------- -------------
TOTAL STOCKHOLDERS' EQUITY 57,685,455 60,857,892
- -------------------------------------------------- ------------- -------------
- --------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $905,804,178 $732,693,510
- -------------------------------------------------- ============= =============
(1)
<PAGE>
- ------------------------------------------------------------
ITEM 1 - FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------
STATE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
- -----------------------------------------------------------------------------
<CAPTION>
--------------------------------- ---------------------------------
THREE MONTHS NINE MONTHS
--------------------------------- ---------------------------------
--------------- --------------- ----------------- -------------
1999 1998 1999 1998
--------------- --------------- ----------------- -------------
- ------------------------------------------------
INTEREST INCOME:
- ------------------------------------------------
<S> <C> <C> <C> <C>
LOANS $ 10,397,512 $ 9,178,208 $ 29,415,506 $ 27,141,603
FEDERAL FUNDS SOLD AND SECURITIES
PURCHASED UNDER AGREEMENTS TO RESELL 68,280 701,042 792,568 2,691,801
SECURITIES HELD TO MATURITY AND
SECURITIES AVAILABLE FOR SALE:
STATES AND POLITICAL SUBDIVISIONS 629,580 664,848 980,825 1,755,117
MORTGAGE-BACKED SECURITIES 409,759 506,014 1,335,651 2,011,044
GOVERNMENT AGENCY SECURITIES 4,466,677 2,267,091 11,495,154 6,908,746
OTHER SECURITIES 42,803 48,168 128,331 144,155
------------ ------------ ------------- -------------
TOTAL INTEREST INCOME 16,014,611 13,365,371 44,148,035 40,652,466
------------ ------------ ------------- -------------
- ------------------------------------------------
INTEREST EXPENSE:
- ------------------------------------------------
TIME CERTIFICATES OF DEPOSIT OF $100,000 OR MORE 3,894,232 3,196,241 9,636,800 9,531,181
OTHER DEPOSITS AND TEMPORARY BORROWINGS 2,891,398 2,973,358 7,849,027 9,182,912
------------ ------------ ------------- -------------
TOTAL INTEREST EXPENSE 6,785,630 6,169,599 17,485,827 18,714,093
------------ ------------ ------------- -------------
NET INTEREST INCOME 9,228,981 7,195,772 26,662,208 21,938,373
PROVISION FOR POSSIBLE LOAN LOSSES 750,000 450,000 2,250,000 1,350,000
------------ ------------ ------------- -------------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 8,478,981 6,745,772 24,412,208 20,588,373
------------ ------------ ------------- -------------
- ------------------------------------------------
OTHER INCOME:
- ------------------------------------------------
SERVICE CHARGES ON DEPOSIT ACCOUNTS 427,209 302,833 1,064,957 862,590
NET SECURITY LOSSES (106,889) (13,877) (164,358) (58,100)
OTHER OPERATING INCOME 231,477 84,517 721,182 327,859
------------ ------------ ------------- -------------
TOTAL OTHER INCOME 551,797 373,473 1,621,781 1,132,349
------------ ------------ ------------- -------------
INCOME BEFORE OPERATING EXPENSES 9,030,778 7,119,245 26,033,989 21,720,722
------------ ------------ ------------- -------------
- ------------------------------------------------
OPERATING EXPENSES:
- ------------------------------------------------
SALARIES AND OTHER EMPLOYEE BENEFITS 3,170,334 2,737,565 9,402,290 8,226,343
OCCUPANCY 440,819 444,951 1,331,518 1,287,629
EQUIPMENT 202,458 166,836 598,311 519,421
MARKETING AND ADVERTISING 144,000 119,000 432,000 347,000
DEPOSIT ASSESSMENT FEES 36,686 35,389 111,524 108,461
AMORTIZATION OF INTANGIBLES 9,035 9,034 27,103 74,520
OTHER OPERATING EXPENSES 1,102,312 934,238 3,175,726 2,830,588
------------ ------------ ------------- -------------
TOTAL OPERATING EXPENSES 5,105,644 4,447,013 15,078,472 13,393,962
------------ ------------ ------------- -------------
INCOME BEFORE INCOME TAXES 3,925,134 2,672,232 10,955,517 8,326,760
PROVISION FOR INCOME TAXES 1,169,784 880,068 3,382,494 2,845,541
- ------------------------------------------------ ------------ ------------ ------------- -------------
NET INCOME $ 2,755,350 $ 1,792,164 $ 7,573,023 $ 5,481,219
- ------------------------------------------------ ------------ ------------ ------------- -------------
- ------------------------------------------------
BASIC EARNINGS PER COMMON SHARE $ 0.39 $ 0.26 $ 1.09 $ 0.80
- ------------------------------------------------ ------------ ------------ ------------- -------------
- ------------------------------------------------
DILUTED EARNINGS PER COMMON SHARE $ 0.39 $ 0.25 $ 1.07 $ 0.78
- ------------------------------------------------ ------------ ------------ ------------- -------------
- ------------------------------------------------
AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,984,444 6,888,261 6,955,978 6,855,278
- ------------------------------------------------ ------------ ------------ ------------- -------------
</TABLE>
(2)
<PAGE>
- ----------------------------------------------------------------
ITEM 1 - FINANCIAL STATEMENTS (CONTINUED)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
STATE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
- ----------------------------------------------------------------
- ---------------------------------------------------- ----------- ------------
OPERATING ACTIVITIES: 1999 1998
- ---------------------------------------------------- ----------- ------------
NET INCOME $7,573,023 $5,481,219
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
PROVISION FOR POSSIBLE LOAN LOSSES 2,250,000 1,350,000
DEPRECIATION AND AMORTIZATION OF BANK
PREMISES AND EQUIPMENT 606,450 494,254
AMORTIZATION OF INTANGIBLES 27,103 74,520
(ACCRETION) AMORTIZATION OF NET (DISCOUNT)
PREMIUM ON SECURITIES (229,171) 769,145
AMORTIZATION OF UNEARNED COMPENSATION 190,991 315,748
NET SECURITY LOSSES 164,358 58,100
GAIN ON SALE OF OTHER REAL ESTATE OWNED ("OREO") (39,086) -
(INCREASE) DECREASE IN OTHER ASSETS (1,492,119) 1,240,849
INCREASE IN ACCRUED EXPENSES, TAXES
AND OTHER LIABILITIES 538,567 366,657
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,590,116 10,150,492
------------ ------------
- -----------------------------------------------------
INVESTING ACTIVITIES:
- -----------------------------------------------------
PROCEEDS FROM MATURITIES OF SECURITIES HELD
TO MATURITY 2,278,700 13,441,950
PURCHASES OF SECURITIES HELD TO MATURITY (994,500) (6,531,200)
PROCEEDS FROM SALES OF SECURITIES AVAILABLE
FOR SALE 229,857,009 360,615,464
PROCEEDS FROM MATURITIES OF SECURITIES AVAILABLE
FOR SALE 65,871,633 238,408,002
PURCHASES OF SECURITIES AVAILABLE FOR SALE (436,408,820) (551,700,977)
INCREASE IN LOANS - NET (46,342,735) (12,309,785)
PROCEEDS FROM SALE OF OREO 112,798 -
PURCHASES OF BANK PREMISES AND EQUIPMENT - NET (325,656) (425,678)
------------ ------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (185,951,571) 41,497,776
------------ ------------
- -----------------------------------------------------
FINANCING ACTIVITIES:
- -----------------------------------------------------
DECREASE IN DEMAND AND SAVINGS DEPOSITS (7,954,289) (7,308,597)
INCREASE IN TIME DEPOSITS 89,916,192 5,062,384
INCREASE (DECREASE) IN FEDERAL FUNDS PURCHASED 12,700,000 (6,000,000)
INCREASE (DECREASE) IN SECURITIES SOLD UNDER
AGREEMENTS TO REPURCHASE 65,955,875 (14,318,000)
INCREASE (DECREASE) IN OTHER SHORT-TERM
BORROWINGS 15,000,000 (12,000,000)
CASH DIVIDENDS PAID (2,419,678) (2,515,802)
PROCEEDS FROM SHARES ISSUED UNDER DIVIDEND
REINVESTMENT PLAN 560,952 669,088
PROCEEDS FROM STOCK OPTIONS EXERCISED 219,430 253,948
PURCHASE OF TREASURY STOCK (300,000) -
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 173,678,482 (36,156,979)
------------ ------------
- -----------------------------------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,682,973) 15,491,289
- -----------------------------------------------------
- -----------------------------------------------------
CASH AND CASH EQUIVALENTS - JANUARY 1 19,274,435 60,932,820
- -----------------------------------------------------
- ----------------------------------------------------- ----------- ------------
CASH AND CASH EQUIVALENTS - SEPTEMBER 30 $16,591,462 $76,424,109
- ----------------------------------------------------- ----------- ------------
- -----------------------------------------------------
SUPPLEMENTAL DATA:
- -----------------------------------------------------
INTEREST PAID $17,199,803 $18,578,316
INCOME TAXES PAID $3,955,000 $3,518,592
TRANSFER FROM LOANS TO OREO - $325,000
ADJUSTMENT TO UNREALIZED NET LOSS ON SECURITIES
AVAILABLE FOR SALE ($13,702,033) $1,047,456
DIVIDENDS DECLARED BUT NOT PAID AS OF QUARTER
END $907,246 $778,704
(3)
<PAGE>
- --------------------------------------------------------
ITEM 1 - FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------
STATE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
- -----------------------------------------------------------------------------
<CAPTION>
ACCUMULATED
OTHER
COMPRE- UNEARNED COMPRE-
COMMON RETAINED TREASURY HENSIVE COMPEN- HENSIVE
STOCK SURPLUS EARNINGS STOCK INCOME SATION TOTAL INCOME
----- ------- -------- ----- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1999 $32,966,700 $24,236,479 $4,866,852 ($188,375) ($364,710) ($659,054) $60,857,892
COMPREHENSIVE INCOME:
NET INCOME 7,573,023 7,573,023 $ 7,573,023
----------
OTHER COMPREHENSIVE INCOME,
NET OF TAX:
UNREALIZED HOLDING LOSSES
ARISING DURING THE PERIOD (8,836,285)
RECLASSIFICATION ADJUSTMENT
FOR GAINS INCLUDED IN NET INCOME (34,109)
----------
TOTAL OTHER COMPREHENSIVE INCOME (8,870,394) (8,870,394) (8,870,394)
----------
TOTAL COMPREHENSIVE INCOME ($1,297,371)
----------
CASH DIVIDEND
($0.37 PER SHARE) (2,546,439) (2,546,439)
6% STOCK DIVIDEND (398,404 SHARES
AT MARKET VALUE) 1,992,020 4,631,447 (6,623,467) -
SHARES ISSUED UNDER THE DIVIDEND
REINVESTMENT PLAN (36,880 SHARES
AT 95% OF MARKET VALUE) 184,400 376,552 560,952
STOCK OPTIONS EXERCISED 177,730 41,700 219,430
TREASURY STOCK PURCHASED (300,000) (300,000)
AMORTIZATION OF UNEARNED
COMPENSATION 58,811 132,180 190,991
----------- ----------- ---------- --------- ------------ ---------- ------------
- -----------------------------
BALANCE, SEPTEMBER 30, 1999 $35,320,850 $29,344,989 $3,269,969 ($488,375)($9,235,104) ($526,874) $57,685,455
- -----------------------------
----------- ----------- ---------- --------- ------------ ---------- ------------
BALANCE, JANUARY 1, 1998 $30,970,630 $18,457,388 $6,567,744 - ($215,067) ($850,432) $54,930,263
COMPREHENSIVE INCOME:
NET INCOME 5,481,219 5,481,219 $ 5,481,219
----------
OTHER COMPREHENSIVE INCOME,
NET OF TAX:
UNREALIZED HOLDING GAINS ARISING
DURING THE PERIOD 697,523
RECLASSIFICATION ADJUSTMENT
FOR GAINS INCLUDED IN NET INCOME (22,404)
----------
TOTAL OTHER COMPREHENSIVE INCOME 675,119 675,119 675,119
----------
TOTAL COMPREHENSIVE INCOME $6,156,338
-----------
CASH DIVIDEND
($0.37 PER SHARE) (2,563,979) (2,563,979)
5% STOCK DIVIDEND (312,332 SHARES
AT MARKET VALUE) 1,561,660 4,997,312 (6,558,972) -
SHARES ISSUED UNDER THE DIVIDEND
REINVESTMENT PLAN (31,102 SHARES
AT 95% OF MARKET VALUE) 155,510 513,578 669,088
STOCK OPTIONS EXERCISED 204,695 49,253 253,948
AMORTIZATION OF UNEARNED
COMPENSATION 172,227 143,521 315,748
------------ ----------- ---------- ---------- ---------- ---------- -----------
- -----------------------------
BALANCE, SEPTEMBER 30, 1998 $32,892,495 $24,189,758 $2,926,012 - $460,052 ($706,911) $59,761,406
- ----------------------------- ------------ ----------- ---------- ---------- ---------- ---------- -----------
</TABLE>
(4)
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------------
FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
In the opinion of the management of State Bancorp, Inc. (the "Company"), the
preceding unaudited consolidated financial statements contain all adjustments,
consisting of normal accruals, necessary for a fair presentation of its
consolidated financial condition as of September 30, 1999 and December 31, 1998,
its consolidated earnings for the nine months ended September 30, 1999 and 1998
and cash flows and changes in stockholders' equity and comprehensive income for
the nine months ended September 30, 1999 and 1998. The results of operations for
the nine months ended September 30, 1999 are not necessarily indicative of the
results of operations to be expected for the remainder of the year. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's 1998 annual report on Form 10-K. Certain
amounts have been reclassified to conform with the current year's presentation.
STOCKHOLDERS' EQUITY
The Company has 250,000 shares of preferred stock authorized. No shares were
issued as of September 30, 1999.
Stock held in treasury by the Company is accounted for using the cost method,
which treats stock held in treasury as a reduction to total stockholders'
equity.
In connection with the rights offering in July 1996, the Bank's Employee Stock
Option Plan (the "ESOP") borrowed $1,200,000 from the Company to purchase
133,560 (adjusted for stock dividends and splits) of the Company's shares. As
such, the Company recognizes a deduction from stockholders' equity to reflect
the unearned compensation for the shares. The unearned ESOP shares, pledged as
collateral for the ESOP loan, are held in a suspense account and legally
released for allocation among the participants as principal and interest on the
loan is repaid annually. Shares are committed to be released monthly from the
suspense account, and the Company recognizes compensation expense equal to the
current market price of the common shares. As of September 30, 1999, 74,917
shares have been released from the suspense account and are considered
outstanding for earnings per share computations.
During 1998, the Company adopted the Financial Accounting Standards Board's
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires an entity to present, as a
component of comprehensive income, the amounts from transactions and other
events which currently are excluded from the statement of income and are
recorded directly to stockholders' equity. The adoption of SFAS No. 130, which
concerns disclosure standards only, did not have a material impact on the
Company's financial position and results of operations.
EARNINGS PER SHARE
Basic earnings per common share is computed based on the weighted average number
of shares outstanding. Diluted earnings per share is computed based on the
weighted average number of shares outstanding, increased by the number of common
(5)
<PAGE>
shares that are assumed to have been purchased with the proceeds from the
exercise of stock options (treasury stock method). These purchases were assumed
to have been made at the average market price of the common stock. The average
market price is based on the average closing bid price for the common stock.
Retroactive recognition has been given for stock dividends and splits, as well
as for the adoption of SFAS No. 128, "Earnings Per Share."
For the Nine Months Ended September 30, 1999 1998
- --------------------------------------- ---- ----
Net income $7,573,023 $5,481,219
Average dilutive stock options outstanding 200,281 229,942
Average exercise price per share $4.87 $6.44
Average market price - diluted basis $16.25 $21.34
Average common shares outstanding 6,955,978 6,855,278
Increase in shares due to exercise of options -
diluted basis 103,422 142,189
----------- ----------
Adjusted common shares outstanding - diluted 7,059,400 6,997,467
=========== ==========
Net income per share-basic $1.09 $0.80
=========== ==========
Net income per share-diluted $1.07 $0.78
=========== ==========
UNREALIZED NET GAIN (LOSS) ON SECURITIES AVAILABLE FOR SALE
Securities available for sale are stated at estimated fair value, and unrealized
gains and losses are excluded from earnings and reported as a separate component
of stockholders' equity until realized. Securities held to maturity are stated
at amortized cost. Management designates each security, at the time of purchase,
as either available for sale or held to maturity depending upon investment
objectives, liquidity needs and intent.
LOANS
As a result of the Company's evaluation of impaired loans, an allowance for
possible loan losses of approximately $769,000 and $1,420,000 was established
for $4,481,474 and $8,352,709 of the total impaired loans at September 30, 1999
and December 31, 1998, respectively, with the balance of impaired loans
requiring no specific allowance. The total average impaired loan balance was
$5,817,324 for the quarter ended September 30, 1999 and $8,437,893 for the year
ended December 31, 1998. Total impaired loans amounted to $5,812,500 and
$8,662,116 at September 30, 1999 and December 31, 1998, respectively. At
September 30, 1999, all impaired loans are collateral-dependent loans, and are
measured based on the fair value of the underlying collateral. Total interest
income recognized for impaired, nonaccrual and restructured loans was $8,400
and $8,106 for the three months ended September 30, 1999 and 1998, respectively,
and $36,099 and $197,432 for the nine months ended September 30, 1999 and 1998,
respectively.
(6)
<PAGE>
Activity in the allowance for possible loan losses for the nine months ended
September 30, 1999 and 1998 is as follows:
1999 1998
---- ----
Balance, January 1 $5,788,440 $5,123,651
Provision charged to income 2,250,000 1,350,000
Charge-offs, net of recoveries of
$294,108 in 1999 and $316,745 in 1998 (1,077,731) (994,870)
----------- -----------
Balance, September 30 $6,960,709 $5,478,781
=========== ===========
(7)
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview - State Bancorp, Inc. (the "Company") is a one-bank holding company,
which was formed on June 24, 1986. The Company operates as the parent for its
wholly-owned subsidiary, State Bank of Long Island and subsidiaries (the
"Bank"), a New York State chartered commercial bank founded in 1966. The income
of the Company is derived through the operation of the Bank and its
subsidiaries, SB Portfolio Management Corp. ("SB Portfolio"), SB Financial
Services Corp. ("SB Financial"), New Hyde Park Leasing Corporation and SB ORE
Corp.
Material Changes in Financial Condition - Total assets of the Company amounted
to $905.8 million at September 30, 1999, an increase of $173.1 million or 23.6%
when compared to December 31, 1998, primarily due to an increase in government
agency securities, commercial loans and mortgages. Scheduled loan amortization,
payments and normal clean up activity partially offset the new business that was
generated during the first nine months of the year. The loan portfolio grew
approximately 10.8% during the first nine months of 1999 and management
anticipates continued expansion of the loan portfolio during the fourth quarter.
Asset growth was funded primarily by higher deposit balances and an increase in
short-term borrowings of $93.7 million during the first nine months of 1999, due
to higher levels of Federal funds purchased and securities sold under agreements
to repurchase.
At September 30, 1999, total deposits increased by $82.2 million to $679.0
million when compared to December 31, 1998. This increase was primarily due to
an increase of $14.5 million in demand deposits and an $89.9 million increase in
certificates of deposit, predominantly certificates of deposit over $100,000
("Jumbo certificates of deposit"), offset by a decrease in savings deposits of
$22.4 million. Growth in core deposits (demand, NOW, savings and money market
accounts) of individuals, partnerships and corporations remains strong, due
largely to the Company's two new branch locations in Suffolk County.
Average assets for the third quarter of 1999 were up by $135.8 million or 18.7%
to $861.5 million from the comparable 1998 period. Sources of asset expansion
included growth in the loan portfolio (up on average $70.1 million or 18.2%) and
growth in investment securities (up on average $104.7 million or 40.1%). Funding
this growth were increases in demand deposits and Jumbo certificates of deposit
and an increase in average borrowed funds, primarily securities sold under
agreements to repurchase and Federal Home Loan Bank advances, up on average by
$44.0 million during the third quarter of 1999. The net result of these
activities was a shift in the mix of the Company's balance sheet that yielded an
31-basis point improvement in the third quarter net interest margin to 4.41%.
Management anticipates that the Company's net interest margin may come under
some pressure during the fourth quarter despite projected growth in loans and
core deposits. Higher short-term interest rates are likely to squeeze spreads
due to growth in the Company's use of the Jumbo certificates of deposits and
borrowed funds as a funding source. The Company is liability-sensitive in the
short-term and will be negatively impacted by higher rates.
(8)
<PAGE>
The Company's capacity to grow its assets and earnings stems, in part, from the
significance of its capital strength. The Company strives to maintain an optimal
level of capital, commensurate with its risk profile, on which an attractive
rate of return to stockholders will be realized over both the short and long
term, while serving the needs of depositors, creditors and regulators. In
determining an optimal capital level, the Company also considers the capital
levels of its peers and the evaluations of its primary regulators. At September
30, 1999, management believes that the Company and the Bank meet all capital
adequacy requirements to which they are subject. The Bank's capital adequacy
ratios are significantly in excess of those necessary for it to be classified as
a "well capitalized" institution pursuant to the provisions of the Federal
Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). Total
stockholders' equity amounted to $57.7 million at September 30, 1999, a decrease
of $2.1 million or 3.5% versus the comparable 1998 date. Excluding valuations
related to SFAS No. 115 at September 30, 1999 and 1998, total stockholders'
equity grew at a year-to-year rate of 11.4%. Average equity for the nine months
ended September 30, 1999 increased $3.1 million or 5.1% from the comparable
period. The Company has no plans or commitments for capital utilization or
expenditures that would affect its current capital position or would impact its
future financial performance. The following table (2-1) summarizes the Company's
capital ratios as of September 30, 1999 and compares them to current regulatory
guidelines and December 31, and September 30, 1998 actual results.
TABLE 2-1
Tier I capital/ Total Capital/
Tier I Risk-Weighted Risk-Weighted
Leverage Assets Assets
Regulatory Minimum 3.00%-4.00% 4.00% 8.00%
Ratios as of:
September 30, 1999 7.60% 12.01% 13.26%
December 31, 1998 8.05% 12.82% 14.04%
September 30, 1998 8.13% 13.29% 14.53%
Regulatory Criteria for
a "Well Capitalized"
Institution 5.00% 6.00% 10.00%
Liquidity management is a fundamental component of the Company's business
strategy. The objective of liquidity management is to assure the ability of the
Company and its subsidiary to meet their financial obligations. These
obligations include the withdrawal of deposits on demand or at their contractual
maturity, the repayment of borrowings as they mature, the ability to fund new
and existing loan commitments and to take advantage of business opportunities as
they arise. Liquidity is composed of the maintenance of a strong base of core
customer funds, maturing short-term assets, the ability to sell marketable
securities and access to lines of credit and the capital markets.
(9)
<PAGE>
Liquidity at the Company is measured and monitored daily, thereby allowing
management to better understand and react to emerging balance sheet trends.
After assessing actual and projected cash flow needs, management seeks to obtain
funding at the most economical cost to the Company. Throughout the first three
quarters 1999, the Company's liquidity position remained stable and well within
acceptable industry standards. As previously described, low-cost demand and
money fund deposit balances continued to grow during the third quarter of 1999,
while at the same time, paydowns on mortgage-backed securities also provided a
source of readily available funds to meet general liquidity needs. In addition,
at September 30, 1999, the Company had access to $15.0 million in Federal Home
Loan Bank lines of credit for overnight borrowings. The Company also had $6.5
million in formal and $10.0 million in informal lines of credit extended by
correspondent banks to be utilized, if needed, for short-term funding purposes.
The Federal Reserve Bank accepted the Company into its Borrower-in-Custody
("BIC") Program. This program allows the Company to pledge certain commercial
mortgages and borrow up to 60% or 80% of the asset balances, depending on the
risks associated with and the maturity dates of the collateral. Based on the
requirements of allowable collateral, the Company estimates this line will
approximate $40 million. This borrowing capacity should be formalized by the end
of the fourth quarter of 1999.
Material Changes in Results of Operations - Despite a 67% increase in the
provision for loan losses during 1999 versus 1998, net income for the nine
months ended September 30, 1999 was $7.6 million, a 38.2% improvement over the
comparable 1998 period. The higher level of earnings in 1999 resulted from a
21.5% improvement in net interest income, an increase in noninterest income and
a lower effective income tax rate. Somewhat offsetting these improvements were
increases in total operating expenses and the provision for loan losses.
The increase in net interest income, up $4.7 million to $26.7 million, resulted
from an expanded interest-earning asset base, principally commercial loans and
callable Government agency securities. The Company's average loan portfolio grew
by $60.8 million or 16.0% during the first nine months of 1999 as compared to
1998, with $54.5 million attributable to increases in commercial loans and
mortgages. The strength of the Long Island economy and the ongoing consolidation
of the local banking market continue to provide opportunity for the Company to
increase the loan portfolio. The Company, offering superior service and response
time coupled with competitive product pricing, has been able to steadily improve
its market share through conservative underwriting and credit standards.
Products such as the Small Business Line of Credit have been extremely well
received by the local business community and are generating loan volume and
creating new cross sell opportunities for the Company's full range of deposit
and credit products. In addition, management has added full time staff who will
concentrate on the marketing and sales efforts of new and existing retail
products. Management of the Company has also targeted the Suffolk and Queens
County markets as the most obvious candidates for continued expansion of the
loan portfolio during the coming months.
The Company's investment portfolio expanded, on average, by 20.4% during the
first nine months of 1999 versus 1998, primarily through growth in callable
Government agency securities (up on average $99.4 million) offset by a decrease
in tax-exempt local municipal notes and paydowns on
(10)
<PAGE>
mortgage-backed securities (down on average $26.3 million and $15.5 million,
respectively). Management of the Company continues to be an active purchaser of
Agency securities due to their attractive yields and their pledgeability to
secure municipal deposits.
Other income increased by 43.2% for the nine months ended September 30, 1999 as
compared to 1998 due to increases in service charges on deposit accounts,
annuity sales, wire transfer fees, ATM fees and a nonrecurring gain on the sale
of an asset. Management expects that other income will continue to grow during
the fourth quarter of 1999 for many of the same reasons.
Total operating expenses rose by 12.6% for the nine months ended September 30,
1999 as compared to the comparable 1998 period, mainly due to increases in
salaries and employee benefits arising from staff expansion in product support
areas. In addition, other operating expenses increased due to higher marketing
and advertising costs coupled with increases in credit and collection fees and
computer-related depreciation costs. Somewhat offsetting the foregoing expense
increases was a decline in core deposit intangibles amortization expense and a
reduction in costs related to maintenance on foreclosed properties.
The increase in operating expenses during the first nine months of 1999 was
offset by an increase in net revenue, resulting in a lower operating efficiency
ratio (total operating expenses as a percentage of fully taxable equivalent net
interest revenue, excluding securities transactions). The 1999 efficiency ratio
decreased to 51.8% from 55.8% a year ago. The Company's other primary measure of
expense control, the ratio of total operating expenses to average total assets,
increased slightly during the first nine months of 1999 to 2.50% from a level of
2.43% in 1998. This ratio still places the Company in the top 15% of its peer
group for this efficiency measure. It continues to be the Company's stated goal
to reduce each of these ratios as part of its efforts to improve efficiencies
and, ultimately, stockholder value.
Nonperforming assets (defined by the Company as nonaccrual loans and other real
estate owned) totaled $7.8 million at September 30, 1999, an increase of $3.4
million versus December 31, 1998 and $2.7 million versus the comparable 1998
date. The level of restructured, accruing loans at September 30, 1999 declined
by $5.1 million when compared to year-end 1998. Although classified as
nonperforming for reporting purposes, restructured loans continue to accrue and
pay interest in accordance with their revised terms. The reduction in
restructured, accruing loans that took place during the second quarter of 1999
primarily resulted from the shift of a $4.0 million credit to the nonaccrual
loan category. As outlined in the Company's 1998 Annual Report to Stockholders,
this credit is collateralized by commercial real estate with a current appraised
value in excess of the carrying value of the credit. The restructured rate on
this credit will remain below the contractual rate until cash flows are again
sufficient to support a market rate of interest. The allowance for possible loan
losses amounted to $7.0 million or 1.49% of total loans at September 30, 1999
versus $5.5 million and 1.41%, respectively, at the comparable 1998 date. The
allowance for possible loan losses as a percentage of nonaccrual loans,
restructured and accruing loans and loans 90 days or more past due and still
accruing improved to 90.5% at September 30, 1999 from 54.7% and 51.1% at
December 31, 1998 and September 30, 1998, respectively. The higher 1999
provision for possible loan losses reflects the continued growth in the
Company's loan portfolio and the level of
(11)
<PAGE>
nonperforming loans. A further review of the Company's nonperforming assets may
be found in Table 2-3 following this analysis.
Year 2000 Compliance
The Year 2000 ("Y2K") problem centers on the inability of certain computer
systems to recognize the Year 2000. Many existing computer programs may
incorrectly identify a four-digit date field ending in "00" as the year 1900
rather than the year 2000. The Company, like other banks and financial services
firms that rely on date-sensitive information in their calculations, may be
negatively impacted by the Y2K problem. If computer systems are not corrected to
properly identify the Year 2000, computer systems applications may fail or
produce erroneous results, which could impact the Company's ability to transact
normal business activities. In addition, in certain instances, failure to
adequately address the Y2K problem could adversely impact Company's suppliers,
creditors and the creditworthiness of its borrowers.
The Company has also sent out Year 2000 awareness literature to all of its
deposit customers, and, in addition, Y2K questionnaires have been sent to each
of the Company's commercial and municipal customers to assess their awareness of
the Year 2000 problem. Responses to these questionnaires are currently being
documented and reviewed. The Company, in certain instances, relies on outside
vendors and other third party service providers to perform various services.
Before proceeding with any new contracts or extensions of existing contracts,
the Company requires each of these service providers to provide written proof of
their Y2K compliance.
The Company's Y2K Action Team, formed in 1996 to address this problem, completed
the first three phases of the Company's Y2K project: the Awareness, Assessment
and Renovation phases. The Renovation phase for all mission-critical systems,
which includes upgrading all noncompliant hardware and software, was completed
in the fourth quarter of 1998. The Action team completed the most important
phase of the project: the Validation phase. The Company is concentrating on
training employees to carry out the contingency plan. The Company tested all
critical applications as of the end of the first quarter 1999. Based on these
tests, management anticipates that all of the Company's mission critical
date-sensitive hardware, software and other systems will be Y2K compliant;
however, the probability of such likelihood cannot be determined. The Company
has not developed any of its own computer programs internally nor does it employ
a programming staff. All of the software related to its major application
systems has been purchased from third party vendors. Generally, software
provided by third parties and included in the Company's systems is developed by
leading software suppliers with Y2K programs underway and a vast majority of
these vendors have certified that their products are Y2K compliant. As part of
its assessment procedures, the Company assessed and continues to monitor the
action plans of each major outside vendor. There can, however, be no guarantee
that the software of other companies, on which the Company's systems rely, will
be timely converted or that failure to properly convert by another company would
not have a material adverse effect on the Company. The Company presently
believes that, with continued modifications to existing software and conversions
to new software, the Y2K problem will be mitigated without causing a material
adverse effect upon the operations of the Company and that
(12)
<PAGE>
its internal systems and equipment will be Y2K compliant in a timely manner.
Despite its best efforts to ensure Y2K compliance, it is possible that system
failures may occur. The Company has developed contingency plans, which involve,
among other actions, utilization of an alternate service provider or alternate
products available through existing vendors. The contingency plans, which are
constantly reviewed, also address a temporary disruption of electric or
communication services.
Monitoring and managing the Y2K Project will result in additional direct and
indirect costs to the Company. Direct charges include potential charges by third
party software vendors for product enhancements, costs involved in testing
software products for Y2K compliance, training, and any resulting costs for
developing and implementing contingency plans for critical software products
that are not enhanced. Indirect costs will principally consist of the time
devoted by employees in monitoring software vendor progress, testing enhanced
software products and implementing any contingency plans. The Company estimates
that the total costs related to the Y2K problem are $225,000, of which $80,000
is primarily related to the costs to enhance or replace software and hardware
problems. The balance is not likely to be incremental costs, but rather will
represent the redeployment of existing resources. Two of the Company's other
information technology projects, document and check imaging and personal
computer banking, have been delayed due to the implementation of the Y2K
project. Both direct and indirect costs of addressing the Y2K problem will be
charged to earnings as incurred. To date, $200,000 of the total estimated costs
associated with the Y2K problem have been expended. Funds are provided by
operations and are included in existing operating budgets.
The preceding Y2K issue discussion contains various forward-looking statements,
which represent the Company's beliefs or expectations regarding future events.
When used in the Y2K discussion, the words "believes," "expects," "estimates"
and similar expressions are intended to identify forward-looking statements. All
forward-looking statements involve a number of risks and uncertainties. The
anticipated impact and costs of the Y2K project, as well as the date on which
the Company expects to complete the remediation and validation phases and the
contingency plan of its Y2K project, are based on management's best estimates
using information currently available and numerous assumptions about future
events. However, there can be no guarantee that these estimates will be achieved
and actual results could differ materially from those plans. Differences
include, but are not limited to, the availability of qualified personnel and
other information technology; the ability to identify and remediate all date
sensitive lines of computer code or to replace computer chips in affected
systems or equipment; and the actions of governmental agencies or other third
parties with respect to Y2K problems. Based on its current estimates and
information currently available, costs associated to ensure compliance with Y2K
issues are not expected to have a material adverse effect on the Company's
consolidated financial statements in 1999.
(13)
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
===============================================================================
SEPTEMBER 30, 1999
- -----------------
TABLE 2-2 LIQUIDITY AND INTEREST RATE SENSITIVITY
- ----------------- ===============================================================================
<CAPTION>
==================================================================
SENSITIVITY TIME HORIZON
($ IN THOUSANDS)
- --------------------------------------------------------- Over Noninterest
INTEREST - SENSITIVE ASSETS : 1) 0-6 Months 6-12 Months 1-5 Years 5 Years Sensitive Total
- --------------------------------------------------------- ========== =========== ========= ========= =========== =========
<S> <C> <C> <C> <C> <C> <C>
Loans (net of unearned income) 2) $ 290,828 $ 19,547 $ 84,621 $ 63,733 $ 7,172 $ 465,901
Securities Held to Maturity 649 242 257 84 - 1,232
Securities Available for Sale 3) 23,860 112,212 44,189 237,107 3,306 420,674
--------- --------- --------- --------- --------- ---------
Total Interest-Earning Assets 315,337 132,001 129,067 300,924 10,478 887,807
Unrealized Net Loss on Securities Available for Sale (14,292) - - - - (14,292)
Cash and Due from Banks 16,591 - - - - 16,591
All Other Assets 7) 6,002 2,456 - - 7,240 15,698
--------- --------- --------- --------- --------- ---------
Total Assets $ 323,638 $ 134,457 $ 129,067 $ 300,924 $ 17,718 $ 905,804
--------- --------- --------- --------- --------- ---------
- ---------------------------------------------------------
INTEREST - SENSITIVE LIABILITIES : 1)
- ---------------------------------------------------------
Savings Accounts 4) $ 10,774 $ 10,774 $ 86,189 $ - $ - $ 107,737
Money Fund and Now Accounts 5) 28,744 7,251 29,444 - - 65,439
Time Deposits 6) 326,722 20,000 18,749 525 - 365,996
--------- --------- --------- --------- --------- ---------
Total Interest-Bearing Deposits 366,240 38,025 134,382 525 - 539,172
Securities Sold Under Agreements to Repurchase,
Federal Funds Purchased, and Other Borrowings 163,185 - - - - 163,185
--------- --------- --------- --------- --------- ---------
Total Interest-Bearing Liabilities 529,425 38,025 134,382 525 - 702,357
All Other Liabilities, Equity and Demand Deposits 7) 5,200 687 65 - 197,495 203,447
--------- --------- --------- --------- --------- ---------
Total Liabilities and Equity $ 534,625 $ 38,712 $ 134,447 $ 525 $ 197,495 $ 905,804
--------- --------- --------- --------- --------- ---------
Cumulative Interest-Sensitivity Gap 8) ($ 214,088) ($ 120,112)($ 125,427) $ 174,972 $ 185,450
Cumulative Interest-Sensitivity Ratio 9) 59.6% 78.8% 82.1% 124.9% 126.4%
Cumulative Interest-Sensitivity Gap
As a % of Total Assets (23.6%) (13.3%) (13.8%) 19.3% 20.5%
<FN>
1) Allocations to specific interest sensitivity periods are based on the
earlier of the repricing or maturity date.
2) Nonaccrual loans are shown in the non-interest sensitive category.
3) Estimated principal reductions have been assumed for mortgage-backed
securities based upon their current constant prepayment rates.
4) Savings deposits are assumed to decline at a rate of 20% per year over a
five-year period based upon the nature of their historically stable core
deposit relationships.
5) Money Fund and NOW accounts of individuals, partnerships and corporations
are assumed to decline at a rate of 33% per year over a three-year period
based upon the nature of their historically stable core deposit
relationships. Money Fund and NOW accounts of municipalities are included
in the 0 - 6 months category.
6) Reflected as maturing in each instrument's period of contractual maturity.
7) Other Assets and Liabilities are shown according to payment schedule or a
reasonable estimate thereof.
8) Total interest-earning assets minus total interest-bearing liabilities.
9) Total interest-earning assets as a percentage of total interest bearing
liabilities.
</FN>
</TABLE>
(14)
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
- -----------------------
TABLE 2 - 3
- -----------------------
- -----------------------------------------------------------------------------
STATE BANCORP, INC.
ANALYSIS OF NONPERFORMING ASSETS AND THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
SEPTEMBER 30, 1999 VERSUS DECEMBER 31, 1998 AND SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------
NONPERFORMING ASSETS BY TYPE: PERIOD ENDED:
----------------------------------
9/30/99 12/31/98 9/30/98
--------- ---------- ---------
NONACCRUAL LOANS $7,172 (1) $3,676 $4,622
OTHER REAL ESTATE OWNED 631 704 514
-------- ---------- ---------
TOTAL NONPERFORMING ASSETS $7,803 $4,380 $5,136
-------- ---------- ---------
RESTRUCTURED, ACCRUING LOANS $ 487 $5,545 (1) $5,548(1)
LOANS 90 DAYS OR MORE PAST DUE
AND STILL ACCRUING $ 29 $1,352 $ 545
GROSS LOANS OUTSTANDING $465,901 $420,636 $388,623
TOTAL STOCKHOLDERS' EQUITY $57,685 $60,858 $59,761
ANALYSIS OF THE ALLOWANCE FOR QUARTER ENDED:
----------------------------------
POSSIBLE LOAN LOSSES: 9/30/99 12/31/98 9/30/98
--------- ---------- ---------
BEGINNING BALANCE $6,249 $5,479 $5,374
PROVISION 750 450 450
NET CHARGE-OFFS (38) (141) (345)
--------- ---------- ---------
ENDING BALANCE $6,961 $5,788 $5,479
--------- ---------- ---------
KEY RATIOS AT PERIOD-END:
ALLOWANCE AS A % OF TOTAL LOANS 1.49% 1.38% 1.41%
NONACCRUAL LOANS AS A % OF TOTAL LOANS 1.54% 0.87% 1.19%
NONPERFORMING ASSETS (2) AS A % OF TOTAL
LOANS AND OTHER REAL ESTATE OWNED 1.67% 1.04% 1.32%
ALLOWANCE FOR POSSIBLE LOAN LOSSES AS
A % OF NONACCRUAL LOANS 97.06% 157.45% 118.54%
ALLOWANCE FOR POSSIBLE LOAN LOSSES AS A %
OF NONACCRUAL LOANS, RESTRUCTURED,
ACCRUING LOANS AND LOANS 90 DAYS OR
MORE PAST DUE AND STILL ACCRUING 90.54% 54.74% 51.13%
(1) INCLUDES ONE CREDIT TOTALING $4.0 MILLION AT SEPTEMBER 30, 1999 AND
$5.0 MILLION AT DECEMBER 31, 1998 AND SEPTEMBER 30, 1998 WHICH IS
COLLATERALIZED BY COMMERCIAL REAL ESTATE WITH A CURRENT APPRAISED
VALUE IN EXCESS OF THE CARRYING VALUE OF THE CREDIT.
THE RESTRUCTURED RATE ON THIS CREDIT WILL
REMAIN BELOW THE CONTRACTUAL RATE UNTIL CASH FLOWS ARE AGAIN SUFFICIENT TO
SUPPORT A MARKET RATE OF INTEREST.
(2) EXCLUDES RESTRUCTURED, ACCRUING LOANS AND LOANS 90 DAYS OR MORE PAST DUE
AND STILL ACCRUING INTEREST.
(15)
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STATE BANCORP, INC.
11/12/99 s/Daniel T. Rowe
- -------- -------------------------
Date Daniel T. Rowe, President
11/12/99 s/Brian K. Finneran
- -------- ----------------------------
Date Brian K. Finneran, Secretary
(Principal Financial Officer)
(16)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000723458
<NAME> STATE BANCORP INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 16,458,621
<INT-BEARING-DEPOSITS> 132,841
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 420,673,765
<INVESTMENTS-CARRYING> 1,231,835
<INVESTMENTS-MARKET> 1,239,581
<LOANS> 465,901,384
<ALLOWANCE> 6,960,709
<TOTAL-ASSETS> 905,804,178
<DEPOSITS> 678,982,851
<SHORT-TERM> 163,184,875
<LIABILITIES-OTHER> 5,950,997
<LONG-TERM> 0
0
0
<COMMON> 35,320,850
<OTHER-SE> 22,364,605
<TOTAL-LIABILITIES-AND-EQUITY> 905,804,178
<INTEREST-LOAN> 29,415,506
<INTEREST-INVEST> 13,929,909
<INTEREST-OTHER> 802,620
<INTEREST-TOTAL> 44,148,035
<INTEREST-DEPOSIT> 15,123,094
<INTEREST-EXPENSE> 17,485,827
<INTEREST-INCOME-NET> 26,662,208
<LOAN-LOSSES> 2,250,000
<SECURITIES-GAINS> (164,358)
<EXPENSE-OTHER> 15,078,472
<INCOME-PRETAX> 10,955,517
<INCOME-PRE-EXTRAORDINARY> 7,573,023
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,573,023
<EPS-BASIC> 1.09
<EPS-DILUTED> 1.07
<YIELD-ACTUAL> 7.51
<LOANS-NON> 7,172,444
<LOANS-PAST> 29,396
<LOANS-TROUBLED> 487,007
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,788,440
<CHARGE-OFFS> 1,371,839
<RECOVERIES> 294,108
<ALLOWANCE-CLOSE> 6,960,709
<ALLOWANCE-DOMESTIC> 5,969,496
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 991,213
</TABLE>
