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: JUNE 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 July 28, 1999, there were 6,988,379 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 - June 30, 1999 and December 31, 1998
(Unaudited) 1.
Consolidated Statements of Income for the Three and Six Months Ended
June 30, 1999 and 1998 (Unaudited) 2.
Consolidated Statements of Cash Flows for the Six Months Ended June 30,
1999 and 1998 (Unaudited) 3.
Consolidated Statements of Stockholders' Equity and Comprehensive Income
for the Six Months Ended June 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 16.
Item 5. Other Information - None N/A
Item 6. Exhibits and Reports on Form 8-K - None N/A
SIGNATURES 17.
<PAGE>
- -----------------------------------------------------
ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------------------------------
- -----------------------------------------------------
STATE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998 (UNAUDITED)
- -----------------------------------------------------
- -----------------------------------------------------
ASSETS: 1999 1998
- ----------------------------------------------------- ----------- -------------
CASH AND DUE FROM BANKS $24,147,159 $19,274,435
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL 20,000,000 -
------------- -------------
CASH AND CASH EQUIVALENTS 44,147,159 19,274,435
SECURITIES:
HELD TO MATURITY (ESTIMATED FAIR VALUE -
$3,167,687 IN 1999 AND $2,526,401 IN 1998) 3,168,135 2,516,035
AVAILABLE FOR SALE - AT ESTIMATED FAIR VALUE 290,410,408 279,338,611
------------- -------------
TOTAL SECURITIES 293,578,543 281,854,646
LOANS - NET OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
($6,248,640 IN 1999 AND $5,788,440 IN 1998) 445,579,770 414,847,940
BANK PREMISES AND EQUIPMENT - NET 3,664,420 3,878,013
OTHER ASSETS 16,881,204 12,838,476
- -------------------------------------------------- ------------- -------------
TOTAL ASSETS $803,851,096 $732,693,510
- -------------------------------------------------- ============= =============
- --------------------------------------------------
LIABILITIES:
- --------------------------------------------------
DEPOSITS:
DEMAND $137,963,354 $125,327,460
SAVINGS 190,915,792 195,614,058
TIME 328,559,100 276,079,430
------------- -------------
TOTAL DEPOSITS 657,438,246 597,020,948
FEDERAL FUNDS PURCHASED 3,100,000 -
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 41,776,500 34,529,000
OTHER SHORT-TERM BORROWINGS 38,500,000 35,000,000
ACCRUED EXPENSES, TAXES AND OTHER LIABILITIES 4,214,871 5,285,670
- -------------------------------------------------- ------------- -------------
TOTAL LIABILITIES 745,029,617 671,835,618
- -------------------------------------------------- ------------- -------------
- --------------------------------------------------
STOCKHOLDERS' EQUITY:
- --------------------------------------------------
PREFERRED STOCK, $.01 PAR VALUE, AUTHORIZED
250,000 SHARES - -
COMMON STOCK, $5.00 PAR VALUE, AUTHORIZED
20,000,000 SHARES; ISSUED 7,050,476 SHARES IN 1999
AND 6,988,940 SHARES IN 1998; OUTSTANDING 6,974,928
SHARES IN 1999 AND 6,902,866 SHARES IN 1998 35,252,380 32,966,700
SURPLUS 29,203,236 24,236,479
RETAINED EARNINGS 1,421,865 4,866,852
TREASURY STOCK (188,375) (188,375)
ACCUMULATED OTHER COMPREHENSIVE INCOME (6,296,683) (364,710)
UNEARNED COMPENSATION (570,944) (659,054)
- -------------------------------------------------- ------------- -------------
TOTAL STOCKHOLDERS' EQUITY 58,821,479 60,857,892
- -------------------------------------------------- ------------- -------------
- --------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $803,851,096 $732,693,510
- -------------------------------------------------- ============= =============
(1)
<PAGE>
- ------------------------------------------------------------
ITEM 1 - FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------
STATE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- -----------------------------------------------------------------------------
<CAPTION>
--------------------------------- ---------------------------------
THREE MONTHS SIX MONTHS
--------------------------------- ---------------------------------
--------------- --------------- ----------------- -------------
1999 1998 1999 1998
--------------- --------------- ----------------- -------------
- ------------------------------------------------
INTEREST INCOME:
- ------------------------------------------------
<S> <C> <C> <C> <C>
LOANS $ 9,731,998 $ 9,063,145 $ 19,017,994 $ 17,963,395
FEDERAL FUNDS SOLD AND SECURITIES
PURCHASED UNDER AGREEMENTS TO RESELL 367,034 837,389 724,288 1,990,759
SECURITIES HELD TO MATURITY AND
SECURITIES AVAILABLE FOR SALE:
STATES AND POLITICAL SUBDIVISIONS 189,017 513,900 351,245 1,090,269
MORTGAGE-BACKED SECURITIES 456,270 684,416 925,892 1,505,030
GOVERNMENT AGENCY SECURITIES 3,625,556 2,219,228 7,028,477 4,641,655
OTHER SECURITIES 40,742 48,589 85,528 95,987
------------ ------------ ------------- -------------
TOTAL INTEREST INCOME 14,410,617 13,366,667 28,133,424 27,287,095
------------ ------------ ------------- -------------
- ------------------------------------------------
INTEREST EXPENSE:
- ------------------------------------------------
TIME CERTIFICATES OF DEPOSIT OF $100,000 OR MORE 3,000,415 2,711,209 5,742,568 6,334,940
OTHER DEPOSITS AND TEMPORARY BORROWINGS 2,477,105 3,099,212 4,957,629 6,209,554
------------ ------------ ------------- -------------
TOTAL INTEREST EXPENSE 5,477,520 5,810,421 10,700,197 12,544,494
------------ ------------ ------------- -------------
NET INTEREST INCOME 8,933,097 7,556,246 17,433,227 14,742,601
PROVISION FOR POSSIBLE LOAN LOSSES 750,000 450,000 1,500,000 900,000
------------ ------------ ------------- -------------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 8,183,097 7,106,246 15,933,227 13,842,601
------------ ------------ ------------- -------------
- ------------------------------------------------
OTHER INCOME:
- ------------------------------------------------
SERVICE CHARGES ON DEPOSIT ACCOUNTS 339,651 269,613 637,748 559,757
NET SECURITY LOSSES (103,021) (35,968) (57,469) (44,223)
OTHER OPERATING INCOME 335,849 118,717 489,705 243,342
------------ ------------ ------------- -------------
TOTAL OTHER INCOME 572,479 352,362 1,069,984 758,876
------------ ------------ ------------- -------------
INCOME BEFORE OPERATING EXPENSES 8,755,576 7,458,608 17,003,211 14,601,477
------------ ------------ ------------- -------------
- ------------------------------------------------
OPERATING EXPENSES:
- ------------------------------------------------
SALARIES AND OTHER EMPLOYEE BENEFITS 3,138,436 2,724,075 6,231,956 5,488,778
OCCUPANCY 443,211 439,797 890,699 842,678
EQUIPMENT 200,067 180,040 395,853 352,585
MARKETING AND ADVERTISING 144,000 114,000 288,000 228,000
DEPOSIT ASSESSMENT FEES 36,448 38,974 74,838 73,072
AMORTIZATION OF INTANGIBLES 9,034 9,034 18,068 65,486
OTHER OPERATING EXPENSES 1,023,593 950,696 2,073,414 1,896,350
------------ ------------ ------------- -------------
TOTAL OPERATING EXPENSES 4,994,789 4,456,616 9,972,828 8,946,949
------------ ------------ ------------- -------------
INCOME BEFORE INCOME TAXES 3,760,787 3,001,992 7,030,383 5,654,528
PROVISION FOR INCOME TAXES 1,191,879 1,047,478 2,212,710 1,965,473
- ------------------------------------------------ ------------ ------------ ------------- -------------
NET INCOME $ 2,568,908 $ 1,954,514 $ 4,817,673 $ 3,689,055
- ------------------------------------------------ ------------ ------------ ------------- -------------
- ------------------------------------------------
BASIC EARNINGS PER COMMON SHARE $ 0.36 $ 0.29 $ 0.69 $ 0.54
- ------------------------------------------------ ------------ ------------ ------------- -------------
- ------------------------------------------------
DILUTED EARNINGS PER COMMON SHARE $ 0.36 $ 0.28 $ 0.68 $ 0.53
- ------------------------------------------------ ------------ ------------ ------------- -------------
- ------------------------------------------------
AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,964,323 6,859,438 6,941,510 6,838,513
- ------------------------------------------------ ------------ ------------ ------------- -------------
</TABLE>
(2)
<PAGE>
- ----------------------------------------------------------------
ITEM 1 - FINANCIAL STATEMENTS (CONTINUED)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
STATE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- ----------------------------------------------------------------
- ---------------------------------------------------- ----------- ------------
OPERATING ACTIVITIES: 1999 1998
- ---------------------------------------------------- ----------- ------------
NET INCOME $4,817,673 $3,689,055
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
PROVISION FOR POSSIBLE LOAN LOSSES 1,500,000 900,000
DEPRECIATION AND AMORTIZATION OF BANK
PREMISES AND EQUIPMENT 399,456 322,185
AMORTIZATION OF INTANGIBLES 18,068 65,486
AMORTIZATION OF NET PREMIUM ON SECURITIES 1,405 488,472
AMORTIZATION OF UNEARNED COMPENSATION 127,646 217,208
NET SECURITY LOSSES 57,469 44,223
GAIN ON SALE OF OTHER REAL ESTATE OWNED ("OREO") (39,086) -
(INCREASE) DECREASE IN OTHER ASSETS (1,033,306) 893,383
DECREASE IN ACCRUED EXPENSES, TAXES
AND OTHER LIABILITIES (1,144,526) (858,370)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,704,799 5,761,642
------------ ------------
- -----------------------------------------------------
INVESTING ACTIVITIES:
- -----------------------------------------------------
PROCEEDS FROM MATURITIES OF SECURITIES HELD
TO MATURITY 342,400 9,119,000
PURCHASES OF SECURITIES HELD TO MATURITY (994,500) (4,594,900)
PROCEEDS FROM SALES OF SECURITIES AVAILABLE
FOR SALE 70,707,135 104,543,164
PROCEEDS FROM MATURITIES OF SECURITIES AVAILABLE
FOR SALE 57,149,978 158,946,153
PURCHASES OF SECURITIES AVAILABLE FOR SALE (148,125,020) (218,222,691)
INCREASE IN LOANS - NET (32,231,830) (5,695,261)
PROCEEDS FROM SALE OF OREO 216,858 -
PURCHASES OF BANK PREMISES AND EQUIPMENT - NET (185,863) (265,247)
------------ ------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (53,120,842) 43,830,218
------------ ------------
- -----------------------------------------------------
FINANCING ACTIVITIES:
- -----------------------------------------------------
INCREASE IN DEMAND AND SAVINGS DEPOSITS 7,937,628 12,315,882
INCREASE (DECREASE) IN TIME DEPOSITS 52,479,670 (64,088,785)
INCREASE (DECREASE) IN FEDERAL FUNDS PURCHASED 3,100,000 (6,000,000)
INCREASE (DECREASE) IN SECURITIES SOLD UNDER
AGREEMENTS TO REPURCHASE 7,247,500 (14,318,000)
INCREASE (DECREASE) IN OTHER SHORT-TERM
BORROWINGS 3,500,000 (12,000,000)
CASH DIVIDENDS PAID (1,565,465) (1,468,331)
PROCEEDS FROM SHARES ISSUED UNDER DIVIDEND
REINVESTMENT PLAN 375,219 404,550
PROCEEDS FROM STOCK OPTIONS EXERCISED 214,215 226,699
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 73,288,767 (84,927,985)
------------ ------------
- -----------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 24,872,724 (35,336,125)
- -----------------------------------------------------
- -----------------------------------------------------
CASH AND CASH EQUIVALENTS - JANUARY 1 19,274,435 60,932,820
- -----------------------------------------------------
- ----------------------------------------------------- ----------- ------------
CASH AND CASH EQUIVALENTS - JUNE 30 $44,147,159 $25,596,695
- ----------------------------------------------------- ----------- ------------
- -----------------------------------------------------
SUPPLEMENTAL DATA:
- -----------------------------------------------------
INTEREST PAID $10,945,071 $12,988,198
INCOME TAXES PAID $2,975,000 $2,313,592
TRANSFER FROM LOANS TO OREO - $325,000
ADJUSTMENT TO UNREALIZED NET LOSS ON SECURITIES
AVAILABLE FOR SALE ($9,137,235) ($98,146)
DIVIDENDS DECLARED BUT NOT PAID AS OF QUARTER
END $854,213 $1,047,470
(3)
<PAGE>
- --------------------------------------------------------
ITEM 1 - FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------
STATE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 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 4,817,673 4,817,673 $ 4,817,673
----------
OTHER COMPREHENSIVE INCOME,
NET OF TAX:
UNREALIZED HOLDING LOSSES
ARISING DURING THE PERIOD (5,897,864)
RECLASSIFICATION ADJUSTMENT
FOR GAINS INCLUDED IN NET INCOME (34,109)
----------
TOTAL OTHER COMPREHENSIVE INCOME (5,931,973) (5,931,973) (5,931,973)
----------
TOTAL COMPREHENSIVE INCOME ($1,114,300)
----------
CASH DIVIDEND
($0.24 PER SHARE) (1,639,193) (1,639,193)
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) 120,310 254,909 375,219
STOCK OPTIONS EXERCISED 173,350 40,865 214,215
AMORTIZATION OF UNEARNED
COMPENSATION 39,536 88,110 127,646
----------- ----------- ---------- --------- ------------ ---------- ------------
- -----------------------------
BALANCE, JUNE 30, 1999 $35,252,380 $29,203,236 $1,421,865 ($188,375)($6,296,683) ($570,944) $58,821,479
- -----------------------------
----------- ----------- ---------- --------- ------------ ---------- ------------
BALANCE, JANUARY 1, 1998 $30,970,630 $18,457,388 $6,567,744 - ($215,067) ($850,432) $54,930,263
COMPREHENSIVE INCOME:
NET INCOME 3,689,055 3,689,055 $ 3,689,055
----------
OTHER COMPREHENSIVE INCOME,
NET OF TAX:
UNREALIZED HOLDING LOSSES ARISING
DURING THE PERIOD (35,551)
RECLASSIFICATION ADJUSTMENT
FOR GAINS INCLUDED IN NET INCOME (22,404)
----------
TOTAL OTHER COMPREHENSIVE INCOME (57,955) (57,955) (57,955)
----------
TOTAL COMPREHENSIVE INCOME $3,631,100
-----------
CASH DIVIDEND
($0.26 PER SHARE) (1,785,275) (1,785,275)
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 (17,522 SHARES
AT 95% OF MARKET VALUE) 87,610 316,940 404,550
STOCK OPTIONS EXERCISED 184,180 42,519 226,699
AMORTIZATION OF UNEARNED
COMPENSATION 121,544 95,664 217,208
------------ ----------- ---------- ---------- ---------- ---------- -----------
- -----------------------------
BALANCE, JUNE 30, 1998 $32,804,080 $23,935,703 $1,912,552 - ($273,022) ($754,768) $57,624,545
- ----------------------------- ------------ ----------- ---------- ---------- ---------- ---------- -----------
</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 June 30, 1999 and December 31, 1998, its
consolidated earnings for the six months ended June 30, 1999 and 1998 and cash
flows and changes in stockholders' equity and comprehensive income for the six
months ended June 30, 1999 and 1998. The results of operations for the six
months ended June 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 June 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 June 30, 1999, 70,012 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
shares that are assumed to have been purchased with the proceeds from the
exercise
(5)
<PAGE>
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 Six Months Ended June 30, 1999 1998
- --------------------------------- ---- ----
Net income $4,817,673 $3,689,055
Average dilutive stock options outstanding 264,952 295,233
Average exercise price per share $8.06 $10.96
Average market price - diluted basis $16.61 $22.20
Average common shares outstanding 6,941,510 6,838,513
Increase in shares due to exercise of options -
diluted basis 107,442 149,479
----------- ----------
Adjusted common shares outstanding - diluted 7,048,952 6,987,992
=========== ==========
Net income per share-basic $0.69 $0.54
=========== ==========
Net income per share-diluted $0.68 $0.53
=========== ==========
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 $1,051,000 and $1,420,000 was established
for $7,248,234 and $8,352,709 of the total impaired loans at June 30, 1999 and
December 31, 1998, respectively, with the balance of impaired loans requiring no
specific allowance. The total average impaired loan balance was $7,580,306 for
the quarter ended June 30, 1999 and $8,437,893 for the year ended December 31,
1998. Total impaired loans amounted to $7,556,600 and $8,662,116 at June 30,
1999 and December 31, 1998, respectively. At June 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 $7,533 and $155,326 for the three months ended June
30, 1999 and 1998, respectively, and $27,699 and $189,326 for the six months
ended June 30, 1999 and 1998, respectively.
(6)
<PAGE>
Activity in the allowance for possible loan losses for the six months ended
June 30, 1999 and 1998 is as follows:
1999 1998
---- ----
Balance, January 1 $5,788,440 $5,123,651
Provision charged to income 1,500,000 900,000
Charge-offs, net of recoveries of
$174,136 in 1999 and $172,238 in 1998 (1,039,800) (649,548)
----------- -----------
Balance, June 30 $6,248,640 $5,374,103
=========== ===========
(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 $803.9 million at June 30, 1999, an increase of $71.2 million or 9.7% when
compared to December 31, 1998, primarily due to an increase in commercial loans
and mortgages. Scheduled amortization and normal clean up activity partially
offset the new business that was generated during the first six months of the
year. The loan portfolio grew approximately 7.4% during the first six months of
1999 and management anticipates continued expansion of the loan portfolio
throughout the balance of the year. Asset growth was funded primarily by higher
deposit balances and an increase in short-term borrowings of $13.8 million
during the first six months of 1999, due to higher levels of Federal funds
purchased and other short-term borrowings.
At June 30, 1999, total deposits increased by $60.4 million to $657.4 million
when compared to December 31, 1998. This increase was primarily due to an
increase of $12.6 million in demand deposits and a $52.5 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
$4.7 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 second quarter of 1999 were up by $74.6 million or 10.4%
to $788.6 million from the comparable 1998 period. Sources of asset expansion
included growth in the loan portfolio (up on average $63.1 million or 16.6%) and
growth in investment securities (up on average $43.5 million or 18.5%). Funding
this growth were increases in demand deposits and Jumbo certificates of deposit
and an increase in average borrowed funds, primarily Federal Home Loan Bank
advances, by $93.8 million during the second quarter of 1999, compared to 1998.
The net result of these activities was a shift in the mix of the Company's
balance sheet that yielded an 18-basis point improvement in the second quarter
net interest margin to 4.56%. Management anticipates that growth in loans during
the balance of 1999 coupled with a continued increase in core deposit balances
will serve to widen the net interest rate spread during the last two quarters of
the year.
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
(8)
<PAGE>
an optimal capital level, the Company also considers the capital levels of its
peers and the evaluations of its primary regulators. At June 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 $58.8 million at June 30, 1999, an increase of $1.2 million
or 2.1% versus the comparable 1998 date. Excluding valuations related to SFAS
No. 115 at June 30, 1999 and 1998, total stockholders' equity grew at a
year-to-year rate of 12.5%. 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 June 30, 1999 and compares them to
current regulatory guidelines and December 31, and June 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:
June 30, 1999 8.11% 12.44% 13.64%
December 31, 1998 8.05% 12.82% 14.04%
June 30, 1998 8.05% 13.48% 14.73%
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. 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 second quarter of 1999, the
Company's liquidity position remained stable and well within acceptable industry
standards.
As previously described, low-cost demand and money fund
(9)
<PAGE>
deposit balances continued to grow during the second 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 June
30, 1999, the Company had access to $28.5 million in Federal Home Loan Bank
lines of credit for overnight or term borrowings with maturities of up to thirty
years. 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.
Material Changes in Results of Operations - Despite a 67% increase in the
provision for loan losses during 1999 versus 1998, net income for the six months
ended June 30, 1999 was $4.8 million, a 30.6% improvement over the comparable
1998 period. The higher level of earnings in 1999 resulted from an 18.3%
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 during
the first six months of 1999 as compared to the similar period in 1998.
The increase in net interest income, up $2.7 million to $17.4 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 $56.1 million or 14.8% during the first six months of 1999 as compared to
1998, with $49.2 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 expansion of the loan
portfolio during 1999.
The Company's investment portfolio expanded, on average, by 9.9% during the
first six months of 1999 versus 1998, primarily through growth in callable
Government agency securities (up on average $83.3 million) offset by a decrease
in tax-exempt local municipal notes and paydowns on mortgage-backed securities
(down on average $39.0 million and $16.9 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 41.0% for the six months ended June 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 grow at an annualized
rate of 5.0% to 10.0 % during 1999. Improved deposit service and return item
charges, growth in annuity sales and wire transfer fees and the imposition of an
ATM surcharge on non-customers are all expected to contribute to this growth.
(10)
<PAGE>
Total operating expenses rose by 11.5% for the six months ended June 30, 1999 as
compared to the similar period in 1998, 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 six 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 52.6% from 55.6% a year ago. The Company's other primary measure of
expense control, the ratio of total operating expenses to average total assets,
increased during the first six months of 1999 to 2.60% from a level of 2.44% 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 $9.7 million at June 30, 1999, an increase of $5.3 million
versus December 31, 1998 and $4.2 million versus the comparable 1998 date. The
level of restructured, accruing loans at June 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 $6.2 million or 1.38% of total loans at June 30, 1999 versus $5.4
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
64.8% at June 30, 1999 from 54.7% and 45.7% at December 31, 1998 and June 30,
1998, respectively. The higher 1999 provision for possible loan losses reflects
the increase in 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
(11)
<PAGE>
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 is embarking on the most
important phase of the project: the Validation phase. 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 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 problems will be mitigated without causing a material adverse
effect upon the operations of the Company and that 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
(12)
<PAGE>
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, $80,000 of the
total estimated costs associated with the Y2K problem have been expended, most
of which was expended prior to the second quarter of 1999. 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>
===============================================================================
JUNE 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) $ 269,627 $ 18,687 $ 75,335 $ 79,020 $ 9,159 $ 451,828
Securities Purchased Under Agreements to Resell 20,000 - - - - 20,000
Securities Held to Maturity 2,585 242 257 84 - 3,168
Securities Available for Sale 3) 18,619 25,020 33,466 220,665 2,368 300,138
--------- --------- --------- --------- --------- ---------
Total Interest-Earning Assets 310,831 43,949 109,058 299,769 11,527 775,134
Unrealized Net Loss on Securities Available for Sale (9,727) - - - - (9,727)
Cash and Due from Banks 24,147 - - - - 24,147
All Other Assets 7) 5,811 2,284 - - 6,202 14,297
--------- --------- --------- --------- --------- ---------
Total Assets $ 331,062 $ 46,233 $ 109,058 $ 299,769 $ 17,729 $ 803,851
--------- --------- --------- --------- --------- ---------
- ---------------------------------------------------------
INTEREST - SENSITIVE LIABILITIES : 1)
- ---------------------------------------------------------
Savings Accounts 4) $ 11,136 $ 11,136 $ 89,085 $ - $ - $ 111,357
Money Fund and Now Accounts 5) 42,079 7,406 30,074 - - 79,559
Time Deposits 6) 281,868 24,265 22,104 322 - 328,559
--------- --------- --------- --------- --------- ---------
Total Interest-Bearing Deposits 335,083 42,807 141,263 322 - 519,475
Securities Sold Under Agreements to Repurchase,
Federal Funds Purchased, and Other Borrowings 83,376 - - - - 83,376
--------- --------- --------- --------- --------- ---------
Total Interest-Bearing Liabilities 418,459 42,807 141,263 322 - 602,851
All Other Liabilities, Equity and Demand Deposits 7) 3,632 522 61 - 196,785 201,000
--------- --------- --------- --------- --------- ---------
Total Liabilities and Equity $ 422,091 $ 43,329 $ 141,324 $ 322 $ 196,785 $ 803,851
--------- --------- --------- --------- --------- ---------
Cumulative Interest-Sensitivity Gap 8) ($ 107,628) ($ 106,486)($ 138,691) $ 160,756 $ 172,283
Cumulative Interest-Sensitivity Ratio 9) 74.3% 76.9% 77.0% 126.7% 128.6%
Cumulative Interest-Sensitivity Gap
As a % of Total Assets (13.4%) (13.2%) (17.3%) 20.0% 21.4%
<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
JUNE 30, 1999 VERSUS DECEMBER 31, 1998 AND JUNE 30, 1998
(DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------
NONPERFORMING ASSETS BY TYPE: PERIOD ENDED:
----------------------------------
6/30/99 12/31/98 6/30/98
--------- ---------- ---------
NONACCRUAL LOANS $9,159 (1) $3,676 $4,964
OTHER REAL ESTATE OWNED 527 704 514
-------- ---------- ---------
TOTAL NONPERFORMING ASSETS $9,686 $4,380 $5,478
-------- ---------- ---------
RESTRUCTURED, ACCRUING LOANS $ 488 $5,545 (1) $5,550(1)
LOANS 90 DAYS OR MORE PAST DUE
AND STILL ACCRUING - $1,352 $1,234
GROSS LOANS OUTSTANDING $451,828 $420,636 $382,354
TOTAL STOCKHOLDERS' EQUITY $58,821 $60,858 $57,625
ANALYSIS OF THE ALLOWANCE FOR QUARTER ENDED:
----------------------------------
POSSIBLE LOAN LOSSES: 6/30/99 12/31/98 6/30/98
--------- ---------- ---------
BEGINNING BALANCE $6,510 $5,479 $5,351
PROVISION 750 450 450
NET CHARGE-OFFS (1,011) (141) (427)
--------- ---------- ---------
ENDING BALANCE $6,249 $5,788 $5,374
--------- ---------- ---------
KEY RATIOS AT PERIOD-END:
ALLOWANCE AS A % OF TOTAL LOANS 1.38% 1.38% 1.41%
NONACCRUAL LOANS AS A % OF TOTAL LOANS 2.03% 0.87% 1.30%
NONPERFORMING ASSETS (2) AS A % OF TOTAL
LOANS AND OTHER REAL ESTATE OWNED 2.14% 1.04% 1.43%
ALLOWANCE FOR POSSIBLE LOAN LOSSES AS
A % OF NONACCRUAL LOANS 68.23% 157.45% 108.26%
ALLOWANCE FOR POSSIBLE LOAN LOSSES AS A %
OF NONACCRUAL LOANS, RESTRUCTURED,
ACCRUING LOANS AND LOANS 90 DAYS OR
MORE PAST DUE AND STILL ACCRUING 64.78% 54.74% 45.74%
(1) INCLUDES ONE CREDIT TOTALING $4.0 MILLION AT JUNE 30, 1999 AND $5.0 MILLION
AT DECEMBER 31, 1998 AND JUNE 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>
PART II
-------
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the shareholders of the Company was held on April 27, 1999
for the following purposes:
1. To elect three directors;
2. To consider and vote upon the approval of the 1999 Incentive Stock
Option Plan.
The proxy statement for this meeting was filed with the Securities and Exchange
Commission.
PROPOSALS
1. Election of Directors:
NOMINEE TERM FOR WITHHELD
------- ---- --- --------
Thomas F. Goldrick, Jr. 3 years 4,615,833 16,030
John F. Picciano 3 years 4,619,355 12,508
Suzanne H. Rueck 3 years 4,572,933 58,930
The proposal was passed.
2. The 1999 Incentive Stock Option Plan:
FOR AGAINST ABSTAIN
--- ------- -------
4,418,612 163,299 49,952
The proposal was passed.
(16)
<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.
8/13/99 s/Daniel T. Rowe
- -------- -------------------------
Date Daniel T. Rowe, President
8/13/99 s/Brian K. Finneran
- -------- ----------------------------
Date Brian K. Finneran, Secretary
(Principal Financial Officer)
(17)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000723458
<NAME> STATE BANCORP INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 24,010,154
<INT-BEARING-DEPOSITS> 137,005
<FED-FUNDS-SOLD> 20,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 300,137,808
<INVESTMENTS-CARRYING> 3,168,135
<INVESTMENTS-MARKET> 3,167,687
<LOANS> 451,828,410
<ALLOWANCE> 6,248,640
<TOTAL-ASSETS> 803,851,096
<DEPOSITS> 657,438,246
<SHORT-TERM> 83,376,500
<LIABILITIES-OTHER> 4,214,871
<LONG-TERM> 0
0
0
<COMMON> 35,252,380
<OTHER-SE> 23,569,099
<TOTAL-LIABILITIES-AND-EQUITY> 803,851,096
<INTEREST-LOAN> 19,017,994
<INTEREST-INVEST> 8,384,077
<INTEREST-OTHER> 731,353
<INTEREST-TOTAL> 28,133,424
<INTEREST-DEPOSIT> 9,438,920
<INTEREST-EXPENSE> 10,700,197
<INTEREST-INCOME-NET> 17,433,227
<LOAN-LOSSES> 1,500,000
<SECURITIES-GAINS> (57,469)
<EXPENSE-OTHER> 9,972,828
<INCOME-PRETAX> 7,030,383
<INCOME-PRE-EXTRAORDINARY> 4,817,673
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,817,673
<EPS-BASIC> 0.69
<EPS-DILUTED> 0.68
<YIELD-ACTUAL> 7.48
<LOANS-NON> 9,158,673
<LOANS-PAST> 0
<LOANS-TROUBLED> 488,405
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,788,440
<CHARGE-OFFS> 1,213,936
<RECOVERIES> 174,136
<ALLOWANCE-CLOSE> 6,248,640
<ALLOWANCE-DOMESTIC> 5,641,468
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 607,172
</TABLE>
