Attached files
| file | filename |
|---|---|
| 8-K - STATE BANCORP INC | form8k_nov2009c.htm |
| EX-99.1 - STATE BANCORP INC | form8k_nov2009cexh99-1.htm |
EXHIBIT 99.2
State
Bancorp, Inc. Announces Agreement for Exchange of Outstanding
$10
Million Debt for New Equity and a Major Disposition Strategy for
Low
Quality Commercial Loans
Jericho, N.Y., November 30,
2009 - State Bancorp, Inc. (the “Company”) (NASDAQ–STBC), parent company
of State Bank of Long Island (the “Bank”), today announced two separate
strategic actions that are each designed to aggressively position the Company
for 2010 and beyond.
In the
first initiative, the Company reported that it will retire its outstanding 8.25%
subordinated notes with an aggregate principal balance of $10 million issued in
2006 and due to mature in 2013. In exchange for the subordinated debt and
accrued interest, the Company will issue 1,656,600 shares of its common stock in
a privately negotiated transaction with four major institutional investors at an
effective price of $6.50 per share. This transaction will further bolster the
Company’s already strong capital position and remove expensive debt from the
capitalization structure. The net effects of this exchange will be an increase
in the Company’s tangible common equity of $11 million and an $825,000 annual
reduction in ongoing interest expense related to the retired subordinated notes.
The investors participating in the exchange are Endicott Management Company,
Sandler O’Neill Asset Management, PRB Investors, L.P., and funds affiliated with
Northaven Management, Inc. The exchange is scheduled to close on or about
December 1, 2009.
In the
second initiative, the Company announced that it is in the final stages of
liquidating certain non-performing and higher risk legacy loans, including a $20
million bulk loan sale closed on November 19, 2009 which resulted in a loss of
$11 million. The bulk loan sale is part of a larger fourth quarter strategy of
aggressively liquidating certain problem loans, which is expected to include
additional bulk portfolio and individual loan sales, loan modifications or
similar liquidation strategies. It is anticipated that the combined 2009
fourth quarter full impact of this troubled loan liquidation strategy (including
the $20 million sale) will result in the disposition of approximately $55
million original principal balance loans and an expected aggregate pre-tax
charge of approximately $17 million, thereby generating an operating loss for
the quarter ending December 31, 2009. The Company further anticipates that
this strategy will result in the final disposition of many of its most difficult
loans including the majority of its non-performing loans which totaled $35
million at September 30, 2009. All of the transactions described above
have been for cash.
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Commenting
on these strategic initiatives, President and CEO Thomas M. O’Brien stated,
“Over the past several months we have been investigating alternatives to
accelerate the financial repositioning of our balance sheet in an effort to
create clearer earnings visibility for 2010 and beyond. In this
analysis, it became clear that certain weak legacy credits and high cost debt
stood in the way of realizing the Company’s potential. Accepting the
fact that an immediate disposition of poorly performing loans would carry a high
cost, we modeled the cost-benefit outcomes of these initiatives. The
costs, while not insignificant in the short term, are quickly eclipsed by the
transformative impact of a large scale liquidation and subordinated debt
retirement. These conclusions were consistently validated throughout
our deliberate analytical approach.”
“We are
certainly delighted to have Endicott Management Company, Sandler O’Neill Asset
Management, PRB Investors, L.P., and Northaven Management increase their
ownership and for their vote of confidence in our Company’s future. We share
their positive outlook and enthusiasm for our business model and appreciate
their expanded investment in our Company. I believe that the reputation
of these investors validates these strategic actions conclusively.”
“As those
who follow the Company and our public statements know, over the course of the
past two years we have successfully upgraded the quality of our lending
personnel, strengthened our underwriting policies and practices, and added
seasoned commercial bankers to our organization. We are not in favor of
expending valuable financial and management resources to nurse troubled loans
over protracted timeframes and believe that directly confronting these
situations and liquidating our position is ultimately in the best interests of
our shareholders. We are convinced that the many uncertainties present in
problem loans create a drag on both the Company’s profitability and
valuation. Uncertainty as to loan quality and valuation has depressed most
banking company stocks for the past two years; our Company included. While
in the short-term this disposition is painful, the end result is a company well
situated from a credit standpoint to enter 2010 in a very strong position to
capitalize on growing business opportunities. Additionally, the Company and
its subsidiary, State Bank of Long Island, will continue to have capital ratios
that remain significantly in excess of the highest “well capitalized” regulatory
standard We are hopeful that the long-term market valuation of the Company will
improve on both a relative and absolute basis as investors become aware of the
finality with which we have attacked these loans and the clarity it now provides
to our long-term value proposition.”
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“While
some of these actions will result in a significant fourth quarter 2009 charge to
earnings, together they represent important strategic steps toward reducing
balance sheet risk and will position the Company to concentrate its resources
for long term profitability. Additionally, the resultant improvement in our
capital structure further bolsters our already strong capital base and will
enhance our ability to take advantage of what I believe are attractive
opportunities ahead, including organic franchise expansion or potential
acquisitions.”
Corporate
Information
State
Bancorp, Inc. is the holding company for State Bank of Long Island. In addition
to its seventeen branches located in Nassau, Suffolk, Queens and Manhattan, the
Bank maintains its corporate headquarters in Jericho. The Bank has built a
reputation for providing high-quality personal service to meet the needs of our
diverse customer base which includes commercial real estate owners and
developers, small to middle market businesses, professional service firms,
municipalities and consumers. The Bank maintains a web site at www.statebankofli.com
with corporate, investor and branch banking information.
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Forward-Looking Statements
and Risk Factors
This news
release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "may," "could,"
"should," "would," "believe," "anticipate," "estimate," "expect," "intend,"
"plan," "project," "is confident that," and similar expressions are intended to
identify forward-looking statements. The forward-looking statements involve risk
and uncertainty and a variety of factors that could cause the Company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in these forward-looking statements. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors that could have a material adverse effect on the
operations of the Company and its subsidiaries include, but are not limited to,
changes in: market interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, the quality and composition of the loan or investment portfolios,
demand for loan products, demand for financial services in the Company's primary
trade area, litigation, tax and other regulatory matters, accounting principles
and guidelines, other economic, competitive, governmental, regulatory and
technological factors affecting the Company's operations, pricing and services
and those risks detailed in the Company's periodic reports filed with the SEC.
Investors are encouraged to access the Company's periodic reports filed with the
SEC for financial and business information regarding the Company at www.statebankofli.com.
The Company undertakes no obligation to publish revised events or circumstances
after the date hereof.
Contacts:
Brian K.
Finneran, Chief Financial Officer
516-465-2251
bfinneran@statebankofli.com
Anthony
J. Morris, Chief Marketing &
Corporate
Planning Officer
516-495-5098
amorris@statebankofli.com
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