State Bancorp has had its share of pain in the past couple of years. Now it hopes it's ready to gain.

The Jericho company, which owns State Bank of Long Island, reported that its effort to get out from beneath a burden of bad debt has worked. After ending 2009 with a net loss of $14.8 million, the company had net income of $3 million in the first quarter of 2010.

"This is the good consequence of being as proactive as we were," bank president and chief executive Tom O'Brien said Friday.

By the end of last year, the bank had sold $55 million of bad loans for $38 million, paying a $17-million price for future financial health. At the same time, the company sold stock to pay off $10 million in debt. Those and other steps left the bank in much stronger shape, O'Brien said.

Indeed, the bank is so much stronger that it made bids to buy two area banks that had failed and were taken over by the Federal Deposit Insurance Corp. The bids were unsuccessful, but O'Brien said State Bancorp is interested in expanding by acquiring less healthy competitors.

"If there were something out there, we'd look," he said.

The bank has assets of $1.6 billion and has 18 branches in Nassau, Suffolk, Queens and Manhattan.

The bank's balance showed the result of the medicine it took. A year ago the bank had $28.5 million in bad loans, 2.54 percent of its total loans. Now, that figure is down to just $5.8 million, or 0.53 percent of its total. That percentage is considerably lower than that of most other banks in the area.

Bank analyst Mark Fitzgibbon of Sandler O'Neill investment advisers praised the results in a report this week.

"We think that the company posted a very solid quarter and the company is positioned to thrive in coming periods," Fitzgibbon wrote, adding that its efforts to get rid of bad loans "will hopefully be emulated by many other banks."

Fitzgibbon also said the bank probably will soon repay its $36 million of federal Troubled Asset Relief Program funds.

O'Brien cautioned that the bank's healthier financial shape would not mean that it will lower lending standards. The economy is still fragile, and he said the bank wants to remain strong.

"This is still a time to be pretty cautious," he said.

Shares of State Bancorp closed Friday up 60 cents, or 7.3 percent, to $8.81.

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