State Bancorp's return to health continued in the third quarter, as the Jericho company that owns State Bank of Long Island reported earnings of $3.2 million for the third quarter, 65.4 percent more than the same quarter a year ago.
"You have to make tough decisions in the short run to have long-term success," said company president and chief executive Thomas O'Brien. The bank had been struggling with bad loans and litigation until the bank settled a shareholder suit and got what it could get for the troubled loans in its portfolio.
Now the bank is able to reduce the amount of money it sets aside to cover potential bad loans, as such loans now total $9 million, compared to $35 million a year ago.
In addition, the bank profited by reducing operating expenses by $785,000 and increasing the spread between interest it pays on deposits and the interest it makes on loans. The bank's improved health makes it better able to weather continued economic uncertainty, O'Brien said.
"Our often stated goal is to be among the first to exit this economic calamity in the strongest possible condition," he said.
To that end, the company hopes to be able to repay its Troubled Asset Relief Program funds of $36 million at some point next year. O'Brien said the bank should be in a position to raise enough capital without issuing more stock at that point.
In addition, he said the company continues to look for other banks in the metropolitan area to acquire -- particularly smaller banks struggling to stay afloat.
State Bank of Long Island has assets of $1.6 billion and 17 branches on Long Island and in Queens and Manhattan.
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