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SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended December
31, 2004
Commission
File No. 0-14874
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE
SECURITIES EXCHANGE ACT OF 1934
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, N.Y. |
11040 |
|
(Address
of principal |
(Zip
Code) |
|
executive
offices) |
|
| |
|
| |
|
Registrant's
telephone number including area code: (516)
437-1000
Securities
registered pursuant to Section 12(b) of the Act: NONE
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock ($5.00 par value)
(Title of
Class)
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 requirement for
the past 90 days.
Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act).
As of
June 30, 2004, there were 8,994,398 shares of common stock outstanding and the
aggregate market value of common stock of State Bancorp, Inc. held by
nonaffiliates was approximately $219,733,000 as computed using the closing
market price of the stock of $24.43 reported by the American Stock Exchange on
June 30, 2004.
As of
March 4, 2005, there were 9,123,566 outstanding shares of State Bancorp, Inc.
common stock.
Form
10-K
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18 |
DOCUMENTS
INCORPORATED BY REFERENCE
Listed
hereunder are the documents incorporated by reference and the parts of the Form
10-K into which such documents are incorporated:
The
Annual Report to Stockholders for the year ended December 31, 2004 (the “2004
Annual Report”). Referenced in Parts I, II and IV of the December 31, 2004
Annual Report on Form 10-K, Items 1, 5, 6, 7, 7A, 8 and 15.
The 2005
Proxy Statement to be filed on or about March 31, 2005 (the “2005 Proxy”).
Referenced in Part III of the December 31, 2004 Annual Report on Form 10-K,
Items 10, 11, 12, 13 and 14.
State
Bancorp, Inc. (the "Company") is a $1.4 billion one bank holding company
headquartered in New Hyde Park, New York. The Company was formed in 1985 for the
purpose of acquiring State Bank of Long Island (the "Bank") in a one-for-one
stock exchange. The Bank is the Company’s sole operating subsidiary and
principal asset. The Bank is a New York state chartered commercial bank
conducting a general banking business focused on the small to mid-sized
business, municipal and consumer markets in Long Island and Queens, New York.
The Bank was formed in 1966 and, through a strategy of measured, orderly growth
emphasizing high-quality personal service, has grown to be the largest
independent commercial bank headquartered in Nassau County. In October 2002, the
Company formed the State Bancorp Capital Trust I (“Trust I”) to accommodate the
private placement of $10 million in capital securities and in 2003 the Company
formed the State Bancorp Capital Trust II (“Trust II”) in connection with the
private placement of an additional $10 million in capital securities, both of
which are more fully described in Note 7 of the Company’s 2004 Annual Report
incorporated herein by reference. Trust I and Trust II are the Company’s only
other direct subsidiaries.
At
December 31, 2004, the Company, on a consolidated basis, had total assets of
approximately $1.4 billion, total deposits of approximately $1.3 billion, and
stockholders' equity of approximately $101.0 million. Unless the context
otherwise requires, references herein to the Company include the Company and its
subsidiaries on a consolidated basis.
The Bank
provides a full range of banking services to customers located primarily in
Nassau, Suffolk and Queens Counties. The Bank serves its customer base through
fifteen full-service branches in those counties and a lending center in Jericho,
NY. The Bank’s deposit products include checking, savings, time, money market
and IRA accounts. The Bank offers secured and unsecured commercial and consumer
loans. Additional credit
services offered include commercial mortgage loans, construction mortgage loans,
letters of credit, equipment leasing, other commercial installment loans and
lines of credit, home equity lines of credit, residential mortgage loans and
auto and other personal loans. In addition, the Bank provides safe deposit
services, merchant credit card services, access to annuity products and mutual
funds and a consumer debit card with membership in a national ATM network.
Through an alliance with U.S. Trust Company, the Bank also offers its customers
access to financial planning and wealth management services. Thirteen of the
Bank’s branches have ATMs. The Bank also offers its customers on-line banking,
bill payment and cash management services. The Bank’s strategy of establishing
and maintaining long-term customer relationships has contributed to the Bank’s
relatively stable core deposit base.
The Bank
considers its business to be highly competitive in its market areas. The Bank
vies with local, regional and national depository financial institutions and
other businesses with respect to its lending services and/or in attracting
deposits, including commercial banks, savings banks, insurance companies, credit
unions, money market funds and affiliates of consumer goods manufacturers.
Although the Bank is considerably smaller in size than many of these
institutions operating in its market areas, it has demonstrated the ability to
compete profitably with them.
The
Bank’s leasing activity has been primarily conducted by its wholly owned
subsidiaries, New Hyde Park Leasing Corporation ("NHPL"), formed in 1979 to
lease commercial equipment, and Studebaker-Worthington Leasing Corp., acquired
in 2001 with a thirty year history of nationwide equipment leasing specializing
in small-ticket leases for computers and office equipment.
The Bank
has organized various operating subsidiaries that engage in activities that the
Bank could engage in directly. NHPL owns 51% of P.W.B. Realty, L.L.C., which was
formed in 2002 to own the Bank’s branch premises located in Port Washington, New
York. The Bank owns 100% of SB ORE Corp., formed in 1994 to hold foreclosed
property. In 1998, the Bank established two wholly owned Delaware based
subsidiaries, SB Portfolio Management Corp. (“SB Portfolio”) and SB Financial
Services Corp. (“SB Financial”). SB Portfolio holds and manages a portfolio of
fixed income investments while SB Financial provides balance sheet management
services such as interest rate risk modeling and asset/liability management
reporting along with general advisory services to the Company and its
subsidiaries.
In 2004
the Bank entered into a joint venture with an established title agent and formed
a title abstract agency, State Title Agency, LLC. This agency, majority owned by
the Bank, provides an opportunity for the Bank to offer title insurance for
commercial transactions. The agency is not significant in terms of either assets
or contributions to the Company’s results of operations for the 2004 fiscal
year.
Neither
the Company nor any of its direct or indirect subsidiaries is dependent upon a
single customer or very few customers. No material amount of deposits is
obtained from a single depositor. Additional information about deposits can be
found on pages 64 - 65 of the 2004 Annual Report, which is incorporated herein
by reference.
The Bank
does not rely on foreign sources of funds or income and the Bank does not have
any foreign commitments, with the exception of letters of credit issued on
behalf of several of its customers. The Bank's nature and conduct of business
have remained substantially unchanged since year-end 2003.
The
Company expects that compliance with provisions regulating environmental
controls will have no effect upon the capital, expenditures, earnings or
competitive position of the Company. The Company operates in the banking
industry and management considers the Company to be aggregated in one reportable
operating segment. The Bank has not experienced any material seasonal
fluctuations in its business. The Company has not had material expenditures for
research and development. The Company employed 345 full-time and part-time
officers and employees as of December 31, 2004.
Additional
information on the business of the Company is contained in the 2004 Annual
Report on page 46 and in Management's Discussion and Analysis of Financial
Condition and Results of Operations beginning on page 24, which is incorporated
herein by reference.
The
Company’s Internet address is www.statebankofli.com. The
Company makes available on its Internet website its annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
thereto as soon as reasonably practicable after the Company files such material
with, or furnishes such material to, the Securities and Exchange Commission, as
applicable.
Supervision
and Regulation
The
Company is registered as a bank holding company under the Bank Holding Company
Act of 1956 (the “BHCA”), and is therefore subject to supervision and regulation
by the Federal Reserve Board ("FRB"). The Bank is chartered by the State of New
York and its deposits are insured by the Federal Deposit Insurance Corporation
(“FDIC”). Accordingly, the Bank is subject to the regulation and supervision of
the New York Banking Department (the "Banking Department") and the
FDIC.
The
following summary discussion sets forth certain of the material elements of the
legal and regulatory framework applicable to banks and bank holding companies
and their subsidiaries. The regulation of banks and bank holding companies is
extremely complex and this summary is qualified in its entirety by reference to
the applicable statutes, regulations and regulatory guidance. Management
believes the Company is in compliance in all material respects with these laws
and regulations. A change in applicable statutes and regulations or regulatory
policy may have a material effect on the business of the Company and/or the
Bank. Additional information is set forth in various portions of the 2004 Annual
Report, including “Capital Resources” (pages 36 - 37) and Note 15 to the 2004
consolidated financial statements, all of which portions are incorporated herein
by reference.
Bank
holding companies and banks are prohibited by law from engaging in unsafe and
unsound banking practices. Federal and New York State banking laws, regulations
and policies extensively regulate the Company and the Bank including prescribing
standards relating to capital, earnings, dividends, the repurchase or redemption
of shares, loans or extension of credit to affiliates and insiders, internal
controls, information systems, internal audit systems, loan documentation,
credit underwriting, asset growth, impaired assets and loan to value ratios.
Such laws and regulations are intended primarily for the protection of
depositors, other customers and the federal deposit insurance funds and not for
the protection of security holders. Bank regulatory agencies have broad
examination and enforcement power over bank holding companies and banks,
including the power to impose substantial fines, limit dividends and restrict
operations and acquisitions.
As a bank
holding company, the Company may not acquire direct or indirect ownership or
control of more than 5% of the voting shares of any company, including a bank,
without the prior approval of the FRB, except as specifically authorized under
the BHCA. Under the BHCA, the Company, subject to the approval of or notice to
the FRB, may acquire shares of non-banking corporations the activities of which
are deemed by the FRB to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. A bank holding company is
required to serve as a source of financial strength to its subsidiary depository
institutions and to commit all available resources to support such institutions
in circumstances where it might not do so absent such policy. Consistent with
this “source of strength” policy, the FRB takes the position that a bank holding
company generally should not maintain a rate of cash dividends unless its net
income available to common shareholders is sufficient to fully fund the
dividends and the prospective rate of earnings retention appears to be
consistent with the company’s capital needs, asset quality and overall financial
condition.
The
Change in Bank Control Act prohibits a person or group of persons from acquiring
"control" of a bank holding company unless the FRB has been notified and has not
objected to the transaction. Under a rebuttable presumption established by the
FRB, the acquisition of 10% or more of a class of voting stock of a bank holding
company with a class of securities registered under Section 12 of the Exchange
Act, would, under the circumstances set forth in the presumption, constitute
acquisition of control of the Company. In addition, any entity is required to
obtain the approval of the FRB under the BHCA before acquiring 25% (5% in the
case of an acquirer that is a bank holding company) or more of the Company's
outstanding common stock, or otherwise obtaining control or a "controlling
influence" over the Company. The New York Banking Law (the “Banking Law”)
similarly regulates a change in control affecting the Bank and requires the
approval of the New York State Banking Board or Superintendent of
Banks.
The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, as amended
(the “Interstate Banking Act”) generally permits bank holding companies to
acquire banks in any state, and preempts all state laws restricting the
ownership by a bank holding company of banks in more than one state. The
Interstate Banking Act also permits a bank to merge with an out-of-state bank
and convert any offices into branches of the resulting bank if both states have
not opted out of interstate branching; permits a bank to acquire branches from
an out-of-state bank if the law of the state where the branches are located
permits the interstate branch acquisition; and permits banks to establish and
operate de novo interstate branches whenever the host state opts-in to de novo
branching. Bank holding companies and banks seeking to engage in transactions
authorized by the Interstate Banking Act must be adequately capitalized and
managed. The Banking Law authorizes interstate branching by merger or
acquisition on a reciprocal basis, and permits the acquisition of a single
branch without restriction, but does not provide for de novo interstate
branching.
Bank
holding companies and their subsidiary banks are also subject to the provisions
of the Community Reinvestment Act (“CRA”). Under the terms of the CRA, the FDIC
(or other appropriate bank regulatory agency) is required, in connection with
its examination of a bank, to assess such bank’s record in meeting the credit
needs of the communities served by that bank, including low- and moderate-income
neighborhoods. Furthermore, such assessment is also required of any bank that
has applied, among other things, to merge or consolidate with or acquire the
assets or assume the liabilities of a federally regulated financial institution
or to open or relocate a branch office. In the case of a bank holding company
applying for approval to acquire a bank or bank holding company, the FRB will
assess the record of each subsidiary bank of the applicant bank holding company
in considering the application. The Banking Law contains provisions similar to
the CRA which are applicable to New York state chartered banks. Bank holding
companies and their affiliates are prohibited from tying the provision of
certain services, such as extensions of credit, to other services offered by a
holding company or its affiliates.
The
Company’s primary source of income is dividends from the Bank. Federal and New
York State law impose limitations on the payment of dividends by the Bank.
Further information about the amount available for dividends can be found on
page 59 of the 2004 Annual Report, which is incorporated herein by reference.
The federal banking regulators have adopted risk-based capital and leverage
guidelines that require the Company’s capital-to-assets ratios meet certain
minimum standards. The
risk-based capital ratio is determined by allocating assets and specified
off-balance sheet financial instruments into four weighted categories, with
higher levels of capital being required for the categories perceived as
representing greater risk. For a further discussion, see Note 15 of the 2004
Annual Report, which is incorporated herein by reference.
Government
Monetary Policies and Economic Control
The
earnings of the Company and the Bank are affected by the policies of regulatory
authorities including the Board of Governors of the Federal Reserve System and
the FDIC. An important function of the Federal Reserve System is to regulate the
money supply and interest rates. Among the instruments used to implement these
objectives are open market operations in U.S. Government securities, changes in
reserve requirements against member bank deposits and changes in the federal
discount rate. These instruments are used in varying combinations to influence
overall growth and distribution of bank loans, investments and deposits and
their use may also affect interest rates charged on loans or paid for deposits.
Changes in government monetary policies and economic controls could have a
material effect on the business of the Bank.
Statistical
information is furnished pursuant to the requirements of Guide 3 (Statistical
Disclosure by Bank Holding Companies) promulgated under the Securities Act of
1933. Incorporated by reference is the Company's 2004 Annual Report. The
Company's statistical information may be found on pages 61 - 65.
The
following table sets forth certain information relating to properties owned or
used in the Company's banking activities at December 31, 2004:
|
Location |
Owned
or Leased |
Lease
Expiration Date |
Renewal
Terms |
|
Main
Office: |
|
|
|
|
699
Hillside Avenue |
Building
owned, land leased |
3/27/2009 |
One
ten-year renewal option |
|
New
Hyde Park, NY |
|
|
|
|
Lending
Facility: |
|
|
|
|
Two
Jericho Plaza |
Leased |
3/31/2012 |
None |
|
Jericho,
NY |
|
|
|
|
Nassau
County Branch Offices: |
|
|
|
|
222
Old Country Road |
Leased |
4/30/2010 |
One
ten-year renewal option |
|
Mineola,
NY |
|
|
and
two five-year renewal options |
|
339
Nassau Boulevard |
Owned |
N/A |
N/A |
|
Garden
City South, NY |
|
|
|
|
501
North Broadway |
Leased |
10/31/2011 |
Two
twelve-year renewal options |
|
Jericho,
NY |
|
|
|
|
135
South Street |
Owned |
N/A |
N/A |
|
Oyster
Bay, NY |
|
|
|
|
2
Lincoln Avenue |
Leased |
5/31/2005 |
One
five-year renewal option |
|
Rockville
Centre, NY |
|
|
|
|
960
Port Washington Boulevard |
Leased |
1/24/2007 |
Five
five-year renewal options |
|
Port
Washington, NY |
|
|
|
|
Suffolk
County Branch Offices: |
|
|
|
|
27
Smith Street |
Leased |
10/31/2007 |
Two
five-year renewal options |
|
Farmingdale,
NY |
|
|
|
|
740
Veterans Memorial Highway |
Leased |
6/30/2005 |
Two
ten-year renewal options |
|
Hauppauge,
NY |
|
|
|
|
580
East Jericho Turnpike |
Leased |
12/31/2008 |
None |
|
Huntington
Station, NY |
|
|
|
|
4250
Veterans Memorial Highway |
Leased |
12/31/2008 |
One
five-year renewal option |
|
Holbrook,
NY |
|
|
|
|
234
Route 25A |
Leased |
5/31/2005 |
Two
five-year renewal options |
|
East
Setauket, NY |
|
|
|
|
Queens
County Branch Offices: |
|
|
|
|
49-01
Grand Avenue |
Leased |
4/30/2006 |
Two
five-year renewal options |
|
Maspeth,
NY |
|
|
|
|
75-20
Astoria Boulevard |
Leased |
5/30/2006 |
Two
five-year renewal options |
|
Jackson
Heights, NY |
|
|
|
|
21-31
46th Avenue |
Leased |
1/31/2006 |
One
five-year renewal option |
|
Long
Island City, NY |
|
|
|
|
Subsidiary
and Other Facilities: |
|
|
|
|
1403
Foulk Road |
Leased |
6/30/2005 |
One-year
renewal options |
|
Wilmington,
DE |
|