On Wednesday July 30, State Bancorp (NASDAQ:STBC), parent of State Bank of Long Island, filed its second quarter earnings showing gains of $961,000 versus $930,000 a year ago.
The performance highlights noted,
"On June 2, 2008, the Bank completed the sale of substantially all of the assets of its leasing subsidiary, SB Equipment Leasing Corp. ("SB Equipment") (formerly known as Studebaker-Worthington Leasing Corp.), to Main Street Bank of Kingwood, Texas."
The SEC filing also stated,
"The Company recorded net loan and lease charge-offs in the second quarter of 2008 of $2.1 million versus $229 thousand in the second quarter of 2007 and net recoveries of $100 thousand in the first quarter of 2008."
The sale price of Studebaker-Worthington was not disclosed, but in a May 12, 2008 filing, the following was noted:
"An agreement has been signed with Main Street Bank of Kingwood, Texas for the sale of substantially all of the assets of the Bank's leasing subsidiary, SWLC, at an amount that approximates tangible book value. The sale, which is subject to customary closing conditions, is expected to be completed in the second quarter of 2008. We anticipate that the sale will result in a decrease in net interest income on an annualized basis of approximately $4 million, an annual operating expense savings to the Company of approximately $3 million and an improved operating efficiency ratio. The sale proceeds will be utilized to fund growth in the Company's commercial loan and commercial mortgage portfolios."
Perhaps as interesting, the "Liquidity Section" indicates what other banks are doing by going to the Fed for borrowing and its result on the marketplace. This is very revealing as to what is happening to the banking industry which funds the leasing and finance industry and in turn reacts in a similar manner to STBC.
Note how cheaper funds have changed going to the marketplace, and perhaps lessened their appetite for new business. While its apparent the purpose is to help out past "problems," it appears to be creating new ones as well:
"The Company's primary uses of funds are for the origination of loans and the purchase of investment securities. During the first quarter of 2008 and 2007, the Company originated new loans totaling $31 million and $8 million, respectively, net of principal pay downs. The Company did not purchase any loans during the first quarter of 2008 or 2007. The Company purchased securities available for sale totaling $98 million and $112 million during the first quarter of 2008 and 2007, respectively. The Company's outstanding FHLB borrowings as of March 31, 2008 were primarily used to support the funding of these assets. At March 31, 2008, total deposits were $1.3 billion, a decrease of $55 million or 4% when compared to December 31, 2007. The decline in deposits primarily reflects the Company's decision to use more attractively priced borrowings to fund asset growth rather than offer high rates to raise deposits in a highly competitive environment."