State Bancorp profit level best since '06

State Bancorp beat Wall Street's first-quarter earnings projections even as the quarter's year-over-year profits remained flat, the company reported this week.

The Jericho-based bank's earnings per share was 15 cents, 2 cents above analyst consensus forecasts. First-quarter profits of $3 million were $19,000 higher than the same period a year ago.

"The quarter was squeaky clean and reflected solid operating results," according to a Sandler O'Neil and Partners analyst report. "The company has been more aggressive than most in attacking problem loans, which has served them well."

State Bancorp is the holding company for the State Bank of Long Island, which has 17 branches on Long Island and in New York City.

The bank posted an $11.4-million profit last year -- a level it had not seen since 2006. Profits declined in 2007 and 2008 and plunged into a $14.8 million loss in 2009, a year in which the bank set aside $39.5 million for loan losses. Money set aside for loan losses in the first quarter of this year declined by $350,000 to $1.9 million versus first-quarter 2010.

"Although quality commercial loan demand remains tepid, we are experiencing an improving flow of loan originations within our middle market commercial loan portfolio," president and chief executive officer Thomas O'Brien said in a news release. Though the economy shows signs of modest recovery "the sustainability of any improvement remains uncertain," he said.

Net loan charge-offs increased to $7.4 million in the quarter compared to $5.4 million during the same period last year. The bank attributed the increase to settlements of three outstanding loans totaling $8 million in order to avoid protracted litigation.

In a report on the banking sector last month, Moody's Investors Service said that loan charge-offs had decreased over the five previous quarters. While at their lowest level since 2008, charge-offs remained close to historic highs, accounting for 2.6 percent of loans in the fourth quarter of 2010, Moody's reported.