State Bancorp Inc. in Jericho, N.Y., said Friday it had raised $36 million in a private placement that will restore it to well-capitalized status.
The company's capital was sharply reduced in recent quarters as a result of a long legal battle with HSA Residential Mortgage Services of Texas Inc., which alleged that State had conspired with a customer to commit fraud against HSA.
In January, a jury found State liable for $44 million in damages. Counting legal fees and related expenses, the lawsuit cost the banking company about $74 million. (It is appealing the verdict.)
State said it sold 2.2 million shares at $16.75 each to replenish capital. Its new president and chief operating officer, Thomas M. O'Brien, bought 53,700 of the shares.
As a result of the placement, the company said its ratio of Tier 1 capital to risk-weighted assets is 9.39%, up from 6.47% at Sept. 30.
Thomas M. Goldrick, State Bancorp's chairman and chief executive, said proceeds from the private placement would be used to pursue growth opportunities in its market.
State Bancorp is the $1.6 billion-asset parent of State Bank of Long Island, which has 16 branches in Nassau, Suffolk, and Queens counties.
