Leasing News

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NEW YORK (AP) WorldCom Inc.'s bankruptcy filing may be the biggest in history, but it's expected to create few difficulties for the people who rely on the company for long distance and Internet services. Service not to get worse than it is, until 17,000 people let go. More are predicted.

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JACKSON, Miss. (AP) WorldCom Inc.'s MCI long-distance customers and Internet users aren't going to lose service as a result of the company's bankruptcy filing, officials and analysts said Sunday.

Anxious customers have been approaching competitors like Sprint, AT&T and SBC Communications, who said they were receiving more sales inquiries since WorldCom revealed it had hidden $3.8 billion in operating expenses.

A bankruptcy reorganization, while giving Clinton, Miss.-based WorldCom time to restructure its hefty debt, also is the kind of negative publicity that could scare more customers away.

But company CEO John Sidgmore said Sunday the bankruptcy should have no effect on the company's customers from long-distance users to users of the Internet traffic transported by WorldCom's UUNET, which accounts for 29 percent of the capacity on the nation's busiest Web routes.

''At the end of the day, this really will be business as usual,'' Sidgmore said. ''We don't think that there will be any significant impact on the employees and vendors, for that matter, and we should have plenty of cash to make it.''

An analyst, Drake Johnstone of Davenport & Co. in Richmond, Va., said Federal Communications Commission rules mandate that a company give at least 30 days notice before shutting down a network.

''We're not going to see a situation where they turn the lights out. The company will continue to operate,'' Johnstone said.

FCC Chairman Michael K. Powell also assured customers Sunday they wouldn't lose service.

''While I am deeply concerned by this development, I want to assure the public that we do not believe this bankruptcy filing will lead to an immediate disruption of service to consumers or threaten the operation of WorldCom's Internet backbone facilities,'' Powell said.

The commission ''will act vigilantly and to the full extent of its statutory authority'' to protect customers from losing service, Powell said.

U.S. bankruptcy laws tend to allow big businesses like WorldCom afloat long enough to rearrange their finances or sell off businesses and assets in an orderly manner.

A bigger concern could be if cutbacks the company is making to save money, including the layoff of 17,000 workers, might result in poorer service or even temporary outages.

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Worldcom, the second largest long-distance telephone carrier, disguised nearly $4 billion of expenses as capital expenditures to appear more profitable. With that shuffle exposed, the company is close to bankruptcy.

Centennial Technologies, a computer-card maker in Waltham, Mass., invented sales of a nonexistent product and created false sales records by shipping fruit baskets to the CEO's friends. The fraud drove stock to $55.50 a share, plunging to $3 when it was exposed, costing investors millions.

The cable company Adelphia Communications fired its auditor over questionable business arrangements that allowed founder John J. Rigas and his family to use corporate accounts for their personal business pursuits and amass up to $3 billion in debt.

Telecommunications giant Global Crossing Ltd. and its top executives were charged with deceptive accounting, with founder and chairman Gary Winnick cashing out $734 million in stock before the company crashed.

Tyco International Ltd., a Bermuda-based conglomerate, filed a lawsuit accusing its former general counsel of taking an interest-free $10 million loan from the company without the board's approval and using it to buy a resort home.

AOL Time Warner converted legal disputes into advertising deals, shifted revenue from one division to another and sold ads on behalf of eBay and booked them as its own revenue, among other irregularities, The Washington Post reported last week shortly before the company announced an executive shuffle. The company said the accounting practices were appropriate. In earlier years AOL counted its mass-mailed free-trial subscription disks as assets.

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America, San Francisco, CA, which instituted the service this day, under the direction of Robert D'Oyly Syer. James Joseph Saxon comptroller of the currency, advised national banks on March 18, 1963, that they were permitted to lease personal property, buying equipment and leasing it directly to customers.

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WESTPORT, Conn--On January 15, 1998, American Income Partners V-A Limited Partnership, American Income Partners V-B Limited Partnership, American Income Partners V-C Limited Partnership, American Income Partners V-D Limited Partnership, American Income Fund I-A, a Massachusetts Limited Partnership, American Income Fund I-B, a Massachusetts Limited Partnership, American Income Fund I-C, a Massachusetts Limited Partnership, American Income Fund I-D, a Massachusetts Limited Partnership, American Income Fund I-E, a Massachusetts Limited Partnership, AIRFUND International Limited Partnership, and AIRFUND II International Limited Partnership were named as nominal defendants in a class action lawsuit brought by certain unitholders of the partnerships in the United States District Court for the Southern District of Florida entitled Leonard Rosenblum, et al. v. Equis Financial Group Limited Partnership, et al.

After settlement negotiations by and among the plaintiffs and Equis Financial Group Limited Partnership, for itself and on behalf of the other defendants in the litigation, the parties entered into a settlement agreement. After a fairness hearing, the settlement and the transactions contemplated thereby were approved by the Court, and the Court's final judgment and order directing the implementation of the settlement was entered. The appeal period expired on July 18, 2002. Pursuant to the terms of the settlement, each of the partnerships has agreed to liquidate its assets and dissolve.

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http://www.equisgroup.com/finance.html

“Equis Financial Group Limited Partnership ("Equis Financial Group"), formerly known as American Finance Group, is a privately held independent financial services organization. Formed in 1980, Equis Financial Group is in the business of asset acquisition, asset management, asset financing, and asset remarketing and currently manages leases on over U.S.$350 million of capital equipment (original cost). During the past 20 years, Equis Financial Group has structured, arranged and advised on more than U.S.$2.5 billion in lease transactions and has remarketed over U.S.$1.0 billion in equipment.

“Equis Financial Group and its affiliates currently manage more than 20 different private and publicly held investment funds. The management team provides in-depth experience in all phases of the leasing and financial services business and has developed and maintains an extensive network of industry experts to monitor and assist with its worldwide portfolios.

“Equis Financial Group, either directly or through affiliates, has active business operations in the financial services industry, including equipment leasing.”

Their customers from their website:

http://www.equisgroup.com/finance.html#Clients

LOS ANGELES (AP) Acres of brown, blue, red and yellow, the 40-foot containers stretch as far as the eye can see, stacked three high, forming long steel corridors down the length of the docks.

Inside them are almost everything a consumer could imagine: furniture, clothing, toys, tractors, computers, waste paper and pet food.

Some $113.9 billion worth of goods 35 percent of the nation's container traffic moved through the Port of Los Angeles in 2001. The facility itself sprawls over 3,800 acres of water and another 3,700 acres of land.

The profound scale of the operation leaves little doubt about what is at stake should the Pacific Maritime Association and the International Longshore and Warehouse Union fail to reach a new labor agreement. The current contract between the two groups expired July 1. Since then, the contract has been extended on a 24-hour basis at each negotiating session.

The PMA has argued that West Coast ports are becoming bottlenecked because the union has spurned technological improvements to preserve about 2,100 clerk jobs. The ILWU says it's not against technology, but the new jobs must stay within its ranks.

Although the union has so far disavowed any intent to stage a slowdown, and has yet to take a vote among its members, there is still concern a strike could occur.

''The effect could be chaotic,'' said Monroe Milstein, founder and chief executive of the Burlington Coat Factory Warehouse, a chain of 294 department stores that brings about 60 percent of its products in through West Coast ports.

Indeed, West Coast ports have helped sustain the national economy by funneling billions of dollars worth of furniture, automobiles and automobile parts into the country the key ingredients of the consumer spending binge that kept the recession mild said Larry Keller, executive director of the Port of Los Angeles.

The goods crossing the docks at the combined Los Angeles and Long Beach ports, the third largest complex in the world, and at the other smaller West Coast ports from San Diego to Seattle, represent nearly 8 percent of the nation's gross domestic product. And some 4 million jobs around the country rely on the smooth flow of goods through those ports.

A work stoppage on the West Coast wouldn't create much damage if it lasted less than two weeks, said Milstein. But anything beyond that would disrupt his company's supply of clothes, handbags, belts, perfumes, shoes, furniture and other merchandise coming from Asia, he said.

''Most everything today comes through West Coast ports,'' he said. ''Twenty years ago at least half of it was made in the United States.''

A large percentage of Asian goods destined for the eastern United States come through the West because it's often cheaper to put them on cross-country trucks or trains than to send them on longer routes through the Suez Canal and across the Atlantic Ocean.

The top imports by dollar value through the Port of Los Angeles last year were apparel, toys, computers and office machines, and furniture. The leading exports were resin, raw cotton, waste paper, scrap metal and pet and animal food.

For business owners like Charlie Woo, founder and chief executive of Megatoys, the port is an irreplaceable life line to his suppliers in China, offering the fastest and cheapest travel time for the dolls, radio controlled cars and other battery toys and other toys he imports.

Door-to-door, a 40-foot container holding thousands of toys costs $1,500 to deliver from China.

Woo, whose $25 million-a-year business employs 70, recently brought in an extra $1 million of inventory to cushion his business during any labor disruption, but he's hoping he won't need to use it.

''The port has made my business competitive in L.A. Without it I wouldn't be able to survive in this industry,'' Woo said.

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Blacks making steady progress, but far from parity with whites in many fields, report says

In areas ranging from jobs to home ownership to politics, blacks continue to make gains, but equality with whites remains a far-off goal, the National Urban League says in its annual report on the state of black America.

''When you look at the data, yes, we have made substantial headway, but there are still without a shadow of a doubt substantial gaps in every category, every vital sign,'' said Urban League President Hugh Price. ''We're making steady progress but we're not in the end zone yet.''

The report, a collection of eight essays written by experts in fields such as labor, home ownership and civil rights, is intended to capture an annual snapshot of blacks in America. The first one was published in 1976.

The authors highlight several areas where blacks have made gains yet disparity persists. Among them:

During the 1990s, black unemployment fell to its lowest level in 30 years. The rate of poverty among black families fell to 26 percent, the lowest ever recorded, Bernard Anderson, a management professor at the University of Pennsylvania's Wharton School, says in the essay ''The Black Worker: Continuing Quest for Economic Parity.''

Yet black workers have been hit harder by the recession than others. In June, the unemployment rate for whites was 5.2 percent; for blacks it was more than twice that, 10.7 percent.

In the workplace, blacks are about twice as likely to hold lower-paying, less- prestigious service jobs. About 20 percent of blacks hold professional or managerial jobs, while more than 30 percent of whites do. Less than 1 percent of certified public accountants, for example, are black, Theresa Young, associate professor of accounting at Boston College says in the essay ''Holding the Accountants Accountable: Why are there so few African-American CPAs?''

Compared to whites and the rest of the nation, blacks are still stuck in the pre-civil rights era when it comes to owning their homes. For whites, the homeownership rate is 74 percent. For blacks, it is 48 percent the national rate in the 1940s.

There were more than 9,000 black elected officials in the year 2000 more than at any other time in the nation's history, the report says, drawing on data from the Joint Center for Political and Economic Studies.

But Rep. J.C. Watts of Oklahoma, the sole black Republican in Congress, recently said he would not seek another term.

The GOP has demonstrated a ''lack of commitment to include blacks among its ranks of elected officeholders,'' the report says. ''The Republicans have seemed content to play appointive politics with the black electorate.''

Pamela Mantis, spokeswoman for the Republican National Committee, contends there are black Republicans in elected offices across the country, as well as black candidates.

''If anyone is playing politics with the black vote, it is the Democrats,'' said Mantis, noting she had not seen the report. Polls show many blacks ''feel the Democrats are taking their vote for granted,'' she said.

Blacks also represent 38 percent of all AIDS cases reported in the United States, Maya Rockeymoore, of the Urban League's Institute for Opportunity and Equality, says in an essay citing Centers for Disease Control and Prevention figures.

The vocal gay community, led mainly by white males, responded to the early threat of AIDS by using political muscle to marshal federal, state and local resources. But blacks were slower to organize, Rockeymoore says in her essay, ''African Americans Confront a Pandemic: Assessing Community Impact, Organization and Advocacy in the Second Decade of AIDS.''

That lack of a coordinated, early mobilization, combined with ''poverty, substance abuse problems and exclusion from social insurance programs'' has placed black and Hispanic communities ''at a distinct disadvantage in their efforts to ward off the spread of AIDS,'' Rockeymoore writes.

The Urban League's report is scheduled to be released at a news conference in Washington on Wednesday.

ORLANDO, Fla. (AP) When it came to the future of passenger rail in Florida, Amtrak was supposed to lead the way.

There were plans to expand its existing service, adding a twice-daily Jacksonville-to- Miami run down the Atlantic coast. Following in the tracks of rail pioneer Henry Flagler, it would serve travelers along the east coast for the first time in 34 years.

But as Amtrak hemorrhages federal money at an alarming rate an expected operating loss of about $1 billion this year, the same as last year Florida's leaders are confronting a possible future without the nation's passenger rail carrier.

''People are concerned about corporate scandals, but that was investor money,'' said U.S. Rep John Mica, chairman of the House Transportation Committee. ''Even more scandalous is Amtrak's inability to account for billions of taxpayer dollars.''

Amtrak's troubles have stopped dead any plans for serving the state's east coast, although experts anticipate some entity will eventually fill the void.

Amtrak's future is in question. It took an emergency infusion of $200 million in late June to keep passenger trains running through September, avoiding the first systemwide shutdown in its 31-year history.

Half of that money was a loan from the Department of Transportation, and Amtrak had to agree to a dozen conditions regarding its finances. One requires Amtrak to spend all its money over the next 15 months on existing assets and services not to plan for an expansion of its service.

Soon after, Amtrak President David Gunn told Congress that the provision could affect work on restoration of service to Florida's east coast.

Last year, Amtrak made a splashy announcement that it planned to bring passenger rail back to the Atlantic coast, complete with a demonstration trip packed with civic leaders. In a fit of optimism, Amtrak said service would begin in spring 2002.

Passenger trains haven't run on the state's Atlantic coast since November 1968, when a labor dispute at Florida East Coast Railway ended service.

''Amtrak's wanted to serve the east coast of Florida for a long, long time,'' Ray Lang, Amtrak's director of government affairs, said last June. ''The east coast of Florida has some of the busiest tourist destinations in the whole world. There's a tremendous market there, and the potential is almost unlimited.''

Amtrak already carries passengers from Jacksonville to Miami, but the routes cut inland, serving Tampa, Orlando, Lakeland and Winter Haven.

The new route was to use tracks owned by freight carrier Florida East Coast, and make stops in St. Augustine, Daytona Beach, Titusville, Cocoa/Port Canaveral, Melbourne, Vero Beach, Fort Pierce and Stuart.

Improvements on the line were necessary $60 million to build tracks and siding, and erect new signals; $8 million for depots but the Florida Department of Transportation and FEC said they had their share the money.

However, Amtrak is currently reviewing the project to see if it is allowed by the loan provision and under contract to finish it, spokeswoman Karina Van Veen said. If so, the work will continue.

Gov. Jeb Bush called the developments disappointing. ''Based on the investment for that expanded service on the east coast, I thought it was a great concept, particularly for smaller communities that were looking for hubs of economic activity,'' he said.

FEC general counsel Heidi Eddins said: ''The agreements that we reached were subject to very hard and intense negotiations. So, seeing the project languish is not what we expected.''

Still, the route is regarded as highly lucrative and it's expected some entity will step into the breach once Amtrak is gone.

''I think (Atlantic coast service) will happen eventually because some of the Florida routes make a lot of sense,'' Mica said. ''You have the passengers and traffic to warrant those lines.''

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[Middle English lesing, from Old English lēasung, from lēasian, to lie, from lēas, untrue.]

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Lease (les) n. 1.A contract granting use or occupation of land or holdings during

a specified period in exchange for rent. 2. Property used or occupied in exchange

for rent. 3. An extension under improved circumstances: a new lease on life --tr.

v.leased, leasing, leases . 1.To use or occupy by contract in exchange for rent.

2. A modern financial means of acquiring personal property (equipment), often with

a option to purchase, most often at the termination of the contract. {Middle English

les, from Norman French, from Lesser, to lease, from Old French laissier, to let

go, leave, from Latin laxare, to let go, loosen, from laxus, LAX.} ---leas'a-ble.adj.

(The Bank also owns Jericho, N.Y.-based Studebaker-Worthington Leasing Corp., a nationwide provider of business equipment leasing.)

NEW HYDE PARK, N.Y--The Board of Directors of State Bancorp, Inc., parent company of State Bank of Long Island, today reported earnings for the quarter ended June 30, 2002.

Net income for the second quarter of 2002 was $3.4 million, representing a record level for the period and an 18.1% increase over the comparable 2001 time frame. Basic earnings per common share were $0.42 in 2002 versus $0.35 a year ago. Fully diluted earnings per common share were $0.41 and $0.35, respectively, for the same periods. All per share amounts appearing in the release have been restated to reflect a 5% stock dividend paid on July 12, 2002. The Company's returns on average assets and stockholders' equity were 1.16% and 17.19% in 2002 and 1.16% and 15.16% in 2001, respectively. Excluding the impact of SFAS No. 115, the Company's returns on average stockholders' equity were 16.95% and 15.04% during the second quarter of 2002 and 2001, respectively.

The Company also reported net income for the first six months of $5.6 million in 2002, down 1.2% versus last year. Basic earnings per common share were $0.69 in 2002 and $0.68 in 2001. Fully diluted earnings per common share were $0.68 in each reported period. The Company's return on average assets was 1.01% in 2002 versus 1.13% a year ago while return on average equity was 14.26% and 15.07% in 2002 and 2001, respectively. Excluding the impact of SFAS No. 115, the Company recorded returns on average stockholders' equity of 14.09% in 2002 and 14.89% in 2001.

Earnings for the second quarter of 2002 rose by 18.1% when compared to 2001 due to a higher level of net interest income (up 18.6%), greater net security gains and a higher level of other operating income. Net interest income increased by $2.0 million to $13.0 million as the result of an increase of 18.7% in average interest-earning assets, primarily due to growth in taxable investment securities and loans. The expansion of the investment portfolio during the second quarter resulted from a leverage strategy utilizing medium-term (average life) mortgage-backed securities (up $251 million, on average). Growth in commercial loans and commercial mortgages resulted in a 6.4% increase in average loans outstanding during the second quarter of the year. Somewhat offsetting the aforementioned increases were lower levels of Government Agency and municipal securities and short-term money market instruments, primarily overnight reverse repurchase agreements. Funding the asset expansion was a 13.6% increase in average deposits, principally low-cost core deposit balances (demand, savings, money fund and Super NOW deposits) which rose by 25.4%. The higher level of core deposits allowed the Company to reduce its dependence on higher-cost funding which, in combination with the lower interest rate environment during 2002, resulted in a 154 basis point decline in the Company's second quarter cost of funds to 1.44%.

The provision for probable loan losses amounted to $1.0 million during the second quarter of 2002, an increase of $196 thousand or 25.6% when compared to 2001.

Noninterest income, excluding the impact of securities sales, improved by 9.7% to $726 thousand due in large measure to growth in annuity commissions, letter of credit fees, sweep account income and mutual fund sales commissions. Somewhat offsetting these improvements was a decline in return item charges.

Net security gains amounted to $1.5 million in 2002 versus a net loss of $50 thousand in 2001. Sales of Government Agency and mortgage-backed securities during the second quarter of this year, undertaken as a result of the dramatic decline in interest rates, produced the foregoing gain. Management expects to reinvest the proceeds of these sales in fixed-income instruments, at various maturity structures, during the third and fourth quarters of 2002.

Total operating expenses rose by 31.8% to $9.5 million during 2002 when compared to last year. The principal reasons for this increase were growth in legal fees, salaries and benefits costs, occupancy expenses, marketing and advertising costs and growth in various categories of other operating expenses. The increases in salaries and benefits costs were largely the result of the recent expansion of the Company's branch network. The growth in occupancy expense was due to the expanded branch network and growth in leased space for the Company's support areas. The increase in marketing and advertising expense in 2002 was due principally to promotions related to the Company's new branch locations and a corporate sponsorship of the recent U.S. Open golf event held on Long Island. Legal fees rose by $1.0 million during the second quarter of 2002. Growth in this expense category was solely attributable to the cost of ongoing litigation related to our relationship with Island Mortgage Network, a former deposit customer, and its affiliates ("IMN"), as previously disclosed in the Company's filings with the Securities and Exchange Commission. The Company expects to incur additional costs related to this litigation during the second half of this year. Other operating expenses also grew from year to year, increasing by 23.0% during the second quarter of 2002. This increase is the result of growth in several expense categories, most notably audit and examination costs, loan collection expenses, telecommunications costs and computer service fees. The foregoing expense factors resulted in an operating efficiency ratio of 66.9% for the second quarter of 2002 versus 58.5% in 2001. Excluding costs related to litigation, total operating expenses increased by 18.6% in 2002 and would have produced an efficiency ratio of 64.7%.

Income tax expense rose by $581 thousand in 2002 resulting in an increase in the Company's effective tax rate to 27.0% from 19.1% a year ago. This increase is largely due to a reduction in tax-exempt income coupled with a higher effective New York State tax rate in 2002.

Commenting on second quarter performance, Chairman and CEO Thomas F. Goldrick stated, "Despite the continued growth in operating expenses in 2002, we are gratified that the Company's core lines of business, in particular the core deposit growth generated by the Company's new branches and the cross-sell opportunities provided by Studebaker-Worthington Leasing Corp., have performed well enough to provide growth in net income and earnings per share during the second quarter of the year. The new branches opened during the past twelve months have been well received in their communities and are ahead of plan at this point in time. This activity, combined with the outstanding results generated by our Delaware subsidiaries, gives me great optimism about the Company's future earnings capacity."

Net income declined by 1.2% in the first six months of 2002 versus the comparable 2001 period. Growth in operating expenses (up 33.6%), a higher provision for probable loan losses and an increase in the effective tax rate (25.6% versus 19.2%) accounted for the decline in June year-to-date net income. Improvements in net interest income (up 18.9%) and noninterest income excluding the impact of securities sales (up 4.9%), coupled with an increase in net security gains partly offset the foregoing negative factors. The reasons supporting the six months earnings performance are primarily the same as those described in the second quarter earnings analysis, differing only in magnitude. Growth in average interest-earning assets, mainly investments (up 26.9%) and loans (6.8% increase), coupled with a wider net interest margin (4.92% versus 4.69%) accounted for the improved net interest income. Average total deposits advanced by 7.3% to $969 million, led by growth in low cost core deposits of 26.0%. Noninterest income improved during the third quarter as the result of higher deposit service charge income along with increases in letter of credit and sweep account fees, annuity commissions and ATM income. Total operating expenses rose by $4.6 million due primarily to an increase in IMN-related litigation expenses of $1.8 million. Excluding these expenses, total operating expenses would have risen by 21.6% in 2002. Exclusive of these factors, the Company's June year-to-date operating efficiency ratio of 67.1% (versus 57.9% in 2001) would have been 65.0%.

As of June 30, 2002, the Company's allowance for probable loan losses amounted to $9.9 million or 1.69% of period-end loans outstanding. The allowance as a percentage of loans outstanding was 1.68% at December 31, 2001 and 1.79% a year ago.

Net charge-offs for the six months and second quarter periods of 2002 were $1.3 million and $308 thousand, respectively. As a percentage of average total loans outstanding, these charge-off totals represented 0.45% in the six-month period and 0.21% in the second quarter. Due to the uncertain nature of the current economy, management anticipates further loan charge-offs during the remainder of 2002.

Nonperforming assets, defined by the Company as nonaccrual loans and other real estate owned, amounted to $8.2 million at June 30, 2002, $8.9 million at December 31, 2001 and $12.5 million at June 30, 2001. The decline in nonperforming assets versus the comparable 2001 period resulted from the transfer to other real estate owned, and subsequent sale, of a large credit during the fourth quarter of 2001. The decline in nonperforming assets since December 31, 2001 resulted primarily from current year charge-off activity.

Total stockholders' equity was $83.5 million at June 30, 2002, up 10.3% when compared to June 30, 2001. Excluding valuations related to SFAS No. 115, total stockholders' equity grew at a rate of 5.9% from year to year. State Bancorp, Inc.'s Tier I leverage ratio was 6.71% and 7.50% at June 30, 2002 and 2001, respectively. This ratio continues to be well in excess of current regulatory guidelines for a well-capitalized institution. The Company's Tier I and Total Risk-Based capital ratios were 11.00% and 12.26%, respectively, at June 30, 2002.

During the first six months of the year, the Company distributed $2.2 million in cash dividends on its common stock, representing a payout ratio of 38.8%. The Company also paid a 5% stock dividend in July 2002.

The Company's stock repurchase program has expended $1.1 million thus far in 2002 to repurchase 64,777 shares at an average cost of $17.10 per share. Since 1998, 541,477 shares of Company stock have been repurchased at an average cost of $15.10 per share. Under the Board of Directors' existing authorization, an additional 458,523 shares may be repurchased from time to time as conditions warrant.

State Bancorp's sole subsidiary, State Bank of Long Island, is the largest independent commercial bank headquartered in Nassau County. State Bank currently operates full service banking offices in fifteen locations throughout Nassau, Suffolk and Queens Counties: New Hyde Park, Jericho, Oyster Bay, Rockville Centre, Garden City South, Huntington, Hauppauge, Farmingdale, Holbrook, East Setauket, Mineola, Jackson Heights, Maspeth, Port Washington and Long Island City. The Bank maintains a lending facility in Jericho and has two subsidiaries based in Wilmington, Delaware, which provide investment and balance sheet management services to the Bank. The Bank also owns Jericho, N.Y.-based Studebaker-Worthington Leasing Corp., a nationwide provider of business equipment leasing. The Company maintains a World Wide Web site at www.statebankofli.com with corporate, investor and branch banking information.

State Bancorp, Inc.'s common stock trades under the symbol STB on the American Stock Exchange. Effective July 1, 2002, the Company was added to the Russell 2000 index, a leading benchmark of small-cap stocks compiled by the Frank Russell Company, one of the world's leading investment management and advisory firms.

The bubble in high-tech stocks burst emphatically back in March 2000. Now, just two years later, some financial advisers wonder whether a second bubble isn't over-inflating in our own back yards – literally.

Thanks to extremely low interest rates and stable employment, real estate prices in San Diego County have swelled dramatically in recent years, with the median price of new and resale homes hitting a sizzling $323,000 in June. That's up 81 percent from the median price of $178,000 just five years ago.

In some areas, condos are appreciating by $100,000 in one year, and first-time buyers are paying as much as $500,000 for a home.

The rapid appreciation in real estate and the continued battering of the stock market are leading some people to conclude that the only place left to make money is real estate. It's little wonder that a book titled "Flipping Properties: Generate Instant Cash Profits in Real Estate" is currently a brisk seller.

John M. Smith, a certified financial planner with Old Mission Mortgage in Serra Mesa, says the rapid appreciation is creating some eerie similarities with the Nasdaq market before it fell in 2000. People are saying, "We can't lose if we buy real estate."

Chris Jaccard, a certified financial planner with Financial Alternatives in La Jolla, is concerned when he sees buyers taking on sizable debt to buy real estate either for a home or as an investment property. "People are thinking it's a risk-free investment," he says. "But nothing is risk- free."

Most years, California home prices increase in value. However, as anyone who bought a home in the early 1990s before the home market tanked can tell you, California real estate can go down in value. So the question is this: Are we heading for a major economic downturn that will drag down the housing market?

Alan Nevin, director of economic research for Market Point Reality Advisors in San Diego, acknowledges that the 10 percent to 12 percent annual housing appreciation of the past six years has been far too rapid and could slow to 4 percent or 5 percent.

But, he says, interest rates remain very low, and the perpetual imbalance in housing supply and demand keeps prices aloft. New jobs continue to be created and, since the early 1990s, developers have kept their inventories small.

First-time home buyers and residents new to this area often say they feel great pressure to purchase because of the increasing prices, as if the San Diego housing market were an escalator moving upward – and if they don't jump on it now, they never will be able to.

"If they're planning on living the rest of their lives here, I usually agree with them," Jaccard says. "The cost of waiting is greater than the cost of jumping in."

Smith says, "I get this question all the time. 'When should I buy a house?' And I say, 'When you can. Then you get on the escalator.' "

Of course, there are periodic slowdowns or even slumps in the market that could provide buying opportunities, but there's no predicting when these will happen.

Jaccard knows of one couple who expect the housing market to follow the stock market in taking a major downturn, so they've put off buying. But as home prices continue to climb, they're becoming frustrated.

So what are nervous buyers to do? Proceed with caution and keep these points in mind:

Honestly evaluate your time horizon. If you plan to stay in the area indefinitely, then you are safer buying into a market peak and riding the ups and downs. But if you know you will be leaving in two or three years, there's no way of telling now whether you'll depart with a nice profit or a painful loss when you sell.

Consider the total cost of home ownership before buying, advises Jean Sinclair, a certified financial planner with Avenue Advisors LLC in the Golden Triangle. This would include utility bills and homeowners association dues.

Think of your house as a home first and as an investment second. "You have to buy a place that you can be happy to come home to and that you can afford," says Smith.

Don't buy a home expecting to turn around and sell it within a year at a profit. "Holding real estate is a long-term investment," Smith says.

Just because lenders will lend you the money doesn't mean you can afford it. In years past, lenders would let you allocate no more than one-third of your income for your mortgage and no more than 40 percent toward all debts.

But today, with credit scoring, home buyers with good scores can devote as much as 50 percent of their income to their mortgage and up to 70 percent for all debts. That doesn't mean, however, that they should.

Living with such tight demands on income leaves very little margin for setbacks. "It's troubling," Smith says. "Not everybody enjoys job security."

Leverage works both ways. Because you borrow to buy a home, your investment is leveraged, notes Sinclair. That can magnify your gain or loss. If you purchase a $300,000 home that falls by 20 percent in value, you've lost $60,000.

Be realistic about your sacrifices. Are you really willing to commute 90 miles round trip from Temecula to have a bigger house? "Being house poor limits your choices," says Jaccard. "Can you eat Top Ramen and beans for the next five years?"

Think through possible life scenarios. What would happen if the main breadwinner in your family were laid off? What if one spouse stops working to take care of a new baby? If you had to relocate in the midst of a down market, could you sell or rent out the house without losing money?

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