As each of you know, the PL Capital Group previously submitted a shareholder proposal respecting the stock ownership guidelines of State Bancorp, Inc. (the Company), for inclusion in the Company’s proxy for the upcoming 2009 Annual Meeting.  In addition to the shareholder proposal, we suggested several other corporate governance improvements that we believe the Board of Directors should adopt, including reducing the size of the board and declassifying the board.

On January 27, 2009 we met telephonically with the members of the Nominating and Governance Committee to discuss our proposal and suggestions.  We appreciate the Committee members’ willingness to meet with us and listen to our concerns and suggestions.  We also listened to the concerns and suggestions of the Committee.

We also considered the following items before reaching the decisions noted later in this letter:

• Q4 and Full Year 2008 Earnings:  Subsequent to our meeting with the Nominating and Governance Committee, the Company reported its results for the quarter and year ended December 31, 2008.  The results were, to quote President and CEO Thomas M. O’Brien in the Company’s press release, “both disappointing and plainly unacceptable.”
• TARP Capital Purchase Program:  On December 10, 2008 the Company announced the sale to the U.S.