Long Island Financial Briefs: August 15, 2008

By Laura Glasser

Insurance company Geico dropped its attempt to increase rates in the state at the request of New York State Insurance Department Superintendent Eric Dinallo.

Dinallo said that higher gas prices are causing New Yorkers to drive less, which should be taken into account when establishing insurance prices. He pointed to a new Department of Transportation report that shows New Yorkers drove 4 percent fewer miles in May 2008 than in May 2007.

The insurance department didn't disclose how much Geico, the largest writer of auto insurance in the state, had wanted to raise its rates.

Other insurers, too, will now have to assess the impact of a decrease in driving and spike in gas prices on rate increases when they petition the insurance department for approval.

Auto insurers must get all rate hikes approved by the state insurance department.

State Bank settles shareholder suit

New Hyde Park-based State Bancorp has settled its shareholder- derivative lawsuit that was filed last year.

There were no monetary exchanges in the settlement, except the return of attorneys' fees to both parties.

Two shareholders had sued certain officers and directors of the State Bank of Long Island parent last year for its part in fraud perpetrated by Island Mortgage Network, which filed for bankruptcy in 2000.

As part of the settlement, State Bancorp must put new corporate governance measures in place, including periodic rotation of committee chairs and submission of account overdrafts of more than $50,000 to the audit committee.

In a separate case against HSA Residential Mortgage Services, State Bank had paid $65 million when a judge determined that Island Mortgage's fraud couldn't have continued without the bank's participation.

The shareholders had requested the $65 million, along with exit packages paid to officers listed in the case, be returned to State Bancorp.

In the current settlement, State Bank agreed that two unnamed directors, who were defendants in the case, would resign by 2010.

"We are very pleased to finally have the shareholder-derivative lawsuit behind us. Such legal fees have been running at a level in excess of $1 million per quarter over the past year. During this period of general economic dislocation, it is vital that the company be undistracted in pursuit of its strategic goals," Thomas O'Brien, chief executive of State Bank, said in a statement.

Liquidation Bureau to get annual audits

The New York Liquidation Bureau just completed the first independent audit of its financial statements in its 99 years of existence.

The bureau, which manages insolvent or bankrupt state insurance companies, will now be required to submit yearly audits to the Legislature and governor as part of a recently adopted insurance law change.

State Insurance Department Superintendent Eric Dinallo and Mark Peters, chief of the Liquidation Bureau, proposed the change.

The bureau will also soon release independent audits of the financial statements of insurance companies under its control.

"This revision to the insurance law helps us fulfill Gov. Paterson's mandate that agencies serving New Yorkers operate as transparently and cost efficiently as possible," Dinallo said in a statement.

Esquire deposits, assets surge

Garden City-based Esquire Bank doesn't seem fazed by the credit crisis.

With the opening of its second branch in Garden City in April - the bank previously had a branch in Brooklyn and administrative offices in Garden City - deposits grew 135 percent since June of last year to about $54 million as of June this year.

Assets jumped 79 percent from $36.1 million in June 2007 to $64.7 million this year.

Signature moves

Signature Bank has moved its Melville office to a larger facility right next door.

The new location is at 68 South Service Road and will accommodate a third private client banking team, which it added in November.

The new space will hold about 30 bankers.

"We look forward to continuing to expand on Long Island, which is among the nation's leading areas for privately owned businesses, our direct focus," Joseph J. DePaolo, chief executive at Signature Bank, said in a statement.

Originally published by Laura Glasser.

(c) 2008 Long Island Business News. Provided by ProQuest LLC. All rights Reserved.

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