0000950123-95-002222.txt : 19950811 0000950123-95-002222.hdr.sgml : 19950811 ACCESSION NUMBER: 0000950123-95-002222 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUFFOLK BANCORP CENTRAL INDEX KEY: 0000754673 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 112708279 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13580 FILM NUMBER: 95560707 BUSINESS ADDRESS: STREET 1: 6 W SECOND ST CITY: RIVERHEAD STATE: NY ZIP: 11901 BUSINESS PHONE: 516725667 MAIL ADDRESS: STREET 1: 6 WEST SECOND STREET CITY: RIVERHEAD STATE: NY ZIP: 11901 10-Q 1 SUFFOLK BANCORP 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1995 Commission file number 0-13580 SUFFOLK BANCORP -------------------------------------------------------------------------------- (exact name of registrant as specified in its charter) New York State 11-2708279 ----------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
6 West Second Street, Riverhead, New York 11901 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (516) 727-2700 -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE -------------------------------------------------------------------------------- (former name, former address and former fiscal year if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ----- ----- Indicate the number shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 3,741,673 SHARES OF COMMON STOCK OUTSTANDING AS OF JUNE 30, 1995 2 SUFFOLK BANCORP AND SUBSIDIARIES
Part I Financial Information page Consolidated Statements of Condition 1 Consolidated Statements of Income, For the Three Months Ended June 30, 1995 and 1994 2 Consolidated Statements of Income, For the Six Months Ended June 30, 1995 and 1994 3 Statements of Cash Flows, For the Six Months Ended June 30, 1995 and 1994 4 Notes to the Unaudited Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial Condition and Results of Operation 5 Part II Other Information 6 Signatures 7
3 SUFFOLK BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CONDITION (IN THOUSANDS EXCEPT NUMBER OF SHARES)
JUNE 30, 1995 DECEMBER 31, 1994 ASSETS Cash and Due From Banks ............................................................... $ 38,819 $ 56,488 Federal Funds Sold .................................................................... 48,700 -- Investment Securities: United States Treasury Obligations; Available for Sale ............................. 70,762 68,261 Held to Maturity: United States Treasury Obligations ................................................. 34,072 57,091 Obligations of States and Political Subdivisions ................................... 13,493 36,780 U.S. Govt. Agency Obligations ...................................................... 30,765 31,871 Corporate Bonds and Other Securities ............................................... 638 638 --------- --------- Total Investment Securities ...................................................... 149,730 194,641 Total Loans, Net of Unearned Income ................................................... 528,990 535,646 Less: Allowance for Possible Loan Losses ............................................ 6,050 6,213 --------- --------- Net Loans ....................................................................... 522,940 529,433 Premises and Equipment ................................................................ 12,435 12,428 Other Real Estate Owned ............................................................... 1,634 2,265 Accrued Interest Receivable, Net ...................................................... 4,028 4,007 Excess Cost Over Fair Value of Net Assets Acquired .................................... 3,167 3,348 Other Assets .......................................................................... 9,422 9,044 --------- --------- TOTAL ASSETS .................................................................... $ 790,875 $ 811,654 ========= ========= LIABILITIES Demand Deposits ....................................................................... $ 150,125 $ 147,133 Savings, N.O.W. and Money Market Deposits ............................................. 350,894 408,838 Time Certificates of $100,000 or More ................................................. 25,035 23,767 Other Time Deposits ................................................................... 181,550 144,255 --------- --------- Total Deposits ..................................................................... 707,604 723,993 Federal Funds Purchased ............................................................... -- 4,300 Dividends Payable on Common Stock ..................................................... 753 722 Accrued Interest Payable .............................................................. 1,631 1,100 Other Liabilities ..................................................................... 2,407 4,446 --------- --------- TOTAL LIABILITIES ............................................................... $ 712,395 $ 734,561 STOCKHOLDERS' EQUITY Common Stock (Par Value $5.00; 7,500,000 authorized; 3,799,674 issued at June 30, 1995 and December 31, 1994, respectively) ................................................... $ 18,998 $ 18,998 Surplus ............................................................................... 18,373 18,373 Unrealized Gain (Loss) on Investments Available for Sale, Net of Tax .................................................... 271 (443) Treasury Stock (66,301 Shares) ........................................................ (332) -- Undivided Profits ..................................................................... 41,170 40,165 --------- --------- TOTAL STOCKHOLDERS' EQUITY ......................................................... $ 78,480 $ 77,093 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................................... $ 790,875 $ 811,654 ========= =========
See accompanying notes to consolidated financial statements. (1) 4 SUFFOLK BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (FOR THE THREE MONTHS ENDED JUNE 30,)
1995 1994 INTEREST INCOME Loans (including fee income) ............ $ 12,167 $ 10,564 Federal Funds Sold ...................... 324 217 United States Treasury Securities ....... 1,346 1,159 Obligations of States and Political Subdivisions ............... 408 418 U.S. Govt. Agency Obligations ........... 517 512 Corporate Bonds and Other Securities .... 9 10 ---------- ---------- Total Interest Income ............... 14,771 12,880 INTEREST EXPENSE Savings, N.O.W. and Money Market Deposits ............................. 2,125 2,320 Time Certificates of $100,000 or more ... 265 95 Other Time Deposits ..................... 2,588 1,454 Federal Funds Purchased ................. -- 14 Interest on Other Borrowings ............ 30 -- Interest on Mortgages ................... 43 37 ---------- ---------- Total Interest Expense .............. 5,051 3,920 ---------- ---------- Net Interest Income ................. 9,720 8,960 Provision For Possible Loan Losses ...... 115 330 ---------- ---------- Net Interest Income After Provision For Possible Loan Losses .......... 9,605 8,630 OTHER INCOME Service Charges on Deposit Accounts ..... 897 827 Other Service Charges, Commissions & Fees ............................... 392 328 Fiduciary Activities .................... 121 115 Other Operating Income .................. 265 158 ---------- ---------- Total Other Income .................. 1,675 1,428 OTHER EXPENSE Salaries and Employee Benefits .......... 4,201 3,743 Net Occupancy Expense ................... 638 589 Equipment Expense ....................... 816 704 Other Operating Expense ................. 2,444 2,302 ---------- ---------- Total Other Expense ................. 8,099 7,338 ---------- ---------- Income Before Income Taxes .............. 3,181 2,720 Provision For Income Taxes .............. 1,150 1,110 ---------- ---------- NET INCOME .............................. $ 2,031 $ 1,610 ========== ========== Earnings Per Share ...................... $ 0.54 $ 0.42 ========== ========== Average Shares .......................... 3,780,195 3,741,574
See accompanying notes to consolidated financial statements. (2) 5 SUFFOLK BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (FOR THE SIX MONTHS ENDED JUNE 30,)
1995 1994 INTEREST INCOME Loans (including fee income) ............ $ 23,956 $ 19,429 Federal Funds Sold ...................... 397 259 United States Treasury Securities ....... 3,281 2,489 Obligations of States and Political Subdivisions ............... 828 865 U.S. Govt. Agency Obligations ........... 1,044 525 Corporate Bonds and Other Securities .... 19 24 ---------- ---------- Total Interest Income ............... 29,525 23,591 INTEREST EXPENSE Savings, N.O.W. and Money Market Deposits ............................. 4,302 4,219 Time Certificates of $100,000 or more ... 555 166 Other Time Deposits ..................... 4,499 2,834 Federal Funds Purchased ................. 86 122 Interest on Other Borrowings ............ 512 7 Interest on Mortgages ................... 95 37 ---------- ---------- Total Interest Expense .............. 10,049 7,385 ---------- ---------- Net Interest Income ................. 19,476 16,206 Provision For Possible Loan Losses ...... 305 480 ---------- ---------- Net Interest Income After Provision For Possible Loan Losses .......... 19,171 15,726 OTHER INCOME Service Charges on Deposit Accounts ..... 1,800 1,370 Other Service Charges, Commissions & Fees ............................... 752 565 Fiduciary Activities .................... 236 225 Other Operating Income .................. 408 279 ---------- ---------- Total Other Income .................. 3,196 2,439 OTHER EXPENSE Salaries and Employee Benefits .......... 8,398 6,737 Net Occupancy Expense ................... 1,251 1,004 Equipment Expense ....................... 1,617 1,198 Other Operating Expense ................. 4,548 3,709 ---------- ---------- Total Other Expense ................. 15,814 12,648 ---------- ---------- Income Before Income Taxes .............. 6,553 5,517 Provision For Income Taxes .............. 2,321 2,000 ---------- ---------- NET INCOME .............................. $ 4,232 $ 3,517 ========== ========== Earnings Per Share ...................... $ 1.12 $ 0.98 ========== ========== Average Shares .......................... 3,789,881 3,583,414
See accompanying notes to consolidated financial statements. (3) 6 SUFFOLK BANCORP AND SUBSIDIARIES UNAUDITED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (FOR THE SIX MONTHS ENDED JUNE 30,)
1995 1994 NET INCOME .............................................. $ 4,232 $ 3,517 ADJUSTMENT TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Provision for Loan Losses ........................... 305 480 Depreciation ........................................ 1,047 679 Amortization of Excess of Cost Over Fair Value of Net Assets Acquired ............ 181 156 Accretion of Discounts .............................. (549) (972) Amortization of Premiums ............................ 50 54 Increase in Accrued Interest Receivable ............. (21) (949) Increase in Other Assets ............................ (378) (2,862) Increase in Dividends Payable on Common Stock ....... 31 68 Increase (Decrease) in Accrued Interest Payable ..... 531 (585) (Decrease) Increase in Other Liabilities ............ (2,039) 830 Other, Net .......................................... -- 340 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES ......... $ 3,390 $ 756 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Principal Payments on Investment Securities ......... $ 1,189 $ 545 Maturities of Investments - Available for Sale ...... 33,286 64,000 Purchases of Investments - Available for Sale ....... (35,564) (39,169) Maturities of Investments - Held to Maturity ........ 78,085 25,761 Purchases of Investments - Held to Maturity ......... (31,586) (2,237) Investments Acquired from Hampton Bancshares ........ -- (34,929) Loan Disbursements and Repayments, Net .............. 4,944 (24,128) Net Loans Acquired from Hampton Bancshares .......... -- (86,422) Purchases of Premises and Equipment, Net ............ (1,054) (242) Premises & Equipment Acquired from Hampton Bancshares -- (8,244) Acquisition of Hampton Bancshares, Net .............. -- 4,980 Disposition of OREO Property ........................ 844 -- --------- --------- NET CASH PROVIDED BY INVESTING ACTIVITIES ......... $ 50,144 $(100,085) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net (Decrease) Increase in Deposit Accounts ......... $ (16,389) $ 9,862 Net Deposits Acquired from Hampton Bancshares ....... -- 142,227 Net Proceeds from Other Borrowings .................. (4,300) (4,483) Treasury Stock Acquired ............................. (332) -- Common Stock Sold for Cash .......................... -- 10 Dividends Paid to Stockholders ...................... (1,482) (1,155) --------- --------- NET CASH USED BY FINANCING ACTIVITIES ............. $ (22,503) $ 146,461 --------- --------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ............................ 31,031 47,132 CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD ... 56,488 27,557 ========= ========= CASH AND CASH EQUIVALENTS END OF PERIOD ......... $ 87,519 $ 74,689 ========= =========
See accompanying notes to consolidated financial statements. (4) 7 SUFFOLK BANCORP AND SUBSIDIARIES NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (1) GENERAL In the opinion of management, the accompanying unaudited consolidated financial statements of Suffolk Bancorp and its consolidated subsidiaries have been prepared to reflect all adjustments (consisting solely of normal recurring accruals) necessary for a fair presentation of the financial condition and results of operations for the periods presented. Certain information and footnotes normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Notwithstanding, management believes that the disclosures are adequate to prevent the information from misleading the reader, particularly when the accompanying consolidated financial statements are read in conjunction with the audited consolidated financial statements and notes thereto included in the Registrant's annual report and on Form 10-K, for the year ended December 31, 1994. The results of operations for the three months and six months ended June 30, 1995, are not necessarily indicative of the results of operations to be expected for the remainder of the year. (2) IMPACT OF NEW ACCOUNTING STANDARDS Effective January 1, 1995, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan" ("Statement 114") as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures", ("Statement 118"). Statement 114 generally requires all creditors to account for impaired loans, except those loans that are accounted for at fair value or at the lower of cost or fair value, at the present value of the expected future cash flows discounted at the loan's effective interest rate. Statement 114 did not have a material effect on the Company's financial condition or results of operations. Statement 114 also provides that in-substance foreclosured loans should not be included in OREO for financial reporting purposes, but rather should be included in the loan portfolio. Statement 118 amends Statement 114 to allow a creditor to use existing methods for recognizing interest income on an impaired loan. This statement also amends the disclosure requirements of Statement 114 to require information about the recorded investment in certain impaired loans and about how a creditor recognizes interest income related to those impaired loans. Statement 118 did not have a material effect on the Company's financial condition or results of operations. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION for the Three and Six Month Period ended June 30, 1995 and 1994 NET INCOME Net income was $2,031,000 for the quarter, ahead 26.2 percent from $1,610,000 posted during the same period last year when the company completed the acquisition of Hamptons Bancshares, Inc. Earnings-per-share for the quarter were $0.54 versus $0.42. Net income for the six months ended June 30, 1995 was $4,232,000 compared to $3,517,000 for the first six months of 1994, up 20.3 percent for the period. Earnings-per-share for the six months was $1.12 versus $0.98. INTEREST INCOME Interest income was $14,771,000 for the second quarter 1995, ahead 14.7 percent from the $12,880,000 posted for the same quarter in 1994. Average net loans for the second quarter of 1995 totaled $528,808,000, compared to $503,169,000 for the same period of 1994. During the second quarter of 1995, the yield on average earning assets of $722,924,000 increased to 8.31 percent, up from 7.39 percent on average earning assets of $709,890,000 during second quarter 1994. Interest income was $29,525,000 for the first six months of 1995, up 25.2 percent from $23,591,000 posted for the same period in 1994. Interest income has been impacted by higher rates of interest as well as greater loan balances outstanding. (5) 8 INTEREST EXPENSE Interest expense for the second quarter 1995 was $5,051,000, ahead 28.9 percent from the $3,920,000 for the same period of 1994. Average deposits for the second quarter 1995 were $701,262,000, up from $692,729,000 for the comparable period in 1994. Other borrowings, in the form of repurchase agreements and federal funds purchased, averaged $1,998,000 during the second quarter 1995, compared to $1,336,000 during second quarter 1994. Other time deposits which have matured, as well as time certificates of $100,000 or more have been repriced at higher rates of interest during the second quarter of 1995. The variation in deposit balances from quarter to quarter is primarily attributable to increases in other time deposits. Interest expense for the six months ended June 30, 1995 was $10,049,000, up from $7,385,000 for the same period of 1994, an increase of 36.1 percent. Interest paid on deposits reflects the rise in interest rates as maturing certificates of deposit reprice at higher rates. NET INTEREST INCOME Net interest income remains the largest component of the Company's earnings. The net interest income for year to date 1995 was $19,476,000, up from $16,206,000 during the same period of 1994, an increase of 20.2 percent. Net interest margin, on a fully tax equivalent basis, for second quarter 1995 was 5.51 percent compared to 5.18 percent for the second quarter 1994. Net interest income for the first six months of 1995 was $19,476,000, up from $16,206,000 during the same period of 1994, an increase of 20.2 percent. Net interest margin, on a fully tax equivalent basis, for the first six months of 1995 was 5.41 percent compared to 5.10 percent for the first half of 1994. Rates have increased more rapidly on assets than liabilities. As asset-quality has improved and stabilized since the most recent recession, and as the troubled assets acquired from Hamptons have been disposed of, the provision for possible loan losses has become a less significant adjustment to net interest income. The following table presents the resulting coverage of troubled assets:
----------------------------------------------------------------------------------------------------------------------------------- LAST 12 JUNE 30 MAR. 31 DEC. 31 SEP. 30 COVERAGE RATIO'S MONTHS 1995 1995 1994 1994 ----------------------------------------------------------------------------------------------------------------------------------- Net Charge-offs/Average Net Loans (annualized) 0.31% 0.12% 0.24% 0.15% 0.71% Allowance for loan losses/non-accrual, restructured, & OREO 79.22% 89.78% 77.69% 77.39% 72.02% Allowance for loan losses/loans, Net of Discount 1.17% 1.16% 1.14% 1.18% 1.19% ===================================================================================================================================
OTHER INCOME Other income increased to $1,675,000 for the three months ended June, 30, 1995 compared to $1,428,000 for the same period during 1994. Service charges on deposit accounts for the year to date 1995 totaled $1,800,000, up from $1,370,000 for the first six months of 1994. Included in other income are revenues of the Island Computer Corporation, of which The Suffolk County National Bank represents 92 percent of its business. Other income for the six months ended June 30, 1995 was $3,196,000, an increase of 31 percent over other income of $2,439,000 for the six months ended June 30, 1994. The increase is attributable to a larger deposit base and related account activity. OTHER EXPENSE Other expenses for the second quarter 1995 were $8,099,000, up 10.4 percent from $7,338,000 for the comparable period 1994. Other expenses for the first half of 1995 was $15,814,000, up 25 percent from $12,648,000 for the comparable period 1994. CAPITAL RESOURCES Stockholders' equity totaled $78,480,000 on June 30, 1995, an increase of $1,387,000 from $77,093,000 on December 31, 1994. The ratio of equity to assets was 9.9 percent at June 30, 1995 and 9.2 percent at December 31, 1994. PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. See item 4 of attached Form 8-K. (6) 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SUFFOLK BANCORP Date: August 10, 1995 /s/ Edward J. Merz ------------------------------ Edward J. Merz President & Chief Executive Officer Date: August 10, 1995 /s/ Victor F. Bozuhoski, Jr. ------------------------------ Victor F. Bozuhoski, Jr. Executive Vice President, Treasurer & Chief Financial Officer (7) 10 EXHIBIT INDEX Exhibit 27 - Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
9 1000 6-MOS DEC-31-1994 DEC-31-1994 JUN-30-1995 38,819 557,479 48,700 0 70,762 78,968 79,389 528,990 6,050 790,875 707,604 0 4,791 0 18,998 0 0 59,482 790,875 23,956 5,569 0 29,525 9,356 10,049 19,476 305 0 15,814 6,553 4,232 0 0 4,232 1.12 1.12 8.00 4,588 1,638 517 0 6,213 557 89 6,050 6,050 0 0 Provision for loan loss for 6 month period ended 6/30/94 $305.