-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OwKYTJegc4umT3iWWoRSAs48eN76uAru0/U4mX6JtS+IfOfFaadnD2BEuvJAc28G JLr4KN2k4p2GyW8WN6QAfw== 0000950123-97-009521.txt : 19971113 0000950123-97-009521.hdr.sgml : 19971113 ACCESSION NUMBER: 0000950123-97-009521 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: SEC FILE NUMBER: 000-13580 FILM NUMBER: 97716859 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 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 September 30, 1997 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) 727-5667 (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 of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 6,095,356 SHARES OF COMMON STOCK OUTSTANDING AS OF SEPTEMBER 30, 1997 (1) 2 THIS PAGE IS INTENTIONALLY BLANK. (2) 3 SUFFOLK BANCORP AND SUBSIDIARIES
Part I Financial Information page Consolidated Statements of Condition 4 Consolidated Statements of Income, For the Three Months Ended September 30, 1997 and 1996 5 Consolidated Statements of Income, For the Nine Months Ended September 30, 1997 and 1996 6 Statements of Cash Flows, For the Nine Months Ended September 30, 1997 and 1996 7 Notes to the Unaudited Consolidated Financial Statements 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II Other Information 9 Signatures 10
(3) 4 SUFFOLK BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CONDITION (in thousands of dollars except number of shares)
September 30, 1997 December 31, 1996 ------------------ ----------------- ASSETS Cash and Due From Banks 43,639 49,824 Federal Funds Sold 27,300 1,500 Investment Securities: Investment Securities Available for Sale 110,728 104,649 Investment Securities Held to Maturity: United States Treasury Obligations -- 8,019 Obligations of States and Political Subdivisions 15,050 10,170 U.S. Govt. Agency Obligations 9,656 11,877 Other Securities 638 638 -------- -------- Total Investment Securities 136,072 135,353 Loans, Net of Discounts 592,756 584,996 Less: Allowance for loan loss 6,440 6,113 -------- -------- Net Loans 586,316 578,883 Premises and Equipment, net 15,989 13,201 Other Real Estate Owned, net 349 1,899 Accrued Interest Receivable, net 4,551 5,222 Intangible Assets 2,352 2,624 Other Assets 16,185 15,873 -------- -------- TOTAL ASSETS 832,753 804,379 ======== ======== LIABILITIES Demand Deposits 178,430 168,315 Savings, N.O.W.'s and Money Market Deposits 319,477 329,930 Time Certificates of $100,000 or More 21,181 31,074 Other Time Deposit 231,643 181,698 -------- -------- Total Deposits 750,731 711,017 Federal Funds Purchased & Securities Sold Under Agreements to Repurchase -- 7,200 Dividends Payable on Common Stock 1,097 1,088 Accrued Interest Payable 2,533 1,579 Other Liabilities 15,144 10,745 -------- -------- TOTAL LIABILITIES 769,505 731,629 STOCKHOLDER'S EQUITY Common Stock (Par Value $2.50; 15,000,000 authorized 6,095,356 & 6,604,890 shares outstanding at September 30, 1997 & 1996, respectively) 19,026 19,026 Surplus 18,456 18,456 Undivided Profits 29,101 37,353 Treasury Stock (1,515,064 shares and 1,005,530 shares) (3,787) (2,543) Net Unrealized (Loss) Gain on Securities Available for Sale 452 458 -------- -------- TOTAL STOCKHOLDERS EQUITY 63,248 72,750 TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 832,753 804,379 ======== =======
(4) 5 SUFFOLK BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (in thousands of dollars except shares and per share data)
Three Months Three Months Ended 9/30/97 Ended 9/30/96 --------------- ------------- INTEREST INCOME Loans (including fee income) 13,861 12,985 Federal Funds Sold 449 226 United States Treasury Obligations 1,492 1,585 Obligations of States and Political Subdivisions 97 128 U.S. Govt. Agency Obligations 419 431 Other Securities 10 10 --------- --------- Total Interest Income 16,328 15,365 INTEREST EXPENSE Savings, N.O.W.'s and Money Market Deposits 1,867 1,975 Time Certificates of $100,000 or more 298 230 Other Time Deposits 3,228 2,589 Federal Funds Purchased -- 1 Total Interest Expense 5,393 4,795 --------- --------- Net Interest Income 10,935 10,570 Provision for Possible Loan Losses 300 300 --------- --------- Net Interest Income After Provision for Possible Loan Losses 10,635 10,270 OTHER INCOME Service Charges on Deposit Accounts 1,117 1,047 Other Service Charges, Commissions & Fees 739 562 Fiduciary Activities 125 117 Other Operating Income 184 222 --------- --------- Total Other Income 2,165 1,948 OTHER EXPENSE Salaries and Employee Benefits 4,151 3,992 Net Occupancy Expense 662 595 Equipment Expense 527 624 Other Operating Expense 2,546 2,158 --------- --------- Total Other Expense 7,886 7,369 Income Before Taxes 4,914 4,849 Provision for Income Taxes 2,034 2,066 --------- --------- NET INCOME 2,880 2,783 ========= ========= Earnings Per Share 0.47 0.43 Average Shares 6,131,886 6,620,416
(5) 6 SUFFOLK BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (in thousands of dollars except shares and per share data)
Nine Months Nine Months Ended 9/30/97 Ended 9/30/96 ------------- ------------- INTEREST INCOME Loans (including fee income) 40,765 37,306 Federal Funds Sold 664 685 United States Treasury Obligations 4,740 5,105 Obligations of States and Political Subdivisions 319 532 U.S. Govt. Agency Obligations 1,252 1,372 Other Securities 29 29 --------- --------- Total Interest Income 47,769 45,029 INTEREST EXPENSE Savings, N.O.W.'s and Money Market Deposits 5,630 5,949 Time Certificates of $100,000 or more 800 659 Other Time Deposits 8,577 8,009 Federal Funds Purchased 100 16 Interest on Other Borrowings 337 -- --------- --------- Total Interest Expense 15,444 14,633 Net Interest Income 32,325 30,396 Provision for Possible Loan Losses 834 820 --------- --------- Net Interest Income After Provision for Possible Loan Losses 31,491 29,576 OTHER INCOME Service Charges on Deposit Accounts 3,349 3,065 Other Service Charges, Commissions & Fees 1,517 1,349 Fiduciary Activities 384 392 Other Operating Income 415 530 --------- --------- Total Other Income 5,665 5,336 OTHER EXPENSE Salaries and Employee Benefits 12,272 11,911 Net Occupancy Expense 1,880 1,799 Equipment Expense 1,575 1,915 Other Operating Expense 7,158 5,966 --------- --------- Total Other Expense 22,885 21,591 Income Before Taxes 14,271 13,321 Provision for Income Taxes 5,957 5,551 --------- --------- NET INCOME 8,314 7,770 ========= ========= Earnings Per Share 1.30 1.16 Average Shares 6,380,305 6,710,104
(6) 7 SUFFOLK BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars)
Nine Months Nine Months Ended 9/30/97 Ended 9/30/96 ------------- ------------- NET INCOME 8,314 7,770 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH : Provision for Loan Losses 834 820 Depreciation 978 1,213 Amortization of Excess of Cost Over Fair Market Value of Net Assets Acquired 271 272 Accretion of Discounts (618) (1,749) Amortization of Premiums 253 366 Decrease in Interest Receivable 672 1,060 Increase in Other Assets (313) (2,542) Increase (Decrease) in Interest Payable 954 (205) Increase in Other Liabilities 4,400 2,329 ------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 15,745 9,334 CASH FLOWS FROM INVESTING ACTIVITIES Principal Payments on Investment Securities 2,278 1,822 Maturities of Investments Held to Maturity 12,406 163,934 Purchases of Investments Held to Maturity (9,288) (2,237) Maturities of Investments Available for Sale 45,509 9,790 Purchases of Investments Available for Sale (51,259) (114,540) Net Loan Disbursements & Repayments (8,582) (54,740) Purchases of Premises and Equipment, Net (3,765) (1,427) Disposition of OREO Property 1,862 1,299 ------- -------- NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (10,839) 3,901 CASH FLOWS FROM FINANCING ACTIVITIES Net Increase (Decrease) in Deposit Accounts 39,713 (19,376) Reduction of Other Borrowings (7,200) 0 Treasury Shares Acquired (14,578) (3,514) Dividends Paid to Shareholders (3,226) (3,116) Increase in Dividends Payable on Common Stock 0 (105) ------- -------- NET CASH USED FROM FINANCING ACTIVITIES 14,709 (26,111) NET DECREASE IN CASH AND CASH EQUIVALENTS 19,615 (12,876) CASH AND CASH EQUIVALENTS: BEGINNING OF PERIOD 51,324 81,455 ------- -------- CASH AND CASH EQUIVALENTS: END OF PERIOD 70,939 68,579 ======= ========
(7) 8 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 normally 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, 1996. The results of operations for the three and nine months ended September 30, 1997 are not necessarily indicative of the results of operations to be expected for the remainder of the year. (2) IMPACT OF NEW ACCOUNTING STANDARDS In December 1996, the Financial Accounting Standards Board, ("FASB") issued SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125," which is an amendment to SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities." which supersedes SFAS No. 122. SFAS No. 125 is effective for transfers and servicing of financial assets and extinguishment of liabilities occurring after December 31, 1996. SFAS No. 127 delayed the effective date of certain provisions of SFAS No. 125 until January 1, 1998. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION for the Three-Month Periods ended September 30, 1997 and 1996 NET INCOME Net income was $2,880,000 for the quarter, ahead 3.5 percent from $2,783,000 posted during the same period last year. Earnings per share for the quarter were $0.47 versus $0.43, a gain of 9.3 percent. INTEREST INCOME Interest income was $16,328,000 for the third quarter of 1997, up 6.3 percent from $15,365,000 posted for the same quarter in 1996. Average net loans during the third quarter of 1997 totaled $590,466,000, compared to $555,560,000 for the same period of 1996. During the third quarter of 1997, the yield was 8.68 percent on average earning assets of $752,202,000 up from $709,439,000 during the third quarter of 1996, yielding 8.63 percent. The increase in interest income is primarily attributable to the increase in average balances of earning assets. INTEREST EXPENSE Interest expense for the third quarter of 1997 was $5,393,000, up 12.5 percent from $4,795,000 for the same period of 1996. Average deposits for the third quarter 1997 were $762,728,000 up from $715,112,000 for the comparable period in 1996. NET INTEREST INCOME Net interest income is the largest component of the Company's earnings. Net interest income for the third quarter of 1997 was $10,935,000, up from $10,570,000 during the same period of 1996. The net interest margin for the quarter, on a fully taxable-equivalent basis, was 5.81 percent compared to 5.96 percent for the same period of 1996. (8) 9 The following table presents the coverage of troubled assets:
LAST 12 SEPT. 30 JUNE 30 MAR 31 DEC 31 COVERAGE RATIOS MONTHS 1997 1997 1997 1996 Net Charge-offs/Average Net Loans 0.11% 0.19% 0.06% 0.10% 0.09% Allowance for Loan Losses/Non-Accrual, Restructured, & OREO 148.76% 172.10% 161.87% 158.13% 102.93% Allowance for Loan Losses/Net Loans 1.07% 1.09% 1.08% 1.05% 1.05%
OTHER INCOME Other income increased to $2,165,000 for the three months ended September 30, 1997 compared to $1,948,000. Trust revenue was up 6.8 percent. Other operating income was down 17.1 percent. OTHER EXPENSE Other expense for the third quarter 1997 was $7,886,000, up 7.0 percent from $7,369,000 for the comparable period in 1996. CAPITAL RESOURCES Stockholders' equity totaled $63,248,000 on September 30, 1997, a decrease of $9,502,000 from $72,750,000 on December 31, 1996. The ratio of equity to assets was 7.6 percent at September 30, 1997 and 9.04 percent at December 31, 1996. At their annual meeting on April 8, 1997, the Company's shareholders voted to increase the number of shares authorized from 7,500,000 to 15,000,000 and to split the stock 2 for 1, changing the par value from $5.00 to $2.50. The split was payable on May 15, 1997. All numbers in the following discussion are adjusted to reflect the split. The Company believes that the repurchase of stock is an important tool to manage capital in times when its business generates capital faster than assets. In January of 1997, the Company announced its intention to repurchase five percent of the common shares then outstanding, or 329,644 shares. In 1996, the Company authorized the repurchase of 340,130 shares, of which it was able to repurchase only 236,800 shares. The remaining 103,330 shares not repurchased during 1996 were added to the 1997 plan, calling in total to repurchase 432,974 shares more. In the first week of the quarter, the Company reached an agreement with its largest shareholder to repurchase 373,422 shares, or 5.77 percent of the shares outstanding on September 30, 1997. This purchase raised the total of shares repurchased since December 31, 1996 to 497,536, or 64,562 shares more than had previously been announced for repurchase. The additional shares were authorized by the board for repurchase in order to complete the transaction. This transaction reduced the Company's leverage ratio from 8.68 percent to 7.26 percent, pro-forma, based on September 30, 1997 balances and should be accretive to earnings per share. This transaction concludes the Company's formal repurchase program, although the Company may repurchase shares in the future for various corporate purposes. PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. None. (9) 10 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: November 13, 1997 /s/ Edward J. Merz ------------------------------ Edward J. Merz Chairman, President & Chief Executive Officer Date: November 13, 1997 /s/ Victor F. Bozuhoski, Jr. ------------------------------ Victor F. Bozuhoski, Jr. Executive Vice President, Treasurer & Chief Financial Officer (10) 11 THIS PAGE IS INTENTIONALLY BLANK. (11) EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 43,639 0 27,300 0 110,728 18,350 18,522 599,196 6,440 832,753 750,731 0 18,774 0 0 0 63,248 0 832,753 40,765 6,340 664 47,769 15,007 15,444 32,325 834 0 22,885 14,271 14,271 0 0 8,314 1.16 1.16 5.91 2,620 1,989 773 0 6,113 307 83 6,423 6,423 0 0
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