On The Cover   Moriches Inlet and Moriches Bay   The region of Brookhaven Township now called Moriches is believed to have been named after a Native American trader named Mertices who lived in the 17th century on the east bank of what is now known as the Terrell River, located midway along Long Island’s south shore. The first Europeans who settled in the area were Puritans. The area was the scene of considerable conflict and seven years occupation by the British during the Revolutionary War. In 1881, the Long Island Rail Road was extended to Moriches, spurring economic development. In recent years, agriculture and fishing have given way to a bedroom community for other, more industrial areas of Long Island. It supports a diverse collection of service businesses. SCNB established an office in Center Moriches in 1985 which, on average, was the third largest in SCNB’s network during 2005.

Corporate Profile	1
Financial Highlights	1
To Our Shareholders	2
Price Range of Common Stock and Dividends	4
Summary of Selected Financial Data	4
Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Summary of Recent Developments and Current Trends	5
Suffolk’s Business	6
General Economic Conditions	6
Results of Operations	6
Net Income	6
Net Interest Income	6
Average Assets, Liabilities, and Stockholders’ Equity, Rate Spread, and Effective Interest Rate Differential	7
Analysis of Changes in Net Interest Income	8
Interest Income	8
Investment Securities	8
Loan Portfolio	9
Non-Performing Loans	10
Summary of Loan Losses and Allowance for Loan Losses	10
Interest Expense	11
Deposits	11
Short-Term Borrowings	12
Other Income	12
Other Expense	12
Interest Rate Sensitivity	12
Market Risk	13
Interest Rate Risk	13
Asset/Liability Management & Liquidity	14
Off- Balance-Sheet Obligations	14
Capital Resources	14
Risk-Based Capital and Leverage Guidelines	15
Discussion of New Accounting Pronouncements	15
Critical Accounting Policies, Judgments, and Estimates	17
Business Risks and Uncertainties	17
Management’s Report on Internal Control over Financial Reporting	17
Consolidated Statements of Condition	18
Consolidated Statements of Income	19
Consolidated Statements of Changes in Stockholders’ Equity	20
Consolidated Statements of Cash Flows	21
Notes to Consolidated Financial Statements	22
Report of Independent Registered Public Accounting Firm - Internal Control	35
Report of Independent Registered Public Accounting Firm - Financial Statements	36
Report of Management	36
Annual Report of Form 10-K	37
Certifications of Periodic Report	46
Directors and Officers – Suffolk Bancorp	46
Directors and Officers – Suffolk County National Bank	47
Directory of Offices and Departments	inside back cover

Corporate Profile

Suffolk Bancorp does commercial banking through its wholly owned subsidiary, Suffolk County National Bank. Organized in 1890, “SCNB” is a full-service, nationally chartered commercial bank. Most of SCNB’s revenue comes from net interest income, and the remainder from charges for a variety of services. SCNB has built a good reputation for personal, attentive service, resulting in a loyal and growing clientele. SCNB operates 27 full-service offices throughout Suffolk County, New York.

The staff at SCNB works hard to develop and maintain ties to the communities it serves. SCNB’s business includes loans to small and medium-sized commercial enterprises, to professionals, and to individual consumers. In recent years commercial loans of all types have increased as a percentage of the loan portfolio and have made substantial contributions to SCNB’s profitability. SCNB’s primary market is Long Island, New York. Long Island is home to approximately 2.8 million people outside of the limits of New York City and is primarily suburban in nature. Nassau County and the western end of Suffolk County are a center for commerce and are highly developed, supporting a diversified economy. The economy on eastern Long Island is based on services that support tourism, a large number of second homes, and agriculture. Together, they generate family incomes greater than the national average, providing Suffolk Bancorp with a steady and growing demand for loans and other services, and a reliable, reasonably priced supply of deposits.

Financial Highlights

(dollars in thousands, except ratios, share, and per-share information)
December 31,	2005			2004
EARNINGS FOR THE YEAR
Net income	$	22,102		$	20,875
Net interest income		64,361			60,605
Net income-per-share		2.09			1.92
Cash dividends-per-share		0.79			0.76
BALANCES AT YEAR END
Assets	$	1,408,283		$	1,348,218
Net loans		895,209			817,220
Investment securities		417,312			442,139
Deposits		1,158,707			1,197,592
Equity		102,001			106,212
Shares outstanding		10,406,721			10,842,537
Book value per common share	$	9.80		$	9.80
RATIOS
Return on average equity		22.18	%		20.85	%
Return on average assets		1.59			1.53
Average equity to average assets		7.19			7.35
Net interest margin (taxable-equivalent)		5.09			4.90
Efficiency ratio		50.28			50.24
Net (recoveries) charge-offs to average net loans		(0.01	)		0.28

Suffolk Bancorp Annual Meeting	Trading	Independent Public Accountants
Tuesday, April 11, 2006, 1:00 P.M.	Suffolk Bancorp’s common stock is	Grant Thornton LLP
Suffolk County National Bank	traded over-the-counter, and is listed	Two Commerce Square
Administrative Center	on the NASDAQ National Market	Suite 3100
Lower Level	System under the symbol “SUBK.”	2001 Market Street
Four West Second Street		Philadelphia, Pennsylvania 19103
Riverhead, New York	Registrar and Transfer Agent
	Any questions about the registration	General Counsel
S.E.C. Form 10-K	or transfer of shares, the payment,	Smith, Finkelstein, Lundberg,
The Annual Report to the Securities	reinvestment, or direct deposit of	Isler & Yakaboski
and Exchange Commission on Form	dividends can be answered by:	456 Griffing Avenue
10-K and documents incorporated by		Riverhead, New York 11901
reference can be obtained, without	American Stock Transfer
charge, by writing to the Secretary,	& Trust Co.	FDIC Rules and Regulations, Part
Suffolk Bancorp, 4 West Second	59 Maiden Lane	350.4(d)
Street, Riverhead, New York 11901,	New York, New York 10038	This statement has not been reviewed,
or call (631) 727-5667, fax to (631)	1-800-937-5449	or confirmed for accuracy or
727-3214, or e-mail to		relevance, by the Federal Deposit
invest@suffolkbancorp.com		Insurance Corporation.

Dear Shareholder:

Suffolk Bancorp and its wholly owned subsidiary, Suffolk County National Bank, rose to a variety of challenges during 2005. The results were these:

Net income was $22,102,000, up 5.9 percent from $20,875,000 last year. Earnings-per-share were $2.09, up 8.9 percent compared to $1.92 during 2004. Net interest income increased by 6.2 percent, to $64,361,000 from $60,605,000. Income other than from interest declined by 17.3 percent, to $10,166,000. Expense other than for interest increased by 2.3 percent, to $37,474,000 from $36,621,000. Our efficiency ratio was essentially unchanged from year to year at 50.28 percent compared to 50.24 percent, considerably better than in the banking industry as a whole. Return on average assets increased to 1.59 percent from 1.53 percent. Overall we achieved return on average equity of 22.18 percent, up from 20.85 percent last year, substantially in excess of recent averages for our industry.

We did this in a year during which the Federal Reserve Board increased the key fed funds rate eight times, and during which the spread between that rate and the ten-year Treasury narrowed to a scant ten basis points. At the end of the year, the yield curve was actually inverted, with short-term rates exceeding those for intermediate terms. This created incentives for borrowers to extend maturities wherever possible without providing lenders with a premium for the risk inherent in longer terms. This may have been, in part, the result of overcapacity in the banking industry which encouraged many institutions to reach for rates on deposits, and to price loans at levels that were insufficient to account for the risks of both credit and variations in rates of interest.

In this complex environment, our core banking business continued to grow, with earnings-per-share and net income increasing from year to year even without the benefit of securities gains of $1,994,000 in 2004. Along with long-term managerial discipline and prudence, one of the most important characteristics of a successful banking company is flexibility. Key is our ability to discern changes in the economy generally and in our own marketplace, and to develop measured, orderly responses. Our first concern is to protect operating margins, and the second, to take advantage of changed opportunities to bolster profits and thus shareholder value. While the principles underlying Suffolk’s strategic direction and operations remain constant, a review of both balance sheet and income statement reveals significant evolution in our business.

Most important has been the continued redistribution of the loan portfolio out of indirect retail paper. Just three years ago this comprised fully one third of the portfolio, and now it is just 14.7 percent, a level closer to what we believe will be sustainable in light of the structural changes in automobile finance. The loan portfolio grew 9.6 percent from year to year, particularly in commercial real estate, even while overcoming an 18.0 percent decline in indirect paper during that same period. Another example of our adaptability has been in the composition of our investment portfolio, where we have redeployed cash flow from maturing collateralized mortgage obligations, originally purchased to provide downside protection while rates fell to their recent, historic lows, to purchase municipal securities that provide superior returns in the current environment.

We have adapted to the current and somewhat peculiar interest rate environment by further sharpening our focus on demand deposits, primarily in lending

2

relationships, and on those time deposits that are less sensitive to price. The result has been a 10.0 percent increase in demand deposits, a 13.3 percent decline in non-maturity deposits, and a decline in total deposits of 3.2 percent from year to year. We have replaced these funds with borrowings in the capital markets, and expect to continue to do so until the yield curve assumes a more normal, upward slope and the cost of new deposits is more favorable. The result of this repositioning has been a net interest margin of 5.09 percent for the year, up from 4.90 percent a year ago. This compares to 4.05 and 3.97 percent, respectively for the industry as a whole.

Absent the effect of securities gains taken last year as we repositioned the investment portfolio, non-interest income declined by 1.3 percent for the year. This was a reflection of sharp competition among banks offering “free” services during 2005. Non-interest expense increased modestly, by only 2.3 percent year to year. The exception was for occupancy as we outgrew certain locations and moved to larger quarters. Facilities in other locations were upgraded to attract and retain customers, and we opened a new office in Deer Park, New York.

Finally, we continue to manage the capital account to adjust it to the size of the business at hand and thus maximize leverage for our shareholders’ benefit, having repurchased just over 4 percent of the shares outstanding one year ago. This permits us to provide a return to those shareholders who wish to exit their position in Suffolk Bancorp stock while concentrating earnings-per-share among our continuing shareholders and allowing them to time their gains as best benefits their individual tax positions. We balance this with a cash dividend that runs between 35 and 40 percent of net income for shareholders who prefer current income.

Our first obligation to our shareholders is to remain alert to both the challenges and opportunities of our markets as they develop, and to craft strategies and tactics to make the most of them. There are a number of countervailing pressures in our marketplace and in the economy. One obvious example lies in the demographics of our primary market on Long Island. By almost any measure, they are enviable, whether one measures median family incomes, median net worth, business activity, or education. This provides us with rich opportunity, but also attracts the attention of competitors from outside the region, making our market not only attractive, but fiercely competitive, where superior service is our essential edge.

My colleagues and I are committed to finding the best mix of responses to maximize our returns to our shareholders over the long haul. We believe that the key is controlled, orderly growth that finds balance among a wide variety of factors. We believe that we have accomplished that during 2005, and we plan to continue to do so in 2006. This year, as always, we are grateful for your steady support and confidence in our enterprise.

Sincerely,

Thomas S. Kohlmann

President & Chief Executive Officer

3

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

Suffolk’s common stock is traded in the over-the-counter market, and is quoted on the NASDAQ National Market System under the symbol “SUBK.” Following are quarterly high and low prices of Suffolk’s common stock as reported by NASDAQ.

2005	High		Low		Dividends		2004	High		Low		Dividends
First Quarter	$	35.62	$	30.95	$	0.19	First Quarter	$	36.30	$	33.34	$	0.19
Second Quarter		34.49		25.68		0.20	Second Quarter		36.00		29.69		0.19
Third Quarter		34.76		28.94		0.20	Third Quarter		32.95		29.74		0.19
Fourth Quarter		37.00		27.01		0.20	Fourth Quarter		35.77		29.73		0.19

At January 31, 2006, there were approximately 1,639 equity holders of record and approximately 2,400 beneficial shareholders of the Company’s common stock.

SUMMARY OF SELECTED FINANCIAL DATA

FIVE-YEAR SUMMARY: (dollars in thousands except per-share amounts)

For the years	2005			2004			2003			2002			2001
Interest income	$	75,673		$	67,984		$	70,995		$	78,428		$	79,565
Interest expense		11,312			7,379			9,801			16,088			24,342
Net interest income		64,361			60,605			61,194			62,340			55,223
Provision for loan losses		1,575			1,973			932			1,380			1,544
Net interest income after provision		62,786			58,632			60,262			60,960			53,679
Other income		10,166			12,294			11,310			10,073			9,548
Other expense		37,474			36,621			36,190			35,744			32,307
Income before income taxes		35,478			34,305			35,382			35,289			30,920
Provision for income taxes		13,376			13,430			14,046			14,020			12,235
Net Income	$	22,102		$	20,875		$	21,336		$	21,269		$	18,685
BALANCE AT DECEMBER 31:
Federal funds sold	$	—		$	2,500		$	4,300		$	17,500		$	17,600
Investment securities — available for sale		400,038			427,678			376,189			359,903			241,061
Investment securities — held to maturity		17,273			14,461			14,641			16,983			13,559
Total investment securities		417,311			442,139			390,830			376,886			254,620
Net loans		895,209			817,220			830,510			779,862			787,285
Total assets		1,408,283			1,348,218			1,328,757			1,272,717			1,164,947
Total deposits		1,158,707			1,197,592			1,187,496			1,142,582			1,051,712
Other borrowings		127,975			25,300			20,000			—			—
Stockholders’ equity	$	102,001		$	106,212		$	100,170		$	108,793		$	96,837
SELECTED FINANCIAL RATIOS:
Performance:
Return on average equity		22.18	%		20.85	%		21.93	%		21.12	%		20.55	%
Return on average assets		1.59			1.53			1.64			1.72			1.73
Net interest margin (taxable-equivalent)		5.09			4.90			5.13			5.45			5.62
Efficiency ratio		50.28			50.24			49.91			49.36			49.88
Average equity to average assets		7.19			7.35			7.50			8.13			8.41
Dividend pay-out ratio		37.56			39.69			38.74			34.70			33.89
Asset quality:
Non-performing assets to total loans, net of discount		0.49			0.65			0.22			0.22			0.25
Non-performing assets to total assets		0.32			0.40			0.14			0.14			0.17
Allowance to non-performing assets		220.41			153.06			470.09			494.60			448.42
Allowance to loans, net of discount		1.09			0.99			1.02			1.10			1.11
Net (recoveries) charge-offs to average net loans		(0.01	)		0.28			0.13			0.19			0.06
PER-SHARE DATA:
Net income (basic)		2.09			1.92			1.92			1.82			1.58
Cash dividends		0.79			0.76			0.76			0.68			0.56
Book value at year-end		9.80			9.80			9.15			9.47			8.23
Highest market value		37.00			36.30			37.58			39.60			29.13
Lowest market value		25.68			29.69			29.40			26.50			15.13
Average shares outstanding		10,570,896			10,882,327			11,055,897			11,657,984			11,822,452
Number of full-time-equivalent employees		369			374			377			391			381
Number of branch offices		27			26			26			27			26
Number of automatic teller machines		25			25			24			23			20

4

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The discussion that follows analyzes Suffolk Bancorp’s (“Suffolk”) operations for each of the past three years and its financial condition as of December 31, 2005 and 2004, respectively. Selected tabular data are presented for each of the past five years.

Summary of Recent Developments and Current Trends

Suffolk Bancorp is a one-bank holding company engaged in the commercial banking business through Suffolk County National Bank, a full-service commercial bank headquartered in Riverhead, New York. “SCNB” is Suffolk Bancorp’s wholly owned subsidiary. Organized in 1890, Suffolk County National Bank is headquartered on Long Island, with 27 offices in Suffolk County, New York.

Recent Developments

Interest rates rose gradually during the year, in part as a result of increases to the federal funds and discount targets set by the Federal Reserve Board. At times, both short- and long-term rates rose in parallel, but during the course of the year, short-term rates rose more than long-term rates. At the end of the year, the short end of the yield curve had inverted, meaning that rates for certain shorter terms exceeded those for certain other intermediate terms. Suffolk’s net interest margin increased to 5.09 percent from 4.90 percent, year to year.

Return on average equity increased, to 22.18 percent for the year from 20.85 percent during 2004, and basic earnings-per-share increased to $2.09, from $1.92 during the prior year.

Key to maintaining performance was close management of the balance sheet. Steps included:

• Continuing to redirect the flow of investment from the consumer portfolio, comprised primarily of indirect automobile paper, to the commercial loan and commercial real estate portfolios, residential mortgages, and construction loans.

• Repositioning the investment portfolio from maturing collateralized mortgage obligations, originally purchased to provide downside protection from falling rates, to purchase municipal securities currently providing higher returns.

• Pursuing an ongoing program of capital management, which applies leverage to shareholders’ investment by means of the selective repurchase of shares, while maintaining “well-capitalized” status with regulatory agencies. During the year, Suffolk repurchased approximately 4.0 percent of the shares outstanding at the beginning of 2005.

• Ongoing emphasis on both commercial and personal demand deposits, while allowing more expensive time deposits to decline. Demand deposits increased 10.0 percent year to year, while other interest-bearing deposits declined by 9.5 percent.

• Loan recoveries exceeded loan charge-offs at 1 basis point of average net loans, well below industry averages.

Current Trends

• Consumer loans continued to decline in the face of the incentive programs of the major manufacturers.

• Commercial loans and mortgages, home equity loans, and construction loans more than made up for that decline, with increasing rates of return. However, overcapacity in the industry in combination with an inverted yield curve has encouraged certain competitors to price loans without an appropriate premium for the risk inherent in longer terms.

• Changes in the balance of funding from deposits to borrowings from capital markets were undertaken to moderate the rate of increase in interest paid for deposits. Again, overcapacity in the industry has encouraged certain competitors to price deposits above comparable instruments in the money markets.

5

Suffolk’s Business

Nearly all of Suffolk’s business is to provide banking services to its commercial and retail customers in Suffolk County, on Long Island, New York. Suffolk is a one-bank holding company. Its banking subsidiary, Suffolk County National Bank (the “Bank”), operates 27 full-service offices in Suffolk County, New York. It offers a full line of domestic, retail, and commercial banking services, and trust services. The Bank’s primary lending area includes all of Suffolk County, New York, and a limited number of loans or loan-participations in the adjacent markets of Nassau County and New York City. The Bank makes loans that are secured by commercial real estate and float with the prime rate, which are retained in the Bank’s portfolio: commercial and industrial loans to small manufacturers, wholesalers, builders, farmers, and retailers, including dealer financing. The Bank serves as an indirect lender to the customers of a number of automobile dealers. The Bank also makes loans secured by residential mortgages, and both fixed and floating rate second mortgage loans with a variety of plans for repayment. Real estate construction loans are also offered.

Other investments are made in short-term United States Treasury debt, high-quality obligations of municipalities in New York State, issues of agencies of the United States government, collateralized mortgage obligations, mortgage-backed securities, and stock in the Federal Reserve Bank and the Federal Home Loan Bank of New York, each required as a condition of membership.

The Bank finances most of its activities with deposits, including demand, saving, N.O.W., and money market accounts, as well as term certificates. It also relies on other short-term sources of funds, including inter-bank overnight loans, and sale-repurchase agreements.

General Economic Conditions

Long Island has a population of approximately 2.8 million people, which accounts for 15 percent of the population of New York State. Long Island has a total population greater than that of 19 states, and in fact, if it were a city, it would rank as the fourth largest in the nation. Health is the largest industry cluster; government and military is the largest segment of the regional economy; and the finance and insurance cluster has the greatest economic impact. Long Island added about 13,546 jobs, growing from 1.24 million in 2004 to 1.26 million in 2005; this is an increase of 1.2 percent. Of these 13,545 new jobs, net, 13,568 were added in private industry and 23 jobs were lost in the government and military sectors. Long Island’s total employment increased by about 13.2 percent, or 152,850 jobs, from 1995 to 2005. Private industry employment increased by more than 10 percent and government and military employment increased 7 percent. (Source: Long Island Index 2006)

The economy on Long Island continued to prosper during 2005. Interest rates continued to rise from their low point during 2004. Demand for finance, information, transportation, and tourism continued, and employment remained stable in the region. Long Island has a highly educated and skilled work force and a diverse industrial base. It is adjacent to New York City, one of the world’s largest centers of distribution and a magnet for finance and culture. The island’s economic cycles vary from those of the national economy. In general, Long Island’s economy seems to have been more stable than the national economy, owing in part to its comparative diversity.

Results of Operations

Net Income

Net income was $22,102,000 compared to $20,875,000 last year and $21,336,000 in 2003. These figures represent an increase of 5.9 percent and a decrease of 2.2 percent, respectively. Basic earnings-per-share were $2.09 during 2005, compared to $1.92 last year and $1.92 in 2003.

Net Interest Income

Net interest income during 2005 was $64,361,000, up 6.2 percent from $60,605,000 in 2004, which was down 1.0 percent from $61,194,000 in 2003. Net interest income is the most important part of the net income of Suffolk. The effective interest rate differential, on a taxable-equivalent basis, was 5.09 percent in 2005, 4.90 percent during 2004, and 5.13 percent in 2003. Average rates on average interest-earning assets increased to 5.97 percent in 2005, up from 5.50 percent in 2004, and 5.95 percent in 2003. Average rates on average interest-bearing liabilities increased to 1.34 percent in 2005, up from 0.89 percent in 2004, which was down from 1.19 percent in 2003. The interest rate differential increased in 2005, up from 2004 and 2003. Demand deposits remained a significant source of funds as a percentage of total liabilities.

6

Average Assets, Liabilities, Stockholders’ Equity, Rate Spread, and Effective Interest Rate Differential

(on a taxable-equivalent basis)

The following table illustrates the average composition of Suffolk’s statements of condition. It presents an analysis of net interest income on a taxable-equivalent basis, listing each major category of interest-earning assets and interest-bearing liabilities, as well as other assets and liabilities: (dollars in thousands)

	2005							2004							2003
Year ended December 31,	Average Balance		Interest			Average Rate		Average Balance		Interest			Average Rate		Average Balance		Interest			Average Rate
Interest-earning assets
U.S. Treasury securities	$	9,416	$	393		4.17	%	$	9,790	$	423		4.32	%	$	9,960	$	424		4.26	%
Collateralized mortgage obligations		230,248		9,457		4.11			251,934		10,203		4.05			244,547		9,936		4.06
Mortgage-backed securities		2,733		140		5.12			6,875		162		2.36			12,871		460		3.57
Obligations of states & political subdivisions		57,587		3,269		5.68			26,022		1,442		5.54			14,397		837		5.81
U.S. government agency obligations		125,443		4,896		3.90			107,601		4,342		4.04			85,743		3,691		4.30
Corporate bonds & other securities		3,055		147		4.81			2,486		80		3.22			2,190		94		4.29
Federal funds sold & securities purchased under agreements to resell		2,904		91		3.13			23,919		310		1.30			20,365		221		1.09
Loans, including non-accrual loans
Commercial, financial & agricultural loans		169,338		11,392		6.73			168,188		8,832		5.25			158,950		8,504		5.35
Commercial real estate mortgages		288,065		19,965		6.93			240,146		16,381		6.82			200,829		14,794		7.37
Real estate construction loans		56,191		5,134		9.14			37,630		2,693		7.16			36,892		3,332		9.03
Residential mortgages (1st and 2nd liens)		117,575		7,476		6.36			110,594		7,011		6.34			102,128		7,125		6.98
Home equity loans		78,465		5,082		6.48			66,510		3,439		5.17			52,489		2,798		5.33
Consumer loans		142,426		9,268		6.51			191,980		13,134		6.84			253,126		19,060		7.53
Other loans		2,098		—		—			1,717		—		—			3,016		—		—
Total interest-earning assets	$	1,285,544	$	76,710		5.97	%	$	1,245,392	$	68,452		5.50	%	$	1,197,503	$	71,276		5.95	%
Cash & due from banks	$	47,803						$	52,403						$	50,241
Other non-interest-earning assets		52,732							64,901							50,105
Total assets	$	1,386,079						$	1,362,696						$	1,297,849
Interest-bearing liabilities
Saving, N.O.W. & money market deposits	$	561,137	$	3,689		0.66	%	$	600,668	$	2,755		0.46	%	$	569,262	$	3,659		0.64	%
Time deposits		218,825		5,431		2.48			220,248		4,577		2.08			253,044		6,081		2.40
Total saving & time deposits		779,962		9,120		1.17			820,916		7,332		0.89			822,306		9,740		1.18
Federal funds purchased & securities sold under agreements to repurchase		781		25		3.20			27		0		1.45			560		12		2.14
Other borrowings		62,388		2,167		3.47			3,815		47		1.23			3,941		49		1.24
Total interest-bearing liabilities	$	843,131	$	11,312		1.34	%	$	824,758	$	7,379		0.89	%	$	826,807	$	9,801		1.19	%
Rate spread						4.63	%						4.60	%						4.77	%
Non-interest-bearing deposits	$	423,214						$	401,718						$	352,588
Other non-interest-bearing liabilities		20,066							36,114							21,179
Total liabilities	$	1,286,411						$	1,262,590						$	1,200,574
Stockholders’ equity		99,668							100,106							97,275
Total liabilities & stockholders’ equity	$	1,386,079						$	1,362,696						$	1,297,849
Net interest income (taxable-equivalent basis)
& effective interest rate differential			$	65,398		5.09	%			$	61,073		4.90	%			$	61,475		5.13	%
Less: taxable-equivalent basis adjustment				(1,037	)						(468	)						(281	)
Net interest income			$	64,361						$	60,605						$	61,194

Interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if Suffolk’s investment in nontaxable U.S. Treasury securities and state and municipal obligations had been subject to New York State and federal income taxes yielding the same after-tax income. The rate used for this adjustment was approximately 34 percent for federal income taxes and 9 percent for New York State income taxes for all periods. For each of the years 2005, 2004, and 2003, $1.00 of nontaxable income from obligations of states and political subdivisions equates to fully taxable income of $1.52. In addition, in 2005, 2004, and 2003, $1.00 of nontaxable income on U.S. Treasury securities equates to $1.02 of fully taxable income. The amortization of loan fees is included in interest income.

7

Analysis of Changes in Net Interest Income

The table below presents a summary of changes in interest income, interest expense, and the resulting net interest income on a taxable-equivalent basis for the periods presented, each as compared with the preceding period. Because of numerous, simultaneous changes in volume and rate during the period, it is not possible to allocate precisely the changes between volumes and rates. In this table changes not due solely to volume or to rate have been allocated to these categories based on percentage changes in average volume and average rate as they compare to each other: (in thousands)

	In 2005 over 2004									In 2004 over 2003
	Changes Due to									Changes Due to
	Volume			Rate			Net Change			Volume			Rate			Net Change
Interest-earning assets
U.S. Treasury securities	$	(16	)	$	(14	)	$	(30	)	$	(7	)	$	6		$	(1	)
Collateralized mortgage obligations		(889	)		143			(746	)		299			(32	)		267
Mortgage-backed securities		(137	)		115			(22	)		(172	)		(126	)		(298	)
Obligations of states & political subdivisions		1,776			51			1,827			639			(31	)		608
U.S. government agency obligations		700			(146	)		554			894			(243	)		651
Corporate bonds & other securities		21			46			67			12			(26	)		(14	)
Federal funds sold & securities purchased under agreements to resell		(421	)		202			(219	)		43			46			89
Loans, including non-accrual loans		2,427			4,400			6,827			636			(4,760	)		(4,124	)
Total interest-earning assets	$	3,461		$	4,797		$	8,258		$	2,344		$	(5,166	)	$	(2,822	)
Interest-bearing liabilities
Saving, N.O.W., & money market deposits	$	(192	)	$	1,126		$	934		$	193		$	(1,096	)	$	(903	)
Time deposits		(29	)		883			854			(736	)		(768	)		(1,504	)
Federal funds purchased & securities		24			1			25			(8	)		(3	)		(11	)
Other borrowings		1,895			225			2,120			(2	)		—			(2	)
Total interest-bearing liabilities	$	1,698		$	2,235		$	3,933		$	(553	)	$	(1,867	)	$	(2,420	)
Net change in net interest income (taxable-equivalent basis)	$	1,763		$	2,562		$	4,325		$	2,897		$	(3,299	)	$	(402	)

Interest Income

Interest income increased to $75,673,000 in 2005, up 11.3 percent from $67,984,000 in 2004, which was down 4.2 percent from $70,995,000 in 2003.

Investment Securities

Average investment in U.S. government agency securities increased to $125,443,000 from $107,601,000 in 2004, which was up from $85,743,000 in 2003. Average balances of CMO’s decreased to $230,248,000 in 2005 from $251,934,000 in 2004, and $244,547,000 in 2003. Average investments in municipal securities increased to $57,587,000 in 2005, up from $26,022,000 in 2004 and $14,397,000 in 2003. U.S. Treasury, U.S. government agency, collateralized mortgage obligations, and municipal securities provide collateral for various liabilities to municipal depositors. Securities are Suffolk’s primary source of liquidity. With regard to securities characterized as available for sale, in general, Suffolk has the intent and ability to hold them until maturity. The following table summarizes Suffolk’s investment securities available for sale and held to maturity as of the dates indicated: (in thousands)

December 31,	2005		2004		2003
Investment securities available for sale, at fair value:
U.S. Treasury securities	$	9,337	$	9,516	$	9,840
U.S. government agency debt securities		123,421		127,049		102,554
Collateralized mortgage obligations agency issues		194,404		257,199		245,917
Collateralized mortgage obligations private issues		—		405		1,590
Mortgage-backed securities		1,788		4,231		9,399
Obligations of states & political subdivisions		71,088		29,278		6,889
Total investment securities available for sale		400,038		427,678		376,189
Investment securities held to maturity:
Obligations of states & political subdivisions		11,378		11,900		12,369
Corporate bonds & other securities		5,896		2,561		2,272
Total investment securities held to maturity		17,274		14,461		14,641
Total investment securities	$	417,312	$	442,139	$	390,830
Fair value of investment securities held to maturity	$	17,885	$	15,151	$	15,365
Unrealized gains		664		732		733
Unrealized losses		53		42		9

8

The amortized cost, maturities, and approximate weighted average yields, at December 31, 2005 are as follows: (in thousands)

	Available for Sale												Held to Maturity
	U.S. Treasury Securities				U.S. Govt. Agency Debt				Obligations of States & Political Subdivisions				Obligations of States & Political Subdivisions				Corporate Bonds & Other Securities
Maturity (in years)	Fair Value		Yield		Fair Value		Yield		Fair Value		Yield		Amortized Cost		Yield		Amortized Cost		Yield	Total		Yield
Within 1	$	5,954	4.49	%	$	502	3.41		$	—	—		$	4,063	3.19	%	$	—	—	$	10,519	3.94	%
After 1 but within 5		3,383	3.47			122,919	3.85	%		1,031	3.86			1,378	4.06	%		—	—	$	128,711	3.84	%
After 5 but within 10		—	—			—	—			20,554	3.57			2,650	4.43			—	—	$	23,204	3.67	%
After 10		—	—			—	—			49,503	3.83	%		3,287	5.92	%		—	—	$	52,790	3.96	%
Other securities		—	—			—	—			—	—			—	—			5,896	—	$	5,896	—
Subtotal	$	9,337	4.12	%	$	123,421	3.85	%	$	71,088	3.76	%	$	11,378	4.37	%	$	5,896	—	$	221,120	3.75	%
Collateralized mortgage obligations																				$	194,404	3.92	%
Mortgage-backed securities																				$	1,788	5.26	%
Total	$	9,337	4.12	%	$	123,421	3.85	%	$	71,088	3.76	%	$	11,378	4.37	%	$	5,896	—	$	417,312	3.84	%

As a member of the Federal Reserve System, the Bank owns Federal Reserve Bank stock with a book value of $638,000. Being an equity investment, the stock has no maturity. There is no public market for this investment. The last dividend was 6 percent.

As a member of the Federal Home Loan Bank of New York, the Bank owns Federal Home Loan Bank of New York stock with a book value of $5,158,000. Being an equity investment, the stock has no maturity. There is no public market for this investment. The last declared dividend was 5.11 percent.

Loan Portfolio

Loans, net of unearned discounts but before the allowance for loan losses, totaled $905,037,000. Loans secured by commerical real estate amounted to $308,436,000 and comprise 34.1 percent of the portfolio, the largest single component, up from $262,262,000 in 2004, and $232,119,000 in 2003. Commercial and industrial loans followed at $179,523,000, up 13.5 percent from $158,205,000 at the end of 2004. These loans are made to small local businesses throughout Suffolk County. Commercial loan balances are seasonal, particularly in the Hamptons where retail inventories rise in the spring and decline by autumn. Consumer loans are a declining part of the portfolio. Net of unearned discounts, they totaled $132,930,000 at the end of 2005, down 18.0 percent from $162,206,000 at year-end 2004. Consumer loans include primarily indirect, dealer-generated automobile loans. Competition among commercial banks and with captive finance companies of automobile manufacturers has reduced yields and volume. Additionally, rising fuel costs and uncertainties regarding the economic impact of recent hurricanes have led to a decline in consumer confidence, affecting automobile sales. As commerce on Long Island strengthened, commercial mortgages offered continuing opportunity.

The remaining significant components of the loan portfolio are residential mortgages at $131,006,000, up 13.9 percent from $114,969,000; home equity loans at $80,775,000, up 7.0 percent from $75,486,000; and construction loans at $67,411,000, up 33.6 percent from $50,455,000. Current economic trends indicate a slowing housing market, as inventories of unsold homes increased and interest rates gradually increased.

The following table categorizes total loans (net of unearned discounts) at December 31: (in thousands)

	2005				2004				2003				2002				2001
Commercial, financial & agricultural loans	$	179,523	19.8	%	$	158,205	19.2	%	$	171,616	20.5	%	$	150,130	19.0	%	$	133,076	16.7	%
Commercial real estate mortgages		308,436	34.1	%		262,262	31.8	%		232,119	27.7	%		183,501	23.3	%		173,092	21.7	%
Real estate — construction loans		67,411	7.4	%		50,455	6.1	%		30,461	3.6	%		36,558	4.6	%		27,365	3.4	%
Residential mortgages (1st and 2nd liens)		131,006	14.5	%		114,969	13.9	%		113,979	13.6	%		94,864	12.0	%		95,424	12.0	%
Home equity loans		80,775	8.9	%		75,486	9.1	%		60,397	7.2	%		44,349	5.6	%		31,699	4.0	%
Consumer loans		132,930	14.7	%		162,206	19.7	%		229,711	27.4	%		277,633	35.2	%		334,849	42.1	%
Other loans		4,956	0.5	%		1,847	0.2	%		778	0.1	%		1,522	0.2	%		605	0.1	%
Total loans (net of unearned discounts)	$	905,037	100	%	$	825,430	100	%	$	839,061	100	%	$	788,557	100	%	$	796,110	100	%

9

Non-Performing Loans

Generally, recognition of interest income is discontinued when reasonable doubt exists as to whether interest can be collected. Ordinarily, loans no longer accrue interest when 90 days past due. When a loan stops accruing interest, all interest accrued in the current year, but not collected, is reversed against interest income in the current year. Any interest accrued in prior years is charged against the allowance for loan losses. Loans start accruing interest again when they become current as to principal and interest, and when, in the opinion of management, they can be collected in full. All non-performing loans, of a material amount, are reflected in the foregoing tables. The following table shows non-accrual, past due, and restructured loans at December 31: (in thousands)

	2005		2004		2003		2002		2001
Loans accruing but past due contractually 90 days or more	$	—	$	—	$	1,286	$	349	$	1,505
Loans not accruing interest		4,459		5,337		1,784		1,560		1,912
Restructured loans		—		27		35		198		56
Total	$	4,459	$	5,364	$	3,105	$	2,107	$	3,473

Interest on loans that are restructured or are no longer accruing interest would have amounted to about $335,000 for 2005 under the contractual terms of those loans. Suffolk records the payment of interest on such loans as a reduction of principal. Interest income recognized on restructured and non-accrual loans was immaterial for the years 2005, 2004, and 2003. Suffolk has a formal procedure for internal credit review to more precisely identify risk and exposure in the loan portfolio. A single credit, the circumstances of which are particular to that loan, is included in non-accrual loans as of December 31, 2005 and 2004. Management does not believe that it is reflective of a systemic weakness in the loan portfolio or of the underwriting standards and procedures.

Summary of Loan Losses and Allowance for Loan Losses

The allowance for loan losses is determined by continuous analysis of the loan portfolio. That analysis includes changes in the size and composition of the portfolio, historical loan losses, industry-wide losses, current and anticipated economic trends, and details about individual loans. It also includes estimates of the actual value of collateral and other possible sources of repayment. There can be no assurance that the allowance is, in fact, adequate. When a loan, in full or in part, is deemed uncollectible, it is charged against the allowance. This happens when it is well past due and the borrower has not shown the ability or intent to make the loan current, or the borrower does not have enough assets to pay the debt, or the value of the collateral is less than the balance of the loan and not likely to improve soon. Residential real estate and consumer loans are analyzed as a group and not individually because of the large number of loans, small balances, and historically low losses. In the future, the provision for loan losses may change as a percentage of total loans. The percentage of net recoveries to average net loans during 2005 was 0.01 percent, compared to net charge-offs of 0.28 percent in 2004, and 0.13 percent during 2003. The ratio of the allowance for loan losses to loans, net of discounts, was 1.09 percent at the end of 2005, up from 0.99 percent in 2004, which was down from 1.02 percent in 2003. A summary of transactions follows: (in thousands)

Year ended December 31,	2005			2004		2003		2002		2001
Allowance for loan losses, January 1,	$	8,210		$	8,551	$	8,695	$	8,825	$	7,749
Loans charged-off:
Commercial, financial & agricultural loans		180			2,130		110		27		111
Commercial real estate mortgages		—			—		—		—		—
Real estate — construction loans		—			—		—		—		—
Residential mortgages (1st and 2nd liens)		—			—		—		—		—
Home equity loans		—			—		62		—		—
Consumer loans		428			1,059		1,835		1,826		691
Lease finance		—			—		—		—		—
Other loans		—			—		5		—		4
Total Charge-offs	$	608		$	3,189	$	2,012	$	1,853	$	806
Loans recovered after being charged-off	2005			2004		2003		2002		2001
Commercial, financial & agricultural loans		46			50		23		33		178
Commercial real estate mortgages		—			—		—		—		—
Real estate — construction loans		—			—		—		—		—
Residential mortgages (1st and 2nd liens)		—			—		—		—		—
Home equity loans		—			—		—		—		—
Consumer loans		605			825		913		310		160
Lease finance		—			—		—		—		—
Other loans		—			—		—		—		—
Total recoveries	$	651		$	875	$	936	$	343	$	338
Net loans (recovered) charged-off		(43	)		2,314		1,076		1,510		468
Provision for loan losses		1,575			1,973		932		1,380		1,544
Allowance for loan losses, December 31,	$	9,828		$	8,210	$	8,551	$	8,695	$	8,825

10

The following table summarizes the allowance for loan losses allocated by loan type: (dollars in thousands)

As of December 31,	2005		% of Total		2004		% of Total		2003		% of Total		2002		% of Total		2001		% of Total
Commercial, financial & agricultural loans	$	5,209	53.0	%	$	4,004	48.8	%	$	3,072	35.9	%	$	3,213	37.0	%	$	3,819	43.3	%
Commercial real estate mortgages		2,431	24.7	%		2,597	31.6	%		2,939	34.4	%		2,760	31.7	%		2,282	25.9	%
Real estate — construction loans		388	3.9	%		261	3.2	%		208	2.4	%		305	3.5	%		202	2.3	%
Residential mortgages (1st and 2nd liens)		162	1.6	%		215	2.6	%		233	2.7	%		143	1.6	%		138	1.6	%
Home equity loans		502	5.1	%		540	6.6	%		551	6.4	%		468	5.4	%		401	4.5	%
Consumer loans		434	4.4	%		593	7.2	%		1,389	16.2	%		1,598	18.4	%		1,867	21.2	%
Unallocated allowance		702	7.1	%		—	0.0	%		159	1.9	%		208	2.4	%		116	1.3	%
Allowance for loan losses	$	9,828	100.0	%	$	8,210	100.0	%	$	8,551	100.0	%	$	8,695	100.0	%	$	8,825	100.0	%

The following table presents information concerning loan balances and asset quality: (dollars in thousands)

Year ended December 31,	2005			2004			2003			2002			2001
Loans, net of discounts:
Average	$	863,057		$	825,348		$	816,058		$	781,521		$	776,936
At end of period		905,037			825,430			839,061			790,450			785,322
Non-performing assets/total loans, net of discounts		0.49	%		0.65	%		0.22	%		0.22	%		0.25	%
Non-performing assets/total assets		0.32			0.40			0.14			0.14			0.17
Ratio of net (recoveries) charge-offs/average net loans		(0.01	)		0.28			0.13			0.19			0.06
Net (recoveries) charge-offs/net loans at December 31,		(0.00	)		0.28			0.13			0.19			0.06
Allowance for loan losses/loans, net of discounts		1.09			0.99			1.02			1.10			1.11

Interest Expense

Interest expense in 2005 was $11,312,000, up from $7,379,000 the year before, which was down from $9,801,000 during 2003. Most interest was paid for the deposits of individuals, businesses, and various governments and their agencies. Short-term borrowings may include federal funds purchased (short-term lending by other banks), securities sold under agreements to repurchase, and Federal Home Loan Bank borrowings. The Federal Reserve Bank discount window was available though not used during 2005. Short-term borrowings averaged $63,169,000 during 2005, $3,842,000 during 2004, and $4,501,000 during 2003.

Deposits

Average interest-bearing deposits decreased to $779,962,000 in 2005, down 5.0 percent from $820,916,000 in 2004. Saving, N.O.W., and money market deposits decreased during 2005, averaging $561,137,000, down 6.6 percent from 2004 when they averaged $600,668,000. Average time certificates of less than $100,000 totaled $198,856,000, down 0.7 percent from $200,283,000 in 2004. Average time certificates of $100,000 or more totaled $19,969,000, up very slightly from $19,965,000 during 2004. Each of the Bank’s demand deposit accounts has a related non-interest-bearing sweep account. The sole purpose of the sweep accounts is to reduce the non-interest-bearing reserve balances that the Bank is required to maintain with the Federal Reserve Bank, and thereby increase funds available for investment. Although the sweep accounts are classified as saving accounts for regulatory purposes, they are included in demand deposits in the accompanying consolidated statements of condition.

The following table classifies average deposits for each of the periods indicated: (in thousands)

	2005				2004				2003
	Average		Average Rate Paid		Average		Average Rate Paid		Average		Average Rate Paid
Demand deposits	$	423,214			$	401,718			$	352,588
Saving deposits		364,837	0.54	%		388,712	0.42	%		381,971	0.64	%
N.O.W. & money market deposits		196,300	0.87			211,956	0.53			187,291	0.65
Time certificates of $100,000 or more		19,969	2.72			19,965	1.84			22,822	2.09
Other time deposits		198,856	2.46			200,283	2.10			230,222	2.43
Total deposits	$	1,203,176			$	1,222,634			$	1,174,894

11

At December 31, 2005, the remaining maturities of time certificates of $100,000 or more were as follows: (in thousands)

3 months or less	$	8,136
Over 3 through 6 months		3,464
Over 6 through 12 months		1,722
Over 12 months		2,503
Total	$	15,825

Short-Term Borrowings

Suffolk uses short-term funding when it is advantageous to do so in comparison with the alternatives. As the yield curve remained flat, short-term funding activity increased during 2005. This includes borrowings from the Federal Home Loan Bank, lines of credit for federal funds with correspondent banks, retail sale-repurchase agreements, and the Federal Reserve Bank discount window. Average balances of federal funds purchased were $781,000 and $27,000 for 2005 and 2004, respectively. Average balances of Federal Home Loan Bank borrowings were $27,961,000 during 2005 and $3,815,000 in 2004. Average balance of repurchase agreements were $34,427,000 during 2005. There were no repurchase agreements made during 2004.

Other Income

Other income decreased to $10,166,000 during 2005, down 17.3 percent from $12,294,000 during 2004, which was up 8.7 percent from $11,310,000 during 2003. Service charges on deposit accounts remained flat from 2004 to 2005, and from 2003 to 2004. Other service charges were up 1.0 percent and down 0.7 percent for the same periods, respectively. Fiduciary fees in 2005 totaled $1,183,000, down 2.0 percent from 2004 when they amounted to $1,207,000, which was up 0.7 percent from 2003, at $1,199,000. There were no net gains on sales of securities in 2005. Net gains on sales of securities amounted to $1,994,000 and $464,000 in 2004 and 2003, respectively.

Other Expense

Other expense during 2005 was $37,474,000, up 2.3 percent from 2004 when it was $36,621,000, and 1.2 percent from $36,190,000 in 2003. Increases were primarily due to increase in net occupancy expense, up 20.3 percent from 2004 to 2005 and in outside services, up 2.4 percent from 2004 to 2005. Net losses on sales of securities amounted to $22,000 in 2005. During 2005, non-interest expense grew at 2.3 percent.

Interest Rate Sensitivity

Interest rate “sensitivity” is determined by the date when each asset and liability in Suffolk’s portfolio can be repriced. Sensitivity increases when interest-earning assets and interest-bearing liabilities cannot be repriced at the same time. While this analysis presents the volume of assets and liabilities repricing in each period of time, it does not consider how quickly various assets and liabilities might actually be repriced in response to changes in interest rates. Management reviews its interest rate sensitivity regularly and adjusts its asset/liability management strategy accordingly. Because the interest rates of assets and liabilities vary according to their maturity, management may selectively mismatch the repricing of assets and liabilities to take advantage of temporary or projected differences between short- and long-term interest rates.

The following table reflects the sensitivity of Suffolk’s assets and liabilities at December 31, 2005: (dollars in thousands)

Maturity	Less than 3 Months			3 to 6 Months			7 to 12 Months			More Than 1 Year			Not Rate Sensitive			Total
Interest-earning assets
Domestic loans (1) (net of unearned discount)	$	360,138		$	63,567		$	95,513		$	376,634		$	9,185		$	905,037
Investment securities (2)		17,578			16,247			28,412			349,178			5,896			417,311
Federal funds sold		—			—			—			—			—			—
Total interest-earning assets	$	377,716		$	79,814		$	123,925		$	725,812		$	15,081		$	1,322,348
Demand deposits and interest-bearing liabilities
Demand deposits (3)	$	21,216		$	21,216		$	42,432		$	339,456		$	—		$	424,320
N.O.W. & money market accounts (4)		5,088			91,508			10,177			81,414			—			188,187
Borrowings		90,700			37,275									—			127,975
Interest-bearing deposits (5)		227,211			50,219			39,355			229,414			—			546,199
Total demand deposits & interest-bearing liabilities	$	344,215		$	200,218		$	91,964		$	650,284		$	—		$	1,286,681
Gap	$	33,501		$	(120,404	)	$	31,961		$	75,528		$	15,081		$	35,667
Cumulative difference between interest-earning assets and interest-bearing liabilities	$	33,501		$	(86,903	)	$	(54,942	)	$	20,586		$	35,667
Cumulative difference/total assets		2.38	%		(6.17	%)		-3.90	%		1.46	%		2.53	%

Footnotes to Interest Rate Sensitivity

(1) Based on contractual maturity and instrument repricing date, if applicable; projected prepayments and prepayments of principal based on experience.

12

(2) Based on contractual maturity, and projected prepayments based on experience. FRB and FHLB stock is not considered rate-sensitive.

(3) Based on experience of historical stable core deposit relationships.

(4) N.O.W. and money market accounts are assumed to decline over a period of five years.

(5) Fixed-rate deposits and deposits with fixed pricing intervals are reflected as maturing in the period of contractual maturity. Saving accounts are assumed to decline over a period of five years.

At December 31, 2005, interest-earning assets with maturities of less than one year exceed interest-bearing liabilities of similar maturity. This cumulative gap might result in increased net interest income if interest rates increase. If interest rates decline, net interest income might decrease.

Market Risk

Market risk is the risk that a financial instrument will lose value as the result of adverse changes in market prices, interest rates, foreign currency exchange rates, commodity prices, or the prices of equity securities. Suffolk’s primary exposure to market risk is to changing interest rates.

Monitoring and managing this risk is an important part of Suffolk’s asset/liability management process. It is governed by policies established by its Board of Directors. These policies are reviewed and approved annually. The Board delegates responsibility for asset/liability management to the Asset/Liability Committee (“ALCO”). ALCO then develops guidelines and strategies to implement the policy.

Interest Rate Risk

Interest rate risk is the sensitivity of earnings to changes in interest rates. As interest rates change, interest income and expense also change, thereby changing net interest income (“NII”). NII is the primary component of Suffolk’s earnings. ALCO uses a detailed and dynamic model to quantify the effect of sustained changes in interest rates on NII. While ALCO routinely monitors simulated NII sensitivity two years into the future, it uses other tools to monitor longer term interest rate risk.

The model measures the effect in the future of changing interest rates on both interest income and expense for all assets and liabilities, as well as for derivative financial instruments that do not appear on the balance sheet. The results are compared to ALCO policy limits that specify a maximum effect on NII one year in the future, assuming no growth in assets or liabilities, or 200 basis point (“bp”) change in interest rates upward and downward. Following is Suffolk’s NII sensitivity as of December 31, 2005. Suffolk’s Board has approved a policy limit of 12.5 percent.

Rate Change	Estimated NII Sensitivity to December 31, 2006
+200 basis point rate shock	0.76%
-200 basis point rate shock	(1.65%)

These estimates should not be interpreted as Suffolk’s forecast, and should not be considered as indicative of management’s expectations for operating results. They are hypothetical estimates that are based on many assumptions including: the nature and time of changes in interest rates, the shape of the “yield curve” (variations in interest rates for financial instruments of varying maturity at a given moment in time), prepayments on loans and securities, deposit outflows, pricing on loans and deposits, and the reinvestment of cash flows from assets and liabilities, among other things. While these assumptions are based on management’s best estimate of current economic conditions, Suffolk cannot give any assurance that they will actually predict results, nor can they anticipate how the behavior of customers and competitors may change in the future.

Factors that may affect actual results include: prepayment and refinancing of loans other than as assumed, interest rate change caps and floors, re-pricing intervals on adjustable rate instruments, changes in debt service on adjustable rate loans, and early withdrawal of deposits. Actual results may also be affected by actions ALCO takes in response to changes in interest rates, actual or anticipated.

When appropriate, ALCO may use off-balance-sheet instruments such as interest rate floors, caps, and swaps to hedge its position with regard to interest rate risk. The Board of Directors has approved a hedging policy statement that governs the use of such instruments. As of December 31, 2005, there were no derivative financial instruments outstanding.

13

The following table illustrates the contractual sensitivity to changes in interest rates of the Company’s total loans, net of discounts, not including overdrafts and loans not accruing interest, together totaling $9,185,000 at December 31, 2005: (in thousands)

Interest rate provision	Due Within 1 Year		After 1 but Before 5 Years		After 5 Years		Total
Predetermined rates	$	127,974	$	139,995	$	41,165	$	309,134
Floating or adjustable rates		391,244		187,222		8,252		586,718
Total	$	519,218	$	327,217	$	49,417	$	895,852

The following table illustrates the contractual sensitivity to changes in interest rates on the Company’s commercial, financial, agricultural, and real estate construction loans not including non-accrual loans totaling approximating $3,575,000 at December 31, 2005: (in thousands)

	Due Within 1 Year		After 1 but Before 5 Years		After 5 Years		Total
Commercial, financial & agricultural
Predetermined rates		18,063		25,833		3,370		47,266
Floating or adjustable rates		128,323		328		31		128,682
	$	146,386	$	26,161	$	3,401	$	175,948
Real estate construction
Predetermined rates		4,382		0		0		4,382
Floating or adjustable rates		57,654		5,306		69		63,029
	$	62,036	$	5,306	$	69	$	67,411
Total	$	208,422	$	31,467	$	3,470	$	243,359

Asset/Liability Management & Liquidity

The asset/liability management committee reviews Suffolk’s financial performance and compares it to the asset/liability management policy. The committee includes four outside directors, executive management, the senior lender, the comptroller, and the head of risk management. It uses computer simulations to quantify interest rate risk and to project liquidity. The simulations also help the committee to develop contingent strategies to increase net interest income. The committee always assesses the impact of any change in strategy on Suffolk’s ability to make loans and repay deposits. Only strategies and policies that meet regulatory guidelines and that are appropriate under the economic and competitive circumstances are considered by the committee. Suffolk has not used forward contracts or interest rate swaps to manage interest rate risk.

Off-Balance-Sheet Obligations

Following is a table describing certain liabilities not included in Suffolk’s consolidated statement of condition in the period in which they are due: (in thousands of dollars)

Contractual obligations	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Long-term debt obligations	$	—	$	—	$	—	$	—	$	—
Capital lease obligations										—
Operating lease obligations		9,217		919		1,704		1,562		5,032
Purchase obligations		2,328		859		1,250		219		—
Other long-term liabilities reflected on Suffolk’s balance sheet under GAAP		—		—		—		—		—
Total	$	11,545	$	1,778	$	2,954	$	1,781	$	5,032

Amounts listed as purchase obligations represent agreements to purchase services for Suffolk’s core banking system.

Capital Resources

Primary capital, including stockholders’ equity, not including the net unrealized gain (loss) on securities available for sale, net of tax, and the allowance for loan losses, amounted to $114,107,000 at year-end 2005, compared to $112,951,000 at year-end 2004 and $104,187,000 at year-end 2003. During 2005, Suffolk repurchased 435,816 shares for an aggregate price of $14,200,488. Management determined that this would increase leverage while preserving capital ratios well above regulatory requirements.

14

The following table presents Suffolk’s capital ratio and other related ratios for each of the past five years: (dollars in thousands)

	2005 (1)			2004 (1)			2003 (1)			2002 (1)			2001 (1)
Primary capital at year-end	$	114,107		$	112,951		$	104,187		$	109,103		$	104,566
Primary capital at year-end as a percentage of year-end:
Total assets plus allowance for loan losses		8.05	%		8.33	%		7.79	%		8.51	%		8.91	%
Loans, net of unearned discounts		12.61	%		13.68	%		12.42	%		13.84	%		13.13	%
Total deposits		9.85	%		9.43	%		8.77	%		9.55	%		9.94	%

(1) Capital ratios do not include the effect of SFAS No. 115, “Accounting for Certain Investments in Debt and Investment Securities.”

In 2000, the Board adopted a policy whereby management will maximize both return on average equity and earnings-per-share, and therefore shareholder value, while maintaining the regulatory standard of “well capitalized.” That standard is 10 percent Total Risk-Based Capital, 6 percent Tier 1 Capital, and 5 percent Leverage Capital. When capital exceeds that standard by more than a small cushion over what is expected to be required to maintain the “well-capitalized” standard during the current quarter, shares may be repurchased as they become available at prices that remain accretive to earnings-per-share in transactions under SEC rule 10-b 18 and in private purchases. When capital expected to be required during the current quarter does not exceed the standard, repurchases will not be made. Further, the dividend reinvestment program will automatically follow the same standard, purchasing shares in the market when Suffolk is in the market to repurchase shares, and issuing from the reserve when it is not. Each of these replaces the prior practice of authorizing the repurchase of a specific number of shares by Suffolk, or the purchase or issuance of shares by the dividend reinvestment program without specific reference to capital ratios.

The following table details repurchases during 2005:

Year ending	Total shares repurchased	Average price per share		Aggregate cost
December 31, 2005	435,816	$	32.58	$	14,200,488

Suffolk measures how effectively it uses capital by two widely accepted performance ratios: return on average assets and return on average common stockholders’ equity. The return in 2005 on average assets of 1.59 percent and average common equity of 22.18 percent increased from 2004 when returns were 1.53 percent and 20.85 percent, respectively.

All dividends must conform to applicable statutory requirements. Suffolk Bancorp’s ability to pay dividends depends on Suffolk County National Bank’s ability to pay dividends. Under 12 USC 56-9, a national bank may not pay a dividend on its common stock if the dividend would exceed net undivided profits then on hand. Further, under 12 USC 60, a national bank must obtain prior approval from the Office of the Comptroller of the Currency to pay dividends on either common or preferred stock that would exceed the bank’s net profits for the current year combined with retained net profits (net profits minus dividends paid during that period) of the prior two years. The amount the Bank currently has available to pay dividends is approximately $26,263,000.

Risk-Based Capital and Leverage Guidelines

The Federal Reserve Bank’s risk-based capital guidelines call for bank holding companies to require minimum ratios of capital to risk-weighted assets, which include certain off-balance-sheet activities, such as standby letters of credit. The guidelines define capital as being “core,” or “Tier 1” capital, which includes common stockholders’ equity; a limited amount of perpetual preferred stock; minority interest in unconsolidated subsidiaries, less goodwill; or “supplementary” or “Tier 2” capital, which includes subordinated debt, redeemable preferred stock, and a limited amount of the allowance for loan losses. All bank holding companies must meet a minimum ratio of total qualifying capital to risk-weighted assets of 8.00 percent, of which at least 4.00 percent should be in the form of Tier 1 capital. At December 31, 2005 Suffolk’s ratios of core capital and total qualifying capital (core capital plus Tier 2 capital) to risk-weighted assets were 9.96 percent and 10.91 percent, respectively.

Discussion of New Accounting Pronouncements

On March 9, 2004, the SEC Staff issued Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments” (“SAB 105”). SAB 105 clarifies existing accounting practices relating to the valuation of issued loan commitments, including interest rate lock commitments (“IRLC”), subject to SFAS No. 149 and Derivative Implementation Group Issue C13, “Scope Exceptions: When a Loan Commitment is included in the Scope of Statement 133.” Furthermore, SAB 105 disallows the inclusion of the values of a servicing component and other internally developed intangible assets in the initial and subsequent IRLC valuation. The provisions of SAB 105 were effective for loan commitments entered into after March 31, 2004. The Company has adopted the provisions of SAB 105 which did not have a material effect on either the Company’s consolidated financial position or consolidated results of operations.

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In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment” (SFAS 123R). This statement is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The provisions of this statement are effective for periods beginning after December 31, 2005. The Company is currently evaluating the provisions of this revision to determine the impact on its consolidated financial statements. A pro forma effect is listed in Footnote 1 (K), Stock-Based Compensation. The recording of this expense is, however, expected to decrease consolidated net income. Suffolk will adopt this prospectively in 2006.

On March 29, 2005, the SEC released Staff Accounting Bulletin 107, “Share-Based Payments,” (“SAB 107”). The interpretations in SAB 107 express the views of the SEC staff regarding the application of SFAS No. 123(R). Among other things, SAB 107 provides interpretive guidance about the interaction of Statement 123(R) and certain SEC rules and regulations. It also provides the staff’s views regarding the valuation of share-based payments by public companies. Suffolk is evaluating the impact that the implementation of SAB 107 and SFAS 123(R) will have on options granted in the future.

In May 2005, FASB issued Statement No. 154, “Accounting Changes and Error Corrections – a replacement of APB Opinion No. 20 and FASB Statement No. 3.” This statement changes the requirements for the accounting for and reporting of a change in accounting principle. Opinion 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new principle. Statement No. 154 requires retrospective application to prior periods, financial statements of changes in accounting principle, where practicable, and limits retrospective application of a change to direct effects of the change in accounting principle. Indirect effects of a change in accounting principle should be recognized in the period of accounting change. This statement is effective for accounting changes made in fiscal years after December 15, 2005. Suffolk is currently evaluating the impact of FAS No. 154 on its financial condition and results of operations.

Emerging Issues Task Force (EITF) Issue 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” (“EITF 03-1”) provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. An investment is considered impaired if the fair value of the investment is less than its cost. Generally, an impairment is considered other-than-temporary unless: (i) the investor has the ability and intent to hold an investment for a reasonable period of time sufficient for an anticipated recovery of fair value up to (or beyond) the cost of the investment; and (ii) evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If impairment is determined to be other-than-temporary, then an impairment loss should be recognized equal to the difference between the investment’s cost and its fair value. Certain disclosure requirements of EITF 03-1 were adopted in 2003 and Suffolk began presenting the new disclosure requirements in its consolidated financial statements for the year ended December 31, 2003. The recognition and measurement provisions were initially effective for other-than-temporary impairment evaluations in reporting periods beginning after June 15, 2004. However, in September 2004, the effective date of these provisions was delayed until the finalization of a FASB Staff Position (FSP) to provide additional implementation guidance.

In June, the FASB decided not to provide additional guidance on the meaning of other-than-temporary impairment, but directed its staff to issue proposed FSP EITF 03-1-a, “Implementation Guidance for the Application of Paragraph 16 of EITF Issue No. 03-1,” as final. The final FSP will supersede EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” and EITF Topic No. D-44, “Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value.” The final FSP (re-titled FSP FAS 115-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”) will replace the guidance set forth in paragraphs 10-18 of Issue 03-1 with references to existing other-than-temporary impairment guidance, such as FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities;” SEC Staff Accounting Bulletin No. 59, “Accounting for Non-current Marketable Equity Securities;” and APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” FASB Staff Position No. FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (the “FSP”), were issued on November 3, 2005 and addresses the determination of when an investment is considered impaired; whether the impairment is other than temporary; and how to measure an impairment loss. The FSP replaces the impairment guidance in EITF Issue No. 03-1 with references to existing authoritative literature concerning other-than-temporary determinations (principally Statement of Financial Accounting Standards No. 115 and SEC Staff Accounting Bulletin 59). Under the FSP, impairment losses must be recognized in earnings equal to the entire difference between the security’s cost and its fair value at the financial statement date, without considering partial recoveries subsequent to that date. The FSP also requires that an investor recognize an other-than-temporary impairment loss when a decision to sell a security has been made and the investor does not expect the fair value of the security to fully recover prior to the expected time of sale. The FSP is effective for reporting periods beginning after December 15, 2005. Suffolk does not expect that the application of the FSP will have a material impact on its financial condition, results of operations, or financial statement disclosures.

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Critical Accounting Policies, Judgments, and Estimates

The accounting and reporting policies of Suffolk conform to accounting principles generally accepted in the United States of America and general practices in the financial services industry. The preparation of financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results in the future could differ from those estimates.

Suffolk considers that the determination of the allowance for loan losses involves a higher degree of judgment and complexity than its other significant accounting policies. The allowance for loan losses is calculated to maintain a reserve believed by management to be sufficient to absorb estimated credit losses. Management’s determination of the adequacy of the allowance is based on periodic evaluations of the loan portfolio and other relevant factors. This evaluation is inherently subjective as it requires material estimates, including, among others, the expected probability of default; the amount of loss in the event of default; the expected usage of loan commitments; the amounts and timing of cash flows expected in the future from impaired loans and mortgages; and an additional factor for potential loan losses based on historical experience. Management also considers economic conditions, uncertainties in estimating losses, and inherent risks in the loan portfolio. All of these factors may change significantly in the future. To the extent that actual results differ from management’s estimates, additional provisions for loan losses may be required that could reduce earnings in future periods.

Suffolk recognizes deferred-tax assets and liabilities. Deferred income taxes occur when income taxes are allocated through time. Some items are temporary resulting from differences in the timing of a transaction under generally accepted accounting principles (“GAAP”), and for the computation of income tax. Examples would include the future tax effects of temporary differences for such items as deferred compensation and the provision for loan losses. Estimates of deferred tax assets are based upon evidence available to management that future realization is more likely than not. If management determines that Suffolk may be unable to realize all or part of net deferred tax assets in the future, a direct charge to income tax expense may be required to reduce the recorded value of the net deferred tax asset to the amount that management expects to realize.

Business Risks and Uncertainties

This annual report contains some statements that look to the future. These may include remarks about Suffolk Bancorp, the banking industry, and the economy in general. Factors affecting Suffolk Bancorp include particularly, but are not limited to: changes in interest rates; increases or decreases in retail and commercial economic activity in Suffolk’s market area; variations in the ability and propensity of consumers and businesses to borrow, repay, or deposit money, or to use other banking and financial services. Further, it could take Suffolk longer than anticipated to implement its strategic plans to increase revenue and manage non-interest expense, or it may not be possible to implement those plans at all. Finally, new and unanticipated legislation, regulation, or accounting standards may require Suffolk to change its practices in ways that materially change the results of operations. Each of the factors may change in ways that management does not now foresee. These remarks are based on current plans and expectations. They are subject, however, to a variety of uncertainties that could cause future results to vary materially from Suffolk’s historical performance, or from current expectations.

Management’s Report on Internal Control over Financial Reporting

The management of Suffolk Bancorp is responsible for establishing and maintaining adequate internal control over financial reporting. Suffolk Bancorp’s internal control system was designed to provide reasonable assurance to the company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Suffolk Bancorp management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2005. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework. Based on our assessment and those criteria we have determined that, as of December 31, 2005, the company’s internal control over financial reporting is effective.

Suffolk Bancorp’s independent registered public accounting firm has issued its report on our assessment of the company’s internal control over financial reporting. This report appears on page 35.

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CONSOLIDATED STATEMENTS OF CONDITION

	December 31,
	2005			2004
ASSETS
Cash and Due From Banks	$	48,530,407		$	37,553,338
Federal Funds Sold		—			2,500,000
Investment Securities:
Available for Sale, at Fair Value		400,037,573			427,677,640
Held to Maturity (Fair Value of $17,884,527 and $15,151,102, respectively) Obligations of States and Political Subdivisions		11,377,803			11,900,483
Federal Reserve Bank Stock		637,849			637,849
Federal Home Loan Bank Stock		5,158,200			1,822,800
Corporate Bonds and Other Securities		100,000			100,000
Total Investment Securities		417,311,425			442,138,772
Total Loans		905,080,229			825,475,786
Less: Unearned Discounts		43,084			46,252
Allowance for Loan Losses		9,828,258			8,209,704
Net Loans		895,208,887			817,219,830
Premises and Equipment, Net		22,791,649			23,004,954
Accrued Interest Receivable		6,747,285			5,803,901
Excess of Cost Over Fair Value of Net Assets Acquired		814,445			814,445
Other Assets		16,878,462			19,183,097
TOTAL ASSETS	$	1,408,282,560		$	1,348,218,337
LIABILITIES & STOCKHOLDERS’ EQUITY
Demand Deposits	$	424,319,945		$	385,736,154
Saving, N.O.W., and Money Market Deposits		521,155,530			601,335,816
Time Certificates of $100,000 or more		15,825,053			22,737,118
Other Time Deposits		197,405,982			187,783,227
Total Deposits		1,158,706,510			1,197,592,315
Federal Funds Purchased		7,700,000			—
Repurchase Agreements		37,275,000			—
Federal Home Loan Bank Borrowings		83,000,000			25,300,000
Dividend Payable on Common Stock		2,081,344			2,060,614
Accrued Interest Payable		1,722,408			721,572
Other Liabilities		15,796,539			16,332,103
TOTAL LIABILITIES		1,306,281,801			1,242,006,604
Commitments and Contingent Liabilities (see Note 11)
STOCKHOLDERS’ EQUITY
Common Stock (par value $2.50; 15,000,000 shares authorized, 10,406,721 and 10,842,537 shares outstanding at December 31, 2005 & 2004, respectively)		33,884,340			33,884,340
Surplus		19,439,444			19,439,444
Retained Earnings		58,822,484			58,195,233
Treasury Stock at Par (3,147,015 shares and 2,711,199 shares, respectively)		(7,867,542	)		(6,778,002	)
Accumulated Other Comprehensive (Loss) Income, Net of Tax		(2,277,967	)		1,470,718
TOTAL STOCKHOLDERS’ EQUITY		102,000,759			106,211,733
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	1,408,282,560		$	1,348,218,337

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF INCOME

	For the Years ended December 31,
	2005			2004		2003
INTEREST INCOME
Federal Funds Sold	$	90,810		$	309,591	$	220,708
United States Treasury Securities		385,115			414,506		415,957
Obligations of States and Political Subdivisions (tax exempt)		1,968,450			878,691		524,319
Obligations of States and Political Subdivisions (taxable)		271,667			104,543		38,962
Mortgage-Backed Securities		9,596,310			10,364,817		10,396,009
U.S. Government Agency Obligations		4,896,096			4,341,882		3,690,831
Corporate Bonds and Other Securities		147,351			79,677		94,064
Loans		58,316,917			51,490,416		55,613,709
Total Interest Income		75,672,716			67,984,123		70,994,559
INTEREST EXPENSE
Saving, N.O.W., and Money Market Deposits		3,688,631			2,754,739		3,658,406
Time Certificates of $100,000 or more		542,709			367,314		477,522
Other Time Deposits		4,888,187			4,209,134		5,603,758
Federal Funds Purchased and Repurchase Agreements		1,251,893			392		12,384
Interest on Other Borrowings		940,320			47,279		49,091
Total Interest Expense		11,311,740			7,378,858		9,801,161
Net Interest Income		64,360,976			60,605,265		61,193,398
Provision for Loan Losses		1,575,000			1,973,000		931,500
Net Interest Income After Provision for Loan Losses		62,785,976			58,632,265		60,261,898
OTHER INCOME
Service Charges on Deposit Accounts		5,670,036			5,658,689		5,693,454
Other Service Charges, Commissions & Fees		2,542,067			2,518,502		2,537,068
Fiduciary Fees		1,182,643			1,207,050		1,199,117
Other Operating Income		771,550			915,886		1,416,818
Net (Loss) Gain on Sale of Securities Available for Sale		(21,723	)		1,993,974		464,262
Total Other Income		10,144,573			12,294,101		11,310,719
OTHER EXPENSE
Salaries & Employee Benefits		22,222,712			21,753,835		21,669,863
Net Occupancy Expense		3,763,796			3,128,962		2,856,024
Equipment Expense		2,055,659			2,141,907		2,181,295
Outside Services		2,019,188			1,971,825		1,929,695
FDIC Assessments		169,045			185,041		189,631
Other Operating Expense		7,222,173			7,439,992		7,363,774
Total Other Expense		37,452,573			36,621,562		36,190,282
Income Before Provision for Income Taxes		35,477,976			34,304,804		35,382,335
Provision for Income Taxes		13,376,463			13,429,742		14,046,091
NET INCOME	$	22,101,513		$	20,875,062	$	21,336,244
Average: Common Shares Outstanding		10,570,896			10,882,327		11,055,897
Dilutive Stock Options		29,318			31,323		34,205
Average Total Common Shares and Dilutive Options		10,600,214			10,913,650		11,090,102
EARNINGS PER COMMON SHARE
Basic	$	2.09		$	1.92	$	1.92
Diluted	$	2.09		$	1.91	$	1.92

See accompanying notes to consolidated financial statements.

19

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock		Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income, Gain (Loss) Net of Tax			Total			Comprehensive Income
Balance, December 31, 2002	$	33,838,045	$	19,230,182	$	52,453,451		$	(5,114,347	)	$	8,385,361		$	108,792,692
Net Income		—		—		21,336,244			—			—			21,336,244		$	21,336,244
Dividend - Cash		—		—		(8,390,512	)		—			—			(8,390,512	)
Purchase of Treasury Stock		—		—		(16,340,067	)		(1,378,295	)		—			(17,718,362	)
Stock Options Exercised		41,000		144,790		(172,562	)		(13,200	)		—			28
Other		—		—		1,426			—			—			1,426
Net Change in Unrealized Loss on Securities Available for Sale		—		—		—			—			(3,851,266	)		(3,851,266	)		(3,851,266	)
Comprehensive Income																	$	17,484,978
Balance, December 31, 2003	$	33,879,045	$	19,374,972	$	48,887,980		$	(6,505,842	)	$	4,534,095		$	100,170,250
Net Income		—		—		20,875,062			—			—			20,875,062		$	20,875,062
Dividend - Cash		—		—		(8,266,122	)		—			—			(8,266,122	)
Purchase of Treasury Stock		—		—		(3,301,687	)		(272,160	)		—			(3,573,847	)
Stock Appreciation Rights Exercised		5,295		64,472		—			—			—			69,767
Net Change in Unrealized Loss on Securities Available for Sale		—		—		—			—			(3,063,377	)		(3,063,377	)		(3,063,377	)
Comprehensive Income																	$	17,811,685
Balance, December 31, 2004	$	33,884,340	$	19,439,444	$	58,195,233		$	(6,778,002	)	$	1,470,718		$	106,211,733
Net Income		—		—		22,101,513			—			—			22,101,513		$	22,101,513
Dividend - Cash		—		—		(8,320,754	)		—			—			(8,320,754	)
Purchase of Treasury Stock		—		—		(13,110,948	)		(1,089,540	)		—			(14,200,488	)
Other		—		—		(42,560	)		—			—			(42,560	)
Net Change in Unrealized Loss on Securities Available for Sale		—		—		—			—			(3,748,685	)		(3,748,685	)		(3,748,685	)
Comprehensive Income																	$	18,352,828
Balance, December 31, 2005	$	33,884,340	$	19,439,444	$	58,822,484		$	(7,867,542	)	$	(2,277,967	)	$	102,000,759

See accompanying notes to consolidated financial statements.

20

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years ended December 31,
	2005			2004			2003
NET INCOME	$	22,101,513		$	20,875,062		$	21,336,244
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
CASH FLOWS FROM OPERATING ACTIVITIES
Provision for Loan Losses		1,575,000			1,973,000			931,500
Depreciation and Amortization		2,109,645			2,139,579			2,146,385
Accretion of Discounts		(324,834	)		(398,396	)		(292,237	)
Amortization of Premiums		3,676,946			4,600,668			5,294,635
(Increase) Decrease in Accrued Interest Receivable		(943,384	)		65,172			76,495
Decrease in Other Assets		2,304,635			2,416,955			1,672,177
Increase (Decrease) in Accrued Interest Payable		1,000,836			(77,931	)		(534,832	)
(Decrease) Increase in Income Taxes Payable		(479,966	)		317,644			1,909,390
Increase in Other Liabilities		2,507,642			1,837			927,532
Net Loss (Gain) on Sale of Securities		21,723			(1,993,974	)		(464,262	)
Net Cash Provided by Operating Activities		33,549,756			29,919,616			33,003,027
CASH FLOWS FROM INVESTING ACTIVITIES
Principal Payments on Investment Securities		61,231,605			77,880,445			100,805,657
Proceeds from Sale of Investment Securities; Available for Sale		8,422,802			88,413,187			39,108,805
Maturities of Investment Securities; Available for Sale		—			3,500,000			—
Purchases of Investment Securities; Available for Sale		(51,743,399	)		(228,684,740	)		(167,267,856	)
Maturities of Investment Securities; Held to Maturity		8,925,200			6,633,995			9,500,000
Purchases of Investment Securities; Held to Maturity		(11,736,400	)		(6,452,200	)		(7,156,595	)
Loan Disbursements and Repayments, Net		(79,564,058	)		11,317,401			(51,579,772	)
Purchases of Premises and Equipment, Net		(1,896,340	)		(2,364,382	)		(4,489,386	)
Net Cash Used in Investing Activities		(66,360,590	)		(49,756,294	)		(81,079,147	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (Decrease) Increase in Deposit Accounts		(38,885,805	)		10,096,813			44,913,567
Short-Term Borrowings and Repayments, Net		102,675,000			5,300,000			20,000,000
Dividends Paid to Shareholders		(8,300,804	)		(8,285,870	)		(8,266,338	)
Stock Options and Stock Appreciation Rights Exercised		—			7			28
Treasury Shares Acquired		(14,200,488	)		(3,573,847	)		(17,718,362	)
Net Cash Provided by Financing Activities		41,287,903			3,537,103			38,928,895
Net Increase (Decrease) in Cash and Cash Equivalents		8,477,069			(16,299,575	)		(9,147,225	)
Cash and Cash Equivalents Beginning of Year		40,053,338			56,352,913			65,500,138
Cash and Cash Equivalents End of Year	$	48,530,407		$	40,053,338		$	56,352,913
Supplemental Disclosure of Cash Flow Information
Cash Received During the Year for Interest	$	74,729,332		$	68,049,295		$	71,071,054
Cash Paid During the Year for:
Interest	$	10,310,904		$	7,456,789		$	10,335,993
Income Taxes		14,128,373			12,101,242			12,697,665
Total Cash Paid During Year for Interest & Income Taxes	$	24,439,277		$	19,558,031		$	23,033,658
Non-Cash Investing and Financing:
Decrease in Market Value of Investments		6,353,704			5,192,164			6,527,570
Decrease in Deferred Tax Liability Related to Market Value of Investments Available for Sale		2,605,019			2,128,787			2,676,304
Dividends Declared But Not Paid		2,081,344			2,060,614			2,080,361
Stock Options and Stock Appreciation Rights Exercised for Stock		—			69,767			185,790

See accompanying notes to consolidated financial statements.

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Notes to Consolidated Financial Statements

Note 1 — Summary of Significant Accounting Policies

The accounting and reporting policies of Suffolk Bancorp and its subsidiary conform to generally accepted accounting principles and general practices within the banking industry. The following footnotes describe the most significant of these policies.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported assets and liabilities as of the date of the consolidated statements of condition. The same is true of revenues and expenses reported for the period. Actual results could differ significantly from those estimates.

(A) Consolidation — The consolidated financial statements include the accounts of Suffolk and its wholly owned subsidiary, Suffolk County National Bank (the “Bank”). In 1998, the Bank formed a Real Estate Investment Trust named Suffolk Green-way, Inc. In 2004, the Bank formed an insurance agency named SCNB Financial Services, Inc. All intercompany transactions have been eliminated in consolidation.

(B) Investment Securities — Suffolk reports debt securities and mortgage-backed securities in one of the following categories: (i) “held to maturity” (management has the intent and ability to hold to maturity), which are to be reported at amortized cost; (ii) “trading” (held for current resale), which are to be reported at fair value, with unrealized gains and losses included in earnings; and (iii) “available for sale” (all other debt securities and mortgage-backed securities), which are to be reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity. Accordingly, Suffolk classified all of its holdings of debt securities and mortgage-backed securities as either “held to maturity” or “available for sale.” At the time a security is purchased, a determination is made as to the appropriate classification.

Premiums and discounts on debt and mortgage-backed securities are amortized as expense and accreted as income over the estimated life of the respective security using a method that approximates the level-yield method. Gains and losses on the sales of investment securities are recognized upon realization, using the specific identification method and shown separately in the consolidated statements of income.

Emerging Issues Task Force (EITF) Issue 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (“EITF 03-1”) provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. An investment is considered impaired if the fair value of the investment is less than its cost. Generally, an impairment is considered other-than-temporary unless: (i) the investor has the ability and intent to hold an investment for a reasonable period of time sufficient for an anticipated recovery of fair value up to (or beyond) the cost of the investment; and (ii) evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If impairment is determined to be other-than-temporary, then an impairment loss should be recognized equal to the difference between the investment’s cost and its fair value. Certain disclosure requirements of EITF 03-1 were adopted in 2003 and the Company began presenting the new disclosure requirements in its consolidated financial statements for the year ended December 31, 2003. The recognition and measurement provisions were initially effective for other-than-temporary impairment evaluations in reporting periods beginning after June 15, 2004. However, in September 2004, the effective date of these provisions was delayed until the finalization of a FASB Staff Position (FSP) to provide additional implementation guidance.

In June, the FASB decided not to provide additional guidance on the meaning of other-than-temporary impairment, but directed its staff to issue proposed FSP EITF 03-1-a, “Implementation Guidance for the Application of Paragraph 16 of EITF Issue No. 03-1,” as final. The final FSP will supersede EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” and EITF Topic No. D-44, “Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value.” The final FSP (re-titled FSP FAS 115-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”) will replace the guidance set forth in paragraphs 10-18 of Issue 03-1 with references to existing other-than-temporary impairment guidance, such as FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities;” SEC Staff Accounting Bulletin No. 59, “Accounting for Non-current Marketable Equity Securities;” and APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” FASB Staff Position No. FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (the “FSP”), were issued on November 3, 2005 and addresses the determination of when an investment is considered impaired; whether the impairment is other than temporary; and how to measure an impairment loss. The FSP replaces the impairment guidance in EITF Issue No. 03-1 with references to existing authoritative literature concerning other-than-temporary determinations, principally Statement of Financial Accounting Standards (“SFAS”) No. 115 and SEC Staff Accounting Bulletin 59. Under the FSP, impairment losses must be recognized in earnings equal to the entire difference between the security’s cost and its fair value at the financial statement date, without considering partial recoveries subsequent to that date. The FSP also requires that an investor recognize an other-than-temporary impairment loss when a decision to sell a security has been made and the investor does not expect the fair value of the security to fully recover prior to the expected time of sale. The FSP is effective for reporting periods beginning after December 15, 2005. The Company does not expect that the application of the FSP will have a material impact on its financial condition, results of operations, or financial statement disclosures.

(C) Loans and Loan Interest Income Recognition — Loans are stated at the principal amount outstanding. Interest on loans not made on a discounted basis is credited to income, based upon the principal amount outstanding during the period. Unearned discounts on installment loans are credited to income

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using methods that approximate a level yield. Recognition of interest income is discontinued when reasonable doubt exists as to whether interest due can be collected. Loans generally no longer accrue interest when 90 days past due. When a loan is placed on non-accrual status, all interest previously accrued in the current year, but not collected, is reversed against current-year interest income. Any interest accrued in prior years is charged against the allowance for loan losses. Loans and leases start accruing interest again when they become current as to principal and interest, and when, in the opinion of management, the loans can be collected in full.

(D) Allowance for Loan Losses — The balance of the allowance for loan losses is determined by management’s estimate of the amount of financial risk in the loan portfolio and the likelihood of loss. The analysis also considers the Bank’s loan loss experience and may be adjusted in the future depending on economic conditions. Additions to the allowance are made by charges to expense, and actual losses, net of recoveries, are charged to the allowance. Regulatory examiners may require the Bank to add to the allowance based upon their judgment of information available to them at the time of their examination.

In accordance with SFAS No. 114, titled “Accounting by Creditors for Impairment of a Loan,” as amended by Statement No. 118, titled “Accounting by Creditors for Impairment of Loan-Income Recognition and Disclosures,” an allowance is maintained for impaired loans to reflect the difference, if any, between the principal balance of the loan and the present value of projected cash flows, observable fair value, or collateral value. SFAS No. 114 defines an impaired loan as a loan for which it is probable that the lender will not collect all amounts due under the contractual terms of the loan.

The Bank accounts for its transfers and servicing financial assets in accordance with SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 140 revises the standards for accounting for the securitizations and other transfers of financial assets and collateral. Transfers of financial assets for which the Bank has surrendered control of the financial assets are accounted for as sales to the extent that consideration other than beneficial interests in the transferred assets is received in exchange. Retained interests in a sale or securitization of financial assets are measured at the date of transfer by allocating the previous carrying amount between the assets transferred and based on their relative estimated fair values. The fair values of retained servicing rights and any other retained interests are determined based on the present value of expected future cash flows associated with those interests and by reference to market prices for similar assets. There were no transfers of financial assets to related or affiliated parties. At December 31, 2005 and 2004, the Bank’s servicing loan portfolio approximated $97,913,000, and $99,929,000, respectively. The estimated fair value of mortgage servicing rights was $1,189,000 and $1,164,000 as of December 31, 2005 and 2004, respectively.

Suffolk adopted FASB Interpretation 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others,” on January 1, 2003. FIN 45 requires a guarantor entity, at the inception of a guarantee covered by the measurement provisions of the interpretation, to record a liability for the fair value of the obligation undertaken in issuing the guarantee. Suffolk has financial and performance letters of credit. Financial letters of credit require Suffolk to make payment if the customer’s financial condition deteriorates, as defined in the agreements. Performance letters of credit require Suffolk to make payments if the customer fails to perform certain nonfinancial contractual obligations. Suffolk previously did not record a liability when guaranteeing obligations unless it became probable that Suffolk would have to perform under the guarantee. FIN 45 applies prospectively to guarantees Suffolk issues or modifies subsequent to December 31, 2002. The maximum potential undiscounted amount of the future payments of these letters of credit as of December 31, 2005 is $6,647,000 and they expire as follows:

2006	$	5,174,000
2007		1,155,000
2010 and thereafter		318,000
	$	6,647,000

Amounts due under these letters of credit would be reduced by any proceeds that Suffolk would be able to obtain in liquidating the collateral for the loans, which varies depending on the customer. The valuation of the allowance for loan losses includes a provision of $10,000 for loan losses based on the letters of credit outstanding on December 31, 2005.

In October 2003, the AICPA issued SOP 03-3, “Accounting for Loans or Certain Debt Securities Acquired in a Transfer.” SOP 03-3 applies to loans with evidence of deterioration of credit quality since origination acquired by completion of a transfer for which it is probable at acquisition that the Company will be unable to collect all contractually required payments receivable. SOP 03-3 requires that the Company recognize the excess of all cash flows expected at acquisition over the investor’s initial investment in the loan as interest income on a level-yield basis over the life of the loan as the accretable yield. The loan’s contractual required payments receivable in excess of the amount of its cash flows excepted at acquisition (non-accretable difference) should not be recognized as an adjustment to yield, a loss accrual, or a valuation allowance for credit risk. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 31, 2004. Early adoption is permitted. Based on current business operations, management expects that the provisions of SOP 03-3 will not materially impact Suffolk’s financial condition, results of operations, or disclosures.

(E) Premises and Equipment — Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is calculated by the declining-balance or straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the term of the lease or the estimated life of the asset, whichever is shorter.

On January 1, 2002, the Bank adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 retains the existing requirements to recognize and measure the impairment of long-lived assets to be held and used or to be disposed of by sale. SFAS No. 144

23

changes the requirements relating to reporting the effects of a disposal or discontinuation of a segment of a business. The adoption of this statement did not have an impact on the financial condition or results of operations of the Bank.

(F) Other Real Estate Owned — Property acquired through foreclosure (other real estate owned or “OREO”), is stated at the lower of cost or fair value less selling costs. Credit losses arising at the time of the acquisition of property are charged against the allowance for loan losses. Any additional write-downs to the carrying value of these assets that may be required, as well as the cost of maintaining and operating these foreclosed properties, are charged to expense. Additional write-downs are recorded in a valuation reserve account that is maintained asset by asset.

(G) Excess of Cost Over Fair Value of Net Assets Acquired and Other Intangible Assets — Through December 31, 2001, the excess of cost over fair value of net assets acquired (goodwill) was amortized on a straight-line basis over a period of ten years. Effective with the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets,” on January 1, 2002, the Bank ceased amortizing goodwill and, instead, tests goodwill for impairment on a periodic basis.

(H) Income Taxes — Suffolk uses an asset and liability approach to accounting for income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are recognized if it is more likely than not that a future benefit will be realized. It is management’s position that no valuation allowance is necessary against any of Suffolk’s deferred tax assets.

(I) Summary of Retirement Benefits Accounting — Suffolk’s retirement plan is noncontributory and covers substantially all eligible employees. The plan conforms to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Suffolk’s policy is to accrue for all pension costs and to fund the maximum amount allowable for tax purposes. Actuarial gains and losses that arise from changes in assumptions concerning future events are amortized over a period that reflects the long-term nature of pension expense used in estimating pension costs.

Suffolk accrues for post-retirement benefits other than pensions by accruing the cost of providing those benefits to an employee during the years that the employee serves.

(J) Cash and Cash Equivalents — For purposes of the consolidated statement of cash flows, cash and due from banks, and federal funds sold are considered to be cash equivalents. Generally, federal funds are sold for one-day periods.

(K) Stock-Based Compensation — At December 31, 2005, the Bank had one stock-based employee compensation plan, which is more fully described in Note 8. The bank accounts for that plan under the recognition and measurement principles of APB No. 25, “Accounting for Stock Issued to Employees,” and related interpretations, as an accepted alternative under FASB No. 123, “Accounting for Stock-Based Compensation.” All options granted under the plan had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings-per-share if the Bank had applied the fair value recognition provisions of FASB No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation: (in thousands, except per-share amounts)

	2005		2004		2003
Net Income:
As Reported	$	22,102	$	20,875	$	21,336
Stock-Based Compensation Expense		70		51		57
Pro Forma		22,032		20,824		21,279
Basic EPS:
As Reported		2.09		1.92		1.92
Pro Forma		2.08		1.91		1.92

(L) Treasury Stock — The balance of treasury stock is computed at par value. The excess cost over par is subtracted from undivided profits.

(M) Earnings-per-share — Basic earnings-per-share is computed by dividing net income by the number of weighted-average shares outstanding during the period. Diluted earnings-per-share reflect the dilution that would occur if stock options were exercised in return for common stock that would then share in Suffolk’s earnings. It is computed by dividing net income by the sum of the weighted-average number of common shares outstanding and the weighted-average number of stock options exercisable during the period. Suffolk has no other securities that could be converted into common stock, nor any contracts that would result in the issuance of common stock.

(N) Comprehensive Income — Comprehensive income includes net income and all other changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income includes revenues, expenses, gains, and losses that under generally accepted accounting principles are included in comprehensive income but excluded from net income. Comprehensive income and accumulated other comprehensive income are reported net of related income taxes. Accumulated other comprehensive income for the Bank consists solely of unrealized holding gains or losses on securities available for sale.

As of December 31, 2005, the fair market value of the Company’s investments classified Available for Sale was $400,038,000. The book value of the Company’s investments classified Available for Sale was $403,899,000. The net difference or net unrealized loss on Available for Sale investments as of December 31, 2005 was $3,861,000. Available for Sale investments are recorded on the Statement of Condition at fair market value. The corresponding entries as of December 31, 2005 include in liabilities a deferred tax asset of $1,583,000 and in capital accumulated other comprehensive loss, net of tax amount of $2,278,000.

(O) Segment Reporting — SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information,” requires that public companies report certain information about operating segments. It also requires that public companies report certain information about their products and services, the

24

geographic areas in which they operate, and their major customers. Suffolk is a regional bank, which offers a wide array of products and services to its customers. Pursuant to its banking strategy, emphasis is placed on building relationships with its customers, as opposed to building specific lines of business. As a result, at December 31, 2005 and 2004, Suffolk is not organized around discernible lines of business and prefers to work as an integrated unit to customize solutions for its customers, with business line emphasis and product offerings changing over time as needs and demands change. Thus, all necessary requirements of SFAS No. 131 have been met by Suffolk as of December 31, 2005.

(P) Variable Interest Entities (VIE’s) — In January 2003, the FASB issued FASB Interpretation 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” FIN 46 clarifies the application of Accounting Research Bulletin 51, “Consolidated Financial Statements,” for certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or in which equity investors do not have the characteristics of a controlling financial interest (“variable interest entities”). Variable interest entities within the scope of FIN 46 will be required to be consolidated by their primary beneficiary. The primary beneficiary of a variable interest entity is determined to be the party that absorbs a majority of the entity’s expected losses, receives a majority of its expected returns, or both. Subsequent to the issuance of FIN 46, the FASB issued a revised interpretation, FIN 46(R), the provisions of which must be applied to certain variable interest entities by March 31, 2004. Suffolk has determined the adoption of the provisions of FIN 46 do not materially impact its financial condition or results of operation.

(Q) Reclassification of Prior Year Consolidated Financial Statements — Certain reclassifications have been made to the prior year’s consolidated financial statements that conform with the current year’s presentation.

Note 2 — Investment Securities

The amortized cost, estimated fair values, and gross unrealized gains and losses of Suffolk’s investment securities available for sale and held to maturity at December 31, 2005 and 2004 were: (in thousands)

	2005									2004
	Amortized Cost		Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses			Amortized Cost		Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
Available for sale:
U.S. Treasury securities	$	9,442	$	9,337	$	—	$	(105	)	$	9,385	$	9,516	$	148	$	(17	)
U.S. government agency debt		126,055		123,421		447		(3,081	)		126,337		127,049		1,558		(847	)
Collateralized mortgage obligations agency issue		195,207		194,404		471		(1,274	)		255,888		257,199		1,884		(573	)
Collateralized mortgage obligations private issue		—		—		—		—			401		405		3		—
Mortgage-backed securities		1,712		1,788		76		—			4,068		4,231		163		—
Obligations of states and political subdivisions		71,483		71,088		289		(684	)		29,105		29,278		432		(259	)
Balance at end of year		403,899		400,038		1,283		(5,144	)		425,184		427,678		4,188		(1,696	)
Held to maturity:
Obligations of states and political subdivisions		11,378		11,989		664		(53	)		11,900		12,590		732		(42	)
Other securities		5,896		5,896		—		—			2,561		2,561		—		—
Balance at end of year		17,274		17,885		664		(53	)		14,461		15,151		732		(42	)
Total investment securities	$	421,173	$	417,923	$	1,947	$	(5,197	)	$	439,645	$	442,829	$	4,920	$	(1,738	)

The amortized cost, maturities, and approximate fair value of Suffolk’s investment securities at December 31, 2005 are as follows: (in thousands)

	Available for Sale												Held to Maturity
	U.S. Treasury Securities				U.S. Govt. Agency Debt				Obligations of States & Political Subdivisions				Obligations of States & Political Subdivisions				Other Securities				Total Amortized Cost		Total Fair Value
(1) Maturity (in years)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1	$	5,954	$	5,954	$	505	$	502	$	—	$	—	$	4,063	$	4,052	$	—	$	—	$	10,522	$	10,508
After 1 but within 5		3,488		3,383		125,550		122,919		1,053		1,031		1,378		1,395		—		—		131,469		128,728
After 5 but within 10		—		—		—		—		20,721		20,554		2,650		2,744		—		—		23,371		23,298
After 10		—		—		—		—		49,709		49,503		3,287		3,798		—		—		52,996		53,301
Other Securities		—		—		—		—		—		—		—		—		5,896		5,896		5,896		5,896
Subtotal	$	9,442	$	9,337	$	126,055	$	123,421	$	71,483	$	71,088	$	11,378	$	11,989	$	5,896	$	5,896	$	224,254	$	221,731
Collateralized mortgage obligations																						1,712		1,788
Mortgage-backed securities																						195,207		194,404
Total																					$	421,173	$	417,923

(1) Maturities shown are stated maturities. Securities backed by mortgages are expected to have substantial periodic prepayments resulting in weighted average lives considerably less than what would be surmised from the table above.

25

As a member of the Federal Reserve system, the Bank owns Federal Reserve Bank stock with a book value of $638,000. The stock has no maturity and there is no public market for the investment.

As a member of the Federal Home Loan Bank of New York, the bank owns Federal Home Loan Bank of New York stock with a book value of $5,158,000. The stock has no maturity and there is no public market for the investment.

At December 31, 2005 and 2004, investment securities carried at $161,285,000 and $153,362,000 respectively, were pledged to secure trust deposits and public funds on deposit. The following table presents detail concerning realized securities gains and losses during the years indicated: (in thousands)

	2005		2004	2003
Gross realized gains	—		1,994	509
Gross realized losses	22		—	44
Net (losses) gains	(22	)	1,994	464

The table below indicates the length of time individual securities, both held-to-maturity and available-for-sale, have been held in a continuous unrealized loss position at the date indicated: (in thousands)

As of December 31, 2005 Type of securities	Number of Securities	Less than 12 months				12 months or longer				Total
		Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
U. S. government agency securities	6	$	502	$	3	$	105,413	$	3,078	$	105,915	$	3,081
U.S. Treasury securities	1		—		—		3,383		105		3,383		105
Municipal securities	207		3,539		12		51,957		725		55,496		737
Collateralized mortgage obligations	21		—		—		121,555		1,274		121,555		1,274
Total	235	$	4,041	$	15	$	282,308	$	5,182	$	286,349	$	5,197
	Number of Securities	Less than 12 months				12 months or longer				Total
As of December 31, 2004 Type of securities		Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
U. S. government agency securities	5	$	—	$	—	$	96,582	$	864	$	96,582	$	864
Municipal securities	71		4,029		10		15,867		291		19,896		301
Collateralized mortgage obligations	13		—		—		128,352		573		128,352		573
Total	89	$	4,029	$	10	$	240,801	$	1,728	$	244,830	$	1,738

Management has considered factors regarding other-than-temporarily impaired securities and determined that there are no impaired securities as of December 31, 2005.

Note 3 — Loans

At December 31, 2005 and 2004, loans included the following: (in thousands)

	2005			2004
Commercial, financial, and agricultural	$	179,523		$	158,205
Commercial real estate		308,436			262,262
Real estate construction loans		67,411			50,455
Residential mortgages (1st and 2nd liens)		131,006			114,969
Home equity loans		80,775			75,486
Consumer loans		132,973			162,252
Other loans		4,956			1,847
		905,080			825,476
Unearned discounts		(43	)		(46	)
Allowance for loan losses		(9,828	)		(8,210	)
Balance at end of year	$	895,209		$	817,220

Restructured loans, loans not accruing interest, and loans contractually past due 90 days or more with regard to payment of principal and/or interest amounted to $4,459,000 and $5,364,000 at December 31, 2005 and 2004, respectively. Interest on loans that have been restructured or are no longer accruing interest would have amounted to $335,000 during 2005, $292,000 during 2004, and $71,000 during 2003, under contractual terms of those loans. Interest income recognized on restructured and non-accrual loans was immaterial for the years 2005, 2004, and 2003.

Suffolk makes loans to its directors and executives, as well as to other related parties in the ordinary course of its business. Loans made to directors and executives, either directly or indirectly, which exceed $60,000 in aggregate for any one director, totaled $15,615,000 and $17,763,000 at December 31, 2005 and 2004, respectively. Unused portions of lines of credit to directors and executives, directly or indirectly, totaled $13,078,000 and $8,483,000. New loans totaling $55,424,000 were granted and payments of $57,572,000 were received during 2005.

Note 4 — Allowance for Loan Losses

An analysis of the changes in the allowance for loan losses follows: (in thousands)

	2005			2004			2003
Balance at beginning of year	$	8,210		$	8,551		$	8,695
Provision for loan losses		1,575			1,973			932
Loans charged-off		(608	)		(3,189	)		(2,012	)
Recoveries on loans		651			875			936
Balance at end of year	$	9,828		$	8,210		$	8,551

At December 31, 2005 and 2004, respectively, the Bank’s recorded investment in impaired loans and the related valuation allowance calculated under SFAS No. 114 and SFAS No. 118 are as follows: (in thousands)

	2005		2004
Recorded investment	$	3,910	$	4,350
Valuation allowance		3,626		2,264

This valuation allowance is included in the allowance for loan losses on the statements of condition. The average investment in impaired loans in 2005 was $4,136,000, compared to $1,269,000 in 2004.

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Note 5 — Premises and Equipment

The following table details premises and equipment: (in thousands)

	Estimated Useful Lives	2005			2004
Land	Indefinite	$	3,326		$	3,399
Premises	30 - 40 years		18,633			18,657
Furniture, fixtures & equipment	3 - 7 years		22,286			21,319
Leasehold improvements	1 - 15 years		2,580			1,937
			46,825			45,312
Accumulated depreciation and amortization			(24,033	)		(22,307	)
Balance at end of year		$	22,792		$	23,005

Depreciation and amortization charged to operations amounted to $2,110,000, $2,140,000, and $2,146,000 during 2005, 2004, and 2003, respectively.

Note 6 — Deposits

The following table summarizes the contractual maturities of time deposits during the years after 2005: (in thousands)

Year during which Time Deposit Matures	Time Deposits > $100,000		Other Time Deposits
2006	$	10,698	$	139,897
2007		2,624		31,648
2008		104		10,913
2009		1,289		5,525
2010		1,110		9,423
Total	$	15,825	$	197,406

Note 7 — Short-Term Borrowings

Presented below is information concerning short-term interest-bearing liabilities - principally Federal Home Loan Bank Borrowings, Securities Sold Under Agreements to Repurchase, and Federal Funds Purchased - with maturities of less than one year, and their related weighted-average interest rates for the years 2005 and 2004: (dollars in thousands)

	2005			2004
Daily average outstanding	$	63,169		$	3,842
Total interest cost		2,192			48
Average interest rate paid		3.47	%		1.24	%
Maximum amount outstanding at any month-end	$	127,975		$	25,300
December 31, balance		127,975			25,300
Weighted-average interest rate on balances outstanding at December 31		4.30	%		2.41	%

For purposes of borrowing, Suffolk has no assets pledged as collateral to the Federal Reserve Bank as of December 31, 2005. Assets pledged as collateral to the Federal Home Loan Bank as of December 31, 2005 totaled $100,220,000.

Note 8 — Stockholders’ Equity

Suffolk has a Dividend Reinvestment Plan. Stockholders can reinvest dividends in common stock of Suffolk at a 3 percent discount from market value on newly issued shares. Shareholders may also make additional cash purchases. No shares were issued in 2005, 2004, or 2003.

At December 31, 2005, Suffolk has a Stock Option Plan (“the Plan”) under which 1,200,000 shares of Suffolk’s common stock were originally reserved for issuance to key employees, and of which 1,086,500 remained available at that date. Options are awarded by a committee appointed by the Board of Directors. The Plan provides that the option price shall not be less than the fair value of the common stock on the date the option is granted. All options are exercisable for a period of ten years or less. The Plan provides for but does not require the grant of stock appreciation rights that the holder may exercise instead of the underlying option. When the stock appreciation right is exercised, the underlying option is canceled. The optionee receives shares of common stock with a fair market value equal to the excess of the fair value of the shares subject to the option at the time of exercise (or the portion thereof so exercised) over the aggregate option price of the shares set forth in the option agreement. The exercise of stock appreciation rights is treated as the exercise of the underlying option. Options vest after one year and expire after ten years. Compensation expense related to stock appreciation rights amounted to approximately $31,000, $78,000, and $226,000 for the years ended December 31, 2005, 2004, and 2003, respectively. The following table presents the options granted, exercised, or expired during each of the past three years:

	Shares		Wtd. Avg. Exercise
Balance at December 31, 2002	76,400		$	14.00
Options granted	15,500			31.83
Options exercised	(16,400	)		11.33
Options expired or terminated	—			—
Balance at December 31, 2003	75,500		$	18.14
Options granted	16,000			34.39
Options exercised	(4,000	)		15.50
Options expired or terminated	—			—
Balance at December 31, 2004	87,500		$	21.23
Options granted	23,000			31.25
Options exercised	—			—
Options expired or terminated	—			—
Balance at December 31, 2005	110,500		$	23.32

The following table presents additional information:

At, or during, year ended December 31,	2005			2004			2003
Average remaining contractual life in years		6.28			6.91			6.99
Exercisable options (vested)		87,500			71,500			60,000
Weighted average fair value of options (Black-Scholes model) at date of grant:	$	8.11		$	10.39		$	8.80
Black-Scholes Assumptions:
Risk-free interest rate		4.19	%		4.20	%		3.96	%
Expected dividend yield		2.24	%		2.33	%		2.60	%
Expected life in years		10			10			10
Expected volatility		20.50	%		26.20	%		26.50	%

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The following table details contractual weighted-averages lives of outstanding options at various prices:

	By range of exercise prices
from		13.13		31.25		34.39
to		15.50		31.83		34.39
Outstanding stock options		56,000		38,500		16,000
Weighted-average remaining life		4.39		8.29		8.08
Weighted-average exercise price	$	14.54	$	31.48	$	34.39
Exercisable stock options		56,000		15,500		16,000
Weighted-average remaining life		4.39		7.16		8.08
Weighted-average exercise price	$	14.54	$	31.83	$	34.39
	Weighted-average
At all prices	Options		price		life (yrs)
Total outstanding		110,500	$	23.32		6.28
Total exerciseable		87,500	$	21.23		5.56

All dividends must conform to applicable statutory requirements. Under 12 USC 56-9, a national bank may not pay a dividend on its common stock if the dividend would exceed net undivided profits then on hand. Further, under 12 USC 60, a national bank must obtain prior approval from the Office of the Comptroller of the Currency (“OCC”) to pay dividends on either common or preferred stock that would exceed the bank’s net profits for the current year combined with retained net profits (net profits minus dividends paid during that period) from the prior two years. At December 31, 2005, approximately $26,263,000 was available for dividends from the Bank to Suffolk Bancorp without prior approval of the OCC.

On October 23, 1995, the Board of Directors adopted a Shareholder Rights Plan and declared a dividend of one right per common share. Each right, if made exercisable by certain events, entitles the holder to acquire one-half of a share of common stock for $17.50, adjustable to prevent dilution. The rights expired in October of 2005 and were not renewed.

Note 9 — Income Taxes

The following table presents the provision for income taxes in the consolidated statements of income which is comprised of the following: (in thousands)

	2005			2004			2003
Current:
Federal	$	11,782		$	10,857		$	11,437
State		2,191			1,967			2,251
		13,973			12,824			13,688
Deferred:
Federal		(456	)		675			2,146
State		(141	)		(69	)		(1,788	)
		(597	)		606			358
Total	$	13,376		$	13,430		$	14,046

The total current tax expense was greater than the amounts computed by applying the federal income tax rate because of the following:

	2005		2004		2003
Federal income tax expense at statutory rates	35	%	35	%	35	%
Tax-exempt interest	(2	%)	(1	%)	0	%
State income taxes net of federal benefit	4	%	4	%	4	%
Other	1	%	1	%	1	%
Total	38	%	39	%	40	%

The effects of temporary differences between tax and financial accounting that create significant deferred-tax assets and liabilities at December 31, 2005 and 2004, and the recognition of income and expense for purposes of tax and financial reporting, that resulted in a net increase to Suffolk’s net deferred tax asset for the years ended December 31, 2005, 2004, and 2003 are presented below: (in thousands)

	2005		2004		2003
Deferred tax assets:
Provision for possible loan losses	$	4,017	$	3,355	$	3,495
Post-retirement benefits		993		961		930
Deferred compensation		1,765		1,742		1,676
Securities available for sale		1,583		—		—
Other		365		571		574
Total deferred tax assets before valuation allowance		8,723		6,629		6,675
Valuation allowance		—		—		—
Total deferred tax assets net of valuation allowance		8,723		6,629		6,675
Deferred tax liabilities:
Pension		1,584		1,522		1,526
Securities available for sale		—		1,022		3,151
Other		580		728		164
Total deferred tax liabilities		2,164		3,272		4,841
Net deferred tax asset	$	6,559	$	3,357	$	1,834

Note 10 — Employee Benefits

(A) Retirement Plan — Suffolk has a noncontributory defined benefit pension plan available to all full-time employees who are at least 21 years old and have completed at least one year of employment. The plan is governed by the rules and regulations in the Prototype Plan of the New York Bankers Association Retirement System and the Retirement System Adoption Agreement executed by the Bank. For purposes of investment, the plan contributions are pooled with those of other participants in the system.

The following tables set forth the status of Suffolk Bancorp’s combined plan as of September 30, 2005 and September 30, 2004, the time at which the annual valuation of the plan is made.

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The following table sets forth the plan’s change in benefit obligation:

	2005			2004
Benefit obligation at start of year	$	21,269,432		$	19,811,876
Service cost		1,194,639			1,128,438
Interest cost		1,250,591			1,163,160
Actuarial loss		2,480,423			155,599
Benefits paid		(1,007,567	)		(989,641	)
Benefit obligation at end of year	$	25,187,518		$	21,269,432

The following table sets forth the plan’s change in plan assets:

	2005			2004
Fair value of plan assets at start of year	$	19,709,574		$	17,716,506
Actual return on plan assets		2,376,097			1,918,346
Employer contribution		1,207,091			1,064,363
Benefits paid		(1,007,567	)		(989,641	)
Fair value of plan assets at end of year	$	22,285,195		$	19,709,574

Suffolk will be required to make an annual minimum contribution of $1,430,806 by June 15, 2006 for the plan year ending September 30, 2005 and $1,541,906 by June 15, 2006 for the plan year ending September 30, 2006.

The following table presents estimated benefits to be paid during the years indicated: (in thousands)

	Qualified Pension plan		Post- retirement plan
2007	$	924	$	45
2008		993		48
2009		1,014		51
2010		1,055		54
2011		1,114		57
2012-2016		7,447		343

The following table summarizes the funded status of the plan:

	2005			2004
Funded status	$	(2,902,323	)	$	(1,559,858	)
Unrecognized net transition liability		—			(10,400	)
Unrecognized prior service cost		(28,620	)		(32,599	)
Unrecognized net loss		6,727,560			5,247,142
Prepaid cost	$	3,796,617		$	3,644,285

The following table summarizes the net periodic pension cost:

	2005			2004			2003
Service cost	$	1,401,348		$	1,194,639		$	1,128,438
Interest cost on projected benefit obligations		1,359,983			1,250,591			1,163,160
Expected return on plan assets		(1,779,840	)		(1,571,239	)		(1,408,445	)
Net amortization & deferral		263,230			180,768			184,093
Net periodic pension cost	$	1,244,721		$	1,054,759		$	1,067,246
Weighted-average discount rate		5.50	%		6.00	%		6.75	%
Rate of increase in future compensation		3.00	%		3.00	%		3.00	%
Expected long-term rate of return on assets		8.00	%		8.00	%		8.00	%

Plan Assets

Suffolk’s pension plan weighted-average asset allocations at September 30, 2005 and 2004, by asset category are as follows:

	at September 30,
Asset category	2005		2004
Equity Securities	58.80	%	64.70	%
Debt Securities	41.20	%	34.90	%
Other	0.00	%	0.40	%
Total	100	%	100	%

Investment Policies

The New York State Bankers Retirement System (the “System”) was established in 1938 to provide for the payment of benefits to employees of participating banks. The System is overseen by a Board of Trustees who meet quarterly and set the investment policy guidelines.

The System utilizes two investment management firms (which will be referred to as Firm I and Firm II), each investing approximately 50 percent of the total portfolio. The System’s investment objective is to exceed the investment benchmarks in each asset category. Each firm operates under a separate written investment policy approved by the Trustees and designed to achieve an allocation approximating 60 percent invested in equity securities and 40 percent invested in debt securities.

Each Firm shall report at least quarterly to the Investment Committee and semiannually to the Board.

Equity Securities

The target allocation percentage for equity securities is 60 percent but may vary from 50-70 percent at the investment manager’s discretion.

Firm I is employed for its expertise as a Value Manager. It is allowed to invest a certain amount of the equity portfolio under its management in international securities and to hedge said international securities so as to protect against currency devaluations.

The equities managed by Firm II are in a commingled Large Cap Equity Fund. The Fund is invested in a diversified portfolio of common or capital stocks, or bonds, debentures, notes, or preferred stocks convertible into common or capital stocks, or in other types of equity investments whether foreign or domestic. Short-term obligations of the U.S. government or other short-term investments may be purchased and held pending the selection and purchase of suitable investments which meet the guidelines above. Investments may include units of participation in any other Fund established within this Fund which consists of assets of the nature described in the preceding paragraph.

Debt Securities

For both investment portfolios, the target allocation percentage

29

for debt securities is 40 percent but may vary from 30-50 percent at the investment manager’s discretion.

The Fixed Income Portfolio managed by Firm I operates with guidelines relating to types of debt securities, quality ratings, maturities, and maximum single and sector allocations.

The portfolio may trade foreign currencies in both spot and forward markets to effect securities transactions and to hedge underlying asset positions. The purchase and sale of futures and options on futures on foreign currencies and on foreign and domestic bonds, bond indices, and short-term securities is permitted; however, purchases may not be used to leverage the portfolio. Currency transactions may be used only to hedge 0-100 percent of currency exposure of foreign securities.

The Fixed Income portfolio managed by Firm II is in a commingled Fixed Income Fund. This style of fixed income management focuses of high-quality securities drawn from various market sectors, including U.S. Treasuries and government-sponsored agencies, sovereigns, supra-nationals, residential mortgage-backed securities (MBS), corporates, commercial mortgage-backed securities (CMBS), asset-backed securities (ABS), and municipals as set forth in its guidelines and the System’s investment policy.

Expected Long-Term Rate of Return

The expected long-term rate of return on plan assets reflects long-term earnings expectations on existing plan assets and those contributions expected to be received during the current plan year. In estimating that rate, appropriate consideration was given to historical returns earned by plan assets in the fund and the rates of return expected to be available for reinvestment. Average rates of return over the past one-, three-, five-, and ten-year periods were determined and subsequently adjusted to reflect current capital market assumptions and changes in investment allocations.

(B) Director’s Retirement Income Agreement of the Bank of the Hamptons — On April 11, 1994, Suffolk acquired Hamptons Bancshares, Inc., which had a director’s deferred compensation plan. The liability for this plan was approximately $255,000 and $283,000 on December 31, 2005 and 2004. Interest (approximately $20,000 in 2005 and $22,000 in 2004) is accrued over the term of the plan. In 2005, the Bank paid approximately $48,000 to participants.

(C) Deferred Compensation

1986 Plan — During 1986, the Board approved a deferred compensation plan. Under the plan, certain employees and Directors of Suffolk elected to defer compensation aggregating approximately $177,000 in exchange for stated future payments to be made at specified dates. The rate of return on the initial deferral was guaranteed. For purposes of financial reporting, interest (approximately $222,000 in 2005, $239,000 in 2004, and $135,000 in 2003) at the plan’s contractual rate is being accrued on the deferral amounts over the expected plan term. During 2005, Suffolk made payments of approximately $155,000 to participants of the plan. Suffolk has purchased life insurance policies on the plan’s participants based upon reasonable actuarial benefit and other financial assumptions where the present value of the projected cash flows from the insurance proceeds approximates the present value of the projected cost of the employee benefit. Suffolk is the named beneficiary on the policies. Net insurance income related to the policies aggregated approximately $72,000, $57,000, and $47,000, in 2005, 2004, and 2003, respectively.

1999 Plan—During 1999, the Board approved a non-qualified deferred compensation plan. Under this plan, certain employees and Directors of Suffolk may elect to defer some or all of their compensation in exchange for a future payment of the compensation deferred, with accrued interest, at retirement. During 2005, participants deferred compensation totaling $158,000. No payments have been made to any of the participants.

(D) Post-Retirement Benefits Other Than Pension —The following table sets forth the post-retirement benefit liability included in other liabilities in the accompanying consolidated statements of condition as of December 31, 2005 and 2004:

	2005			2004
Accumulated post-retirement benefit obligation (the “APBO”):
Retirees	$	(718,235	)	$	(664,854	)
Fully eligible active plan participants		(306,429	)		(579,988	)
Other active participants		(277,088	)		(212,951	)
Total APBO	$	(1,301,752	)	$	(1,457,793	)
Unrecognized net gain		(989,836	)		(798,785	)
Unrecognized past service cost		(12,410	)		(13,218	)
Unrecognized transition obligation		5,558			6,466
Post-retirement benefit liability	$	(2,298,440	)	$	(2,263,330	)

Net periodic post-retirement benefit cost (the “net periodic cost”) for the years ended December 31, 2005, 2004, and 2003 includes the following components:

	2005			2004			2003
Service cost of benefits earned	$	37,411		$	39,480		$	34,284
Interest cost on liability		64,102			81,445			81,807
Unrecognized (gain) loss		(61,133	)		(38,047	)		(44,950	)
Net periodic cost	$	40,380		$	82,878		$	71,141

Benefit assumptions are based on sponsor contributions of $0.27 per participant per month per $1,000 of life insurance. The retiree is responsible for the premiums, less sponsor contributions. The Bank no longer contributes towards a retiree health plan.

Note 11 — Commitments and Contingent Liabilities

In the normal course of business, there are various outstanding commitments and contingent liabilities, such as standby letters of credit and commitments to extend credit, which are not reflected in the accompanying consolidated financial statements. No material losses are anticipated as a result of these transactions. Suffolk is contingently liable under standby letters of credit in the amount of $6,647,000 and $6,530,000 at December 31, 2005 and 2004, respectively. Suffolk has commitments to make or to extend credit in the form of revolving open-end lines secured by one- to four-family residential properties, commercial

30

real estate, construction and land development loans, and lease financing arrangements in the amount of $159,151,000 and $123,798,000, and commercial loans of $34,580,000 and $32,459,000 as of December 31, 2005 and 2004, respectively.

In the opinion of management, based upon legal counsel, liabilities arising from legal proceedings against Suffolk would not have a significant effect on the financial position of Suffolk.

During 2005, Suffolk was required to maintain balances with the Federal Reserve Bank of New York for reserve and clearing requirements. These balances averaged $3,587,000 in 2005.

Total rental expense for the years ended December 31, 2005, 2004, and 2003 amounted to $963,000, $712,000, and $653,000, respectively.

At December 31, 2005, Suffolk was obligated under a number of noncancelable operating leases for land and buildings used for bank purposes. Minimum annual rentals, exclusive of taxes and other charges under noncancelable operating leases, are summarized as follows: (in thousands)

	Minimum Rentals
2006	$	919
2007		886
2008		818
2009		817
2010 and thereafter		5,777

Note 12 — Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital requirements that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2005, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2005, the most recent notification from the Comptroller of the Currency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. Management believes that since that notification no circumstances have changed the institution’s category.

The Bank’s actual capital amounts and ratios are also presented in the following table: (dollars in thousands)

	Actual capital ratios				Minimum for capital adequacy				Minimum to be “Well Capitalized” under prompt corrective action provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2005
Total Capital (to risk-weighted assets)	$	113,665	10.96	%	$	82,938	8.00	%	$	103,672	10.00	%
Tier 1 Capital (to risk-weighted assets)		103,837	10.02	%		82,938	4.00	%		62,203	6.00	%
Tier 1 Capital (to average assets)		103,837	7.50	%		55,384	4.00	%		69,230	5.00	%
As of December 31, 2004
Total Capital (to risk-weighted assets)	$	112,361	12.03	%	$	74,745	8.00	%	$	93,432	10.00	%
Tier 1 Capital (to risk-weighted assets)		104,151	11.15	%		37,373	4.00	%		56,059	6.00	%
Tier 1 Capital (to average assets)		104,151	7.65	%		54,452	4.00	%		68,065	5.00	%

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Note 13 — Credit Concentrations

Suffolk’s principal investments are loans and a portfolio of short- and medium-term debt of the United States Treasury, states and other political subdivisions, U.S. government agencies, corporations, and mortgage-backed securities and collateralized mortgage obligations.

Consumer loans, net of unearned discounts, comprised 14.7 percent of Suffolk’s loan portfolio and 9.4 percent of assets. A majority are indirect dealer-generated loans secured by automobiles. Most of these loans are made to residents of Suffolk’s primary lending area. Each loan is small in amount. Borrowers represent a cross-section of the population and are employed in a variety of industries. The risk presented by any one loan is correspondingly small, and therefore, the risk that this portion of the portfolio presents to Suffolk depends on the financial stability of the population as a whole, not any one entity or industry. Loans secured by real estate comprise 64.9 percent of the portfolio and 41.7 percent of assets, 34.1 percent of which are for commercial real estate. Commercial real estate loans present greater risk than residential mortgages. Suffolk has attempted to minimize the risks of these loans by considering several factors, including the creditworthiness of the borrower, location, condition, value, and the business prospects for the security property. Commercial, financial, and agricultural loans, unsecured or secured by collateral other than real estate, comprise 19.8 percent of the loan portfolio and 12.7 percent of assets. These loans present significantly greater risk than other types of loans. Average credits are greater in size than consumer loans, and unsecured loans may be more difficult to collect. Suffolk obtains, whenever possible, both the personal guarantees of the principal(s) and cross-guarantees among the principals’ business enterprises.

U.S. Treasury securities represented 2.2 percent of the investment portfolio and 0.7 percent of assets. U.S. government agency debt securities represented 29.6 percent of the investment portfolio and 8.8 percent of assets. These offer little or no financial risk. Collateralized mortgage obligations represented 46.6 percent of the investment portfolio and 13.8 percent of assets. Mortgage-backed securities represented 0.4 percent of the investment portfolio and 0.1 percent of assets. Municipal obligations constitute 19.7 percent of the investment portfolio and 5.8 percent of assets. These obligations present slightly greater risk than U.S. Treasury securities, or those secured by the U.S. government, but significantly less risk than loans because they are backed by the full faith and taxing power of the issuer, each of which is located in the state of New York. Suffolk usually holds these securities to maturity.

Note 14 — Fair Value of Financial Instruments

The following table presents the carrying amounts and fair values of Suffolk’s financial instruments. SFAS No. 107, “Disclosures About Fair Value of Financial Instruments,” defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation: (in thousands)

	2005				2004
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash & cash equivalents	$	48,530	$	48,530	$	40,053	$	40,053
Investment securities available for sale		400,038		400,038		427,678		427,678
Investment securities held to maturity		17,274		17,884		14,461		15,151
Loans, net		905,037		895,370		825,430		827,046
Accrued interest receivable		6,747		6,747		5,804		5,804
Deposits		1,158,707		1,155,959		1,197,592		1,196,390
Accrued interest payable		1,722		1,722		721		721

Limitations

The following estimates are made at a specific point in time and may be based on judgments regarding losses expected in the future, risk, and other factors that are subjective in nature. The methods and assumptions used to produce the fair value estimates follow.

Short-Term Instruments

Short-term financial instruments are valued at the carrying amounts included in the statements of condition, which are reasonable estimates of fair value due to the relatively short term of the instruments. This approach applies to cash and cash equivalents; federal funds purchased; accrued interest receivable; non-interest-bearing demand deposits; N.O.W., money market, and saving accounts; accrued interest payable; and other borrowings.

Loans

Fair values are estimated for portfolios of loans with similar characteristics. Loans are segregated by type.

The fair value of performing loans was calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk of the loan. Estimated maturity is based on the Bank’s history of repayments for each type of loan and an estimate of the effect of the current economy.

Fair value for significant non-performing loans is based on recent external appraisals of collateral, if any. If appraisals are not available, estimated cash flows are discounted using a rate commensurate with the associated risk. Assumptions regarding credit risk, cash flows, and discount rates are made using available market information and specific borrower information.

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The carrying amount and fair value of loans were as follows at December 31, 2005 and 2004: (in thousands)

	2005				2004
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Commercial, financial & agricultural	$	179,523	$	178,956	$	158,205	$	158,470
Commercial real estate		308,436		300,677		262,262		260,461
Real estate construction loans		67,411		68,387		50,455		50,462
Residential mortgages (1st & 2nd liens)		131,006		130,560		114,969		118,183
Home equity loans		80,775		80,524		75,486		75,339
Consumer loans		132,930		131,310		162,206		162,284
Other loans		4,956		4,956		1,847		1,847
Totals	$	905,037	$	895,370	$	825,430	$	827,046

Investment Securities

The fair value of the investment portfolio, including mortgage-backed securities, was based on quoted market prices or market prices of similar instruments.

Deposit Liabilities

The fair value of certificates of deposit less than $100,000 was calculated by discounting cash flows with applicable origination rates. At December 31, 2005, the fair value of certificates of deposit less than $100,000 totaling $194,821,000 had a carrying value of $197,406,000. At December 31, 2005, the fair value of certificates of deposit more than $100,000 totaling $15,662,000 had a carrying value of $15,825,000.

Commitments to Extend Credit, Standby Letters of Credit, and Written Financial Guarantees

The fair value of commitments to extend credit was estimated by either discounting cash flows or using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the current creditworthiness of the counterparties.

Credit in the form of revolving open-end lines secured by one- to four-family residential properties, commercial real estate, construction and land development loans, and lease financing arrangements were $159,151,000 and $123,798,000 as of December 31, 2005 and 2004, respectively.

The estimated fair value of written financial guarantees and letters of credit is based on fees currently charged for similar agreements. The contractual amounts of these commitments were $41,227,000 and $38,990,000 at December 31, 2005 and 2004. The fees charged for the commitments were not material in amount.

Note 15 — Selected Quarterly Financial Data (Unaudited)

The comparative results for the four quarters of 2005 and 2004 are as follows: (in thousands of dollars except for share and per-share data)

	2005								2004
	1st Qtr.		2nd Qtr.		3rd Qtr.		4th Qtr.		1st Qtr.		2nd Qtr.		3rd Qtr.		4th Qtr.
Interest income	$	17,808	$	18,653	$	19,348	$	19,864	$	16,847	$	16,879	$	17,084	$	17,174
Interest expense		2,314		2,751		2,866		3,381		1,885		1,815		1,843		1,836
Net interest income		15,494		15,902		16,482		16,483		14,962		15,064		15,241		15,338
Provision for loan losses		300		375		450		450		225		1,298		225		225
Net interest income after provision for loan losses		15,194		15,527		16,032		16,033		14,737		13,766		15,016		15,113
Other income		2,338		2,489		2,528		2,811		2,452		3,774		2,614		3,454
Other expense		9,293		9,464		9,178		9,539		9,119		9,191		8,990		9,321
Provision for income taxes		3,107		3,227		3,537		3,505		3,206		3,316		3,433		3,475
Net income	$	5,132	$	5,325	$	5,845	$	5,800	$	4,864	$	5,033	$	5,207	$	5,771
Basic per-share data:
Net income	$	0.48	$	0.50	$	0.55	$	0.56	$	0.45	$	0.46	$	0.48	$	0.53
Cash dividends	$	0.19	$	0.20	$	0.20	$	0.20	$	0.19	$	0.19	$	0.19	$	0.19
Average shares		10,764,150		10,616,833		10,494,505		10,412,798		10,928,342		10,887,087		10,867,334		10,847,098

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Note 16 — Suffolk Bancorp (Parent Company Only) Condensed Financial Statements (in thousands)

Condensed Statements of Condition as of December 31,	2005			2004			2003
Assets
Due From Banks	$	2,098		$	2,074		$	2,083
Investment in Subsidiaries:
SCNB		102,373			106,436			100,636
Other Assets		242			430			285
Total Assets	$	104,713		$	108,940		$	103,004
Liabilities and Stockholders’ Equity
Dividends Payable	$	2,081		$	2,061		$	2,080
Other Liabilities		631			667			754
Stockholders’ Equity		102,001			106,212			100,170
Total Liabilities and Stockholders’ Equity	$	104,713		$	108,940		$	103,004
Condensed Statements of Income for the Years Ended December 31,	2005			2004			2003
Income
Net Security Gains	$	—		$	—		$	—
Other Income		—			—			—
Dividends From Subsidiary Bank		22,546			12,215			26,258
		22,546			12,215			26,258
Expense
Other Expense		172			203			40
Income Before Equity in Undistributed Net Income of Subsidiaries		22,374			12,012			26,218
Equity in Undistributed Earnings of Subsidiaries		(272	)		8,863			(4,882	)
Net Income	$	22,102		$	20,875		$	21,336
Condensed Statements of Cash Flows for the Years Ended December 31,	2005			2004			2003
Cash Flows From Operating Activities
Net Income	$	22,102		$	20,875		$	21,336
Less: Equity in Undistributed Earnings of Subsidiaries		272			(8,863	)		4,882
Other, Net		151			(231	)		(124	)
Net Cash Provided by Operating Activities		22,525			11,781			26,094
Cash Flows From Investing Activities
Maturities of Investment Securities; Available for Sale		—			—			—
Net Cash Provided by Investing Activities		—			—			—
Cash Flows From Financing Activities
Stock Appreciation Rights Exercised		—			70			—
Repurchase of Common Stock		(14,200	)		(3,574	)		(17,718	)
Dividends Paid		(8,301	)		(8,286	)		(8,266	)
Net Cash Used in Financing Activities		(22,501	)		(11,790	)		(25,984	)
Net Increase in Cash and Cash Equivalents		24			(9	)		110
Cash and Cash Equivalents, Beginning of Year		2,074			2,083			1,973
Cash and Cash Equivalents, End of Year	$	2,098		$	2,074		$	2,083

Note: No income tax provision has been recorded on the books of Suffolk Bancorp since it files a return consolidated with its subsidiaries.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and

Shareholders of Suffolk Bancorp

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that Suffolk Bancorp and its subsidiary maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Suffolk Bancorp’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Suffolk Bancorp maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion, Suffolk Bancorp maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Suffolk Bancorp as of December 31, 2005 and 2004, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005 and our report dated March 1, 2006 expressed an unqualified opinion on those financial statements.

Philadelphia, Pennsylvania March 1, 2006	GRANT THORNTON, LLP

35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and

Shareholders of Suffolk Bancorp

We have audited the accompanying consolidated balance sheets of Suffolk Bancorp and its subsidiary as of December 31, 2005 and 2004, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Suffolk Bancorp as of December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Suffolk Bancorp’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 1, 2006 expressed an unqualified opinion on management’s assessment of the effectiveness of internal control over financial reporting and an unqualified opinion on the effectiveness of internal control over financial reporting.

Philadelphia, Pennsylvania

March 1, 2006

REPORT OF MANAGEMENT

Board of Directors and

Shareholders of Suffolk Bancorp

The management of Suffolk Bancorp is responsible for the preparation and integrity of the consolidated financial statements and all other information in this annual report, whether audited or unaudited. The financial statements have been prepared in accordance with generally accepted accounting principles and, where necessary, are based on management’s best estimates and judgment. The financial information contained elsewhere in this annual report is consistent with that in the consolidated financial statements.

Suffolk Bancorp’s independent registered public accounting firm has been engaged to perform an audit of the consolidated financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), and the firm’s report expresses its opinion as to the fair presentation of the consolidated financial statements and conformity with generally accepted accounting principles.

Suffolk Bancorp maintains systems of internal controls that provide reasonable assurance that assets are safeguarded and keeps reliable financial records for preparing financial statements. Internal audits are conducted to continually evaluate the adequacy and effectiveness of such internal controls, policies, and procedures.

The audit committee of the Board of Directors, which is composed entirely of directors who are not employees of Suffolk Bancorp, meets periodically with the internal auditors, and management to discuss audit and internal accounting controls, regulatory audits, and financial reporting matters.

Thomas S. Kohlmann

President & Chief Executive Officer

J. Gordon Huszagh

Executive Vice President & Chief Financial Officer

Riverhead, New York

March 1, 2006

36

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x Annual report pursuant to section 13 or 15 (d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2005

-OR-

¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     .

Commission File Number: 01-13580

SUFFOLK BANCORP

(Name of Issuer in Its Charter)

New York	11-2708279
(State or Other Jurisdiction of Incorporation of Organization)	(I.R.S. Employer Identification No.)
4 West Second Street, P.O. Box 9000, Riverhead, New York	11901
(Address of Principal Executive Offices)	(Zip Code)

Issuer’s Telephone Number, Including Area Code: (631) 727-5667

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $2.50 per share

(Title of Class)

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES  ¨    NO  x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. YES  ¨    NO  x

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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨ Accelerated filer  x Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes  ¨    No  x

The aggregate market value of the common equity held by non-affiliates of the Registrant as of the last business day of the Registrant’s most recently completed second fiscal quarter was $364.9 million.

As of January 31, 2006, there were 10,336,906 shares outstanding of the Registrant’s common stock.

37

PART I

DOCUMENT INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for its Annual Meeting of Shareholders to be held April 11, 2006, filed on March 10, 2006. (Part III)

ITEM 1. Business

Suffolk Bancorp (“Suffolk”)

Suffolk was incorporated on January 2, 1985 as a bank holding company. On that date, Suffolk acquired, and currently owns, all of the outstanding capital stock of Suffolk County National Bank. On July 14, 1988, Suffolk acquired all the outstanding capital stock of Island Computer Corporation of New York, Inc. The business of Suffolk consists primarily of the ownership, supervision, and control of its subsidiaries. On April 11, 1994, Suffolk acquired all the outstanding capital stock of Hamptons Bancshares, Inc. and merged it into a subsidiary. During 1996, the operations of Island Computer Corporation of New York, Inc. were assumed by Suffolk County National Bank.

Suffolk’s chief competition includes local banks with main or branch offices in the service area of Suffolk County National Bank, including North Fork Bank and Bridgehampton National Bank. Additionally, New York City money center banks and regional banks provide competition. These banks include primarily the Bank of New York, Citibank, Bank of America, and J.P. Morgan Chase.

Suffolk and its subsidiaries had 353 full-time and 64 part-time employees on December 31, 2005.

Suffolk County National Bank (“Bank”)

The Suffolk County National Bank of Riverhead was organized under the national banking laws of the United States of America on January 6, 1890. The Bank is a member of the Federal Reserve System, and its deposits are insured by the Federal Deposit Insurance Corporation to the extent provided by law.

Directed by members of the communities it serves, the Bank’s main service area includes the towns of Babylon, Brookhaven, East Hampton, Islip, Riverhead, Smithtown, Southampton, and Southold. The main office of the Bank is situated at 6 West Second Street, Riverhead, New York. Its branch offices are located at Bohemia, Center Moriches, Cutchogue, Deer Park, East Hampton, Hampton Bays, Hauppauge, Manorville, Mattituck, Medford, Miller Place, Montauk, Port Jefferson, Riverhead, Sag Harbor, Sayville, Shoreham, Smithtown, Southampton, Wading River, Water Mill, West Babylon, and Westhampton Beach, New York.

The Bank is a full-service bank serving the needs of the local residents of Suffolk County. Most of the Bank’s business is devoted to serving those residing in the immediate area of the Bank’s main and branch offices. Among the services offered by the Bank are checking accounts, savings accounts, time and savings certificates, money market accounts, negotiable-order-of-withdrawal accounts, holiday club accounts, and individual retirement accounts; secured and unsecured loans, including commercial loans to individuals, partnerships, and corporations, agricultural loans to farmers, installment loans to finance small businesses, mobile home loans, and automobile loans; home equity and real estate mortgage loans; safe deposit boxes; trust and estate services; the sale of mutual funds and annuities; and the maintenance of a master pension plan for self-employed individuals’ participation. The business of the Bank is only mildly seasonal.

AVAILABLE INFORMATION

Suffolk files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Form 14(a), and any amendments to those reports, with the United States Securities and Exchange Commission (“SEC”). The public may read and copy any of these materials at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330 (1-800-732-0330). The SEC also maintains an Internet site (http://www.sec.gov) that contains reports, proxy, and information statements, and other information regarding issuers, including Suffolk, that file electronically with the SEC. Suffolk also makes these reports available free of charge through its Internet website (http://www.suffolkbancorp.com) as soon as practicably possible after Suffolk files these reports electronically with the SEC.

SUPERVISION AND REGULATION

References in this section to applicable statutes and regulations are brief summaries only, and do not purport to be complete. The reader should consult such statutes and regulations themselves for a full understanding of the details of their operation.

As a consequence of the extensive regulation of commercial banking activities in the United States, the business of Suffolk and its subsidiaries are particularly susceptible to federal and state legislation that may have the effect of increasing or decreasing the cost of doing business, modifying permissible activities, or enhancing the competitive position of other financial institutions.

Suffolk is a bank holding company registered under the Bank Holding Company Act (“BHC” Act) and is subject to supervision and regulation by the Federal Reserve Board. Federal laws subject bank holding companies to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violation of laws and policies.

Activities “Closely Related” to Banking

The BHC Act prohibits a bank holding company, with certain limited exceptions, from acquiring direct or indirect ownership or control of any voting shares of any company that is not a bank or from engaging in any activities other than those of banking, managing or controlling banks and certain other subsidiaries, or furnishing services to or performing services for its subsidiaries. One principal exception to these prohibitions allows the acquisition of interests in companies whose activities are found

38

by the Federal Reserve Board, by order or regulation, to be closely related to banking, or managing or controlling banks. If a bank holding company has become a “financial holding company” (an “FHC”), it may engage in activities that are jointly determined by the Federal Reserve Board and the Treasury Department to be “financial in nature or incidental to such financial activity.” FHCs may also engage in activities that are determined by the Federal Reserve to be “complementary to financial activities.” See “Gramm-Leach-Bliley Act” for a brief summary of the statutory provisions relating to FHCs.

Safe and Sound Banking Practices

Bank holding companies are not permitted to engage in unsafe and unsound banking practices. The Federal Reserve Board may order a bank holding company to terminate an activity or control of a nonbank subsidiary if such activity or control constitutes a significant risk to the financial safety, soundness, or stability of a subsidiary bank and is inconsistent with sound banking principles. Regulation Y also requires a holding company to give the Federal Reserve Board prior notice of any redemption or repurchase of its own equity securities, if the consideration to be paid, together with the consideration paid for any repurchases or redemptions in the preceding year, is equal to 10 percent or more of the company’s consolidated net worth.

The Federal Reserve Board has broad authority to prohibit activities of bank holding companies and their non-banking subsidiaries which represent unsafe and unsound banking practices or which constitute violations of laws or regulations. Notably, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) provides that the Federal Reserve Board can assess civil money penalties for such practices or violations, which can be as high as $1 million per day. FIRREA contains expansive provisions regarding the scope of individuals and entities against which such penalties may be assessed.

Annual Reporting and Examinations

Suffolk is required to file an annual report with the Federal Reserve Board, and such additional information as the Federal Reserve Board may require pursuant to the BHC Act. The Federal Reserve Board may examine a bank holding company or any of its subsidiaries, and charge the company for the cost of such an examination. Suffolk is also subject to reporting and disclosure requirements under state and federal securities laws.

Imposition of Liability for Undercapitalized Subsidiaries

The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentration of credit risk, and the risks of nontraditional activities, as well as reflect the actual performance and expected risk of loss on multifamily mortgages. In accordance with the law, each federal banking agency has specified, by regulation, the levels at which an insured institution would be considered “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” Under these regulations, as of December 31, 2005, the Bank would be deemed to be “well capitalized.”

FDICIA requires bank regulators to take “prompt corrective action” to resolve problems associated with insured depository institutions. In the event an institution becomes “undercapitalized,” it must submit a capital restoration plan. If an institution becomes “significantly undercapitalized” or “critically undercapitalized,” additional and significant limitations are placed on the institution. The capital restoration plan of an undercapitalized institution will not be accepted by the regulators unless each company “having control of” the undercapitalized institution “guarantees” the subsidiary’s compliance with the capital restoration plan until it becomes “adequately capitalized.” Suffolk has control of the Bank for purpose of this statute.

Additionally, Federal Reserve Board policy discourages the payment of dividends by a bank holding company from borrowed funds as well as payments that would adversely affect capital adequacy. Failure to meet the capital guidelines may result in supervisory or enforcement actions by the Federal Reserve Board.

Acquisition by Bank Holding Companies

The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve Board before it may acquire all or substantially all of the assets of any bank, or ownership or control of any voting shares of any bank, if after such acquisition it would own or control, directly or indirectly, more than 5 percent of the voting shares of such bank. In approving bank acquisitions by bank holding companies, the Federal Reserve Board is required to consider the financial and managerial resources and future prospects of the bank holding company and banks concerned, the convenience and needs of the communities to be served, and the effect on competition. The Attorney General of the United States may, within 30 days after approval of an acquisition by the Federal Reserve Board, bring an action challenging such acquisition under the federal antitrust laws, in which case the effectiveness of such approval is stayed pending a final ruling by the courts. Under certain circumstances, the 30-day period may be shortened to 15 days.

Interstate Acquisitions

Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, beginning September 29, 1995, bank holding companies may acquire banks in any state subject to limited restrictions including bank age and deposit concentration limits, notwithstanding contrary state law. All banks owned in common by a bank holding company may act as agents for one another. An agent bank may receive deposits, renew time deposits, accept payments, and close and service loans for its principal bank and not be considered to be a branch of the principal banks.

Banks also may merge with banks in another state and operate either office as a branch, preexisting contrary state law notwithstanding. This law became effective automatically in all states on June 1, 1997, unless a state, by legislation enacted before June 1, 1997, opted out of coverage by the interstate branching provision. Upon consummation of an interstate merger, the resulting bank may acquire or establish branches on the same basis that any participant in the merger could have if the merger had not taken place.

39

Banks may also merge with branches of banks in other states without merging with the banks themselves, or may establish de novo branches in other states if the laws of the other states expressly permit such mergers or such interstate de novo branching.

Banking Regulation

The Bank is a national bank, which is subject to regulation and supervision primarily by the Office of the Comptroller of the Currency (the “OCC”) and secondarily by the Federal Reserve Board and the FDIC. The Bank is subject to the requirements and restrictions under federal law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be granted and the interest that may be charged thereon, and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer laws and regulations also affect the operations of the Bank.

Restrictions on Transactions with Affiliates

Section 23A of the Federal Reserve Act imposes quantitative and qualitative limits on transactions between a bank and any affiliate, and requires certain levels of collateral for such loans. It also limits the amount of advances to third parties which are collateralized by the securities or obligations of Suffolk or its subsidiaries.

Section 23B requires that certain transactions between the Bank and its affiliates must be on terms substantially the same, or at least as favorable, as those prevailing at the time for comparable transactions with or involving other nonaffiliated companies. In the absence of such comparable transactions, any transaction between the Bank and its affiliates must be on terms and under circumstances, including credit standards, that in good faith would be offered to or would apply to nonaffiliated companies.

Examinations

The OCC regularly examines the Bank and records of the Bank. The FDIC may also periodically examine and evaluate insured banks. In addition, the Federal Reserve Board regularly examines the Bank and records of Suffolk.

Standards for Safety and Soundness

As part of the FDICIA’s efforts to promote the safety and soundness of depository institutions and their holding companies, appropriate federal banking regulators are required to have in place regulations specifying operational and management standards (addressing internal controls, loan documentation, credit underwriting, and interest rate risk), asset quality, and earnings. In addition, the Federal Reserve Board, the OCC, and FDIC have extensive authority to police unsafe or unsound practices and violations of applicable laws and regulations by depository institutions and their holding companies. For example, the FDIC may terminate the deposit insurance of any institution that it determines has engaged in an unsafe or unsound practice. The agencies can also assess civil money penalties of up to $1 million per day, issue cease-and-desist or removal orders, seek injunctions, and publicly disclose such actions.

Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act, effective on March 11, 2000, permits bank holding companies to become FHCs and, by doing so, affiliate with securities firms and insurance companies and engage in other activities that are financial in nature or complementary thereto. A bank holding company may become an FHC, if each of its subsidiary banks is well capitalized under the FDICIA prompt corrective action provisions, is well managed, and has at least a satisfactory rating under the Community Reinvestment Act, by filing a declaration that the bank holding company wishes to become an FHC and meets all applicable requirements.

No prior regulatory approval is required for an FHC to acquire a company, other than a bank or savings association, engaged in activities permitted under the Gramm-Leach-Bliley Act. Activities specified in the Gramm-Leach-Bliley Act as being “financial in nature” include securities underwriting and dealing, and insurance underwriting and agency activities. Activities that the Federal Reserve Board has determined to be closely related to banking are also deemed to be financial in nature.

A national bank also may engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting, merchant banking, real estate development, and real estate investment, through a financial subsidiary of the bank, if the bank is well capitalized, well managed, and has at least a satisfactory Community Reinvestment Act rating. Subsidiary banks of an FHC or national bank with financial subsidiaries must continue to be well capitalized and well managed in order to continue to engage in such activities without regulatory actions or restrictions, which could include divestiture of the financial subsidiary or subsidiaries. In addition, an FHC or a bank may not acquire a company that is engaged in such activities unless each of the subsidiary banks of the FHC or the bank has at least a satisfactory Community Reinvestment Act rating.

In July of 2001, provisions of the Gramm-Leach-Bliley Act became effective that impose additional requirements on financial institutions with respect to customer privacy. These provisions generally prohibit disclosure of customer information to nonaffiliated third parties unless the customer has been given the opportunity to object, and has not objected, to such disclosure. Financial institutions are also required to disclose their privacy policies to customers annually and may be required to comply with provisions of applicable state law if such provisions are more protective of customer privacy than those contained in the Gramm-Leach-Bliley Act.

Governmental Monetary Policies and Economic Conditions

The principal sources of funds essential to the business of banks and bank holding companies are deposits, stockholders’ equity, and borrowed funds. The availability of these various sources of funds and other potential sources, such as preferred stock or commercial paper, and the extent to which they are utilized, depends on many factors, the most important of which are the Federal Reserve Board’s monetary policies and the relative costs of different types of funds. An important function of the Federal

40

Reserve Board is to regulate the national supply of bank credit in order to combat recession and curb inflationary pressure. Among the instruments of monetary policy used by the Federal Reserve Board to implement these objectives are open market operations in United States government securities, changes in the discount rate on bank borrowings, and changes in reserve requirements against bank deposits. The monetary policies of the Federal Reserve Board have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. In view of the recent changes in regulations affecting commercial banks and other actions and proposed actions by the federal government and its monetary and fiscal authorities, including proposed changes in the structure of banking in the United States, no prediction can be made as to future changes in interest rates, availability of credit, deposit balances, or the overall performance of banks generally or of Suffolk and its subsidiaries in particular.

STATISTICAL DISCLOSURE

ITEM 2. Properties

Registrant

Suffolk as such has no physical properties. Office facilities of Suffolk are located at 4 West Second Street, Riverhead, New York.

Bank

The Bank’s main office campus, with three buildings, is located at 6 West Second Street, Riverhead, New York, title to which is held by the Town of Riverhead, New York Industrial Development Agency for reasons of tax abatement, but to which the Bank has all other rights of ownership. The Bank also owns a total of 12 properties with 12 buildings in fee, and holds 16 buildings under lease agreements. The decision was made to consolidate a number of offices housing central operations in the new campus facility on property already owned by the Bank in Riverhead, New York, in the interest of operational efficiency. Capitalized costs through December 31, 2005 totaled $9,613,000. Depreciation commenced during the first quarter of 2003. Management anticipates that costs will exceed recent run rates in the first years after construction. Otherwise, management believes that the physical facilities are suitable and adequate and at present are being fully utilized. Suffolk, however, evaluates future needs continuously and anticipates other changes in its facilities during the next several years.

ITEM 3. Legal Proceedings

There are no material legal proceedings, individually or in the aggregate, to which Suffolk or its subsidiaries are a party or of which any of the property is subject.

ITEM 4. Submission of Matters to a Vote of Security Holders

None.

PART II

ITEM 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Pages 4 and 19 of this Annual Report to Shareholders for the fiscal year ended December 31, 2005.

At January 31, 2006, there were approximately 1,639 equity holders of record and approximately 2,400 beneficial shareholders of the Company’s common stock.

ITEM 6. Selected Quarterly Financial Data

Page 33 of this Annual Report to Shareholders for the fiscal year ended December 31, 2005.

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Pages 5 - 17 of this Annual Report to Shareholders for the fiscal year ended December 31, 2005.

ITEM 7a. Quantitative and Qualitative Disclosure about Market Risk

Page 13 of this Annual Report to Shareholders for the fiscal year ended December 31, 2005.

ITEM 8. Financial Statements and Supplementary Data

Pages 18 - 34 of this Annual Report to Shareholders for the fiscal year ended December 31, 2005.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9a. Controls and Procedures

Suffolk’s Chief Executive Officer and Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for establishing and maintaining disclosure controls and procedures for Suffolk. Based upon their evaluation of these controls and procedures as of a date within 90 days of the filing of this report, the Certifying Officers have concluded that Suffolk’s disclosure controls and procedures are effective to ensure that information required to be disclosed by Suffolk in this report is accumulated and communicated to Suffolk’s management, including its principal executive officers as appropriate, to allow timely decisions regarding required disclosure.

The Certifying Officers also have indicated that there were no significant changes in Suffolk’s internal controls or other factors that could significantly affect these controls subsequent to the date of their evaluation, and there were no corrective actions with regard to significant deficiencies and material weaknesses. Management’s Report on Internal Control over Financial Reporting is incorporated herein and can be found on page 17. Management’s assessment of the effectiveness of Suffolk’s internal control over financial reporting as of December 31, 2005, has been audited by Grant Thornton LLP whose report can be found on page 35.

41

PART III

ITEM 10. Directors and Executive Officers of the Registrant

Pages 2 - 6 of Registrant’s Proxy Statement for its Annual Meeting of Shareholders to be held on April 11, 2006 is incorporated herein by reference.

Executive Officers

NAME	AGE	POSITION			BUSINESS EXPERIENCE
Thomas S. Kohlmann	59	Chairman, President, and Chief Executive Officer	Apr-05	-    Present	Chairman, President, CEO, and Director, Suffolk Bancorp
			Oct-99	-    Apr-05	President, CEO, and Director, Suffolk Bancorp
			Oct-99	-    Present	President, CEO, and Director, SCNB
			Jan-98	-    Oct-99	EVP, Suffolk Bancorp
			Jan-96	-    Oct-99	EVP and Chief Lending Officer
			Feb-92	-    Dec-95	SVP, SCNB
			1980	-    Feb-92	Marine Midland Bank
			Employed by SCNB since February 1992.
J. Gordon Huszagh	52	Executive Vice President and Chief Financial Officer	Jan-99	-    Present	EVP and CFO, Suffolk Bancorp
			Jan-99	-    Present	EVP and CFO, SCNB
			Jan-97	-    Jan-99	SVP and CFO, SCNB
			Dec-92	-    Dec-96	SVP & Comptroller, SCNB
			Dec-88	-    Dec-92	VP & Comptroller, SCNB
			Dec-86	-    Dec-88	VP, SCNB
			Jan-83	-    Dec-86	Auditor, SCNB
			1975	-     1982	Eastern Federal Savings and Loan
			Employed by SCNB since January 1983.
Robert C. Dick	56	Executive Vice President and Chief Lending Officer	Apr-00	-    Present	EVP, Suffolk Bancorp
			Apr-00	-    Present	EVP and Chief Lending Officer, SCNB
			Oct-99	-    Apr-00	SVP and Chief Lending Officer, SCNB
			Dec-88	-    Oct-99	SVP, Commercial Loans, SCNB
			Dec-82	-    Apr-88	VP, Commercial Loans, SCNB
			1965	-     1980	Security National Bank/Chemical Bank
			Employed by SCNB since January 1980.
Frank D. Filipo	54	Executive Vice President, Retail Banking	Mar-03	-    Present	EVP, Suffolk Bancorp
			Mar-03	-    Present	EVP, Retail Banking, SCNB
			Sep-01	-    Mar-03	SVP, Retail Banking, SCNB
			Sep-96	-    Sep-01	Regional Administrator, North Fork Bank
			Apr-94	-    Sep-96	SVP, Commercial Loans, SCNB
			Jul-84	-    Apr-94	EVP, Senior Lending Officer, Bank of the Hamptons, N.A.
			1982	-    Jul-84	VP Commerical Loans, Continental Bank
			Employed by SCNB from April 1994 to September 1996 and since September 2001.
Augustus C. Weaver	63	Executive Vice President and Chief Information Officer	Jan-98	-    Present	EVP, Suffolk Bancorp
			Jan-96	-    Present	EVP and Chief Information Officer, SCNB
			Feb-87	-    Dec-95	President, Island Computer Corporation of New York, Inc.
			Feb-86	-    Feb-87	Director of Data Processing and Corporate Planning,
					Southland Frozen Food Corporation
			Feb-62	-    Feb-86	VP & Director of Operations, Long Island Savings Bank
			Employed by SCNB since January 1996.

42

ITEM 11. Executive Compensation

Pages 5-10 of Registrant’s Proxy Statement for its Annual Meeting of Shareholders to be held on April 11, 2006 is incorporated herein by reference.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

Pages 2, 8, 9, and 10 of Registrant’s Proxy Statement for its Annual Meeting of Shareholders to be held on April 11, 2006 is incorporated herein by reference.

ITEM 13. Certain Relationships and Related Transactions

Page 10 of Registrant’s Proxy Statement for its Annual Meeting of Shareholders to be held on April 11, 2006 is incorporated herein by reference.

ITEM 14. Principal Accountant Fees and Services

The following table presents the fees billed for each of the last two fiscal years by Suffolk’s principal accountant by category:

	2005		2004
Audit fees	$	205,499	$	196,152
Audit-related fees		100,000		99,750
Tax fees		26,629		23,701
All other fees		—		—
	$	332,128	$	319,603

The Audit Committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for Suffolk by its independent auditor, subject to the de minimus exceptions for non-audit services described in Section 10A (i) (1) (B) of the Exchange Act which are approved by the Committee prior to the completion of the audit. The Audit Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.

PART IV

ITEM 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The following consolidated financial statements of the Registrant and Subsidiaries, and the accountant’s report thereon, are included on pages 18 through 34 inclusive.

Financial Statements (Consolidated)

EXHIBITS

The following exhibits, which supplement this report, have been filed with the Securities and Exchange Commission. Suffolk Bancorp will furnish a copy of any or all of the following exhibits to any persons sending a request in writing to the Corporate Secretary, Suffolk Bancorp, 4 West Second Street, P.O. Box 9000, Riverhead, New York 11901.

A. Certificate of Incorporation of Suffolk Bancorp (filed by incorporation by reference to Suffolk Bancorp’s Form 10-K for the fiscal year ended December 31, 1999, filed March 10, 2000)

B. Bylaws of Suffolk Bancorp (filed by incorporation by reference to Suffolk Bancorp’s Form 10-K for the fiscal year ended December 31, 1999, filed March 10, 2000)

C. Suffolk Bancorp 1995 Shareholder Rights Plan (filed by incorporation by reference to Suffolk Bancorp’s Form 10-K for the fiscal year ended December 31, 1999, filed March 10, 2000)

D. Suffolk Bancorp 1999 Stock Option Plan (filed by incorporation by reference to Suffolk Bancorp’s Form 10-K for the fiscal year ended December 31, 1999, filed March 10, 2000)

E. Suffolk Bancorp Form of Change-of-Control Employment Contract (filed by incorporation by reference to Suffolk Bancorp’s Form 10-K for the fiscal year ended December 31, 1999, filed March 10, 2000)

Reports on Form 8-K

The following reports were filed on Form 8-K during the three-month period ended December 31, 2005:

October 17, 2005, Item 2.02 Results of Operations and Financial Condition. Attached as an exhibit is the Company’s press release titled “Suffolk Bancorp Announces 16.7 Percent Increase in Third Quarter Earnings per Share,” dated October 17, 2005.

November 29, 2005, Item 8.01 Other Events and Required FD Disclosure. Attached as an exhibit is the Company’s press release titled “Suffolk Bancorp Announces Regular Quarterly Dividend,” dated November 29, 2005.

43

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

March 10, 2006

(Registrant)

By:	/s/ THOMAS S. KOHLMANN	By:	/s/ JOSEPH A. DEERKOSKI
	Thomas S. Kohlmann		Joseph A. Deerkoski
	President, Chief Executive Officer, & Chairman of the Board, Director		Director
By:	/s/ J. GORDON HUSZAGH	By:	/s/ JOSEPH A. GAVIOLA
	J. Gordon Huszagh		Joseph A. Gaviola
	Executive Vice President & Chief Financial Officer		Director
By:	/s/ JAMES E. DANOWSKI	By:	/s/ RALPH M. GIBSON
	James E. Danowski		Ralph M. Gibson
	Director		Director
		By:	/s/ EDGAR F. GOODALE
			Edgar F. Goodale
			Director
		By:	/s/ DAVID A. KANDELL
			David A. Kandell
			Director
		By:	/s/ TERENCE X. MEYER
			Terence X. Meyer
			Director
		By:	/s/ SUSAN V. B. O’SHEA
			Susan V. B. O’Shea
			Director

44

CERTIFICATION OF PERIODIC REPORT

I, Thomas S. Kohlmann, Chief Executive Officer of the Company, certify that:

1. I have reviewed this annual report on Form 10-K of Suffolk Bancorp;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated: March 10, 2006

/s/ THOMAS S. KOHLMANN

Thomas S. Kohlmann

President & Chief Executive Officer

CERTIFICATION OF PERIODIC REPORT

I, J. Gordon Huszagh, Chief Financial Officer of the Company, certify that:

1. I have reviewed this annual report on Form 10-K of Suffolk Bancorp;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated: March 10, 2006

/s/ J. GORDON HUSZAGH

J. Gordon Huszagh

Executive Vice President & Chief Financial Officer

45

CERTIFICATION OF PERIODIC REPORT

I, Thomas S. Kohlmann, President & Chief Executive Officer of Suffolk Bancorp (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: (1) the Annual Report on Form 10-K of the Company for the year ended December 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2) the information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 10, 2006

/s/ Thomas S. Kohlmann

Thomas S. Kohlmann

President & Chief Executive Officer

CERTIFICATION OF PERIODIC REPORT

I, J. Gordon Huszagh, Executive Vice President & Chief Financial Officer of Suffolk Bancorp (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: (1) the Annual Report on Form 10-K of the Company for the year ended December 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2) the information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 10, 2006

/s/ J. Gordon Huszagh

J. Gordon Huszagh

Executive Vice President & Chief Financial Officer

DIRECTORS

James E. Danowski

Partner; Coughlin, Foundotos, Cullen & Danowski

(accounting firm)

Joseph A. Deerkoski

Consultant

(general insurance)

Joseph A. Gaviola

Principal; Gaviola’s Montauk Market

Chris-Nic Properties

(retail; commercial and residential real estate)

Ralph M. Gibson, M.D.

Physician

Edgar F. Goodale

President; Riverhead Building Supply Corp.

(building supply distributor)

David A. Kandell

Managing Partner; Kandell, Farnworth, & Pubins, C.P.A.’s

(accounting firm)

Thomas S. Kohlmann

Chairman, President & Chief Executive Officer

Terence X. Meyer

Managing Partner; Meyer, Meyer, & Keneally, Esqs. L.L.P.

(attorneys)

Susan V. B. O’Shea

Managing Partner; L. I. Commercial Industrial Corp.

(commercial real estate)

OFFICERS

Thomas S. Kohlmann

Chairman, President & Chief Executive Officer

J. Gordon Huszagh

Executive Vice President & Chief Financial Officer

Robert C. Dick

Executive Vice President

Frank D. Filipo

Executive Vice President

Augustus C. Weaver

Executive Vice President

Douglas Ian Shaw

Vice President & Corporate Secretary

46

DIRECTORS	Robert T. Ellerkamp	Hampton Bays Office
Thomas S. Kohlmann	Vice President	David C. Barczak
Chairman of the Board	Wendy Harris	Vice President
James E. Danowski	Vice President
Joseph A. Deerkoski	Benjamin Mancuso	Hauppauge Office
Joseph A. Gaviola	Vice President	Mark Harrigan
Ralph M. Gibson	Deborah Simonetti	Assistant Vice President
Edgar F. Goodale	Vice President
David A. Kandell	Frederick J. Weinfurt	Manorville Office
Terence X. Meyer	Vice President	Diane De Fabrizio
Susan V. B. O’Shea		Assistant Vice President
	RETAIL BANKING
EXECUTIVE OFFICERS	Stanley V. Gelish	Mattituck Office
Thomas S. Kohlmann	Senior Vice President	Janet V. Stewart
Chairman, President &	Anita J. Nigrel	Vice President
Chief Executive Officer	Senior Vice President
J. Gordon Huszagh	Susan M. Martinelli	Medford Office
Executive Vice President &	Vice President	Paul E. Vaas
Chief Financial Officer		Vice President
Frank D. Filipo	Bohemia Office
Executive Vice President	Steve E. Horner	Miller Place Office
Retail Banking	Vice President	Lynn S. Burnett
Augustus C. Weaver		Vice President
Executive Vice President &	Center Moriches Office
Chief Information Officer	Julia Pratt	Montauk Harbor Office
Robert C. Dick	Assistant Vice President	Montauk Village Office
Executive Vice President &		John J. McDonald
Chief Lending Officer	Cutchogue Office	Assistant Vice President
	Kim Sweeney
LOANS	Assistant Vice President	Port Jefferson Harbor Office
Philip D. Ammirato		Port Jefferson Village Office
Senior Vice President	Deer Park Office	Robert P. Grady
Bruce W. Bradley	Steven DeLuca	Vice President
Senior Vice President	Vice President
David T. DeVito		Riverhead, Ostrander
Senior Vice President	East Hampton Pantigo Office	Avenue Office
Lawrence Milius	Paul D. Hawkins, Jr.	Angela R. Reese
Senior Vice President	Vice President	Assistant Vice President
Peter M. Almasy
Vice President	East Hampton Village Office	Riverhead, Second Street Office
Joan Brigante	Jill James	Vincent Cangiano
Vice President	Vice President	Vice President

47

Sag Harbor Office	TRUST & INVESTMENT
Michael E. Newins	SERVICES	COMPTROLLER
Assistant Vice President	Dan A. Cicale	William Cassara
	Senior Vice President	Vice President
Sayville Office	& Trust Officer
Pamela S. Werner		CORPORATE SERVICES
Assistant Vice President	Trust & Estate Services	Douglas Ian Shaw
	Linda Schwartz	Vice President &
Shoreham Office	Vice President & Trust Officer	Corporate Secretary
Wendy A. Stapon	Warren Palzer
Assistant Vice President	Vice President	DATA PROCESSING
	Lori E. Thompson	Mark J. Drozd
Smithtown Office	Vice President	Senior Vice President
Susan L. Hughes
Assistant Vice President	SCNB Financial Services, Inc.	FACILITIES
	William C. Araneo	Charles E. Anderson
Southampton Office	Vice President	Manager
Patricia Bolomey
Vice President	AUDIT	HUMAN RESOURCES
	Maria R. Michaelson	Nancy Jacob
Wading River Office	Senior Vice President	Vice President
John A. Maki	Tricia Thomas-Hector
Assistant Vice President	Vice President	INFORMATION
		SECURITY
Water Mill Office	COLLECTIONS	Joanne Appel
Rebecca Yousik	Christopher R. Martinelli	Assistant Vice President
Assistant Vice President	Assistant Vice President
West Babylon Office	COMPLIANCE
Joanne Goodman	Jeanne P. Kelley
Assistant Vice President	Senior Vice President
	Linda Follett
Westhampton Beach Office	Vice President
John McGregor
Assistant Vice President

48

Directory of Offices and Departments

		Area Code (631)
ON THE WEB AT:	WWW.SCNB.COM	Telephone	FAX
Executive Offices	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2400	727-2638
Audit	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2285	727-8236
Bohemia Office	3880 Veterans Memorial Highway, Bohemia, N.Y. 11716	585-4477	585-4809
Business and Professional Banking Center	260 Middle County Road, Smithtown, N.Y. 11787	979-3400	979-3430
Center Moriches Office	502 Main Street, Center Moriches, N.Y. 11934	878-8800	878-4431
Collections	206 Griffing Avenue, Riverhead, N.Y. 11901	208-2370	727-5732
Commercial Loans	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2201	727-5798
	3880 Veterans Memorial Highway, Bohemia, N.Y. 11716	580-0181	580-0183
	137 West Broadway, Port Jefferson, N.Y. 11777	642-1000	642-0200
	295 North Sea Road, Southampton, N.Y. 11968	287-3104	287-3296
Compliance	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2292	727-2638
Comptroller	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2270	369-2230
Consumer Loans	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2222	727-5521
Corporate Services (Investor Relations)	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	727-5667	727-3214
Cutchogue Office	31525 Main Road, P.O. Box 702, Cutchogue, N.Y. 11935	734-5050	734-7759
Deer Park Office	21 East Industry Court, Suite 4, Deer Park, N.Y. 11729	274-4888	274-4810
Data Processing	206 Griffing Avenue, Riverhead, N.Y. 11901	208-2495	369-5834
East Hampton Pantigo Office	351 Pantigo Road, East Hampton, N.Y. 11937	324-2000	324-6367
East Hampton Village Office	99 Newtown Lane, East Hampton, N.Y. 11937	324-3800	324-3863
Facilities	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2333	208-0767
Hampton Bays Office	168 West Montauk Highway, Hampton Bays, N.Y. 11946	728-2700	728-8311
Hauppauge Office	110 Marcus Boulevard, Hauppauge, N.Y. 11788	436-5400	436-4454
Human Resources	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2310	727-3170
Manorville Office	460 County Road 111, Suite 18, Manorville, N.Y. 11949	281-8200	281-5695
Marketing	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2323	727-9223
Mattituck Office	10900 Main Road, P.O. Box 1420, Mattituck, N.Y. 11952	298-9400	298-9188
Medford Office	2801 Route 112, Suite B, Medford, N.Y. 11763	758-1500	758-1509
Miller Place Office	159-21A Route 25A, Miller Place, N.Y. 11764	474-8400	474-5357
Montauk Harbor Office	541 West Lake Drive, P.O. Box 2368, Montauk, N.Y. 11954	668-4333	668-3643
Montauk Village Office	746 Montauk Highway, P.O. Box 743, Montauk, N.Y. 11954	668-5300	668-1214
Operations	206 Griffing Avenue, Riverhead, N.Y. 11901	208-2450	369-5834
Port Jefferson Harbor Office	135 West Broadway, Port Jefferson, N.Y. 11777	474-7200	331-7806
Port Jefferson Village Office	228 East Main Street, Port Jefferson, N.Y. 11777	473-7700	473-9406
Residential Mortgage Loans	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2244	369-2468
Retail Banking	4 West Second Street, P.O. Box 9000, Riverhead, N.Y. 11901	208-2300	727-3873
Riverhead, Ostrander Avenue Office	1201 Ostrander Avenue, P.O. Box 9000, Riverhead, N.Y. 11901	727-6800	727-5095
Riverhead, Second Street Office	6 West Second Street, Riverhead, N.Y. 11901	208-2350	727-3210
Sag Harbor Office	17 Main Street, P.O. Box 1268, Sag Harbor, N.Y. 11963	725-3000	725-4627
Sayville Office	161 North Main Street, Sayville, N.Y. 11782	218-1600	218-9425
SCNB Financial Services, Inc.	6 West Second Street, P.O. Box 9000, Riverhead, NY 11901	208-2380	727-3210
Shoreham Office	9926 Route 25A, P.O. Box 622, Shoreham, N.Y. 11786	744-4400	744-6743
Smithtown Office	260 Middle Country Road, Suite 112, Smithtown, N.Y. 11787	979-3400	979-3430
Southampton Office	295 North Sea Road, Southampton, N.Y. 11968	283-3800	287-3293
Trust and Investment Services	3880 Veterans Memorial Highway, Bohemia, N.Y. 11716	285-6600	285-6610
Wading River Office	2065 Wading River-Manor Road, Wading River, N.Y. 11792	929-6300	929-6799
Water Mill Office	828 Montauk Highway, P.O. Box 216, Water Mill, N.Y. 11976	726-4500	726-7573
West Babylon Office	955 Little East Neck Road, West Babylon, N.Y. 11704	669-7300	669-5211
Westhampton Beach Office	144 Sunset Avenue, Westhampton Beach, N.Y. 11978	288-4000	288-9252