UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

Commission file number 0-13580

SUFFOLK BANCORP

(Exact Name of Registrant as Specified in Its Charter)

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

(631) 727-5667

(Registrant’s Telephone Number, Including Area Code)

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 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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

9,576,354 SHARES OF COMMON STOCK OUTSTANDING AS OF August 1, 2008

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SUFFOLK BANCORP AND SUBSIDIARIES

	Page
Part I - Financial Information (unaudited)
Item 1.   Financial Statements
Consolidated Statements of Condition	4
Consolidated Statements of Income, For the Three Months Ended June 30, 2008 and 2007	5
Consolidated Statements of Income, For the Six Months Ended June 30, 2008 and 2007	6
Consolidated Statements of Cash Flows, For the Six Months Ended June 30, 2008 and 2007	7
Notes to the Un-audited Consolidated Financial Statements	8
(1) Basis of Presentation	8
(2) Stock-based Compensation	8
(3) Recent Accounting Pronouncements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures About Market Risk	20
Item 4. Controls and Procedures	20
Part II - Other Information
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 6. Exhibits and Reports on Form 8-K	21
Signatures	22
Certifications of Periodic Report –  Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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SUFFOLK BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION

(in thousands of dollars except for share and per share data)

	June 30, 2008			December 31, 2007
	unaudited
ASSETS
Cash & Due From Banks	$	68,329		$	56,633
Federal Funds Sold		—			2,700
Investment Securities:
Available for Sale, at Fair Value		420,997			392,796
Held to Maturity (Fair Value of $18,109 and $18,199, respectively)
Obligations of States & Political Subdivisions		8,048			9,055
Federal Reserve Bank Stock		638			638
Federal Home Loan Bank Stock		8,827			7,818
Corporate Bonds & Other Securities		100			100
Total Investment Securities		438,610			410,407
Total Loans		1,027,031			958,800
Less: Allowance for Loan Losses		7,885			7,672
Net Loans		1,019,146			951,128
Premises & Equipment, Net		22,199			22,143
Accrued Interest Receivable, Net		7,403			7,359
Excess of Cost Over Fair Value of Net Assets Acquired		814			814
Other Assets		15,638			19,397
TOTAL ASSETS	$	1,572,139		$	1,470,581
LIABILITIES & STOCKHOLDERS’ EQUITY
Demand Deposits	$	439,735		$	423,225
Saving, N.O.W. & Money Market Deposits		452,893			404,457
Time Certificates of $100,000 or more		138,028			116,795
Other Time Deposits		186,398			198,898
Total Deposits		1,217,054			1,143,375
Federal Home Loan Bank Borrowings		165,100			143,500
Repurchase Agreements		54,770			54,820
Dividend Payable on Common Stock		2,105			2,121
Accrued Interest Payable		2,238			2,247
Other Liabilities		15,597			15,537
TOTAL LIABILITIES		1,456,864			1,361,600
STOCKHOLDERS’ EQUITY
Common Stock (par value $2.50; 15,000,000 shares authorized; 9,568,730 and 9,610,730 shares outstanding at June 30, 2008 and December 31, 2007, respectively)		33,911			33,911
Surplus		20,266			20,172
Treasury Stock at Par (3,995,661 and 3,953,661 shares, respectively)		(9,989	)		(9,884	)
Retained Earnings		71,891			63,939
		116,079			108,138
Accumulated Other Comprehensive (Loss) Income, Net of Tax		(804	)		843
TOTAL STOCKHOLDERS’ EQUITY		115,275			108,981
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	1,572,139		$	1,470,581

See accompanying notes to consolidated financial statements.

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SUFFOLK BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands of dollars except for share and per share data)

	For the Three Months Ended
	June 30, 2008		June 30, 2007
	unaudited		unaudited
INTEREST INCOME
Federal Funds Sold	$	2	$	34
United States Treasury Securities		99		99
Obligations of States & Political Subdivisions		1,537		1,320
Mortgage-Backed Securities		2,133		1,957
U.S. Government Agency Obligations		1,035		1,218
Corporate Bonds & Other Securities		200		108
Loans		16,980		17,628
Total Interest Income		21,986		22,364
INTEREST EXPENSE
Saving, N.O.W. & Money Market Deposits		1,438		1,232
Time Certificates of $100,000 or more		987		1,259
Other Time Deposits		1,464		2,077
Federal Funds Purchased and Repurchase Agreements		370		726
Interest on Other Borrowings		1,289		1,085
Total Interest Expense		5,548		6,379
Net-interest Income		16,438		15,985
Provision for Loan Losses		300		18
Net-interest Income After Provision for Loan Losses		16,138		15,967
OTHER INCOME
Service Charges on Deposit Accounts		1,433		1,361
Other Service Charges, Commissions & Fees		727		752
Fiduciary Fees		376		339
Other Operating Income		156		106
Total Other Income		2,692		2,558
OTHER EXPENSE
Salaries & Employee Benefits		6,322		6,165
Net Occupancy Expense		1,070		980
Equipment Expense		519		563
Other Operating Expense		2,524		2,611
Total Other Expense		10,435		10,319
Income Before Provision for Income Taxes		8,395		8,206
Provision for Income Taxes		2,681		2,874
NET INCOME	$	5,714	$	5,332
Average: Common Shares Outstanding		9,568,730		9,957,096
Dilutive Stock Options		22,572		15,463
Average Total Common Shares and Dilutive Options		9,591,302		9,972,559
EARNINGS PER COMMON SHARE
Basic	$	0.60	$	0.54
Diluted	$	0.60	$	0.53
DIVIDENDS PER COMMON SHARE	$	0.22	$	0.22

See accompanying notes to consolidated financial statements.

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SUFFOLK BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands of dollars except for share and per share data)

	For the Six Months Ended
	June 30, 2008		June 30, 2007
	unaudited		unaudited
INTEREST INCOME
Federal Funds Sold	$	3	$	83
United States Treasury Securities		198		198
Obligations of States & Political Subdivisions		3,048		2,548
Mortgage-Backed Securities		3,965		3,987
U.S. Government Agency Obligations		2,093		2,435
Corporate Bonds & Other Securities		381		208
Loans		34,265		34,937
Total Interest Income		43,953		44,396
INTEREST EXPENSE
Saving, N.O.W. & Money Market Deposits		2,756		2,411
Time Certificates of $100,000 or more		2,133		2,343
Other Time Deposits		3,334		4,021
Federal Funds Purchased and Repurchase Agreements		886		1,441
Interest on Other Borrowings		2,543		2,113
Total Interest Expense		11,652		12,329
Net-interest Income		32,301		32,067
Provision for Loan Losses		525		130
Net-interest Income After Provision		31,776		31,937
OTHER INCOME
Service Charges on Deposit Accounts		2,806		2,676
Other Service Charges, Commissions & Fees		1,446		1,365
Fiduciary Fees		748		659
Net Security Gains		3,737		—
Other Operating Income		305		229
Total Other Income		9,042		4,929
OTHER EXPENSE
Salaries & Employee Benefits		12,659		12,334
Net Occupancy Expense		2,174		2,004
Equipment Expense		1,046		1,145
Other Operating Expense		4,910		5,159
Total Other Expense		20,789		20,642
Income Before Provision for Income Taxes		20,029		16,224
Provision for Income Taxes		6,756		5,743
NET INCOME	$	13,273	$	10,481
Average: Common Shares Outstanding		9,581,142		10,072,696
Dilutive Stock Options		17,767		23,291
Average Total Common Shares and Dilutive Options		9,598,909		10,095,987
EARNINGS PER COMMON SHARE
Basic	$	1.39	$	1.04
Diluted	$	1.38	$	1.04
DIVIDENDS PER COMMON SHARE	$	0.44	$	0.44

See accompanying notes to consolidated financial statements.

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SUFFOLK BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of dollars)

	For the Six Months Ended
	June 30, 2008			June 30, 2007
	unaudited			unaudited
NET INCOME	$	13,273		$	10,481
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
CASH FLOWS FROM OPERATING ACTIVITIES
Provision for Loan Losses		525			130
Depreciation & Amortization		1,143			1,209
Net Security Gains		(3,737	)		—
Stock Based Compensation		94			120
Accretion of Discounts		(216	)		(74	)
Amortization of Premiums		471			480
Increase in Accrued Interest Receivable		(44	)		(181	)
Decrease (Increase) in Other Assets		3,103			(1,985	)
Decrease in Accrued Interest Payable		(9	)		(1,105	)
Increase (Decrease) in Other Liabilities		913			(3,156	)
Net Cash Provided by Operating Activities		15,516			5,919
CASH FLOWS FROM INVESTING ACTIVITIES
Principal Payments on Investment Securities Available for Sale		19,260			14,176
Proceeds from Sale of Investment Securities Available for Sale		3,737			—
Maturities of Investment Securities; Available for Sale		7,000			—
Purchases of Investment Securities; Available for Sale		(56,412	)		(18,237	)
Maturities of Investment Securities; Held to Maturity		2,068			2,098
Purchases of Investment Securities; Held to Maturity		(2,069	)		(3,385	)
Loan Disbursements & Repayments, Net		(68,654	)		(35,390	)
Purchases of Premises & Equipment, Net		(1,199	)		(541	)
Net Cash Used in Investing Activities		(96,269	)		(41,279	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposit Accounts		73,679			10,775
Dividends Paid to Shareholders		(4,227	)		(4,481	)
Treasury Shares Acquired		(1,253	)		(14,483	)
Net Proceeds from Other Borrowings		21,550			50,555
Net Cash Provided by Financing Activities		89,749			42,366
Net Increase in Cash & Cash Equivalents		8,996			7,006
Cash & Cash Equivalents Beginning of Period		59,333			43,576
Cash & Cash Equivalents End of Period	$	68,329		$	50,582

See accompanying notes to consolidated financial statements.

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SUFFOLK BANCORP AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements of Suffolk Bancorp (Suffolk) and its consolidated subsidiaries have been prepared to reflect all adjustments (consisting solely of normally recurring accruals) necessary for a fair presentation of the financial condition and results of operations for the periods presented. Certain information and footnotes normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted. Notwithstanding, management believes that the disclosures are adequate to prevent the information from misleading the reader, particularly when the accompanying consolidated financial statements are read in conjunction with the audited consolidated financial statements and notes thereto included in the Registrant’s Annual Report on Form 10-K, for the year ended December 31, 2007.

The results of operations for the six months ended June 30, 2008 are not necessarily indicative of the results of operations to be expected for the remainder of the year.

(2) Stock-based Compensation

At June 30, 2008, Suffolk had one stock-based employee compensation plan, 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 1,020,500 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.

Suffolk accounts for stock based compensation in accordance with SFAS No. 123(R), “Share-Based Payment” (SFAS 123(R)). This statement 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. During the three months ended June 30, 2008, $44,000 of compensation expense, net of a tax benefit of $18,000, was recorded for stock-based compensation. During the six months ended June 30, 2008, $94,000 of compensation expense, net of a tax benefit of $38,000, was recorded for stock-based compensation. As of June 30, 2008, there was $103,000 of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested options under the Plan. That cost is expected to be recognized over a weighted-average period of 4.58 months.

The following table presents the options granted, exercised, or expired during the six months ended June 30, 2008:

	Shares	Wtd. Avg. Exercise
Balance at December 31, 2007	141,500	$	27.61
Options granted	17,000		31.18
Options exercised	—		—
Options expired or terminated	—		—
Balance at June 30, 2008	158,500	$	27.99

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The following table presents certain information about the valuation of options granted during the six months ended June 30, 2008 and the year ended December 31, 2007:

At, or during,	6 Months Ended 6/30/2008			Year Ended 12/31/2007
Exercisable options (vested)		141,500			117,500
Weighted average fair value of options (Black-Scholes model) at date of grant:	$	10.38		$	10.07
Black-Scholes Assumptions:
Risk-free interest rate		3.59	%		4.89	%
Expected dividend yield		2.82	%		2.43	%
Expected life in years		10			10
Expected volatility		35.40	%		25.20	%

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

	By range of exercise prices
from		13.13		31.18		34.39
to		15.50		32.90		34.95
Outstanding stock options		42,000		77,500		39,000
Weighted-average remaining life		2.10		7.50		6.81
Weighted-average exercise price	$	14.60	$	31.85	$	34.73
Exercisable stock options		42,000		60,500		39,000
Weighted-average remaining life		2.10		6.91		6.81
Weighted-average exercise price	$	14.60	$	32.04	$	34.39
			Weighted-average
At all prices	Options		price		life (yrs)
Total outstanding		158,500	$	27.99		5.89
Total exerciseable		141,500	$	27.61		5.45

(3) Recent Accounting Pronouncements

On July 13, 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109” (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of FIN 48 are to be applied to all tax positions upon initial adoption of this standard. Only tax positions that meet a “more-likely-than-not” recognition threshold at the effective date may be recognized or continue to be recognized upon adoption of FIN 48. Suffolk has adopted the provisions of FIN 48 as of January 1, 2007. The cumulative effect of applying the provisions of FIN 48 was recorded as a credit adjustment to the 2007 opening balance of retained earnings in the amount of $2,013,000. As of June 30, 2008, Suffolk had a liability for unrecognized tax benefits in the amount of $140,000. There have been no material changes in unrecognized tax benefits since January 1, 2008. Suffolk recognizes interest and penalties accrued relating to unrecognized tax benefits in income tax expense.

In September 2006, FASB issued Statement No. 157, “Fair Value Measurements (SFAS No. 157).” This statement defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. The definition of fair value retains the exchange price notion, however this statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the principal market for the asset or liability. This statement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, therefore a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. This statement clarifies that market participant assumptions include assumptions about risk, the risk inherent in a particular valuation technique used to measure fair value and/or the risk inherent in the inputs to the valuation technique, as well as the effect of credit risk on the fair value of liabilities. This statement also expands disclosures about the use of fair value to measure assets and liabilities in interim

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and annual periods, focusing on the inputs used to measure fair value. The three levels of the fair value inputs under SFAS No. 157 are described below:

Basis of Fair Value Measurement:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2— Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3—Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Suffolk has adopted the provisions of SFAS 157 as of January 1, 2008. The following table summarizes fair value measurements as of June 30, 2008: (in thousands)

	Fair Value Measurements Using
		Active Markets for Identical Assets Quoted Prices in	Significant Other Observable Inputs	Significant Unobservable Inputs
Description	6/30/2008	(Level 1)	(Level 2)	(Level 3)
Held to maturity securities	18,109	—	18,109	—
Available-for-sale securities	420,997	115,765	305,232	—
Impaired Loans	946	—	—	946
Total	440,052	115,765	323,341	946

The types of instruments valued based on quoted market prices in active markets include most U.S. Government debt and agency debt securities. Such instruments are generally classified within level 1 or level 2 of the fair value hierarchy. As required by SFAS No. 157, Suffolk does not adjust the quoted price for such instruments.

The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include state and municipal obligations, mortgage backed securities and collateralized mortgage obligations. Such instruments are generally classified within level 2 of the fair value hierarchy.

Impaired loans are evaluated and valued at the time the loan is identified as impaired, at the lower of cost or market value, and classified at level 3 in the fair value hierarchy. Market value is measured based on the value of the collateral securing these loans or techniques that are not supported by market activity for loans that are not collateral dependent and require management’s judgment. Collateral may be real estate and/or business assets including equipment, inventory and/or accounts receivable. The value of real estate collateral is determined based on appraisals by qualified licensed appraisers hired by Suffolk. The value of business equipment may be based on an appraisal by qualified licensed appraisers hired by Suffolk if significant, or may be valued based on the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral may be valued based on independent field examiner review or aging reports, if significant. Field examiner reviews may be conducted based on the loan exposure and reliance on this type of collateral. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above.

In September 2006, FASB issued Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132(R).” This statement requires an employer that is a business entity and sponsors one or more single-employer defined benefit plans to recognize the funded status of a benefit plan in its statement of financial position; recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to FASB No. 87 or No. 106; measure defined benefit plan assets and obligation as of the date of the employer’s fiscal year-end statement of financial position (with limited exceptions); and disclose in the notes to

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financial statements additional information about certain effects of net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset and obligation. Upon initial application of this statement and subsequently, an employer should continue to apply the provisions in Statements 87, 88, and 106 in measuring plan assets and benefit obligations as of the date of its statement of financial position and in determining the amount of net periodic benefit cost. An employer with publicly traded equity securities was required to recognize initially the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. Suffolk has adopted the provisions of FAS. No. 158, which have been recorded in the accompanying consolidated statement of condition and disclosures.

In February 2007, FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115” (SFAS No. 159). This statement permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. The statement defines items eligible for the measurement option. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Suffolk has adopted the provision of SFAS No. 159, which did not have a material impact on the company’s financial condition, results of operations and disclosures.

In December 2007, FASB revised Statement No. 141, “Business Combinations” (SFAS No. 141R). This statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. This statement recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. This statement also defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquiree achieves control. Additionally this statement determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement is effective for fiscal years beginning after December 15, 2008. Suffolk is currently evaluating the impact of SFAS No. 141R on its financial condition, results of operations and disclosures.

In December 2007, FASB issued Statement No. 160, “Non-controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (SFAS No. 160). This statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding non-controlling interest in one or more subsidiaries or that deconsolidate a subsidiary. This statement amends ARB No. 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years beginning after January 1, 2009. Suffolk is currently evaluating the impact of SFAS No. 160 on its financial condition, results of operations and disclosures.

In March 2008, FASB issued Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133” (SFAS No. 161). This statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement is effective for fiscal years and interim periods beginning after November 15, 2008. Suffolk is currently evaluating the impact of SFAS No. 161 on its financial condition, results of operations and disclosures.

In May 2008, FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS No. 162). This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP in the Unites States (the GAAP hierarchy). SFAS No. 162 divides the body of GAAP into four categories by level of authority. This statement is effective sixty days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. Suffolk is currently evaluating the impact of SFAS No. 162 on its financial condition, results of operations and disclosures.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

For the Quarters and Six-Month Periods ended June 30, 2008 and 2007

Recent Developments

Rates of interest for shorter terms dropped during second quarter of 2008 more than those for longer terms, resulting in a steeper “yield curve.” This was primarily the result of reductions by the Federal Reserve Board in its targets for federal funds and discount rates. Financial markets for both debt and equity continued to be volatile as banks and other investors reported losses in sub-prime mortgages and securities backed by those mortgages. Residential real estate continued to decline in value, and the number of foreclosures increased, further diminishing investors’ confidence and resulting in significant declines in the value of banking stocks.

At Suffolk, interest income was flat despite an increase in total net loans, although that was offset by lesser interest expense, resulting in slightly higher net interest income. The net interest margin decreased to 4.71 percent in the second quarter of 2008, down from 5.03 percent, in the second quarter of 2007. The net interest margin on a year to date basis decreased to 4.75 percent in 2008, down from 5.08 percent for the comparable period last year.

Return on average equity decreased to 19.95 percent for the second quarter in 2008, down slightly from 20.66 percent during the second quarter of 2007, and earnings-per-share increased from $.54 in the second quarter of 2007 to $.60 in the second quarter of 2008. For the first six months of 2008, return on average equity increased to 23.62 percent, up from 20.04 percent during the comparable period of 2007, and earnings per share increased to $1.39 for the first six months of 2008 up from $1.04 for the same period last year.

The increase in return on average equity and earnings per share on a year to date basis is the result of a net gain on sale of securities during the first quarter of 2008, the proceeds of which were realized from the sale of shares issued by VISA, Inc. in connection with its initial public offering. Suffolk’s subsidiary, Suffolk County National Bank, was a member of the former VISA payments organization and was issued shares when VISA Inc.’s was organized. Approximately 39 percent of those shares were redeemed in connection with the initial public offering. The remaining shares are restricted because of unsettled litigation pending against VISA, Inc. VISA, Inc., at its discretion, may redeem additional restricted shares in order to resolve pending litigation. The restriction expires upon resolution of the pending litigation. Accordingly, Suffolk has recorded these shares at $0 in the accompanying statement of condition. Upon expiration of the restriction, Suffolk expects to record the fair value of the remaining shares.

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

• Repositioning of the investment portfolio to purchase certain carefully evaluated collateralized mortgage obligations to take advantage of the current market, purchased to provide downside protection from falling rates, and continued purchases of municipal securities, currently providing liquidity as well as higher returns net of taxes, and some protection from falling interest rates.

• Pursuing ongoing program of capital management, maintaining total risk-based capital (“TRBC”) at a small margin above 10.00 percent which qualifies as “well-capitalized” with regulatory agencies and affords certain advantages to the banking subsidiary. Maximum prudent leverage is thus applied to the shareholders’ investment by means of selected repurchases of shares when capital exceeds the target, and through the retention of earnings when assets are growing.

• Maintaining emphasis on both commercial and personal demand deposits, and non-maturity time deposits while responding as necessary to demand in Suffolk’s market for certificates of deposit of all sizes.

• Managing net loan charge-offs aggressively. During the second quarter of 2008, net charge-offs amounted to 9 basis points of average net loans, on an annualized basis.

• Consistent underwriting for lending to preserve both credit quality and yields in face of competition. Emphasis on preservation of margins over less profitable growth.

Page 12

Net Income

Net income was $5,714,000 for the quarter, up 7.2 percent from $5,332,000 posted during the same period last year. Earnings per share for the quarter were $0.60 versus $0.54, an increase of 11.1 percent. Net income was $13,273,000 for the six months ended June 30, 2008, up from $10,481,000 posted during the same period last year. Earnings per share were $1.39 for the six month period ended June 30, 2008, up from $1.04 posted last year. Included in net income is $2,429,000 attributed to the VISA transaction, net of income taxes.

Interest Income

Interest income was $21,986,000 for the second quarter of 2008, down 1.7 percent from $22,364,000 posted for the same quarter in 2007. Average net loans during the second quarter of 2008 totaled $1,014,318,000 compared to $901,364,000 for the same period of 2007. During the second quarter of 2008, the yield on a fully taxable-equivalent basis was 6.23 percent on average earning assets of $1,462,422,000 down from 6.95 percent on average earning assets of $1,326,199,000 during the second quarter of 2007. Interest income remained flat from quarter to quarter. Interest income was $43,953,000 for the first six months of 2008, down 1.0 percent from $44,396,000 recorded in the first six months of 2007. During the first six months of 2008, the yield on a fully taxable-equivalent basis was 6.38 percent on average earning assets of $1,427,982,000, down from 6.95 percent on average earning assets of $1,315,287,000 during the first six months of 2007.

Interest Expense

Interest expense for the second quarter of 2008 was $5,548,000, down 13.0 percent from $6,379,000 for the same period of 2007. During the second quarter of 2008, the cost of funds was 2.23 percent on average interest-bearing liabilities of $995,869,000, down from 2.92 percent on average interest-bearing liabilities of $875,220,000 during the second quarter of 2007. Interest expense decreased due to decreased rates paid for time certificates and borrowings, offset slightly by increased rates paid for Savings, N.O.W. and Money Market deposits. Interest expense was $11,652,000 for the six months ended June 30, 2008, down 5.5 percent from $12,329,000 recorded last year to date. During the first six months of 2008, the cost of funds was 2.40 percent on average interest-bearing liabilities of $970,198,000, down from 2.86 percent on average-interest bearing liabilities of $863,206,000 during the first six months of 2007.

A portion of the Bank’s demand deposits are reclassified as savings accounts on a daily basis. The purpose of the reclassification 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 these balances are classified as savings accounts for regulatory purposes, they are included in demand deposits in the accompanying consolidated statements of condition.

Net Interest Income

Net interest income, before the provision for loan losses, is the largest component of Suffolk’s earnings. It was $16,438,000 for the second quarter of 2008, up 2.8 percent from $15,985,000 during the same period of 2007. The net interest margin for the quarter, on a fully taxable-equivalent basis, was 4.71 percent compared to 5.03 percent for the same period of 2007.

Page 13

The following table details the components of Suffolk’s net interest income for the quarter on a taxable-equivalent basis: (in thousands)

Quarters ending June 30,	2008							2007
	Average Balance		Interest			Average Rate		Average Balance		Interest			Average Rate
INTEREST-EARNING ASSETS
U.S. Treasury securities	$	9,995	$	101		4.04	%	$	9,453	$	101		4.27	%
Collateralized mortgage obligations		158,001		2,121		5.37			146,841		1,940		5.28
Mortgage backed securities		695		12		6.91			973		17		6.99
Obligations of states and political subdivisions		161,776		2,333		5.77			135,917		2,005		5.90
U.S. govt. agency obligations		106,683		1,035		3.88			123,318		1,218		3.95
Corporate bonds and other securities		10,653		200		7.51			5,712		108		7.56
Federal funds sold and securities purchased under agreements to resell		301		2		2.66			2,621		34		5.19
Loans, including non-accrual loans
Commercial, financial & agricultural loans		235,809		3,779		6.41			202,013		4,276		8.47
Commercial real estate mortgages		322,543		5,658		7.02			292,902		5,472		7.47
Real estate construction loans		99,599		1,992		8.00			83,212		2,192		10.54
Residential mortgages (1st and 2nd liens)		190,332		2,971		6.24			152,939		2,472		6.47
Home equity loans		66,774		896		5.37			68,745		1,452		8.45
Consumer loans		97,161		1,684		6.93			98,124		1,764		7.19
Other loans (overdrafts)		2,100		—		—			3,429		—		—
Total interest-earning assets	$	1,462,422	$	22,784		6.23	%	$	1,326,199	$	23,051		6.95	%
Cash and due from banks	$	48,697						$	49,075
Other non-interest-earning assets		43,562							43,184
Total assets	$	1,554,681						$	1,418,458
INTEREST-BEARING LIABILITIES
Saving, N.O.W. and money market deposits	$	436,614	$	1,438		1.32	%	$	427,905	$	1,232		1.15	%
Time deposits		312,983		2,451		3.13			313,205		3,336		4.26
Total saving and time deposits		749,597		3,889		2.08			741,110		4,568		2.47
Federal funds purchased and securities sold under agreement to repurchase		56,791		370		2.61			53,790		726		5.40
Other borrowings		189,481		1,289		2.72			80,320		1,085		5.40
Total interest-bearing liabilities	$	995,869	$	5,548		2.23	%	$	875,220	$	6,379		2.92	%
Rate spread						4.00	%						4.04	%
Non-interest-bearing deposits	$	429,139						$	425,568
Other non-interest-bearing liabilities		15,124							14,437
Total liabilities	$	1,440,132						$	1,315,225
Stockholders’ equity		114,549							103,233
Total liabilities and stockholders’ equity	$	1,554,681						$	1,418,458
Net-interest income (taxable-equivalent basis) and effective interest rate differential			$	17,236		4.71	%			$	16,672		5.03	%
Less: taxable-equivalent basis adjustment				(798	)						(687	)
Net-interest income			$	16,438						$	15,985

Page 14

For the six months ended June 30, 2008, net interest income was $32,301,000, up .7 percent from $32,067,000 during the same period of 2007. The net interest margin for the first six months of 2008, on a fully taxable-equivalent basis, was 4.75 percent compared to 5.08 percent for the same period of 2007.

The following table details the components of Suffolk’s net interest income for the first six months of the year on a taxable-equivalent basis: (in thousands)

Year to date ending June 30,	2008							2007
	Average Balance		Interest			Average Rate		Average Balance		Interest			Average Rate
INTEREST-EARNING ASSETS
U.S. Treasury securities	$	10,006	$	202		4.04	%	$	9,454	$	202		4.27	%
Collateralized mortgage obligations		148,046		3,939		5.32			150,219		3,952		5.26
Mortgage backed securities		764		26		6.81			990		35		7.07
Obligations of states and political subdivisions		160,711		4,627		5.76			131,038		3,869		5.91
U.S. govt. agency obligations		106,323		2,093		3.94			123,151		2,435		3.95
Corporate bonds and other securities		9,910		381		7.69			5,758		208		7.22
Federal funds sold and securities purchased under agreements to resell		203		3		2.96			3,105		83		5.35
Loans, including non-accrual loans
Commercial, financial & agricultural loans		223,464		7,592		6.79			194,756		8,222		8.44
Commercial real estate mortgages		321,963		11,482		7.13			289,846		10,861		7.49
Real estate construction loans		93,868		3,891		8.29			83,859		4,446		10.60
Residential mortgages (1st and 2nd liens)		186,650		5,857		6.28			150,332		4,871		6.48
Home equity loans		66,536		2,026		6.09			70,806		3,037		8.58
Consumer loans		97,400		3,417		7.02			98,986		3,500		7.07
Other loans (overdrafts)		2,138		—		—			2,987		—		—
Total interest-earning assets	$	1,427,982	$	45,536		6.38	%	$	1,315,287	$	45,721		6.95	%
Cash and due from banks	$	47,632						$	47,554
Other non-interest-earning assets		48,079							47,964
Total assets	$	1,523,693						$	1,410,805
INTEREST-BEARING LIABILITIES
Saving, N.O.W. and money market deposits	$	425,466	$	2,756		1.30	%	$	427,146	$	2,411		1.13	%
Time deposits		315,963		5,467		3.46			303,735		6,364		4.19
Total saving and time deposits		741,429		8,223		2.22			730,881		8,775		2.40
Federal funds purchased and securities sold under agreement to repurchase		56,968		886		3.11			53,689		1,441		5.37
Other borrowings		171,801		2,543		2.96			78,636		2,113		5.37
Total interest-bearing liabilities	$	970,198	$	11,652		2.40	%	$	863,206	$	12,329		2.86	%
Rate spread						3.98	%						4.10	%
Non-interest-bearing deposits	$	419,871						$	422,016
Other non-interest-bearing liabilities		21,255							20,969
Total liabilities	$	1,411,324						$	1,306,191
Stockholders’ equity		112,369							104,614
Total liabilities and stockholders’ equity	$	1,523,693						$	1,410,805
Net-interest income (taxable-equivalent basis) and effective interest rate differential			$	33,884		4.75	%			$	33,392		5.08	%
Less: taxable-equivalent basis adjustment				(1,583	)						(1,325	)
Net-interest income			$	32,301						$	32,067

Page 15

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 quarterly periods presented. 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 Second Quarter 2008 over Second Quarter 2007, Changes Due to
	Volume			Rate			Net Change
Interest-earning assets
U.S. Treasury securities	$	6		$	(6	)	$	—
Collateralized mortgage obligations		149			32			181
Mortgage-backed securities		(5	)		—			(5	)
Obligations of states & political subdivisions		374			(46	)		328
U.S. government agency obligations		(162	)		(21	)		(183	)
Corporate bonds & other securities		93			(1	)		92
Federal funds sold & securities purchased under agreements to resell		(21	)		(11	)		(32	)
Loans, including non-accrual loans		2,061			(2,709	)		(648	)
Total interest-earning assets	$	2,495		$	(2,762	)	$	(267	)
Interest-bearing liabilities
Saving, N.O.W., & money market deposits	$	26		$	180		$	206
Time deposits		(2	)		(883	)		(885	)
Federal funds purchased & securities sold under agreements to repurchase		38			(394	)		(356	)
Other borrowings		938			(734	)		204
Total interest-bearing liabilities	$	1,000		$	(1,831	)	$	(831	)
Net change in net interest income (taxable-equivalent basis)	$	1,495		$	(931	)	$	564

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 six month periods presented: (in thousands)

	In First Six Months of 2008 over First Six Months of 2007, Changes Due to
	Volume			Rate			Net Change
Interest-earning assets
U.S. Treasury securities	$	11		$	(11	)	$	—
Collateralized mortgage obligations		(58	)		45			(13	)
Mortgage-backed securities		(8	)		(1	)		(9	)
Obligations of states & political subdivisions		856			(97	)		759
U.S. government agency obligations		(331	)		(11	)		(342	)
Corporate bonds & other securities		159			14			173
Federal funds sold & securities purchased under agreements to resell		(54	)		(26	)		(80	)
Loans, including non-accrual loans		3,709			(4,381	)		(672	)
Total interest-earning assets	$	4,284		$	(4,468	)	$	(184	)
Interest-bearing liabilities
Saving, N.O.W., & money market deposits	$	(10	)	$	355		$	345
Time deposits		248			(1,145	)		(897	)
Federal funds purchased & securities sold under agreements to repurchase		83			(638	)		(555	)
Other borrowings		1,688			(1,258	)		430
Total interest-bearing liabilities	$	2,009		$	(2,686	)	$	(677	)
Net change in net interest income (taxable-equivalent basis)	$	2,275		$	(1,782	)	$	493

Page 16

Other Income

Other income increased to $2,692,000 for the quarter compared to $2,558,000 the previous year, up 5.2 percent. There were no net gains on the sale of securities for the second quarter of 2008 and 2007. Service charges on deposits were up 5.3 percent. Service charges, including commissions and fees other than for deposits, decreased by 3.3 percent. Trust revenue was up 10.9 percent. Other operating income increased by 47.2 percent.

Other income for the six months ended June 30, 2008 was $9,042,000, up 83.4 percent from $4,929,000 for the comparable year to date period. Service charges on deposit were up 4.9 percent. Service charges, including commissions and fees other than for deposits, increased 5.9 percent. Trust revenue was up 13.5 percent. Other operating income increased by 33.2 percent. Proceeds received in connection with shares redeemed as part of the VISA, Inc. initial public offering resulted in a net securities gain of $3,737,000 during the first quarter.

Other Expense

Other expense for the second quarter of 2008 was $10,435,000, up 1.1 percent from $10,319,000 for the comparable period in 2007. Employee compensation increased by 2.5 percent, net occupancy expense increased 9.2 percent, equipment expense decreased by 7.8 percent, and other operating expense decreased by 3.3 percent.

Other expense for the first six months of 2008 was $20,789,000, up .7 percent from $20,642,000 compared to the first six months of 2007. Employee compensation increased by 2.6 percent, net occupancy expense increased 8.5 percent, equipment expense decreased by 8.6 percent, and other operating expense decreased by 4.8 percent.

In accordance with the requirements of Statement of Financial Accounting Standards 132R (SFAS 132R), Suffolk presents information concerning net periodic defined benefit pension expense for the quarter and year to date periods ended June 30, 2008 and 2007, including the following components:

	3 months 6/30/2008			3 months 6/30/2007			6 months 6/30/2008			6 months 6/30/2007
Service cost	$	338,452		$	345,431		$	676,904		$	690,862
Interest cost		408,165			370,522			816,331			741,043
Expected return on plan assets		(520,474	)		(470,830	)		(1,040,949	)		(941,660	)
Amortization of prior service cost		(995	)		(995	)		(1,990	)		(1,990	)
Amortization of unrecognized net actuarial loss		—			33,732			—			67,463
Net periodic benefit expense	$	225,148		$	277,859		$	450,296		$	555,718

A contribution of approximately $986,000 was made to the pension plan in June of 2008. There were no additional contributions required to be made to the plan in the three months ended June 30, 2008.

Capital Resources

Stockholders’ equity totaled $115,275,000 on June 30, 2008, an increase of 5.8 percent from $108,981,000 on December 31, 2007. This was the result of net income, offset by the depreciation in the market value of securities available for sale, cash dividends and the repurchase of shares. The ratio of equity to assets was 7.3 percent at June 30, 2008 and 7.4 percent at December 31, 2007.

Page 17

The following table details amounts and ratios of Suffolk’s regulatory capital: (in thousands of dollars except ratios)

	Actual				For capital adequacy				To be well capitalized under prompt corrective action provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of June 30, 2008
Total Capital (to risk-weighted assets)	$	123,027	10.12	%	$	97,213	8.00	%	$	121,516	10.00	%
Tier 1 Capital (to risk-weighted assets)		115,142	9.48	%		48,606	4.00	%		72,909	6.00	%
Tier 1 Capital (to average assets)		115,142	7.41	%		62,149	4.00	%		77,686	5.00	%
As of December 31, 2007
Total Capital (to risk-weighted assets)	$	114,858	10.21	%	$	89,991	8.00	%	$	112,488	10.00	%
Tier 1 Capital (to risk-weighted assets)		107,186	9.53	%		44,995	4.00	%		67,493	6.00	%
Tier 1 Capital (to average assets)		107,186	7.60	%		56,449	4.00	%		70,562	5.00	%

Credit Risk

Suffolk makes loans based on the best evaluation possible of the creditworthiness of the borrower. Even with careful underwriting, some loans may not be repaid as originally agreed. To provide for this possibility, Suffolk maintains an allowance for loan losses, based on an analysis of the performance of the loans in its portfolio. The analysis includes subjective factors based on management’s judgment as well as quantitative evaluation. Prudent, conservative estimates should produce an allowance that will provide for a range of losses. According to GAAP, a financial institution should record its best estimate. Appropriate factors contributing to the estimate may include changes in the composition of the institution’s assets, or potential economic slowdowns or downturns. Also important is the geographical or political environment in which the institution operates. Suffolk’s management considers all of these factors when determining the provision for loan losses.

The provision for the allowance for loan losses was $300,000 for the second quarter of 2008, and $18,000 for the comparable period in 2007. Net charge-offs were $222,000 for the second quarter of 2008 compared to net recoveries of $93,000 for the second quarter of 2007. The provision for the allowance for loan losses was $525,000 for the first six months of 2008, and $130,000 for the comparable period in 2007. Net charge-offs were $252,000 for the first six months of 2008 compared to $82,000 of net recoveries for the comparable period of 2007.

The following table presents information about the allowance for loan losses: (in thousands of dollars except for ratios)

	For the last 12 months			For the three months ended
				June 30 2008			Mar. 31 2008			Dec. 31 2007			Sept. 30 2007
Allowance for loan losses
Beginning balance	$	7,397		$	7,852		$	7,672		$	7,459		$	7,397
Total charge-offs		(443	)		(296	)		(95	)		(30	)		(22	)
Total recoveries		243			74			65			42			62
Reclass to Allowance for Contingent Liabilities		(84	)		(45	)		(15	)		(24	)		—
Provision for loan losses		772			300			225			225			22
Ending balance	$	7,885		$	7,885		$	7,852		$	7,672		$	7,459
Coverage ratios
Loans, net of discounts: average	$	962,636		$	1,022,218		$	977,243		$	931,292		$	919,791
at end of period		982,321			1,027,031			1,009,350			958,800			934,102
Non-performing assets		1,675			2,355			1,743			1,648			952
Non-performing assets/total loans (net of discount)		0.17	%		0.23	%		0.17	%		0.17	%		0.10	%
Net charge-offs/average net loans (annualized)		0.02	%		0.09	%		0.01	%		(0.01	)%		(0.02	)%
Allowance/non-accrual, restructured, & OREO		508.59	%		334.82	%		450.49	%		465.53	%		783.51	%
Allowance for loan losses/net loans		0.79	%		0.77	%		0.78	%		0.80	%		0.80	%

Page 18

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 non-financial contractual obligations. The maximum potential undiscounted amount of future payments of these letters of credit as of June 30, 2008 is $25,894,000 and they expire as follows: (in thousands)

2008	$	14,168
2009		11,152
2010		400
2011		102
Thereafter		72
	$	25,894

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 allowance for contingent liabilities includes a provision of $39,000 for losses based on the letters of credit outstanding as of June 30, 2008.

Critical Accounting Policies, Judgments and Estimates

Suffolk’s accounting and reporting policies conform to GAAP and general practices within the financial services industry. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

Allowance for Loan Losses

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 balance in the allowance for loan losses is determined based on management’s review and evaluation of the loan portfolio in relation to past loss experience, the size and composition of the portfolio, current economic events and conditions, and other pertinent factors, including management’s assumptions as to future delinquencies, recoveries and losses. All of these factors may change significantly. To the extent actual performance differs from management’s estimates, additional provisions for loan losses may be required that would reduce earnings in future periods.

Income Taxes

Under the liability method, deferred tax assets and liabilities are determined by the difference between the financial statement, and the tax bases of assets and liabilities. Deferred tax assets are subject to management’s judgment of available evidence that future realization is more likely than not. If management determines that Suffolk may be unable to realize all or part of the 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 management expects can be realized. On January 1, 2007, Suffolk adopted FIN 48. Suffolk determined, under the guidance of FIN 48 and the information available at the time, that is was not likely that the dividend received from its Real Estate Investment Trust subsidiary, would be included in full in taxable income as calculated for purposes of New York State corporate income tax. Accordingly, the cumulative effect of applying the provisions of FIN 48 were recorded as a credit adjustment to retained earnings in the amount of $2,013,000, as a result of the review, recognition, and measurement of uncertain tax positions. As of June 30, 2008, Suffolk had a liability for unrecognized tax benefits in the amount of $140,000. There have been no material changes in unrecognized tax benefits since January 1, 2008. Suffolk recognizes interest and penalties accrued relating to unrecognized tax benefits in income tax expense.

Page 19

Item  3.

Quantitative and Qualitative Disclosures about Market Risk

Market Risk

Suffolk originates and invests in interest-earning assets and solicits interest-bearing deposit accounts. Suffolk’s operations are subject to market risk resulting from fluctuations in interest rates to the extent that there is a difference between the amounts of interest-earning assets and interest-bearing liabilities that are prepaid, withdrawn, mature, or re-priced in any given period of time. Suffolk’s earnings or the net value of its portfolio (the present value of expected cash flows from liabilities) will change when interest rates change. The principal objective of Suffolk’s asset/liability management program is to maximize net interest income while keeping risks acceptable. These risks include both the effect of changes in interest rates, and risks to liquidity. The program also provides guidance to management in funding Suffolk’s investment in loans and securities. Suffolk’s exposure to interest-rate risk has not changed substantially since December 31, 2007.

Business Risks and Uncertainties

This 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 operation. 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.

Item 4.

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 as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934 for Suffolk. Based upon their evaluation of these controls and procedures as of June 30, 2008, the Certifying Officers have concluded that Suffolk’s disclosure controls and procedures are effective.

In addition, there has been no significant change in Suffolk’s internal controls over financial reporting that occurred during Suffolk’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Suffolk’s internal controls over financial reporting.

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PART II

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information about repurchases of common stock:

	For the last 12 months		For the three months ended
			June 30 2008		Mar. 31 2008		Dec. 31 2007		Sept. 30 2007
Average price per share of quarterly repurchases	$	30.06	$	—	$	29.84	$	30.81	$	29.55
Aggregate cost of quarterly repurchases	$	6,998,001	$	—	$	1,253,160	$	3,230,442	$	2,514,399
Repurchases of common stock
Treasury stock, beginning balance		3,763,699		3,995,661		3,953,661		3,848,799		3,763,699
Repurchases		231,962		—		42,000		104,862		85,100
Treasury stock, ending balance		3,995,661		3,995,661		3,995,661		3,953,661		3,848,799

Item 6.

Exhibits and Reports on Form 8-K

CERTIFICATION OF PERIODIC REPORT - Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT - Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT - Exhibit 32.1

CERTIFICATION OF PERIODIC REPORT - Exhibit 32.2

The following reports were filed on Form 8-K during the three month period ended June 30, 2008.

Current Report on Form 8-K – the Company’s press release titled, “Suffolk Bancorp Earnings Advance On Proceeds Of Visa, Inc. Initial Public Offering,” dated April 8, 2008.

Current Report on Form 8-K – the Company’s press release titled, “Suffolk Bancorp Announces Regular Quarterly Dividend,” dated May 23, 2008.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SUFFOLK BANCORP
Date: August 4, 2008		/s/ Thomas S. Kohlmann
		Thomas S. Kohlmann
		President & Chief Executive Officer

Date: August 4, 2008	/s/ J. Gordon Huszagh
	J. Gordon Huszagh
	Executive Vice President & Chief Financial Officer

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