EX-99.1 2 dex991.htm EARNINGS RELEASE FOR THE THREE MONTHS ENDED JUNE 30, 2010 Earnings release for the three months ended June 30, 2010

Exhibit 99.1

PRESS RELEASE

 

FOR IMMEDIATE RELEASE

 

Contact:         Douglas Ian Shaw

             Corporate Secretary

             (631) 727-5667

  

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4 West Second Street

Riverhead, NY 11901

(631) 727-5667 (Voice) - (631) 727-3214 (FAX)

invest@suffolkbancorp.com

  

SUFFOLK BANCORP ANNOUNCES EARNINGS FOR THE SECOND QUARTER OF 2010

Riverhead, New York, July 15, 2010 — Suffolk Bancorp (NASDAQ - SUBK) today released the results of its operations during the second quarter of 2010. Earnings-per-share were $0.50, a decrease of 15.3 percent from $0.59 during the comparable period of 2009. Net income was $4,792,000, down 16.0 percent from $5,708,000 during the same quarter last year. Earnings-per-share for the year to date were $0.66, down 44.1 percent from $1.18 a year ago. Net income for the year to date was $6,324,000, down 44.4 percent from $11,367,000 posted during the first half of 2009. A detailed financial summary follows the text.

J. Gordon Huszagh, President and Chief Executive Officer remarked, “During the past quarter, economic indicators have continued to send mixed signals about the direction of the economy. All things considered, we are glad to be able to report that key ratios of performance for the quarter held up well. Return on average equity was 13.75 percent, below our historic norms, but 4.2 times the average of 3.28 percent for our peer group at the end of the first quarter, the most recent period for which peer information is available. Return on average assets was 1.11 percent, or 3.1 times the peer average (Source: Federal Financial Institutions Examination Council — Uniform Bank Performance Report as of March 31, 2010 — Insured commercial banks having assets between $1 billion and $3 billion). Our net interest margin was 5.05 percent, among the widest in the industry owing to the modest cost of funding. We did this while making a quarterly provision for loan losses of $2,983,000 which was 2.8 times the provision for loan losses made during the same quarter last year, and increasing total risk-based capital to 12.10 percent at June 30, 2010 from 11.09 percent at June 30, 2009.”

Mr. Huszagh went on to say, “We know that one of the greatest concerns of investors is the quality of our assets. As we have disclosed previously, the prolonged slump in the economy has strained the resources of some of our borrowers. We are a community bank that relies upon net interest income generated by the relationships it builds with the owners of small and medium-sized businesses, in contrast to certain large banks that profit from the proprietary trading of securities and derivatives. Therefore, our prospects are tied more to Main Street than to Wall Street. At the start of the current recession, Suffolk’s primary market area was wealthier than many other markets. Owners of small businesses and other customers appeared to have greater financial reserves than similar customers in other regions of the nation, and the development of real estate, both residential and commercial, was more mature and therefore less speculative. This contributed to a steadier and less dramatic decline than elsewhere; and our borrowers remained current in their obligations longer. However, as time has passed, the economy appears to have stabilized at lower levels of output and higher levels of unemployment than before 2008. Accordingly, year over year, our allowance for loan losses has increased by 91.9 percent to $20,866, 000 from $10,873,000 at this time last year. The allowance is computed using a methodology that accounts for current economic conditions, and it is subject to validation by an independent third party, so we believe that it


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adequately provides for the risks we now face in our loan portfolio. While we work continuously with our borrowers to achieve the best possible outcomes, certain of our credits have migrated sufficiently past due that we have decided prudentially that we would charge-off $3,249,000 during the quarter, net of recoveries, in comparison with $167,000 last year, while continuing the effort to recover those balances, although there can be no assurance that we will be able to do so.”

He continued, “Non-performing assets amounted to $36,097,000, or 3.11 percent of total loans at June 30, 2010, up from $31,731,000 at March 31, 2010, and $21,125,000 at this time last year. This continues to compare favorably to the average of our peer group which was 3.65 percent of total loans at March 31, 2010, the most recent period for which information is available (Source: Federal Financial Institutions Examination Council — Uniform Bank Performance Report as of March 31, 2010 — Insured commercial banks having assets between $1 billion and $3 billion). The actual exposure that presents to Suffolk is as follows: of the $36,097,000 of non-performing loans, $31,966,000 is secured by collateral valued at about $57,493,000 having a cumulative loan-to-value of approximately 56 percent. The unsecured portion of $4,131,000 amounts to 36 basis points (36/10,000ths) of net loans at quarter end. However, I want to point out that of the $36,097,000 not accruing interest, $7,736,000 represents credit to one borrower which, in consultation with the primary regulator of Suffolk County National Bank, our banking subsidiary, we determined to place on non-accrual status, although all payments are current and have been since inception, and has a ratio of loan-to-current appraised-value (June 2010) of 59.5 percent. Without this credit, non-performing assets would have decreased to $28,361,000 or 2.45 percent total loans.”

Mr. Huszagh went on to say, “Even in the face of considerable ambiguity about the direction of the economy, and significant regulatory uncertainty, we have been able to meet our fundamental commitment to our shareholders which is to preserve and increase their equity. We hope to continue to meet this commitment, but I feel that it is important to note that the current economic cycle has not either worked itself through or given clear indicators as to its direction in the future. Accordingly, we anticipate that we will provide for and charge off loans at greater levels than in the past for some quarters to come. Additionally, current financial regulatory reform appears to impose considerably greater burdens of compliance than in the past, and it is reasonable to expect that non-interest expense is likely to increase and stabilize at higher percentages of revenues than in the past. Still, we will soldier on, keeping the long-term interests of our shareholders front and center, making the best of our opportunities as they present themselves.”

Suffolk Bancorp is a one-bank holding company engaged in the commercial banking business through Suffolk County National Bank (“SCNB”), a full service commercial bank headquartered in Riverhead, New York. Organized in 1890, SCNB has 29 offices in Suffolk County, New York.

Safe Harbor Statement Pursuant to the Private Securities Litigation Reform Act of 1995

This press release may include statements which look to the future. These can include remarks about Suffolk Bancorp, the banking industry, and the economy in general. 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. 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; and changes in government regulations.


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STATISTICAL SUMMARY

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

 

     2nd Qtr 2010     2nd Qtr 2009     Change     6 Mos. 2010     6 Mos. 2009     Change  

EARNINGS

            

Earnings-Per-Share - Basic

   $ 0.50      $ 0.59      (15.3 %)    $ 0.66      $ 1.18      (44.1 %) 

Cash Dividends-Per-Share

     0.22        0.22      0.0     0.44        0.44      0.0

Net Income

     4,792        5,708      (16.0 %)      6,324        11,367      (44.4 %) 

Net Interest Income

     19,344        18,909      2.3     38,590        37,048      4.2

AVERAGE BALANCES

            

Average Assets

   $ 1,720,074      $ 1,657,334      3.8   $ 1,722,749      $ 1,642,109      4.9

Average Net Loans

     1,145,213        1,117,737      2.5     1,147,334        1,103,222      4.0

Average Investment Securities

     463,885        426,120      8.9     462,387        433,754      6.6

Average Interest - Earning Assets

     1,612,753        1,543,857      4.5     1,612,747        1,537,029      4.9

Average Deposits

     1,440,853        1,364,631      5.6     1,409,629        1,318,788      6.9

Average Borrowings

     109,512        131,531      (16.7 %)      138,344        166,529      (16.9 %) 

Average Interest - Bearing Liabilities

     1,057,269        1,023,111      3.3     1,068,106        1,034,141      3.3

Average Equity

     139,368        120,541      15.6     138,558        117,952      17.5

RATIOS

            

Return on Average Equity

     13.75     18.94   (27.4 %)      9.13     19.27   (52.6 %) 

Return on Average Assets

     1.11     1.38   (19.6 %)      0.73     1.38   (47.1 %) 

Average Equity/Assets

     8.10     7.27   11.4     8.04     7.18   12.0

Net Interest Margin (FTE)

     5.05     5.11   (1.2 %)      5.03     5.04   (0.2 %) 

Efficiency Ratio

     56.45     57.66   (2.1 %)      55.54     56.78   (2.2 %) 

Tier 1 Leverage Ratio Jun. 30

     8.01     7.88   1.7      

Tier 1 Risk-based Capital Ratio Jun. 30

     10.84     10.21   6.2      

Total Risk-based Capital Ratio Jun. 30

     12.10     11.09   9.1      

ASSET QUALITY

            

during period:

            

Net Charge-offs

   $ 3,249      $ 167      1,845.5   $ 3,337      $ 203      1,543.8

Net Charge-offs/Average Net Loans (annualized)

     1.13     0.06   1,783.3     0.58     0.04   1,350.0

at end of period:

            

Loans Not Accruing Interest/Loans Past Due 90 Days

   $ 36,097      $ 11,050      226.7      

Restructured Loans Past Due 90 Days

     —          10,075      0.0      

Foreclosed Real Estate (“OREO”)

     —          —        0.0      

Total Non-performing & Restructured Assets

     36,097        21,125      70.9      

Allowance/Non-performing & Restructured Assets

     57.81     51.47   12.3      

Allowance/Loans, Net of Discount

     1.80     0.96   87.5      

Net Loans/Deposits

     78.21     78.62   (0.5 %)       

EQUITY

            

Shares Outstanding

     9,652,708        9,598,539      0.6      

Common Equity

   $ 143,196      $ 123,665      15.8      

Book Value Per Common Share

     14.83        12.88      15.1      

Tangible Common Equity

     142,382        122,851      15.9      

Tangible Book Value Per Common Share

     14.75        12.80      15.2      

LOAN DISTRIBUTION

            

at end of period:

            

Commercial, Financial & Agricultural Loans

   $ 260,674      $ 249,705      4.4      

Commercial Real Estate Mortgages

     404,335        369,376      9.5      

Real Estate - Construction Loans

     119,519        133,396      (10.4 %)       

Residential Mortgages (1st and 2nd Liens)

     209,264        214,444      (2.4 %)       

Home Equity Loans

     88,805        82,093      8.2      

Consumer Loans

     75,576        85,017      (11.1 %)       

Other Loans

     1,016        1,009      0.7      
                        

Total Loans (Net of Unearned Discounts)

   $ 1,159,189      $ 1,135,040      2.1      


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CONSOLIDATED STATEMENTS OF CONDITION

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

 

     June 30,        
     2010     2009     Change  

ASSETS

      

Cash & Due From Banks

   $ 48,609      $ 86,485      (43.8 %) 

Federal Reserve Bank Stock

     652        652      0.0

Federal Home Loan Bank Stock

     5,462        5,609      (2.6 %) 

Investment Securities:

      

Available for Sale, at Fair Value

     444,435        388,332      14.4

Obligations of States & Political Subdivisions, Held to Maturity

     10,250        14,261      (28.1 %) 

Corporate Bonds & Other Securities

     100        100      0.0
                  

Total Investment Securities

     454,785        402,693      12.9

Total Loans

     1,159,189        1,135,040      2.1

Allowance for Loan Losses

     20,866        10,873      91.9
                  

Net Loans

     1,138,323        1,124,167      1.3

Premises & Equipment, Net

     22,569        23,774      (5.1 %) 

Accrued Interest Receivable, Net

     7,022        7,012      0.1

Goodwill

     814        814      0.0

Other Assets

     24,716        20,961      17.9
                  

TOTAL ASSETS

   $ 1,702,952      $ 1,672,167      1.8
                  

LIABILITIES & STOCKHOLDERS’ EQUITY

      

Demand Deposits

   $ 513,781      $ 497,014      3.4

Saving, N.O.W. & Money Market Deposits

     613,171        585,641      4.7

Time Certificates of $100,000 or More

     223,902        231,611      (3.3 %) 

Other Time Deposits

     104,627        115,653      (9.5 %) 
                  

Total Deposits

     1,455,481        1,429,919      1.8

Federal Home Loan Bank Borrowings

     82,900        90,000      (7.9 %) 

Dividend Payable on Common Stock

     2,124        2,112      0.6

Accrued Interest Payable

     647        904      (28.4 %) 

Other Liabilities

     18,604        25,567      (27.2 %) 
                  

TOTAL LIABILITIES

     1,559,756        1,548,502      0.7
                  

STOCKHOLDERS’ EQUITY

      

Common Stock (par value $2.50; 15,000,000 shares authorized; 9,652,708 and 9,598,539 shares outstanding at June 30, 2010 and 2009, respectively)

     34,137        33,988      0.4

Surplus

     22,464        21,261      5.7

Treasury Stock at Par (4,002,158 and 3,996,878 shares, respectively)

     (10,005     (9,992   0.1

Retained Earnings

     95,099        86,201      10.3
                  
     141,695        131,458      7.8

Accumulated Other Comprehensive Income (Loss), Net of Tax

     1,501        (7,793   (119.3 %) 
                  

TOTAL STOCKHOLDERS’ EQUITY

     143,196        123,665      15.8
                  

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

   $ 1,702,952      $ 1,672,167      1.8
                  


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CONSOLIDATED STATEMENTS OF INCOME

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

 

     For the 3 Months Ended          For the Year to Date       
     6/30/10    6/30/09    Change     2010    2009    Change  

INTEREST INCOME

                

Federal Funds Sold & Interest from Bank Deposits

   $ 3    $ 3    0.0   $ 5    $ 4    25.0

United States Treasury Securities

     71      99    (28.3 %)      142      198    (28.3 %) 

Obligations of States & Political Subdivisions

     1,960      1,757    11.6     3,839      3,450    11.3

Mortgage-Backed Securities

     1,979      1,713    15.5     4,069      3,546    14.7

U.S. Government Agency Obligations

     203      656    (69.1 %)      405      1,443    (71.9 %) 

Corporate Bonds & Other Securities

     125      153    (18.3 %)      225      211    6.6

Loans

     17,508      17,647    (0.8 %)      35,081      34,876    0.6
                                

Total Interest Income

     21,849      22,028    (0.8 %)      43,766      43,728    0.1

INTEREST EXPENSE

                

Saving, N.O.W. & Money Market Deposits

     864      867    (0.3 %)      1,724      1,798    (4.1 %) 

Time Certificates of $100,000 or more

     761      852    (10.7 %)      1,562      1,631    (4.2 %) 

Other Time Deposits

     453      674    (32.8 %)      929      1,418    (34.5 %) 

Federal Funds Purchased & Repurchase Agreements

     1      —      100.0     2      120    (98.3 %) 

Interest on Borrowings

     426      726    (41.3 %)      959      1,713    (44.0 %) 
                                

Total Interest Expense

     2,505      3,119    (19.7 %)      5,176      6,680    (22.5 %) 

Net-interest Income

     19,344      18,909    2.3     38,590      37,048    4.2

Provision for Loan Losses

     2,983      1,050    184.1     11,820      2,025    483.7
                                

Net-interest Income After Provision

     16,361      17,859    (8.4 %)      26,770      35,023    (23.6 %) 

OTHER INCOME

                

Service Charges on Deposit Accounts

     1,264      1,336    (5.4 %)      2,530      2,665    (5.1 %) 

Other Service Charges, Commissions & Fees

     920      851    8.1     1,584      1,657    (4.4 %) 

Fiduciary Fees

     210      256    (18.0 %)      517      542    (4.6 %) 

Net Securities Gains

     12      —      100.0     12      —      100.0

Other Operating Income

     216      381    (43.3 %)      487      723    (32.6 %) 
                                

Total Other Income

     2,622      2,824    (7.2 %)      5,130      5,587    (8.2 %) 

OTHER EXPENSE

                

Salaries & Employee Benefits

     7,193      6,870    4.7     14,225      13,702    3.8

Net Occupancy Expense

     1,266      1,239    2.2     2,694      2,587    4.1

Equipment Expense

     532      561    (5.2 %)      1,065      1,133    (6.0 %) 

FDIC Assessments

     624      1,261    (50.5 %)      1,227      1,685    (27.2 %) 

Other Operating Expense

     2,784      2,600    7.1     5,071      5,100    (0.6 %) 
                                

Total Other Expense

     12,399      12,531    (1.1 %)      24,282      24,207    0.3

Income Before Provision for Income Taxes

     6,584      8,152    (19.2 %)      7,618      16,403    (53.6 %) 

Provision for Income Taxes

     1,792      2,444    (26.7 %)      1,294      5,036    (74.3 %) 
                                

NET INCOME

   $ 4,792    $ 5,708    (16.0 %)    $ 6,324    $ 11,367    (44.4 %) 
                                

Average:

                

Common Shares Outstanding

     9,651,857      9,598,364    0.6     9,643,056      9,594,294    0.5

Dilutive Stock Options

     7,915      16,500    (52.0 %)      7,316      17,892    (59.1 %) 
                                

Average Total

     9,659,772      9,614,864    0.5     9,650,372      9,612,186    0.4

EARNINGS PER COMMON SHARE

                

Basic

   $ 0.50    $ 0.59    (15.3 %)    $ 0.66    $ 1.18    (44.1 %) 

Diluted

   $ 0.50    $ 0.59    (15.3 %)    $ 0.66    $ 1.18    (44.1 %)