Credit Concentrations

12 Months Ended

Dec. 31, 2011

Credit Concentrations [Abstract]

Credit Concentrations

Note 14 — 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.

Loans secured by real estate comprise 74.1 percent of the portfolio and 48.4 percent of assets. 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 21.3 percent of the loan portfolio and 13.9 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. Consumer loans, net of unearned discounts, comprised 4.5 percent of Suffolk's loan portfolio and 3.0 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.

Municipal obligations constitute 55.6 percent of investment securities and 11.5 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, most of which are located in the state of New York. Collateralized mortgage obligations represented 41.0 percent of investment securities and 8.5 percent of assets. These securities are backed by pools of mortgages; however, they provide more predictable cash flows because payments are assigned to specific "tranches" of securities in the order in which they are received. Suffolk invests in senior tranches, some of which provide for prioritized receipt of cash flows. Mortgage-backed securities represented 3.3 percent of the investment portfolio and less than 0.7 percent of assets.