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Suffolk Bancorp (the “Company”) (NASDAQ - SUBK), parent company of Suffolk County National Bank (the “Bank”), today announced the sale of a portfolio of non-performing and classified loans with a book value of $51 million for aggregate proceeds of $31 million and the concurrent completion of a private placement of common stock for aggregate proceeds of $25 million. The two transactions together are expected to boost the Company’s capital base, resolve legacy credit issues at the Bank, and strengthen the overall financial position of the Company and the Bank.
“We are excited to complete these strategic transactions today,” commented Howard Bluver, President and Chief Executive Officer of the Company. “With the completion of the loan sale and capital raise, we have accomplished several key priorities set by our new management team, including revitalizing our balance sheet and moving beyond our legacy credit issues.”
Following the completion of the loan sale, the Bank’s total non-performing loans now stand at $14 million, or 1.8% of total loans, down from $81 million and 8.3%, respectively, at the end of 2011. The Company will recognize a one-time, non-recurring loss of $12 million in the third quarter associated with the disposition of the loans.
Remarking on this improvement, Bluver said, “The loan sale positively impacts our remaining criticized and classified loan book. With a new and highly experienced workout team in place and improved underwriting, loan review, and early warning systems implemented over the past year, we expect to see a continued reduction in criticized and classified assets in future periods. Further, we believe the non-performing loans we chose not to put in the loan sale will be positively resolved through a combination of payoffs in full, upgrades to performing status as workout agreements are met, and the sale of collateral with strong value. We believe that this aggressive disposition of our legacy credit issues puts an end to what otherwise would likely have been a multiyear workout process largely dependent on the delayed foreclosure process in Suffolk County.”