Suffolk Bancorp Announces Results For The Fourth Quarter And The Full Year Of 2011

Suffolk Bancorp (NASDAQ - SUBK) today released the results of its operations during the fourth quarter and full year of 2011. Unaudited earnings-per-share for the quarter were $0.12, a decrease of 62.5 percent from $0.32 during the comparable period of 2010. Net income for the quarter was $1,156,000, down 62.3 percent from $3,069,000 during the same quarter last year. The net loss-per-share for the full year was $(0.01), down 101.2 percent from $0.65 as restated a year ago. The net loss for the year was $76,000, down 101.2 percent from net income of $6,256,000 as restated during 2010. A detailed financial summary follows the text.

Key reasons for the changes in performance include the following:

Decrease of $1,913,000, or 62.3 percent in net income quarter to comparable quarter of 2010:
  • Decrease of $2,391,000, or 12.8 percent in net interest income owing to lower balances of earning assets, and liabilities; and higher balances of non-performing assets. This was offset by a $4,737,000 or 85.6 decrease in the provision for loan losses.
  • Decrease in other income of $2,073,000 or 60.5 percent, primarily attributable to a decrease in deposit service charges owing to lower balances. Fourth quarter results also include a loss attributable to other-than-temporary-impairment on two private label collateralized mortgage obligations in the Bank's investment portfolio of $1,052,000.
  • Increase in other expense of $1,837,000 or 13.6 percent including increased accounting, consulting, and other costs to bring financial reporting current and to assist in transition of management.

Decrease of $6,332,000 or 101.2 percent in net income for the year 2011 from the year 2010:
  • Decrease of $7,028,000, or 9.2 percent in net interest income owing to lower balances of earning assets and liabilities, and higher balances of non-performing assets. This was offset by a $7,198,000 or 22.4 decrease in the provision for loan losses, and an increase of a $2,918,000 or 223.6 percent in the benefit from income taxes.
  • Increase in other expense of $8,264,000 or 16.3 percent including increased accounting, consulting, and other costs to bring financial reporting current and to assist in transition of management.
  • Decrease in other income of $1,156,000 or 10.3 percent primarily attributable to a decrease in deposit service charges owing to lower balances. Annual results also include a loss attributable to other-than-temporary-impairment on two private label collateralized mortgage obligations in the Bank's investment portfolio of $1,052,000.

President and Chief Executive Officer, Howard C. Bluver, remarked, “Given the significant challenges faced by the Bank throughout 2011, I am pleased that this quarter’s results continue to reflect the financial strength that has been the hallmark of this institution over its long history. The Bank was profitable in the fourth quarter, notwithstanding significant costs incurred to complete financial restatements; exceeds all well-capitalized regulatory standards; and maintains an allowance for loan losses equal to 4.12 percent of total loans. Further, the net interest margin of 4.91 percent this quarter is a testament to the loyal customer base that our employees never lose sight of for even a single day.”

He continued, “I am also pleased we made progress this quarter in reducing our levels of non-performing loans and assets. This will continue to be a primary focus for Suffolk as we move through 2012. While the uncertain economic environment on the east end of Long Island will continue to be the most important factor impacting our ability to show future progress, I am confident that we now have in place the right senior leadership and workout resources to manage this priority in a smart and focused way. We also expect to announce the appointment of an experienced Chief Financial Officer shortly.”

Suffolk Bancorp is a one-bank holding company engaged in the commercial banking business through the 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, the Suffolk County National Bank has 30 offices in Suffolk County, New York.

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

This press release includes statements which look to the future. These can include remarks about Suffolk, the banking industry, the economy in general, expectations of the business environment in which Suffolk operates, projections of future performance, and potential future credit experience. These remarks are based upon current management expectations, and may, therefore, involve risks and uncertainties that cannot be predicted or quantified and are beyond Suffolk’s control and are subject to a variety of uncertainties that could cause future results to vary materially from Suffolk’s historical performance, or from current expectations. Factors that could affect Suffolk Bancorp include particularly, but are not limited to: a failure by Suffolk to meet the deadline under SEC rules for filing its Annual Report on Form 10-K (or any permitted extension thereof), or any further delay in filing its Annual Report beyond April 15, 2012; the possibility of further delay in Suffolk’s hiring of a new CFO; 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; results of regulatory examinations; any failure by Suffolk to comply with our written agreement with the OCC (the “Agreement”) or the individual minimum capital ratios for the Bank established by the OCC; the cost of compliance with the Agreement; any failure by Suffolk to maintain effective internal controls over financial reporting; larger-than-expected losses from the sale of assets; potential litigation or regulatory action relating to the matters resulting in Suffolk’s failure to file on time its Quarterly Report on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011 or resulting from the revisions to earnings previously announced on April 12, 2011 or the restatement of its financial statements for the quarterly period ended September 30, 2010 and year ended December 31, 2010; and the potential that net charge-offs are higher than expected or for further increases in our provision for loan losses. 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.
 
STATISTICAL SUMMARY
(unaudited, in thousands of dollars except for share and per share data)
                         
4th Qtr 2011 4th Qtr 2010 Change YTD 2011 YTD 2010 Change

EARNINGS

 
restated restated
Earnings (Loss)-Per-Share - Basic $ 0.12 $ 0.32 (62.6 %) $ (0.01 ) $ 0.65 (101.2 %)
Cash Dividends-Per-Share - 0.15 (100.0 %) - 0.81 (100.0 %)
Net Income 1,154 3,069 (62.4 %) (78 ) 6,256 (101.2 %)
Net Interest Income 16,244 18,635 (12.8 %) 69,564 76,592 (9.2 %)
 

AVERAGE BALANCES

 
Average Assets $ 1,523,781 $ 1,672,174 (8.9 %) $ 1,590,988 $ 1,702,384 (6.5 %)
Average Net Loans 943,463 1,101,736 100.0 % 1,012,835 1,129,917 (10.4 %)
Average Investment Securities 315,049 439,053 (28.2 %) 362,972 456,367 (20.5 %)
Average Interest-Earning Assets 1,436,209 1,563,649 (8.2 %) 1,515,560 1,596,384 (5.1 %)
Average Deposits 1,328,504 1,443,024 (7.9 %) 1,393,832 1,430,738 (2.6 %)
Average Borrowings - 41,906 (100.0 %) 20,269 93,169 (78.2 %)
Average Interest -Bearing Liabilities 794,474 950,419 (16.4 %) 894,599 1,019,227 (12.2 %)
Average Equity 139,462 143,392 (2.7 %) 136,094 141,631 (3.9 %)
 

RATIOS

 
Return on Average Equity 3.31 % 8.56 % (61.3 %) (0.06 %) 4.42 % (101.3 %)
Return on Average Assets 0.30 % 0.73 % (58.7 %) (0.00 %) 0.37 % (101.3 %)
Average Equity/Average Assets 9.15 % 8.58 % 6.7 % 8.55 % 8.32 % 2.8 %
Net Interest Margin (FTE) 4.91 % 5.01 % (2.0 %) 4.97 % 5.05 % (1.6 %)
Efficiency Ratio 87.02 % 61.08 % 42.5 % 74.15 % 57.82 % 28.2 %
Tier 1 Leverage Ratio End of Period 8.46 % 8.26 % 2.4 %
Tier 1 Risk-based Capital Ratio End of Period 12.98 % 11.36 % 14.3 %
Total Risk-based Capital Ratio End of Period 14.26 % 12.62 % 13.0 %
 

ASSET QUALITY

                during period:
Net Charge-offs $ 4,535 $ 3,777 20.1 % $ 13,299 $ 16,051 (17.1 %)
Net Charge-offs/Average Net Loans (annualized) 1.92 % 1.37 % 40.2 % 1.31 % 1.42 % (7.6 %)
at end of period:
Total Non-performing Loans 80,760 29,484 173.9 %
Foreclosed Real Estate ("OREO") 1,800 5,719 (68.5 %)
Total Non-performing Assets 82,560 35,203 134.5 %
Allowance/Non-performing Loans 49.48 % 96.39 % (48.7 %)
Allowance/Loans, Net of Discount 4.12 % 2.56 % 61.3 %
Net Loans/Deposits 70.87 % 77.27 % (8.3 %)
 

EQUITY

 
Shares Outstanding 9,726,814 9,692,312 0.4 %
Common Equity $ 136,560 $ 136,820 (0.2 %)
Book Value Per Common Share 14.04 14.12 (0.5 %)
Tangible Common Equity 135,746 136,006 (0.2 %)
Tangible Book Value Per Common Share 13.96 14.03 (0.5 %)
 

LOAN DISTRIBUTION

at end of period:
Commercial, Financial & Agricultural Loans $ 206,652 $ 248,750 (16.9 %)
Commercial Real Estate Mortgages 428,646 431,179 (0.6 %)
Real Estate - Construction Loans 49,704 82,720 (39.9 %)
Residential Mortgages (1st and 2nd Liens) 160,619 195,993 (18.0 %)
Home Equity Loans 79,684 84,696 (5.9 %)
Consumer Loans 43,806 67,814 (35.4 %)
Other Loans   543     1,127   (51.8 %)
Total Loans (Net of Unearned Discounts) $ 969,654 $ 1,112,279 (12.8 %)
 
 
CONSOLIDATED STATEMENT OF CONDITION
(unaudited, in thousands of dollars except for share data)
             
December 31,
2011 2010 Change
ASSETS restated
Cash & Due From Banks $ 172,559 $ 41,149 319.4 %
Federal Reserve Bank Stock 712 652 9.2 %
Federal Home Loan Bank Stock 1,744 3,531 (50.6 %)
Investment Securities:
Available for Sale, at Fair Value 299,204 396,670 (24.6 %)
Obligations of States & Political Subdivisions, Held to Maturity 9,315 9,936 (6.3 %)
Corporate Bonds & Other Securities   80     80   0.0 %
Total Investment Securities 308,599 406,686 (24.1 %)
 
Total Loans 969,654 1,112,279 (12.8 %)
Allowance for Loan Losses   39,958     28,419   40.6 %
Net Loans 929,696 1,083,860 (14.2 %)
 
Premises & Equipment, Net 27,984 25,548 9.5 %
Other Real Estate Owned, Net 1,800 5,719 (68.5 %)
Accrued Interest and Loan Fees Receivable 6,885 7,025 (2.0 %)
Goodwill 814 814 0.0 %
Other Assets   33,434     31,883   4.9 %
 
TOTAL ASSETS $ 1,484,227   $ 1,606,867   (7.6 %)
 
LIABILITIES & STOCKHOLDERS' EQUITY
Demand Deposits $ 525,379 $ 493,630 6.4 %
Saving, N.O.W. & Money Market Deposits 531,544 601,828 (11.7 %)
Time Certificates of $100,000 or More 168,140 210,096 (20.0 %)
Other Time Deposits   86,809     97,199   (10.7 %)
Total Deposits 1,311,872 1,402,753 (6.5 %)
 
Federal Home Loan Bank Borrowings - 40,000 (100.0 %)
Dividend Payable on Common Stock - 1,454 (100.0 %)
Accrued Interest Payable 348 591 (41.1 %)
Other Liabilities   35,447     25,249   40.4 %
TOTAL LIABILITIES   1,347,667     1,470,047   (8.3 %)
 
STOCKHOLDERS' EQUITY
Common Stock (par value $2.50; 15,000,000 shares authorized;
9,726,814 and 9,692,312 shares outstanding at
December 31, 2011 and 2010, respectively) 34,330 34,236 0.3 %
Paid-in Capital 24,010 23,368 2.7 %
Treasury Stock at Par (4,005,270 and 4,002,158 shares, respectively) (10,013 ) (10,005 ) 0.1 %
Retained Earnings   91,303     91,450   (0.2 %)
139,630 139,049 0.4 %
 
Accumulated Other Comprehensive Loss, Net of Tax   (3,070 )   (2,229 ) 37.7 %
TOTAL STOCKHOLDERS' EQUITY   136,560     136,820   (0.2 %)
 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,484,227   $ 1,606,867   (7.6 %)
 
 
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
December 31, December 31,
2011 2010 Change 2011 2010 Change
restated restated
INTEREST INCOME
Federal Funds Sold & Interest Due from Banks $ 92 $ 20 360.0 % $ 232 $ 28 728.6 %
United States Treasury Securities - 71 (100.0 %) 96 284 (66.2 %)
Obligations of States & Political Subdivisions 1,532 1,989 (23.0 %) 6,864 7,807 (12.1 %)
Mortgage-Backed Securities 1,311 1,771 (26.0 %) 5,869 7,728 (24.1 %)
U.S. Government Agency Obligations - 162 (100.0 %) 337 769 (56.2 %)
Corporate Bonds & Other Securities 44 79 (44.3 %) 247 399 (38.1 %)
Loans and Loan Fees   14,356     16,746   (14.3 %)   61,844     69,291   (10.7 %)
Total Interest Income 17,335 20,838 (16.8 %) 75,489 86,306 (12.5 %)
 
INTEREST EXPENSE
Saving, N.O.W. & Money Market Deposits 342 789 (56.7 %) 1,960 3,340 (41.3 %)
Time Certificates of $100,000 or more 453 644 (29.7 %) 2,029 2,915 (30.4 %)
Other Time Deposits 296 424 (30.2 %) 1,281 1,789 (28.4 %)
Federal Funds Purchased & Repurchase Agreements - 1 (100.0 %) 1 3 (66.7 %)
Borrowings   -     345   (100.0 %)   654     1,667   (60.8 %)
Total Interest Expense 1,091 2,203 (50.5 %) 5,925 9,714 (39.0 %)
 
Net Interest Income 16,244 18,635 (12.8 %) 69,564 76,592 (9.2 %)
Provision for Loan Losses   800     5,537   (85.6 %)   24,888     32,086   (22.4 %)
Net Interest Income After Provision for Loan Losses 15,444 13,098 17.9 % 44,676 44,506 0.4 %
 
OTHER INCOME (LOSS)
Service Charges on Deposit Accounts 934 1,061 (12.0 %) 3,898 4,806 (18.9 %)
Other Service Charges, Commissions & Fees 836 974 (14.2 %) 3,467 3,565 (2.7 %)
Fiduciary Fees 209 216 (3.2 %) 853 976 (12.6 %)
Gain on Sale of Other Real Estate Owned ("OREO") - 310 (100.0 %) - 310 (100.0 %)
Net Gain on Sale of Securities Available for Sale 3 363 (99.2 %) 1,648 375 339.5 %

Other-Than-Temporary-Impairment on Securities (includes

total losses of $2,205, net of $1,153 recognized in other

comprehensive loss, pre-tax, for the three months and year ended December 31, 2011)
(1,052 ) - (100.0 %) (1,052 ) - (100.0 %)
Other Operating Income   421     502   (16.1 %)     1,251     1,191   5.0 %
Total Other Income 1,351 3,426 (60.6 %) 10,065 11,223 (10.3 %)
 
OTHER EXPENSE
Salaries & Employee Benefits 7,456 6,836 9.1 % 30,914 28,518 8.4 %
Net Occupancy Expense 1,403 1,369 2.5 % 5,794 5,399 7.3 %
Equipment Expense 489 474 3.2 % 1,940 2,050 (5.4 %)
Outside Services 1,189 982 21.1 % 4,612 2,631 75.3 %
FDIC Assessments 528 662 (20.2 %) 3,069 2,751 11.6 %
OREO Expense 58 882 (93.4 %) 351 882 (60.2 %)
Prepayment Fee on Borrowing - - 0.0 % 1,028 - 100.0 %
Other Operating Expense   4,189     2,270   84.5 %   11,334     8,547   32.6 %
Total Other Expense 15,312 13,475 13.6 % 59,042 50,778 16.3 %
 
Income (Loss) Before Provision for Income Taxes 1,483 3,049 (51.4 %) (4,301 ) 4,951 (186.9 %)
Provision for (Benefit from) Income Taxes   329     (20 ) (1,745.0 %)   (4,223 )   (1,305 ) 223.6 %
NET INCOME $ 1,154   $ 3,069   (62.4 %) $ (78 ) $ 6,256   (101.2 %)
 
Average: Common Shares Outstanding 9,726,814 9,685,194 0.4 % 9,720,827 9,658,534 0.6 %
Dilutive Stock Options   -     4,022   (100.0 %)   -     4,447   (100.0 %)
Average Total 9,726,814 9,689,216 0.4 % 9,720,827 9,662,981 0.6 %
 

EARNINGS PER COMMON SHARE Basic
$ 0.12 $ 0.32 (62.6 %) $ (0.01 ) $ 0.65 (101.2 %)
Diluted $ 0.12 $ 0.32 (62.6 %) $ (0.01 ) $ 0.65 (101.2 %)
 

Copyright Business Wire 2010

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