<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994
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 (I.R.S. Employer
incorporation or organization) Identification No.)
6 West Second Street, Riverhead, New York 11901
(Address of Principal Executive Offices) (Zip Code)
(516) 727-2700
(Registrant's telephone number, including area code)
NOT APPLICABLE
(former name, former address and former fiscal year if changed since last
report)
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 the number shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
3,396,909 SHARES OF COMMON STOCK OUTSTANDING AS OF MARCH 31, 1994
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SUFFOLK BANCORP AND SUBSIDIARIES
<TABLE>
<CAPTION>
Part I Financial Information page
<S> <C> <C>
Consolidated Balance Sheets 1
Consolidated Statements Of Income,
For the Three Months Ended March 31, 1994 and 1993 2
Statements Of Cash Flows, For the Three Months Ended March 31, 1994 and 1993 3
Note To The Consolidated Financial Statements 4
Management's Discussion And Analysis Of Financial Condition And
Results Of Operation 4
Part II Other Information (Not Applicable)
Signatures 5
</TABLE>
<PAGE> 3
SUFFOLK BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands except number of shares)
<TABLE>
<CAPTION>
March 1994 December 1993
(unaudited) (unaudited)
<S> <C> <C>
ASSETS
Cash and Due From Banks . . . . . . . . . . . . . . . . . . . . . . . $ 24,858 $ 27,557
Federal Funds Sold & Securities Purchased
Under Agreements To Resell . . . . . . . . . . . . . . . . . . . 8,200 -
Investment Securities (Market Value: $154,645,000 at
March 31, 1994 and $195,287,000 at December 31, 1993)
United States Treasury Obligations; Available for Sale . . . . . 55,490 -
United States Treasury Obligations; Held for Investment . . . . 57,117 149,999
Obligations of States and
Political Subdivisions . . . . . . . . . . . . . . . . . . . . 40,767 42,025
U.S. Govt. Agency Obligations . . . . . . . . . . . . . . . . . 944 1,176
Corporate Bonds and Other Securities . . . . . . . . . . . . . . 440 939
--------- --------
Total Investment Securities . . . . . . . . . . . . . . . . . . 154,758 194,139
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455,684 442,224
Less: Unearned Income . . . . . . . . . . . . . . . . . . . . . . . 29,150 30,562
Allowance for Possible Loan Losses . . . . . . . . . . . . 5,029 4,922
--------- --------
Net Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 421,505 406,740
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . 4,807 4,727
Other Real Estate Owned . . . . . . . . . . . . . . . . . . . . . . . 649 649
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . 2,795 2,199
Branch Purchase Premium . . . . . . . . . . . . . . . . . . . . . . . 476 510
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,664 5,838
--------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ 623,712 $642,359
========= ========
LIABILITIES
Demand Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89,198 $ 98,532
Savings, N.O.W. and Money Market Deposits . . . . . . . . . . . . . . 318,108 319,557
Time Certificates of $100,000 or More . . . . . . . . . . . . . . . . 12,521 12,868
Other Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 135,163 137,811
--------- --------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 554,990 568,768
Federal Funds Purchased & Securities Sold
Under Agreements to Repurchase . . . . . . . . . . . . . . . . . - -
Federal Reserve Bank Borrowings . . . . . . . . . . . . . . . . . . . - 6,500
Dividends Payable on Common Stock . . . . . . . . . . . . . . . . . . 577 577
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . 914 968
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 2,592 2,262
--------- --------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . $ 559,073 $579,075
STOCKHOLDERS' EQUITY
Common Stock (Par Value $5.00; 7,500,000 authorized;
3,396,909 and 3,396,460 shares issued at March 31, 1994
and December 31, 1993, respectively) . . . . . . . . . . . . . . . $ 16,985 $ 16,982
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,839 11,832
Unrealized Gain on Investments Available for Sale . . . . . . . . . . 14 -
Undivided Profits . . . . . . . . . . . . . . . . . . . . . . . . . . 35,801 34,470
--------- --------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . $ 64,639 $ 63,284
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . $ 623,712 $642,359
========= ========
</TABLE>
See accompanying note to consolidated financial statements.
(1)
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SUFFOLK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share amounts)
For the Three Months ended March 31,
<TABLE>
<CAPTION>
1994 1993
(unaudited) (unaudited)
<S> <C> <C>
INTEREST INCOME
Loans (including fee income) . . . . . . . . . . . . . . . . . . . . $ 8,865 $ 8,981
Federal Funds Sold & Securities Purchased
Under Agreements to Resell . . . . . . . . . . . . . . . . . . . 42 280
United States Treasury Obligations . . . . . . . . . . . . . . . . . 1,330 1,342
Obligations of States and
Political Subdivisions . . . . . . . . . . . . . . . . . . . . . . 447 615
U.S. Govt. Agency Obligations . . . . . . . . . . . . . . . . . . . . 13 37
Corporate Bonds and Other Securities . . . . . . . . . . . . . . . . 14 18
----------- ----------
Total Interest Income . . . . . . . . . . . . . . . . . . . . . $ 10,711 $ 11,273
INTEREST EXPENSE
Savings, N.O.W. and Money Market Deposits . . . . . . . . . . . . . . $ 1,899 $ 1,997
Time Certificates of $100,000 or more . . . . . . . . . . . . . . . . 71 99
Other Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 1,380 1,685
Federal Funds Purchased & Securities Sold
Under Agreements to Repurchase . . . . . . . . . . . . . . . . . 99 -
Interest on Other Borrowings . . . . . . . . . . . . . . . . . . . . 16 -
----------- ----------
Total Interest Expense . . . . . . . . . . . . . . . . . . . . . $ 3,465 $ 3,781
Net Interest Income . . . . . . . . . . . . . . . . . . . . . . $ 7,246 $ 7,492
Provision For Possible Loan Losses . . . . . . . . . . . . . . . . . 150 345
----------- ----------
Net Interest Income After Provision
For Possible Loan Losses . . . . . . . . . . . . . . . . . . . $ 7,096 $ 7,147
OTHER INCOME
Service Charges on Deposit Accounts . . . . . . . . . . . . . . . . . $ 543 $ 540
Other Service Charges, Commissions & Fees . . . . . . . . . . . . . . 237 201
Fiduciary Activities . . . . . . . . . . . . . . . . . . . . . . . . 110 90
Other Operating Income . . . . . . . . . . . . . . . . . . . . . . . 121 119
----------- ----------
Total Other Income . . . . . . . . . . . . . . . . . . . . . . . $ 1,011 $ 950
OTHER EXPENSE
Salaries and Employee Benefits . . . . . . . . . . . . . . . . . . . $ 2,994 $ 2,894
Net Occupancy Expense . . . . . . . . . . . . . . . . . . . . . . . . 415 417
Equipment Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 494 472
Other Operating Expense . . . . . . . . . . . . . . . . . . . . . . . 1,407 1,402
----------- ----------
Total Other Expense . . . . . . . . . . . . . . . . . . . . . . $ 5,310 $ 5,185
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . $ 2,797 $ 2,912
Provision For Income Taxes . . . . . . . . . . . . . . . . . . . . . 890 1,080
----------- ----------
Net Income Before Cumulative Effect of Accounting Change . . . . . . $ 1,907 $ 1,832
Cumulative Effect of Accounting Change . . . . . . . . . . . . . . . - 624
----------- ----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,907 2,456
=========== ==========
Earnings per Share Before Effect of Accounting Change . . . . . . . . $ 0.56 $ 0.54
Cumulative Effect of Accounting Change . . . . . . . . . . . . . . . - 0.18
------- -------
Earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.56 $ 0.72
Average Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,396,704 3,389,587
</TABLE>
See accompanying note to consolidated financial statements.
(2)
<PAGE> 5
SUFFOLK BANCORP AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(For the Three months Ended March 31,)
<TABLE>
<CAPTION>
1994 1993
(unaudited) (unaudited)
<S> <C> <C>
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,907,877 $ 2,455,600
ADJUSTMENT TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Provision for Loan Losses . . . . . . . . . . . . . . . . . . . 150,000 345,000
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 290,435 282,529
Amortization of Excess of Cost
Over Fair Market Value of Net Assets Acquired . . . . . . . . 33,240 33,240
Accretion of Discounts . . . . . . . . . . . . . . . . . . . . . (552,285) (314,399)
Amortization of Premiums . . . . . . . . . . . . . . . . . . . . 25,197 59,962
Increase in Accrued Interest Receivable . . . . . . . . . . . . (596,455) (754,783)
Decrease (Increase) in Other Assets . . . . . . . . . . . . . . 174,314 (899,281)
Decrease in Accrued Interest Payable . . . . . . . . . . . . . . (54,155) (102,651)
Increase In Income Taxes Payable . . . . . . . . . . . . . . . . 290,000 525,446
Decrease in Other Liabilities . . . . . . . . . . . . . . . . . 40,838 445,943
Increase in Dividends Payable on Common Stock . . . . . . . . . 76 33,978
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . $ 1,709,082 $ 2,110,584
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Principal Payments on Investments . . . . . . . . . . . . . . . $ 231,866 $ 494,784
Maturities of Investments . . . . . . . . . . . . . . . . . . . 40,319,205 50,151,300
Purchases of Investments . . . . . . . . . . . . . . . . . . . . (578,400) (48,220,978)
Loan Disbursements and Repayments, Net . . . . . . . . . . . . . (14,965,043) (3,579,791)
Purchases of Premises and Equipment, Net . . . . . . . . . . . . (369,604) (349,716)
------------- -------------
NET CASH PROVIDED BY INVESTING ACTIVITIES . . . . . . . . . . $ 24,638,024 $ (1,504,401)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase (Decrease) in Deposit Accounts . . . . . . . . . . $ (13,778,414) $ (12,220,524)
Net Proceeds from Other Borrowings . . . . . . . . . . . . . . . (6,500,000) -
Common Stock Sold for Cash . . . . . . . . . . . . . . . . . . . 9,878 6,935
Dividends Paid to Shareholders . . . . . . . . . . . . . . . . . (577,398) (542,285)
------------- -------------
NET CASH USED BY FINANCING ACTIVITIES . . . . . . . . . . . . $ (20,845,934) $ (12,755,874)
------------ -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . 5,501,172 (12,149,691)
CASH AND CASH EQUIVALENTS DECEMBER 31, . . . . . . . . . . 27,556,696 50,896,464
============= =============
CASH AND CASH EQUIVALENTS MARCH 31, . . . . . . . . . . . . $ 33,057,868 $ 38,746,773
============= =============
</TABLE>
See accompanying note to consolidated financial statements.
(3)
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SUFFOLK BANCORP AND SUBSIDIARIES
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
In the opinion of management, the accompanying unaudited consolidated
interim financial statements of Suffolk Bancorp and its consolidated
subsidiaries have been prepared to reflect all adjustments (consisting solely
of normal recurring accruals) necessary for a fair presentation of the results
of operations for the periods shown. Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The results of operations for the periods shown are not necessarily
indicative of results that may be expected for the entire year.
The unaudited consolidated interim financial statements presented herein
should be read in conjunction with the consolidated financial statements and
notes thereto included in Suffolk Bancorp's 1993 Annual Report to Shareholders.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION for the Three Month Periods ended March 31, 1994 and 1993
NET INCOME
Net income was $1,907,000 for the quarter, behind 22 percent from
$2,456,000 posted during the same period last year. Earnings-per-share for
the quarter were $0.56 versus $0.72. However, adjusted for a one-time change in
accounting for income taxes, net income during the first quarter of 1993 was
$1,832,000. Therefore, on an operating basis, net income was ahead by 4
percent.
Net interest income remains the major part of the company's earnings. The
net interest margin has narrowed slightly, however, increased competition for
indirect automobile loans has moderated volume and lowered rates. Chargeoffs
have decreased substantially, and while the provision for possible loan losses
has been reduced, the allowance for possible loan losses now remains high by
historic standards in reflection of management's cautious view of the regional
economy, and a long-term downward trend in chargeoffs.
<TABLE>
<CAPTION>
LAST 12 MAR. 31 DEC. 31 SEPT. 30 JUN. 30
ASSET QUALITY MONTHS 1994 1993 1993 1993
<S> <C> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------------
Net Charge-offs/Average Loans (annualized) 0.20% 0.04% 0.50% 0.06% 0.17%
Allowance for loan losses/non-accrual & 90+ 91.92% 89.91% 93.26% 94.98% 89.51%
Allowance for loan losses/total loans 1.25% 1.18% 1.21% 1.29% 1.30%
</TABLE>
INTEREST INCOME
Net interest income for year to date 1994 was $7,096,000, down from
$7,147,000 during the same period of 1993, a decrease of 1 percent. While the
net interest margin narrowed slightly, loan volume increased, as average net
loans for the first quarter of 1994 totaled $411,577,000, compared to
$369,732,000 for the same period of 1993.
INTEREST EXPENSE
Interest expense for the year to date 1994 was $3,465,000, down from
$3,781,000 for the same period of 1993. Average interest bearing deposits for
the first quarter 1994 were $558,861,000, up from $552,010,000 for the
comparable period in 1993. The decrease in interest expense is the result of
interest rates which remain among the lowest in the past two decades.
OTHER INCOME
Non-interest operating income increased to $1,011,000 for the three months
ended March, 31, 1994 compared to $950,000 for the same period during 1993.
Service charges on deposit accounts for the year to date 1994 totaled $543,000,
up 1 percent, from $540,000 for the first three months of 1993. Included in
other income are revenues of the Island Computer Corporation, which have
remained constant for each period.
OTHER EXPENSE
Other expenses for the year to date 1994 were $5,310,000, up 2 percent from
$5,185,000 for the comparable period 1993. This increase is the result of
increased payroll, regulatory expenses, and preparation for the pending merger
with Hamptons Bancshares, Inc.
CAPITAL RESOURCES
Shareholders' equity totaled $64,639,000 on March 31, 1994, an increase of
$5,646,000 from $58,993,000 on March 31, 1993. The ratio of average equity to
average assets was 10.0 percent at March 31, 1994 and 9.4 percent at March 31,
1993.
(4)
<PAGE> 7
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: May 10, 1994 /s/ Edward J. Merz
---------------------------
Edward J. Merz
President & Chief Executive
Officer
Date: May 10, 1994 /s/ Victor F. Bozuhoski, Jr.
-----------------------------------
Victor F. Bozuhoski, Jr.
Executive Vice President,
Treasurer & Chief Financial Officer
(5)
