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Previous: HABERSHAM BANCORP, 10QSB, 1996-11-14 |
Next: UNITIL CORP, 10-Q, 1996-11-14 |
<PAGE> 1
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 September 30, 1996
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 (I.R.S. Employer
of incorporation or organization) Identification No.)
6 West Second Street,
Riverhead, New York 11901
(Address of Principal (Zip Code)
Executive Offices)
(516) 727-5667
(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 of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
3,302,445 SHARES OF COMMON STOCK OUTSTANDING AS OF SEPTEMBER 30, 1996
(1)
<PAGE> 2
SUFFOLK BANCORP AND SUBSIDIARIES
<TABLE>
<CAPTION>
Part I Financial Information page
<S> <C>
Consolidated Statements of Condition 3
Consolidated Statements of Income, For the Three Months Ended September 30, 1996 and 1995 4
Consolidated Statements of Income, For the Nine Months Ended September 30, 1996 and 1995 5
Consolidated Statements of Cash Flows, For the Nine Months Ended September 30, 1996 and 1995 6
Notes to the Unaudited Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition and Results of Operations 7
Part II Other Information 8
Signatures 8
</TABLE>
(2)
<PAGE> 3
SUFFOLK BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CONDITION
(in thousands of dollars except number of shares)
<TABLE>
<CAPTION>
ASSETS September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Cash and Due From Banks 40,579 48,955
Federal Funds Sold 28,000 32,500
Investment Securities:
Investment Securities Available for Sale 89,016 137,043
Investment Securities Held to Maturity:
United States Treasury Obligations 12,028 12,053
Obligations of States and Political Subdivisions 10,573 18,140
U.S. Govt. Agency Obligations 12,325 14,092
Other Securities 638 638
------------------ -----------------
Total Investment Securities 124,580 181,966
Loans, Net of Discounts 567,581 515,938
Less: Allowance for Loan Loss 5,944 5,923
------------------ -----------------
Net Loans 561,637 510,015
Premises and Equipment, Net 12,016 11,803
Other Real Estate Owned, Net 1,979 1,241
Accrued Interest Receivable, Net 4,073 5,133
Excess of Cost Over Fair Value of Net Assets Acquired 2,715 2,986
Other Assets 13,737 11,195
------------------ -----------------
TOTAL ASSETS 789,316 805,794
================== =================
LIABILITIES
Demand Deposits 175,921 152,007
Savings, N.O.W.'s, and Money Market Deposits 323,360 359,331
Time Certificates of $100,000 or More 28,942 27,777
Other Time Deposit 179,460 187,944
------------------ -----------------
Total Deposits 707,683 727,059
Dividends Payable on Common Stock 991 1,096
Accrued Interest Payable 1,625 1,830
Other Liabilities 8,092 5,763
------------------ -----------------
TOTAL LIABILITIES 718,391 735,748
STOCKHOLDERS' EQUITY
Common Stock (Par Value $5.00; 7,500,000 authorized
3,302,445 & 3,409,309 shares outstanding at
September 30, 1996 and December 31, 1995, respectively) 19,026 18,998
Surplus 18,456 18,374
Undivided Profits 35,735 33,928
Treasury Stock (502,765 shares in 1996 and 390,365 in 1995) (2,514) (1,952)
Net Unrealized Gain on Securities Available for Sale 222 698
------------------ -----------------
TOTAL STOCKHOLDERS' EQUITY 70,925 70,046
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 789,316 805,794
================== =================
SUFFOLK BANCORP AND SUBSIDIARIES
</TABLE>
(3)
<PAGE> 4
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars except shares and per share data)
<TABLE>
<CAPTION>
Three Months Three Months
INTEREST INCOME Ended 9/30/96 Ended 9/30/95
------------------ -----------------
<S> <C> <C>
Loans (including fee income) 12,985 11,970
Federal Funds Sold 226 775
United States Treasury Obligations 1,585 1,481
Obligations of States and Political Subdivisions 128 203
U.S. Govt. Agency Obligations 431 508
Other Securities 10 10
------------------ -----------------
Total Interest Income 15,365 14,947
INTEREST EXPENSE
Savings, N.O.W.'s, and Money Market Deposits 1,975 2,088
Time Certificates of $100,000 or More 230 223
Other Time Deposits 2,589 2,780
Federal Funds Purchased 1 --
Interest on Other Borrowings -- 27
------------------ -----------------
Total Interest Expense 4,795 5,118
Net Interest Income 10,570 9,829
Provision for Possible Loan Losses 300 75
------------------ -----------------
Net Interest Income After Provision for Possible Loan Losses 10,270 9,754
OTHER INCOME
Service Charges on Deposit Accounts 1,047 1,091
Other Service Charges, Commissions, and Fees 562 445
Fiduciary Activities 117 131
Other Operating Income 222 197
------------------ -----------------
Total Other Income 1,948 1,864
OTHER EXPENSE
Salaries and Employee Benefits 3,992 4,002
Net Occupancy Expense 595 715
Equipment Expense 624 767
Other Operating Expense 2,158 1,745
------------------ -----------------
Total Other Expense 7,369 7,229
Income Before Taxes 4,849 4,389
Provision for Income Taxes 2,066 1,713
------------------ -----------------
NET INCOME 2,783 2,676
================== =================
Earnings Per Share 0.85 0.71
Average Shares 3,310,208 3,716,770
</TABLE>
(4)
<PAGE> 5
SUFFOLK BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars except shares and per share data)
<TABLE>
<CAPTION>
Nine Months Nine Months
INTEREST INCOME Ended 9/30/96 Ended 9/30/95
------------------ -----------------
<S> <C> <C>
Loans (including fee income) 37,306 35,926
Federal Funds Sold & Securities Sold Under
Agreements to Resell 685 1,172
United States Treasury Obligations 5,105 4,762
Obligations of States and Political Subdivisions 532 1,031
U.S. Govt. Agency Obligations 1,372 1,552
Other Securities 29 29
------------------ -----------------
Total Interest Income 45,029 44,472
INTEREST EXPENSE
Savings, N.O.W.'s, and Money Market Deposits 5,949 6,390
Time Certificates of $100,000 or More 659 778
Other Time Deposits 8,009 7,279
Federal Funds Purchased 16 86
Interest on Other Borrowings -- 634
------------------ -----------------
Total Interest Expense 14,633 15,167
Net Interest Income 30,396 29,305
Provision for Possible Loan Losses 820 380
------------------ -----------------
Net Interest Income After Provision for Possible Loan Losses 29,576 28,925
OTHER INCOME
Service Charges on Deposit Accounts 3,065 2,891
Other Service Charges, Commissions, and Fees 1,349 1,197
Fiduciary Activities 392 367
Other Operating Income 530 605
------------------ -----------------
Total Other Income 5,336 5,060
OTHER EXPENSE
Salaries and Employee Benefits 11,911 12,400
Net Occupancy Expense 1,799 1,966
Equipment Expense 1,915 2,384
Other Operating Expense 5,966 6,293
------------------ -----------------
Total Other Expense 21,591 23,043
Income Before Taxes 13,321 10,942
Provision for Income Taxes 5,551 4,034
------------------ -----------------
NET INCOME 7,770 6,908
================== =================
Earnings Per Share 2.32 1.83
Average Shares 3,355,052 3,765,620
</TABLE>
(5)
<PAGE> 6
SUFFOLK BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended 9/30/96 Ended 9/30/95
------------------ -----------------
<S> <C> <C>
NET INCOME 7,770 6,908
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH :
Provision for Loan Losses 820 380
Depreciation 1,213 1,545
Amortization of Excess of
Cost Over Fair Market Value of Net Assets Acquired 272 272
Accretion of Discounts (1,749) (1,455)
Amortization of Premiums 366 161
Decrease in Accrued Interest Receivable 1,060 366
Increase in Other Assets (2,542) (668)
(Decrease) Increase in Accrued Interest Payable (205) 695
Increase (Decrease) in Other Liabilities 2,329 (1,507)
------------------ -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,334 6,697
CASH FLOWS FROM INVESTING ACTIVITIES
Principal Payments on Investment Securities 1,822 1,864
Maturities of Investments Available for Sale 163,934 92,515
Purchases of Investments Available for Sale (114,540) (114,091)
Maturities of Investments Held to Maturity 9,790 60,878
Purchases of Investments Held to Maturity (2,237) (9,262)
Net Loan Disbursements & Repayments (54,740) 16,222
Purchases of Premises and Equipment, Net (1,427) (1,288)
Disposition of OREO Property 1,299 1,070
------------------ -----------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 3,901 47,908
CASH FLOWS FROM FINANCING ACTIVITIES
Net Decrease in Deposit Accounts (19,376) (10,374)
Proceeds from Other Borrowings -- 1,240
Treasury Shares Acquired (3,514) (554)
Dividends Paid to Shareholders (3,116) (2,235)
(Decrease) Increase in Dividends Payable on Common Stock (105) 17
------------------ -----------------
NET CASH USED FROM FINANCING ACTIVITIES (26,111) (11,906)
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (12,876) 42,699
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 81,455 56,488
CASH AND CASH EQUIVALENTS END OF PERIOD 68,579 99,187
</TABLE>
(6)
<PAGE> 7
SUFFOLK BANCORP AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL
In the opinion of management, the accompanying unaudited consolidated
financial statements of Suffolk Bancorp and its consolidated subsidiaries have
been prepared to reflect all adjustments (consisting solely of normally
recurring accruals) necessary for a fair presentation of the financial condition
and results of operations for the periods presented. Certain information and
footnotes normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. Notwithstanding, management believes that the disclosures are adequate
to prevent the information from misleading the reader, particularly when the
accompanying consolidated financial statements are read in conjunction with the
audited consolidated financial statements and notes thereto included in the
Registrant's annual report and on Form 10-K, for the year ended December 31,
1995.
The results of operations for the three and nine months ended September 30,
1996 are not necessarily indicative of the results of operations to be expected
for the remainder of the year.
(2) IMPACT OF NEW ACCOUNTING STANDARDS
Effective January 1, 1996, the Company adopted Statement of Financial
Accountings Standards ("SFAS") No. 122, "Accounting for Mortgage Servicing
Rights" ("Statement 122") which is an amendment of SFAS No. 65, "Accounting for
Certain Mortgage Banking Activities." This statement requires the recognition as
separate assets rights to service mortgage loans for others, however those
servicing rights are acquired. Statement 122 did not have a material effect on
the Company's financial condition or results of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
for the Three Month Periods ended September 30, 1996 and 1995
NET INCOME
Net income was $2,783,000 for the quarter, ahead 4.0 percent from
$2,676,000 posted during the same period last year. Earnings per share for the
quarter were $0.85 versus $0.71, a gain of 19.7 percent.
INTEREST INCOME
Interest income was $15,365,000 for the third quarter 1996, up 2.8 percent
from $14,947,000 posted for the same quarter in 1995. Average net loans for the
third quarter of 1996 totaled $555,560,000, compared to $511,755,000 for the
same period of 1995. During the third quarter of 1996, the yield on a fully
taxable-equivalent basis, was 8.63 percent on average earning assets of
$716,427,000, up from 8.34 percent on average earning assets of $723,789,000
during the third quarter of 1995.
INTEREST EXPENSE
Interest expense for the third quarter of 1996 was $4,795,000, down 6.3
percent from $5,118,000 for the same period of 1995. Average deposits for the
third quarter 1996 were $715,112,000, up from $700,915,000 for the comparable
period in 1995. Savings and time deposits have decreased along with other time
deposits while demand deposits have increased by 12.2 percent, to $175,921,000
from $156,775,000.
NET INTEREST INCOME
Net interest income remains the largest component of the Bank's earnings.
Net interest income for the third quarter of 1996 was $10,570,000, up from
$9,829,000 during the same period of 1995, an increase of 7.5 percent. The net
interest margin for the quarter, on a fully taxable-equivalent basis, was 5.96
percent compared to 5.51 percent for the same period of 1995.
(7)
<PAGE> 8
COVERAGE RATIOS
The following table presents the coverage of troubled assets:
<TABLE>
<CAPTION>
Last 12 Sept. 30 June 30 Mar. 31 Dec. 31
Months 1996 1996 1996 1995
------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Charge-offs/Average Net Loans (annualized) 0.20% 0.03% 0.13% 0.35% 0.27%
Allowance for Loan Losses/Non-Accrual,
Restructured, & OREO 93.53% 105.26% 102.43% 79.89% 86.54%
Allowance for Loan Losses/Net Loans 1.09% 1.06% 1.05% 1.10% 1.16%
</TABLE>
OTHER INCOME
Other income increased to $1,948,000 for the three months ended September
30, 1996 compared to $1,864,000 for the same period during 1995. Trust revenue
is down for the quarter, 10.7 percent and up for the year-to-date 6.8 percent.
OTHER EXPENSE
Other expense for the third quarter 1996 was $7,369,000, up 1.9 percent
from $7,229,000 for the comparable period in 1995. Compensation for the nine
months ended September 30, 1996 is down because the number of employees has been
reduced, primarily through attrition. Equipment expense is down for the same
period because of lesser depreciation and the ongoing control of the purchase of
equipment. Other expense is down for the nine months in part because of a
decrease in FDIC insurance premiums.
CAPITAL RESOURCES
Stockholders' equity totaled $70,925,000 on September 30, 1996, a slight
increase from $70,046,000 on December 31, 1995. The ratio of equity to assets
was 9.0 percent at September 30, 1996 and 8.7 percent at December 31, 1995.
In January of 1996, the Company announced its intention to repurchase five
percent of the common shares then outstanding, or approximately 171,000 shares.
During the quarter, the Company repurchased 34,000 shares. Since December 31,
1995, the company has repurchased 112,400 shares or approximately 3.3 percent of
shares outstanding at December 31, 1995.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
None.
(8)
<PAGE> 9
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: November 14, 1996 /s/ Edward J. Merz
-------------------------------------
Edward J. Merz
President and Chief Executive Officer
Date: November 14, 1996 /s/ Victor F. Bozuhoski, Jr.
-------------------------------------
Victor F. Bozuhoski, Jr.
Executive Vice President
Chief Financial Officer and Treasurer
(9)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 40,579
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 28,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 89,016
<INVESTMENTS-CARRYING> 35,564
<INVESTMENTS-MARKET> 35,704
<LOANS> 567,581
<ALLOWANCE> 5,944
<TOTAL-ASSETS> 789,316
<DEPOSITS> 707,683
<SHORT-TERM> 0
<LIABILITIES-OTHER> 8,092
<LONG-TERM> 0
0
0
<COMMON> 19,026
<OTHER-SE> 51,899
<TOTAL-LIABILITIES-AND-EQUITY> 789,316
<INTEREST-LOAN> 37,306
<INTEREST-INVEST> 7,723
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 45,029
<INTEREST-DEPOSIT> 14,617
<INTEREST-EXPENSE> 14,633
<INTEREST-INCOME-NET> 30,396
<LOAN-LOSSES> 820
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 21,591
<INCOME-PRETAX> 13,321
<INCOME-PRE-EXTRAORDINARY> 7,770
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,770
<EPS-PRIMARY> 2.32
<EPS-DILUTED> 2.32
<YIELD-ACTUAL> 5.96
<LOANS-NON> 3,461
<LOANS-PAST> 1,184
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,923
<CHARGE-OFFS> 1,049
<RECOVERIES> 250
<ALLOWANCE-CLOSE> 5,944
<ALLOWANCE-DOMESTIC> 5,944
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
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