<PAGE> 1
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, 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 of incorporation (I.R.S. Employer
or organization) Identification No.)
6 West Second Street, Riverhead, New York 11901
(Address of Principal Executive Offices) (Zip Code)
(516) 727-3800
(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.
3,379,309 SHARES OF COMMON STOCK OUTSTANDING AS OF MARCH 31, 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 March 31, 1996 and 1995 4
Statements of Cash Flows, For the Three Months Ended March 31, 1996 and 1995 5
Notes to the Unaudited Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition and Results of Operations 6
Part II Other Information 7
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 March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Cash and Due From Banks 34,444 48,955
Federal Funds Sold 0 32,500
Investment Securities:
Investment Securities Available for Sale 119,769 137,043
Investment Securities Held to Maturity:
United States Treasury Obligations 12,045 12,053
Obligations of States and Political Subdivisions 17,152 18,140
U.S. Govt. Agency Obligations 13,526 14,092
Other Securities 638 638
-------- --------
Total Investment Securities 163,130 181,966
Loans, Net of Discounts 524,426 515,938
Less: Allowance for loan loss 5,708 5,923
-------- --------
Net Loans 518,718 510,015
Premises and Equipment, net 12,347 11,803
Other Real Estate Owned, net 2,279 1,241
Accrued Interest Receivable, net 4,186 5,133
Intangible Assets 2,895 2,986
Other Assets 11,416 11,195
-------- --------
TOTAL ASSETS 749,415 805,794
======== ========
LIABILITIES
Demand Deposits 136,309 152,007
Savings, N.O.W.'s and Money Market Deposits 313,259 359,331
Time Certificates of $100,000 or More 28,910 27,777
Other Time Deposit 187,951 187,945
-------- --------
Total Deposits 666,429 727,060
Federal Funds Purchased 1,300 --
Dividends Payable on Common Stock 1,168 1,096
Accrued Interest Payable 1,749 1,830
Other Liabilities 8,575 5,763
-------- --------
TOTAL LIABILITIES 679,221 735,749
STOCKHOLDER'S EQUITY
Common Stock (Par Value $5.00; 7,500,000 authorized 3,379,309 and 3,799,674
shares outstanding at March 31, 1996
and 1995, respectively) 18,998 18,998
Surplus 18,373 18,373
Undivided Profits 34,598 33,928
Treasury Stock (420,365 shares in 1996 and 390,365 in 1995) (2,102) (1,952)
Investment Securities Valuation Allowance 327 698
-------- --------
TOTAL STOCKHOLDERS EQUITY 70,194 70,045
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 749,415 805,794
======== ========
</TABLE>
(3)
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SUFFOLK BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars except shares and per share data)
<TABLE>
<CAPTION>
Three Months Three Months
INTEREST INCOME Ended 03/31/96 Ended 03/31/95
--------- ---------
<S> <C> <C>
Loans (including fee income) 11,800 11,789
Federal Funds Sold 261 73
United States Treasury Obligations 1,899 1,935
Obligations of States and Political Subdivisions 207 420
U.S. Govt. Agency Obligations 494 527
Other Securities 10 10
--------- ---------
Total Interest Income 14,671 14,754
INTEREST EXPENSE
Savings, N.O.W.'s and Money Market Deposits 2,021 2,177
Time Certificates of $100,000 or more 218 290
Other Time Deposits 2,750 1,911
Federal Funds Purchased 8 86
Interest on Other Borrowings -- 534
--------- ---------
Total Interest Expense 4,997 4,998
Net Interest Income 9,674 9,756
Provision for Possible Loan Losses 225 190
--------- ---------
Net Income After Provision for Possible Loan Losses 9,449 9,566
OTHER INCOME
Service Charges on Deposit Accounts 963 903
Other Service Charges, Commissions & Fees 353 360
Fiduciary Activities 135 115
Other Operating Income 185 143
--------- ---------
Total Other Income 1,636 1,521
OTHER EXPENSE
Salaries and Employee Benefits 3,988 4,197
Net Occupancy Expense 624 613
Equipment Expense 648 801
Other Operating Expense 1,710 2,104
--------- ---------
Total Other Expense 6,970 7,715
Income Before Taxes 4,115 3,372
Provision for Income Taxes 1,662 1,171
--------- ---------
NET INCOME 2,453 2,201
========= =========
Earnings Per Share 0.72 0.58
Average Shares 3,394,595 3,799,674
</TABLE>
(4)
<PAGE> 5
SUFFOLK BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
Three Months Three Months
Ended 03/31/96 Ended 03/31/95
------- -------
<S> <C> <C>
NET INCOME 2,453 2,201
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH :
Provision for Loan Losses 225 190
Depreciation 421 513
Amortization of Excess of
Cost Over Fair Market Value of Net Assets Acquired 91 91
Accretion of Discounts (813) (852)
Amortization of Premiums 153 23
Decrease in Interest Receivable 947 --
Increase in Other Assets (221) (97)
(Decrease) Increase in Interest Payable (81) 322
Increase in Other Liabilities 2,812 621
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,987 3,012
CASH FLOWS FROM INVESTING ACTIVITIES
Principal Payments on Investment Securities 584 693
Maturities of Investments Held to Maturity 1,419 6,240
Purchases of Investments Held to Maturity (442) (2,219)
Maturities of Investments Available for Sale 32,755 49,020
Purchases of Investments Available for Sale (14,820) (28,603)
Net Loan Disbursements & Repayments (10,100) 789
Purchases of Premises and Equipment, Net (965) (738)
Disposition of OREO Property -- 651
------- -------
Net Cash Provided (Used) from Investing Activities 8,431 25,833
CASH FLOWS FROM FINANCING ACTIVITIES
Net Decrease in Deposit Accounts (60,631) (39,992)
Increase in Federal Funds Purchased 1,300 --
Proceeds from Other Borrowings -- 6,818
Treasury Shares Acquired (1,074) --
Dividends Paid to Shareholders (1,096) (722)
Increase in Accrued Dividends Payable 72 38
------- -------
NET CASH USED FROM FINANCING ACTIVITIES (61,429) (33,858)
NET DECREASE IN CASH AND CASH EQUIVALENTS (47,011) (5,013)
CASH AND CASH EQUIVALENTS: BEGINNING OF PERIOD 81,455 56,488
CASH AND CASH EQUIVALENTS: END OF PERIOD 34,444 51,475
</TABLE>
(5)
<PAGE> 6
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 months ended March 31, 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 OPERATION for the Three
Month Periods ended March 31, 1996 and 1995
NET INCOME
Net income was $2,453,000 for the quarter, ahead 11.4 percent from
$2,201,000 posted during the same period last year. Earnings per share for the
quarter were $0.72 versus $0.58, a gain of 24.1 percent.
INTEREST INCOME
Interest income was $14,671,000 for the first quarter 1996, down 0.6
percent from $14,754,000 posted for the same quarter in 1995. Average net loans
for the first quarter of 1996 totaled $509,375,000, compared to $528,336,000 for
the same period of 1995. During the first quarter of 1996, the yield was 8.32
percent on average earning assets of $711,726,000, up from 7.97 percent on
average earning assets of $753,074,000 during the first quarter of 1995. The
slight decrease in interest income, despite the increase in yield, is
attributable to the decline in average balances of earning assets.
INTEREST EXPENSE
Interest expense for the first quarter of 1996 was $4,997,000, down
slightly from $4,998,000 for the same period of 1995. Average deposits for the
first quarter 1996 were $703,570,000, up from $690,818,000 for the comparable
period in 1995. Other borrowings, in the form of federal funds purchased,
averaged $570,000 during the first quarter 1996, compared to $5,588,000 during
first quarter 1995. Savings deposits have decreased and other time deposits have
increased.
NET INTEREST INCOME
Net interest income remains the largest component of the Bank's
earnings. Net interest income for the first quarter of 1996 was $9,674,000, down
from $9,756,000 during the same period of 1995, a slight decrease. The net
interest margin for the quarter, on a fully taxable-equivalent basis, was 5.52
percent compared to 5.32 percent for the same period of 1995.
(6)
<PAGE> 7
The following table presents the coverage of troubled assets:
<TABLE>
<CAPTION>
LAST 12 MAR. 31 DEC. 31 SEPT. 30 JUNE 30
COVERAGE RATIOS MONTHS 1996 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Net Charge-offs/Average Net Loans (annualized) 0.18% 0.35% 0.27% 0.01% 0.12%
Allowance for Loan Losses/Non-Accrual,
Restructured, & OREO 85.10% 79.89% 86.54% 84.19% 89.78%
Allowance for Loan Losses/Net Loans 1.16% 1.10% 1.15% 1.20% 1.16%
</TABLE>
OTHER INCOME
Other income increased to $1,636,000 for the three months ended March
31, 1996 compared to $1,521,000 for the same period during 1995. Trust revenue
is up 17 percent and other operating income is up 29 percent.
OTHER EXPENSE
Other expense for the first quarter 1996 was $6,970,000, down 10
percent from $7,715,000 for the comparable period in 1995. Compensation is down
because the number of employees has been reduced primarily through attrition.
Equipment expense is down because more equipment is fully depreciated, and
because of the ongoing control of the purchase of equipment . Other expense
reflects a decrease in FDIC insurance premiums.
CAPITAL RESOURCES
Stockholders' equity totaled $70,194,000 on March 31, 1996, an increase
of $148,000 from $70,046,000 on December 31, 1995. The ratio of equity to assets
was 9.4 percent at March 31, 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 35,000 shares, or
approximately 1 percent of the shares outstanding at December 31, 1995.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
None.
(7)
<PAGE> 8
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 9, 1996 /s/ Edward J. Merz
------------------------------
Edward J. Merz
President & Chief Executive Officer
Date: May 9, 1996 /s/ Victor F. Bozuhoski, Jr.
------------------------------
Victor F. Bozuhoski, Jr.
Executive Vice President,
Treasurer & Chief Financial Officer
(8)
<PAGE> 9
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 34,444
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 119,769
<INVESTMENTS-CARRYING> 43,361
<INVESTMENTS-MARKET> 43,576
<LOANS> 524,426
<ALLOWANCE> 5,708
<TOTAL-ASSETS> 749,415
<DEPOSITS> 666,429
<SHORT-TERM> 1,300
<LIABILITIES-OTHER> 11,492
<LONG-TERM> 0
18,998
0
<COMMON> 0
<OTHER-SE> 51,196
<TOTAL-LIABILITIES-AND-EQUITY> 749,415
<INTEREST-LOAN> 11,800
<INTEREST-INVEST> 2,871
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 14,671
<INTEREST-DEPOSIT> 4,899
<INTEREST-EXPENSE> 4,997
<INTEREST-INCOME-NET> 9,674
<LOAN-LOSSES> 225
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,970
<INCOME-PRETAX> 4,115
<INCOME-PRE-EXTRAORDINARY> 2,453
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,453
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.72
<YIELD-ACTUAL> 5.52
<LOANS-NON> 4,281
<LOANS-PAST> 1,483
<LOANS-TROUBLED> 507
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,923
<CHARGE-OFFS> 510
<RECOVERIES> 70
<ALLOWANCE-CLOSE> 5,708
<ALLOWANCE-DOMESTIC> 5,708
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
