Suffolk Bancorp (SCNB) 8-K Suffolk Bancorp Announces Second Quarter Earnings

Exhibit 99.1

PRESS RELEASE

FOR IMMEDIATE RELEASE
Contact:	Douglas Ian Shaw	4 West Second Street
	Corporate Secretary	Riverhead, NY 11901
	(631) 727-5667	(631) 727-5667 (Voice) - (631) 727-3214 (FAX)
		invest@suffolkbancorp.com

SUFFOLK BANCORP ANNOUNCES SECOND QUARTER EARNINGS

Riverhead, New York, July 15, 2004 — Suffolk Bancorp (NASDAQ - SUBK) today released the results of its operations during the second quarter of 2004. Net income for the quarter was $5,033,000, off 1.9 percent from $5,131,000 posted during the same period last year. Earnings-per-share for the quarter were $0.46, the same as the comparable period of 2003. Net income for the year to date was $9,897,000, a decline of 5.5 percent from $10,470,000 posted during the same period last year. Earnings-per-share for the year to date were $0.91 compared to $0.94, down 3.2 percent. A detailed financial summary follows the text of this release.

President and Chief Executive Officer, Thomas S. Kohlmann, remarked, “Despite several events that make the components of our earnings somewhat atypical of our performance over time, Suffolk managed to keep earnings per share level from year to year, and key performance ratios well above recent industry averages. There were three key factors affecting Suffolk’s results of operations. The first, on which I have been commenting for some time, has been the continued pressure on our net interest margin as interest rates have been at historic lows for more than a year. As older, higher-yielding loans and investments amortized or were refinanced, the proceeds were redeployed at current rates, while the corresponding rates on our funding have had less room to decline. For Suffolk, the recent increase in the federal funds rate and the corresponding increase in the prime lending rate may help as current prime-based loans reprice upward and new assets are booked at higher rates.”

He went on to say, “The second factor influencing the past quarter was a repositioning of the securities portfolio to take advantage of a steeper yield curve. We sold securities of shorter remaining maturities and reinvested the proceeds in securities with longer maturities, resulting in a pre-tax net securities gain of $1,219,000. Third, offsetting but unrelated to this, was a provision for the allowance for possible loan and lease losses of $1,298,000 for the quarter in comparison to $270,000 in the same period last year. This provision was occasioned by the deterioration of a single credit, the circumstances of which are particular to that loan. We do not believe that it is reflective of systemic weakness in Suffolk’s loan portfolio or of its underwriting standards and procedures.”

Mr. Kohlmann concluded, “Return on average equity was 20.40 percent for the second quarter, comparing favorably again to the latest available industry average of 12.13 percent (source – SNL securities), the most recent period for which data are available. With the turn in rates, we believe that pressure on our net interest margin will begin to ease. While average assets increased by 7.1 percent compared to the same quarter of 2003, non-interest expense increased by only 0.6 percent. With an efficient operation as the foundation, Suffolk is well positioned to take advantage of both increased business and rising rates.”

Suffolk Bancorp is a one-bank holding company engaged in the commercial banking business through 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, Suffolk County National Bank is the second largest independent bank headquartered on Long Island, with 26 offices in Suffolk County, New York.

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

This press release may include statements which look to the future. These can include remarks about Suffolk Bancorp, the banking industry, and the economy in general. These remarks are based on current plans and expectations. They are subject, however, to a variety of uncertainties that could cause future results to vary materially from Suffolk’s historical performance, or from current expectations. Factors affecting Suffolk Bancorp include particularly, but are not limited to: 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; and changes in government regulations.

PRESS RELEASE July 15, 2004 Page 2 of 4

STATISTICAL SUMMARY

(unaudited, in thousands of dollars except for share and per share data)

	2nd Q 2004			2nd Q 2003			Change		6 Mos. 2004			6 Mos. 2003			Change
EARNINGS
Net Income	$	5,033		$	5,131		(1.9	%)	$	9,897		$	10,470		(5.5	%)
Net Interest Income		15,064			15,170		(0.7	%)		30,026			30,908		(2.9	%)
Earnings-Per-Share - Basic		0.46			0.46		0.0	%		0.91			0.94		(3.2	%)
Cash Dividends-Per-Share		0.19			0.19		0.0	%		0.38			0.38		0.0	%
AVERAGE BALANCES
Average Assets		1,376,670			1,285,744		7.1	%		1,353,025			1,280,993		5.6	%
Average Net Loans		827,163			809,908		2.1	%		825,262			795,770		3.7	%
Average Investment Securities		381,206			359,989		5.9	%		384,130			367,860		4.4	%
Average Deposits		1,225,751			1,163,565		5.3	%		1,207,278			1,152,591		4.7	%
Average Equity		98,667			96,599		2.1	%		99,043			99,339		(0.3	%)
RATIOS
Return on Average Equity		20.40	%		21.25	%	(4.0	%)		19.99	%		21.08	%	(5.2	%)
Return on Average Assets		1.46	%		1.60	%	(8.8	%)		1.46	%		1.63	%	(10.4	%)
Average Equity/Assets		7.17	%		7.51	%	(4.5	%)		7.32	%		7.75	%	(5.5	%)
Net Interest Margin (FTE)		4.89	%		5.13	%	(4.7	%)		4.92	%		5.27	%	(6.6	%)
Efficiency Ratio		48.79	%		50.97	%	(4.3	%)		50.51	%		50.50	%	0.0	%
Tier 1 Leverage Ratio June 30		7.14	%		7.07	%	1.0	%
Tier 1 Risk-based Capital Ratio June 30		10.25	%		9.66	%	6.1	%
Total Risk-based Capital Ratio June 30		11.28	%		10.59	%	6.5	%
ASSET QUALITY             during period:
Net (Recoveries) Charge-offs	$	(66	)	$	118		(155.9	%)	$	223		$	531		(58.0	%)
Net Charge-offs/Average Net Loans (annual)		(0.03	%)		0.06	%	(150.0	%)		0.05	%		0.13	%	(61.5	%)
at end of period:
Non-accrual & Restructured Loans	$	3,682		$	1,480		148.8	%
Foreclosed Real Estate (“OREO”)		0			0		0.0	%
Total Non-performing Assets		3,682			1,480		148.8	%
Allowance/Non-performing Assets		267.54	%		588.11	%	(54.5	%)
Allowance/Loans, Net of Discount		1.18	%		1.06	%	11.3	%
Net Loans/Deposits		62.97	%		64.88	%	(2.9	%)
EQUITY
Shares Outstanding		10,883,719			11,018,181		(1.2	%)
Common Equity	$	99,638		$	98,043		1.6	%
Book Value Per Common Share		9.15			8.90		2.8	%
Tangible Common Equity		98,824			97,229		1.6	%
Tangible Book Value Per Common Share		9.08			8.82		2.9	%							��
LOAN DISTRIBUTION at end of period:
Commercial, Financial & Agricultural Loans		182,952			171,976		6.4	%
Commercial Real Estate Mortgages		236,940			203,815		16.3	%
Real Estate - Construction Loans		33,996			35,137		(3.2	%)
Residential Mortgages (1st and 2nd Liens)		115,803			100,438		15.3	%
Home Equity Loans		69,817			54,995		27.0	%
Consumer Loans		193,168			255,878		(24.5	%)
Other Loans		509			1,312		(61.2	%)
Total Loans (Net of Unearned Discounts)	$	833,185		$	823,551		1.2	%

PRESS RELEASE July 15, 2004 Page 3 of 4

CONSOLIDATED STATEMENTS OF CONDITION

(unaudited, in thousands of dollars except for share and per share data)

	June 30,
	2004			2003				Change
ASSETS
Cash & Due From Banks	$	83,417		$	100,298			(16.8	%)
Federal Funds Sold		78,400			65,300			20.1	%
Investment Securities:
Available for Sale, at Fair Value		377,652			331,250			14.0	%
Obligations of States & Political Subdivisions		9,300			9,986			(6.9	%)
Federal Reserve Bank Stock		638			638			0.0	%
Federal Home Loan Bank Stock		1,823			1,535			18.8	%
Corporate Bonds & Other Securities		100			100			0.0	%
Total Investment Securities		389,513			343,509			13.4	%
Total Loans		833,185			823,551			1.2	%
Allowance for Loan Losses		9,851			8,704			13.2	%
Net Loans		823,334			814,847			1.0	%
Premises & Equipment, Net		22,562			21,924			2.9	%
Accrued Interest Receivable, Net		5,197			5,697			(8.8	%)
Excess of Cost Over Fair Value of Net Assets Acquired		814			814			0.0	%
Other Assets		21,128			21,794			(3.1	%)
							��
TOTAL ASSETS	$	1,424,365		$	1,374,183			3.7	%
LIABILITIES & STOCKHOLDERS’ EQUITY
Demand Deposits	$	446,261		$	384,050			16.2	%
Saving, N.O.W. & Money Market Deposits		642,841			617,771			4.1	%
Time Certificates of $100,000 or More		18,350			23,622			(22.3	%)
Other Time Deposits		200,099			230,500			(13.2	%)
Total Deposits		1,307,551			1,255,943			4.1	%
Dividend Payable on Common Stock		2,069			2,095			(1.2	%)
Accrued Interest Payable		726			994			(27.0	%)
Other Liabilities		14,381			17,108			(15.9	%)
TOTAL LIABILITIES		1,324,727			1,276,140			3.8	%
STOCKHOLDERS’ EQUITY
Common Stock (par value $2.50; 15,000,000 shares authorized; 10,883,719 and 11,018,181 shares outstanding at June 30, 2004 and 2003, respectively)		33,879			33,838			0.1	%
Surplus		19,375			19,230			0.8	%
Treasury Stock at Par (2,667,899 and 2,517,037 shares, respectively)		(6,670	)		(6,293	)		6.0	%
Retained Earnings		52,547			44,944			16.9	%
		99,131			91,719			8.1	%
Accumulated Other Comprehensive Income, Net of Tax		507			6,324			(92.0	%)
TOTAL STOCKHOLDERS’ EQUITY		99,638			98,043			1.6	%
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	1,424,365		$	1,374,183			3.7	%

PRESS RELEASE July 15, 2004 Page 4 of 4

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
	6/30/04		6/30/03		Change		2004		2003		Change
INTEREST INCOME
Federal Funds Sold	$	79	$	55	43.6	%	$	87	$	82	6.1	%
United States Treasury Securities		104		104	0.0	%		208		208	0.0	%
Obligations of States & Political Subdivisions		215		124	73.4	%		391		253	54.5	%
Mortgage-Backed Securities		2,548		2,648	(3.8	%)		4,986		5,836	(14.6	%)
U.S. Government Agency Obligations		966		825	17.1	%		2,044		1,651	23.8	%
Corporate Bonds & Other Securities		17		36	(52.8	%)		38		71	(46.5	%)
Loans		12,950		14,037	(7.7	%)		25,972		28,415	(8.6	%)
Total Interest Income		16,879		17,829	(5.3	%)		33,726		36,516	(7.6	%)
INTEREST EXPENSE
Saving, N.O.W. & Money Market Deposits		664		1,036	(35.9	%)		1,310		2,226	(41.2	%)
Time Certificates of $100,000 or more		88		126	(30.2	%)		182		261	(30.3	%)
Other Time Deposits		1,058		1,473	(28.2	%)		2,168		3,077	(29.5	%)
Federal Funds Purchased		5		—	100.0	%		40		12	233.3	%
Interest on Other Borrowings		—		24	(100.0	%)		—		32	(100.0	%)
Total Interest Expense		1,815		2,659	(31.7	%)		3,700		5,608	(34.0	%)
Net-interest Income		15,064		15,170	(0.7	%)		30,026		30,908	(2.9	%)
Provision for Loan Losses		1,298		270	380.7	%		1,523		540	182.0	%
Net-interest Income After Provision		13,766		14,900	(7.6	%)		28,503		30,368	(6.1	%)
OTHER INCOME
Service Charges on Deposit Accounts		1,419		1,488	(4.6	%)		2,827		2,900	(2.5	%)
Other Service Charges, Commissions & Fees		645		609	5.9	%		1,218		1,119	8.8	%
Fiduciary Fees		308		283	8.8	%		621		563	10.3	%
Net Securities Gains		1,219		—	100.0	%		1,219		—	100.0	%
Other Operating Income		183		368	(50.3	%)		341		683	(50.1	%)
Total Other Income		3,774		2,748	37.3	%		6,226		5,265	18.3	%
OTHER EXPENSE
Salaries & Employee Benefits		5,340		5,338	0.0	%		10,848		10,786	0.6	%
Net Occupancy Expense		829		745	11.3	%		1,682		1,552	8.4	%
Equipment Expense		510		487	4.7	%		1,080		1,195	(9.6	%)
Other Operating Expense		2,512		2,563	(2.0	%)		4,700		4,734	(0.7	%)
Total Other Expense		9,191		9,133	0.6	%		18,310		18,267	0.2	%
Income Before Provision for Income Taxes		8,349		8,515	(1.9	%)		16,419		17,366	(5.5	%)
Provision for Income Taxes		3,316		3,384	(2.0	%)		6,522		6,896	(5.4	%)
NET INCOME	$	5,033	$	5,131	(1.9	%)	$	9,897	$	10,470	(5.5	%)
Average: Common Shares Outstanding		10,887,087		11,046,136	(1.4	%)		10,907,715		11,172,393	(2.4	%)
Dilutive Stock Options		33,080		43,164	(23.4	%)		34,760		43,024	(19.2	%)
Average Total		10,920,167		11,089,300	(1.5	%)		10,942,475		11,215,417	(2.4	%)
EARNINGS PER COMMON SHARE
Basic	$	0.46	$	0.46	0.0	%	$	0.91	$	0.94	(3.2	%)
Diluted	$	0.46	$	0.46	0.0	%	$	0.90	$	0.93	(3.2	%)