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

Exhibit 99.1

PRESS RELEASE

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

SUFFOLK BANCORP ANNOUNCES THIRD QUARTER EARNINGS

Riverhead, New York, October 15, 2004 — Suffolk Bancorp (NASDAQ - SUBK) today released the results of its operations during the third quarter of 2004. Net income for the quarter was $5,207,000, off 3.0 percent from $5,367,000 posted during the same period last year. Earnings-per-share for the quarter were $0.48, down from $0.49 in the comparable period of 2003. Net income for the year to date was $15,104,000, a decline of 4.6 percent from $15,837,000 posted during the same period last year. Earnings-per-share for the year to date were $1.39 compared to $1.43, down 2.8 percent. A detailed financial summary follows the text of this release.

President and Chief Executive Officer, Thomas S. Kohlmann, remarked, “There are two key points to understanding Suffolk’s performance during the past quarter in comparison to the previous year. The first is the continued compression of margin as a result of historically low interest rates, reflected in our net interest margin which declined by 12 basis points from the same quarter last year. As an asset-sensitive bank, where our loans and investments reprice upward faster than our funding, we are heartened by cumulative increases of 75 basis points in the Federal Funds rate, and we look forward to its contribution to our margin. The second point is a substantial decline in balances of indirect automobile loans year to year, a development we had anticipated and planned for during the past several years as the captive finance companies of major automobile manufacturers have used loan incentive programs to generate sales. All other categories of loans as a group, including commercial, commercial real estate, construction, and home equity loans grew by 10.3 percent from the prior year, and demonstrate Suffolk’s capacity to offset indirect loan runoff in the short and intermediate term, and to expand the portfolio in the long run. Variances from the prior period in various measures of asset-quality continue to stem primarily from a single credit now in workout, and which was disclosed in a previous earnings release.”

He went on to say, “Our funding mix continues to improve with demand balances, and less expensive non-maturity time deposits increasing by 4.6 and 3.9 percent respectively, while more expensive time certificates of $100,000 or more and other time deposits have declined by 17.3 and 12.9 percent, leaving deposit balances approximately the same. The main factor influencing non-interest income in comparison to the same period of 2003 is a securities gain in the third quarter of 2003 when interest rates warranted, not repeated in this quarter as Suffolk sells securities primarily to reposition the portfolio for better long-term performance, and not for short-term gain. Non-interest expense was again managed tightly, resulting in a 30 basis point reduction from the prior year.”

Mr. Kohlmann concluded, “Our balance sheet is actually better diversified than it has been in the past, with a variety of sources of revenue, and modestly priced funding. We look forward to taking advantage of this base to build our relationships with both commercial customers and retail consumers in branch offices throughout Suffolk County, New York.”

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
October 15, 2004
Page 2 of 4

STATISTICAL SUMMARY

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

	3rd Q 2004			3rd Q 2003			Change		9 Mos. 2004			9 Mos. 2003			Change
EARNINGS
Net Income	$	5,207		$	5,367		(3.0	)%	$	15,104		$	15,837		(4.6	)%
Net Interest Income		15,241			14,955		1.9	%		45,267			45,863		(1.3	)%
Earnings-Per-Share - Basic		0.48			0.49		(2.0	)%		1.39			1.43		(2.8	)%
Cash Dividends-Per-Share		0.19			0.19		0.0	%		0.57			0.57		0.0	%
AVERAGE BALANCES
Average Assets		1,365,842			1,313,868		4.0	%		1,357,225			1,292,057		5.0	%
Average Net Loans		814,143			809,452		0.6	%		821,515			800,381		2.6	%
Average Investment Securities		414,060			357,346		15.9	%		394,216			364,317		8.2	%
Average Deposits		1,243,779			1,202,352		3.4	%		1,219,578			1,169,463		4.3	%
Average Equity		99,750			94,180		5.9	%		99,280			97,650		1.7	%
RATIOS
Return on Average Equity		20.88	%		22.79	%	(8.4	)%		20.28	%		21.62	%	(6.2	)%
Return on Average Assets		1.52	%		1.63	%	(6.7	)%		1.48	%		1.63	%	(9.2	)%
Average Equity/Assets		7.30	%		7.17	%	1.8	%		7.31	%		7.56	%	(3.3	)%
Net Interest Margin (FTE)		4.85	%		4.97	%	(2.4	)%		4.89	%		5.17	%	(5.4	)%
Efficiency Ratio		50.35	%		49.82	%	1.1	%		50.46	%		50.27	%	0.4	%
Tier 1 Leverage Ratio Sept. 30		7.35	%		6.95	%	5.8	%
Tier 1 Risk-based Capital Ratio Sept. 30		10.72	%		9.76	%	9.8	%
Total Risk-based Capital Ratio Sept. 30		11.58	%		10.68	%	8.4	%
ASSET QUALITY
during period:
Net (Recoveries) Charge-offs	$	2,097		$	325		545.2	%	$	2,319		$	856		170.9	%
Net Charge-offs/Average Net Loans (annual)		1.03	%		0.16	%	543.8	%		0.38	%		0.14	%	171.4	%
at end of period:
Non-accrual & Restructured Loans	$	1,888		$	1,038		81.9	%
Foreclosed Real Estate (“OREO”)		0			0		0.0	%
Total Non-performing Assets		1,888			1,038		81.9	%
Allowance/Non-performing Assets		422.67	%		824.57	%	(48.7	)%
Allowance/Loans, Net of Discount		0.98	%		1.03	%	(4.9	)%
Net Loans/Deposits		65.16	%		66.45	%	(1.9	)%
EQUITY
Shares Outstanding		10,851,337			10,943,652		(0.8	)%
Common Equity	$	104,287		$	99,283		5.0	%
Book Value Per Common Share		9.61			9.07		6.0	%
Tangible Common Equity		103,473			98,469		5.1	%
Tangible Book Value Per Common Share		9.54			9.00		6.0	%
LOAN DISTRIBUTION
at end of period:
Commercial, Financial & Agricultural Loans		155,624			155,929		(0.2	)%
Commercial Real Estate Mortgages		252,799			214,370		17.9	%
Real Estate - Construction Loans		46,164			35,227		31.0	%
Residential Mortgages (1st and 2nd Liens)		115,211			116,889		(1.4	)%
Home Equity Loans		70,968			58,446		21.4	%
Consumer Loans		175,231			246,066		(28.8	)%
Other Loans		597			680		(12.2	)%
Total Loans (Net of Unearned Discounts)	$	816,594		$	827,607		(1.3	)%

PRESS RELEASE
October 15, 2004
Page 3 of 4

CONSOLIDATED STATEMENTS OF CONDITION

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

	September 30,
	2004			2003			Change
ASSETS
Cash & Due From Banks	$	46,567		$	75,718		(38.5	)%
Federal Funds Sold		23,500			31,800		(26.1	)%
Investment Securities:
Available for Sale, at Fair Value		421,897			363,733		16.0	%
Obligations of States & Political Subdivisions		11,275			9,911		13.8	%
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		435,733			375,917		15.9	%
Total Loans		816,594			827,607		(1.3	)%
Allowance for Loan Losses		7,980			8,559		(6.8	)%
Net Loans		808,614			819,048		(1.3	)%
Premises & Equipment, Net		22,781			22,499		1.3	%
Accrued Interest Receivable, Net		5,912			5,095		16.0	%
Excess of Cost Over Fair Value of Net Assets Acquired		814			814		0.0	%
Other Assets		20,283			22,123		(8.3	)%
TOTAL ASSETS	$	1,364,204		$	1,353,014		0.8	%
LIABILITIES & STOCKHOLDERS’ EQUITY
Demand Deposits	$	404,285		$	386,594		4.6	%
Saving, N.O.W. & Money Market Deposits		624,807			601,299		3.9	%
Time Certificates of $100,000 or More		19,144			23,156		(17.3	)%
Other Time Deposits		192,799			221,467		(12.9	)%
Total Deposits		1,241,035			1,232,516		0.7	%
Dividend Payable on Common Stock		2,063			2,079		(0.8	)%
Accrued Interest Payable		718			865		(17.0	)%
Other Liabilities		16,101			18,271		(11.9	)%
TOTAL LIABILITIES		1,259,917			1,253,731		0.5	%
STOCKHOLDERS’ EQUITY
Common Stock (par value $2.50; 15,000,000 shares authorized; 10,851,337 and 10,943,652 shares outstanding at September 30, 2004 and 2003, respectively)		33,884			33,858		0.1	%
Surplus		19,440			19,300		0.7	%
Treasury Stock at Par (2,702,399 and 2,599,766 shares, respectively)		(6,756	)		(6,499	)	4.0	%
Retained Earnings		54,741			45,559		20.2	%
		101,309			92,218		9.9	%
Accumulated Other Comprehensive Income, Net of Tax		2,978			7,065		(57.8	)%
TOTAL STOCKHOLDERS’ EQUITY		104,287			99,283		5.0	%
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	1,364,204		$	1,353,014		0.8	%

PRESS RELEASE
October 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
	9/30/04		9/30/03		Change		2004		2003		Change
INTEREST INCOME
Federal Funds Sold	$	136	$	109	24.8	%	$	223	$	191	16.8	%
United States Treasury Securities		104		104	0.0	%		312		312	0.0	%
Obligations of States & Political Subdivisions		256		148	73.0	%		647		401	61.3	%
Mortgage-Backed Securities		2,694		2,223	21.2	%		7,680		8,059	(4.7	)%
U.S. Government Agency Obligations		1,095		963	13.7	%		3,139		2,614	20.1	%
Corporate Bonds & Other Securities		21		14	50.0	%		59		85	(30.6	)%
Loans		12,778		13,619	(6.2	)%		38,750		42,034	(7.8	)%
Total Interest Income		17,084		17,180	(0.6	)%		50,810		53,696	(5.4	)%
INTEREST EXPENSE
Saving, N.O.W. & Money Market Deposits		724		777	(6.8	)%		2,034		3,003	(32.3	)%
Time Certificates of $100,000 or more		88		115	(23.5	)%		270		376	(28.2	)%
Other Time Deposits		1,031		1,332	(22.6	)%		3,199		4,409	(27.4	)%
Federal Funds Purchased		—		—	0.0	%		—		12	(100.0	)%
Interest on Other Borrowings		—		1	(100.0	)%		40		33	21.2	%
Total Interest Expense		1,843		2,225	(17.2	)%		5,543		7,833	(29.2	)%
Net-interest Income		15,241		14,955	1.9	%		45,267		45,863	(1.3	)%
Provision for Loan Losses		225		180	25.0	%		1,748		720	142.8	%
Net-interest Income After Provision		15,016		14,775	1.6	%		43,519		45,143	(3.6	)%
OTHER INCOME
Service Charges on Deposit Accounts		1,412		1,380	2.3	%		4,239		4,280	(1.0	)%
Other Service Charges, Commissions & Fees		698		739	(5.5	)%		1,916		1,858	3.1	%
Fiduciary Fees		303		312	(2.9	)%		924		875	5.6	%
Net Securities Gains		—		464	(100.0	)%		1,219		464	162.7	%
Other Operating Income		201		246	(18.3	)%		542		929	(41.7	)%
Total Other Income		2,614		3,141	(16.8	)%		8,840		8,406	5.2	%
OTHER EXPENSE
Salaries & Employee Benefits		5,358		5,544	(3.4	)%		16,206		16,330	(0.8	)%
Net Occupancy Expense		669		668	0.1	%		2,351		2,220	5.9	%
Equipment Expense		537		480	11.9	%		1,617		1,675	(3.5	)%
Other Operating Expense		2,426		2,324	4.4	%		7,126		7,058	1.0	%
Total Other Expense		8,990		9,016	(0.3	)%		27,300		27,283	0.1	%
Income Before Provision for Income Taxes		8,640		8,900	(2.9	)%		25,059		26,266	(4.6	)%
Provision for Income Taxes		3,433		3,533	(2.8	)%		9,955		10,429	(4.5	)%
NET INCOME	$	5,207	$	5,367	(3.0	)%	$	15,104	$	15,837	(4.6	)%
Average:Common Shares Outstanding		10,867,334		10,967,478	(0.9	)%		10,894,156		11,105,303	(1.9	)%
Dilutive Stock Options		30,892		39,567	(21.9	)%		33,539		38,327	(12.5	)%
Average Total		10,898,226		11,007,045	(1.0	)%		10,927,695		11,143,630	(1.9	)%
EARNINGS PER COMMON SHARE
Basic	$	0.48	$	0.49	(2.0	)%	$	1.39	$	1.43	(2.8	)%
Diluted	$	0.48	$	0.49	(2.0	)%	$	1.38	$	1.42	(2.8	)%