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 EARNINGS FOR THE FIRST QUARTER OF 2007
Riverhead, New York, April 10, 2007 — Suffolk Bancorp (NASDAQ - SUBK) today released the results of its operations during the first quarter of 2007. Earnings-per-share were $0.51, an increase of 2.0 percent from $0.50 during the comparable period of 2006. Net income was $5,149,000, down 1.4 percent from the same quarter last year. A detailed financial summary follows the text.
Chairman, President, and Chief Executive Officer, Thomas S. Kohlmann, commented, “We find ourselves at the end of yet another quarter during which the yield curve has been inverted, causing rates of interest for short- and long-term loans and deposits to converge, making it difficult for commercial banks to maintain margins and profitability. Add to this over-capacity in the industry and an uncertain market for real estate, and the stage has been set for irrational behavior by some bankers, paying unsustainable rates of interest on deposits, and offering loans on terms that do not adequately compensate for the risks of credit and interest rates. With this as the background, I am satisfied to announce the results of the first quarter of 2007. We were able to earn one penny more per share for our owners than last year, and kept key operating ratios well above industry averages. Return on average equity was 19.43 percent for the quarter, down from 21.07 percent for the same period last year, but much above 9.25 percent for banks in the New York metropolitan area as of December 31, 2006, the date of the most recently available information (source: SNL Securities). Return on average assets was 1.47 percent for the quarter, compared to 0.87 percent for the New York metro area. Our net interest margin actually increased slightly to 5.13 percent from 5.05 percent a year ago, compared to 3.83 percent in greater New York. Net charge-offs were just $11,000 against a portfolio that averaged $882 million during the quarter. The Allowance for Loan Losses stands at more than ten times non-performing loans.”
He went on to say, “I want to take just a moment to explain our strategy which, I believe, explains our ability to hold steady in this environment. First, gaining market share via the unsustainable practices of some in the industry does not necessarily lead to increased shareholder value in either the short or long term. This puts pressure on margins that will lead to consolidation among banks. The successful and surviving players will manage profitability first, second, and always, and manage through their challenges by testing all of their strategy and tactics against long-term shareholder value. For Suffolk, that means that we will maintain a tight focus on our niche of local business and professionals. We know who we are and who we serve. We will invest in future streams of revenue through select expansion and in technology to provide superior service and efficiency only where we see real and verifiable opportunities.”
He concluded, “At the moment, we think our most important task is to ‘keep the powder dry.’ We will not succumb to temptation to chase market share by compromising credit standards or yields at a cost to the long-term quality of the balance sheet. We will minimize interest expense in the interim by means of the ‘marginal cost of funds approach.’ We will manage the capital account closely through a mix of dividends and repurchase of stock to maximize earnings per share while maintaining regulatory advantages of being “well-capitalized” (always our policy, but doubly important during a time of over-capacity in the industry). Then, having preserved profitability, when the yield curve regains upward slope (which it will because over time, in general, the long term demands some premium for risk), and consolidation shakes weaker players out of market (removing incentive for unsustainable pricing, pointless expansion in the face of over-capacity, and risky credit practices), we will resume controlled, orderly growth. We owe our shareholders nothing less.”
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. Organized in 1890, Suffolk County National Bank has 27 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 | ||
April 10, 2007 | ||
Page 2 of 4 |
STATISTICAL SUMMARY
(unaudited, in thousands of dollars except for share and per share data)
1st Qtr 2007 | 1st Qtr 2006 | Change | |||||||||
EARNINGS | |||||||||||
Earnings-Per-Share - Basic | $ | 0.51 | $ | 0.50 | 2.0 | % | |||||
Cash Dividends-Per-Share | 0.22 | 0.22 | 0.0 | % | |||||||
Net Income | 5,149 | 5,224 | (1.4 | )% | |||||||
Net Interest Income | 16,082 | 16,155 | (0.5 | )% | |||||||
AVERAGE BALANCES | |||||||||||
Average Assets | $ | 1,403,061 | $ | 1,413,258 | (0.7 | )% | |||||
Average Net Loans | 881,671 | 893,487 | (1.3 | )% | |||||||
Average Investment Securities | 418,988 | 414,486 | 1.1 | % | |||||||
Average Interest-Earning Assets | 1,304,254 | 1,308,590 | (0.3 | )% | |||||||
Average Deposits | 1,138,963 | 1,136,054 | 0.3 | % | |||||||
Average Borrowings | 130,519 | 151,991 | (14.1 | )% | |||||||
Average Interest -Bearing Liabilities | 851,058 | 877,032 | (3.0 | )% | |||||||
Average Equity | 106,011 | 99,181 | 6.9 | % | |||||||
RATIOS | |||||||||||
Return on Average Equity | 19.43 | % | 21.07 | % | (7.8 | )% | |||||
Return on Average Assets | 1.47 | % | 1.48 | % | (0.7 | )% | |||||
Average Equity/Assets | 7.56 | % | 7.02 | % | 7.7 | % | |||||
Net Interest Margin (FTE) | 5.13 | % | 5.05 | % | 1.6 | % | |||||
Efficiency Ratio | 55.94 | % | 53.18 | % | 5.2 | % | |||||
Tier 1 Leverage Ratio Mar. 31 | 7.93 | % | 7.35 | % | 7.9 | % | |||||
Tier 1 Risk-based Capital Ratio Mar. 31 | 10.34 | % | 9.48 | % | 9.1 | % | |||||
Total Risk-based Capital Ratio Mar. 31 | 11.02 | % | 10.37 | % | 6.3 | % | |||||
ASSET QUALITY during period: | |||||||||||
Net Charge-offs (Recoveries) | $ | 11 | $ | (22 | ) | 150.0 | % | ||||
Net Charge-offs/Average Net Loans (annual) | 0.00 | % | (0.01 | %) | 100.0 | % | |||||
at end of period: | |||||||||||
Non-accrual & Restructured Loans | $ | 719 | $ | 4,182 | (82.8 | )% | |||||
Foreclosed Real Estate (“OREO”) | — | — | 0.0 | % | |||||||
Total Non-performing Assets | 719 | 4,182 | (82.8 | )% | |||||||
Allowance/Non-performing Assets | 1,013.35 | % | 242.71 | % | 317.5 | % | |||||
Allowance/Loans, Net of Discount | 0.81 | % | 1.10 | % | (26.4 | )% | |||||
Net Loans/Deposits | 77.82 | % | 80.62 | % | (3.5 | )% | |||||
EQUITY | |||||||||||
Shares Outstanding | 10,081,092 | 10,328,706 | (2.4 | )% | |||||||
Common Equity | $ | 108,626 | $ | 100,917 | 7.6 | % | |||||
Book Value Per Common Share | 10.78 | 9.77 | 10.3 | % | |||||||
Tangible Common Equity | 107,812 | 100,103 | 7.7 | % | |||||||
Tangible Book Value Per Common Share | 10.69 | 9.69 | 10.3 | % | |||||||
LOAN DISTRIBUTION at end of period: | |||||||||||
Commercial, Financial & Agricultural Loans | $ | 198,626 | 193,941 | 2.4 | % | ||||||
Commercial Real Estate Mortgages | 291,338 | 311,485 | (6.5 | )% | |||||||
Real Estate - Construction Loans | 86,496 | 70,941 | 21.9 | % | |||||||
Residential Mortgages (1st and 2nd Liens) | 155,135 | 136,004 | 14.1 | % | |||||||
Home Equity Loans | 71,945 | 81,219 | (11.4 | )% | |||||||
Consumer Loans | 99,311 | 122,903 | (19.2 | )% | |||||||
Other Loans | 1,240 | 7,763 | (84.0 | )% | |||||||
Total Loans (Net of Unearned Discounts) | $ | 904,091 | $ | 924,256 | (2.2 | )% |
PRESS RELEASE | ||
April 10, 2007 | ||
Page 3 of 4 |
CONSOLIDATED STATEMENTS OF CONDITION
(unaudited, in thousands of dollars except for share and per share data)
March 31, | |||||||||||
2007 | 2006 | Change | |||||||||
ASSETS | |||||||||||
Cash & Due From Banks | $ | 44,611 | $ | 50,975 | (12.5 | )% | |||||
Investment Securities: | |||||||||||
Available for Sale, at Fair Value | 403,067 | 393,384 | 2.5 | % | |||||||
Obligations of States & Political Subdivisions | 9,854 | 11,313 | (12.9 | )% | |||||||
Federal Reserve Bank Stock | 638 | 638 | 0.0 | % | |||||||
Federal Home Loan Bank Stock | 4,703 | 5,851 | (19.6 | )% | |||||||
Corporate Bonds & Other Securities | 100 | 100 | 0.0 | % | |||||||
Total Investment Securities | 418,362 | 411,286 | 1.7 | % | |||||||
Total Loans | 904,091 | 924,256 | (2.2 | )% | |||||||
Allowance for Loan Losses | 7,286 | 10,150 | (28.2 | )% | |||||||
Net Loans | 896,805 | 914,106 | (1.9 | )% | |||||||
Premises & Equipment, Net | 22,235 | 22,571 | (1.5 | )% | |||||||
Accrued Interest Receivable, Net | 7,940 | 7,041 | 12.8 | % | |||||||
Excess of Cost Over Fair Value of Net Assets Acquired | 814 | 814 | 0.0 | % | |||||||
Other Assets | 15,650 | 20,796 | (24.7 | )% | |||||||
TOTAL ASSETS | $ | 1,406,417 | $ | 1,424,910 | (1.3 | )% | |||||
LIABILITIES & STOCKHOLDERS’ EQUITY | |||||||||||
Demand Deposits | $ | 409,486 | $ | 401,498 | 2.0 | % | |||||
Saving, N.O.W. & Money Market Deposits | 427,849 | 509,110 | (16.0 | )% | |||||||
Time Certificates of $100,000 or More | 107,917 | 21,943 | 391.8 | % | |||||||
Other Time Deposits | 207,168 | 201,252 | 2.9 | % | |||||||
Total Deposits | 1,152,420 | 1,133,803 | 1.6 | % | |||||||
Federal Funds Purchased | — | 8,000 | (100.0 | )% | |||||||
Federal Home Loan Bank Borrowings | 72,700 | 98,400 | (26.1 | )% | |||||||
Repurchase Agreements | 53,790 | 64,675 | (16.8 | )% | |||||||
Dividend Payable on Common Stock | 2,228 | 2,272 | (1.9 | )% | |||||||
Accrued Interest Payable | 2,576 | 2,303 | 11.9 | % | |||||||
Other Liabilities | 14,077 | 17,219 | (18.2 | )% | |||||||
TOTAL LIABILITIES | 1,297,791 | 1,323,993 | (2.0 | )% | |||||||
STOCKHOLDERS’ EQUITY | |||||||||||
Common Stock (par value $2.50; 15,000,000 shares authorized; | |||||||||||
10,081,092 and 10,328,706 shares outstanding at | |||||||||||
March 31, 2007 and 2006, respectively) | 33,911 | 33,884 | 0.1 | % | |||||||
Surplus | 19,990 | 19,769 | 1.1 | % | |||||||
Treasury Stock at Par (3,483,299 and 3,225,030 shares, respectively) | (8,708 | ) | (8,062 | ) | 8.0 | % | |||||
Retained Earnings | 66,926 | 59,180 | 13.1 | % | |||||||
112,119 | 104,771 | 7.0 | % | ||||||||
Accumulated Other Comprehensive Loss, Net of Tax | (3,493 | ) | (3,854 | ) | (9.4 | )% | |||||
TOTAL STOCKHOLDERS’ EQUITY | 108,626 | 100,917 | 7.6 | % | |||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 1,406,417 | $ | 1,424,910 | (1.3 | )% | |||||
PRESS RELEASE | ||
April 10, 2007 | ||
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 | |||||||||
3/31/07 | 3/31/06 | Change | |||||||
INTEREST INCOME | |||||||||
Federal Funds Sold | $ | 49 | $ | 8 | 512.5 | % | |||
United States Treasury Securities | 99 | 95 | 4.2 | % | |||||
Obligations of States & Political Subdivisions | 1,228 | 829 | 48.1 | % | |||||
Mortgage-Backed Securities | 2,030 | 2,030 | 0.0 | % | |||||
U.S. Government Agency Obligations | 1,217 | 1,222 | (0.4 | )% | |||||
Corporate Bonds & Other Securities | 100 | 94 | 6.4 | % | |||||
Loans | 17,309 | 16,261 | 6.4 | % | |||||
Total Interest Income | 22,032 | 20,539 | 7.3 | % | |||||
INTEREST EXPENSE | |||||||||
Saving, N.O.W. & Money Market Deposits | 1,179 | 1,047 | 12.6 | % | |||||
Time Certificates of $100,000 or more | 1,084 | 197 | 450.3 | % | |||||
Other Time Deposits | 1,944 | 1,454 | 33.7 | % | |||||
Federal Funds Purchased & Repurchase Agreements | 715 | 662 | 8.0 | % | |||||
Interest on Other Borrowings | 1,028 | 1,024 | 0.4 | % | |||||
Total Interest Expense | 5,950 | 4,384 | 35.7 | % | |||||
Net-interest Income | 16,082 | 16,155 | (0.5 | )% | |||||
Provision for Loan Losses | 112 | 300 | (62.7 | )% | |||||
Net-interest Income After Provision | 15,970 | 15,855 | 0.7 | % | |||||
OTHER INCOME | |||||||||
Service Charges on Deposit Accounts | 1,315 | 1,398 | (5.9 | )% | |||||
Other Service Charges, Commissions & Fees | 613 | 566 | 8.3 | % | |||||
Fiduciary Fees | 320 | 292 | 9.6 | % | |||||
Other Operating Income | 123 | 130 | (5.4 | )% | |||||
Total Other Income | 2,371 | 2,386 | (0.6 | )% | |||||
OTHER EXPENSE | |||||||||
Salaries & Employee Benefits | 6,169 | 6,058 | 1.8 | % | |||||
Net Occupancy Expense | 1,024 | 1,032 | (0.8 | )% | |||||
Equipment Expense | 582 | 504 | 15.5 | % | |||||
Other Operating Expense | 2,548 | 2,266 | 12.4 | % | |||||
Total Other Expense | 10,323 | 9,860 | 4.7 | % | |||||
Income Before Provision for Income Taxes | 8,018 | 8,381 | (4.3 | )% | |||||
Provision for Income Taxes | 2,869 | 3,157 | (9.1 | )% | |||||
NET INCOME | $ | 5,149 | $ | 5,224 | (1.4 | )% | |||
Average: | |||||||||
Common Shares Outstanding | 10,189,580 | 10,355,554 | (1.6 | )% | |||||
Dilutive Stock Options | 26,904 | 34,697 | (22.5 | )% | |||||
Average Total | 10,216,484 | 10,390,251 | (1.7 | )% | |||||
EARNINGS PER COMMON SHARE | |||||||||
Basic | $ | 0.51 | $ | 0.50 | 2.0 | % | |||
Diluted | $ | 0.50 | $ | 0.50 | 0.0 | % |