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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2008
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 or Organization) | (I.R.S. Employer Identification No.) |
4 West Second Street, Riverhead, New York | 11901 | |
(Address of Principal Executive Offices) | (Zip Code) |
(631) 727-5667
(Registrant’s Telephone Number, Including Area Code)
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 by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer ¨ Accelerated Filer x Non-Accelerated Filer ¨ Smaller Reporting Company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
9,568,730 SHARES OF COMMON STOCK OUTSTANDING AS OF May 1, 2008
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SUFFOLK BANCORP AND SUBSIDIARIES
Page | ||||||
Part I - Financial Information (unaudited) | ||||||
Item 1. | Financial Statements | |||||
Consolidated Statements of Condition | 4 | |||||
Consolidated Statements of Income, For the Three Months Ended March 31, 2008 and 2007 | 5 | |||||
Consolidated Statements of Cash Flows, For the Three Months Ended March 31, 2008 and 2007 | 6 | |||||
Notes to the Unaudited Consolidated Financial Statements | 7 | |||||
7 | ||||||
7 | ||||||
8 | ||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 | ||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 16 | ||||
Item 4. | Controls and Procedures | 16 | ||||
Part II - Other Information | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 17 | ||||
Item 4. | Submission of Matters to a Vote of Security Holders | 17 | ||||
Item 6. | Exhibits and Reports on Form 8-K | 17 | ||||
Signatures | 18 | |||||
Certifications of Periodic Report | 19 |
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SUFFOLK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(in thousands of dollars except for share and per share data)
March 31, 2008 | December 31, 2007 | |||||||
unaudited | ||||||||
ASSETS | ||||||||
Cash & Due From Banks | $ | 50,744 | $ | 56,633 | ||||
Federal Funds Sold | — | 2,700 | ||||||
Investment Securities: | ||||||||
Available for Sale, at Fair Value | 413,793 | 392,796 | ||||||
Held to Maturity (Fair Value of $20,301 and $18,199, respectively) | ||||||||
Obligations of States & Political Subdivisions | 8,910 | 9,055 | ||||||
Federal Reserve Bank Stock | 638 | 638 | ||||||
Federal Home Loan Bank Stock | 10,018 | 7,818 | ||||||
Corporate Bonds & Other Securities | 100 | 100 | ||||||
Total Investment Securities | 433,459 | 410,407 | ||||||
Total Loans | 1,009,350 | 958,800 | ||||||
Less: Allowance for Loan Losses | 7,852 | 7,672 | ||||||
Net Loans | 1,001,498 | 951,128 | ||||||
Premises & Equipment, Net | 22,014 | 22,143 | ||||||
Accrued Interest Receivable, Net | 7,957 | 7,359 | ||||||
Excess of Cost Over Fair Value of Net Assets Acquired | 814 | 814 | ||||||
Other Assets | 14,977 | 19,397 | ||||||
TOTAL ASSETS | $ | 1,531,463 | $ | 1,470,581 | ||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Demand Deposits | $ | 393,973 | $ | 423,225 | ||||
Saving, N.O.W. & Money Market Deposits | 428,185 | 404,457 | ||||||
Time Certificates of $100,000 or more | 139,648 | 116,795 | ||||||
Other Time Deposits | 184,199 | 198,898 | ||||||
Total Deposits | 1,146,005 | 1,143,375 | ||||||
Federal Home Loan Bank Borrowings | 192,400 | 143,500 | ||||||
Repurchase Agreements | 54,770 | 54,820 | ||||||
Dividend Payable on Common Stock | 2,106 | 2,121 | ||||||
Accrued Interest Payable | 2,079 | 2,247 | ||||||
Other Liabilities | 18,560 | 15,537 | ||||||
TOTAL LIABILITIES | 1,415,920 | 1,361,600 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common Stock (par value $2.50; 15,000,000 shares authorized; 9,568,730 and 9,610,730 shares outstanding at March 31, 2008 and December 31, 2007, respectively) | 33,911 | 33,911 | ||||||
Surplus | 20,221 | 20,172 | ||||||
Treasury Stock at Par (3,995,661 and 3,953,661 shares, respectively) | (9,989 | ) | (9,884 | ) | ||||
Retained Earnings | 68,283 | 63,939 | ||||||
112,426 | 108,138 | |||||||
Accumulated Other Comprehensive Income, Net of Tax | 3,117 | 843 | ||||||
TOTAL STOCKHOLDERS’ EQUITY | 115,543 | 108,981 | ||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 1,531,463 | $ | 1,470,581 | ||||
See accompanying notes to consolidated financial statements.
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SUFFOLK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars except for share and per share data)
For the Three Months Ended | ||||||
March 31, 2008 | March 31, 2007 | |||||
unaudited | unaudited | |||||
INTEREST INCOME | ||||||
Federal Funds Sold | $ | 1 | $ | 49 | ||
United States Treasury Securities | 99 | 99 | ||||
Obligations of States & Political Subdivisions | 1,511 | 1,228 | ||||
Mortgage-Backed Securities | 1,832 | 2,030 | ||||
U.S. Government Agency Obligations | 1,058 | 1,217 | ||||
Corporate Bonds & Other Securities | 181 | 100 | ||||
Loans | 17,285 | 17,309 | ||||
Total Interest Income | 21,967 | 22,032 | ||||
INTEREST EXPENSE | ||||||
Saving, N.O.W. & Money Market Deposits | 1,318 | 1,179 | ||||
Time Certificates of $100,000 or more | 1,146 | 1,084 | ||||
Other Time Deposits | 1,870 | 1,944 | ||||
Federal Funds Purchased and Repurchase Agreements | 516 | 715 | ||||
Interest on Other Borrowings | 1,254 | 1,028 | ||||
Total Interest Expense | 6,104 | 5,950 | ||||
Net-interest Income | 15,863 | 16,082 | ||||
Provision for Loan Losses | 225 | 112 | ||||
Net-interest Income After Provision for Loan Losses | 15,638 | 15,970 | ||||
OTHER INCOME | ||||||
Service Charges on Deposit Accounts | 1,373 | 1,315 | ||||
Other Service Charges, Commissions & Fees | 719 | 613 | ||||
Fiduciary Fees | 372 | 320 | ||||
Net Securities Gains | 3,737 | — | ||||
Other Operating Income | 149 | 123 | ||||
Total Other Income | 6,350 | 2,371 | ||||
OTHER EXPENSE | ||||||
Salaries & Employee Benefits | 6,337 | 6,169 | ||||
Net Occupancy Expense | 1,104 | 1,024 | ||||
Equipment Expense | 527 | 582 | ||||
Other Operating Expense | 2,386 | 2,548 | ||||
Total Other Expense | 10,354 | 10,323 | ||||
Income Before Provision for Income Taxes | 11,634 | 8,018 | ||||
Provision for Income Taxes | 4,075 | 2,869 | ||||
NET INCOME | $ | 7,559 | $ | 5,149 | ||
Average:Common Shares Outstanding | 9,593,554 | 10,189,580 | ||||
Dilutive Stock Options | 12,610 | 26,904 | ||||
Average Total Common Shares and Dilutive Options | 9,606,164 | 10,216,484 | ||||
EARNINGS PER COMMON SHARE | ||||||
Basic | $ | 0.79 | $ | 0.51 | ||
Diluted | $ | 0.79 | $ | 0.50 |
See accompanying notes to consolidated financial statements.
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SUFFOLK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
For the Three Months Ended | ||||||||
March 31, 2008 | March 31, 2007 | |||||||
unaudited | unaudited | |||||||
NET INCOME | $ | 7,559 | $ | 5,149 | ||||
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Provision for Loan Losses | 225 | 112 | ||||||
Depreciation & Amortization | 575 | 606 | ||||||
Net Security Gains | (3,737 | ) | — | |||||
Stock Based Compensation | 50 | 59 | ||||||
Accretion of Discounts | (32 | ) | (38 | ) | ||||
Amortization of Premiums | 161 | 248 | ||||||
Increase in Accrued Interest Receivable | (598 | ) | (331 | ) | ||||
Decrease (Increase) in Other Assets | 3,650 | (110 | ) | |||||
Decrease in Accrued Interest Payable | (168 | ) | (797 | ) | ||||
Increase (Decrease) in Other Liabilities | 1,199 | (3,156 | ) | |||||
Net Cash Provided by Operating Activities | 8,884 | 1,742 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Principal Payments on Investment Securities Available for Sale | 8,454 | 6,695 | ||||||
Proceeds from Sale of Investment Securities Available for Sale | 3,737 | — | ||||||
Purchases of Investment Securities; Available for Sale | (24,674 | ) | (5,750 | ) | ||||
Maturities of Investment Securities; Held to Maturity | 145 | 112 | ||||||
Purchases of Investment Securities; Held to Maturity | (2,201 | ) | (309 | ) | ||||
Loan Disbursements & Repayments, Net | (50,595 | ) | (13,021 | ) | ||||
Purchases of Premises & Equipment, Net | (445 | ) | (370 | ) | ||||
Net Cash Used in Investing Activities | (65,579 | ) | (12,643 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Net Increase in Deposit Accounts | 2,630 | 13,345 | ||||||
Dividends Paid to Shareholders | (2,121 | ) | (2,253 | ) | ||||
Treasury Shares Acquired | (1,253 | ) | (5,511 | ) | ||||
Net Proceeds from Other Borrowings | 48,850 | 6,355 | ||||||
Net Cash Provided by Financing Activities | 48,106 | 11,936 | ||||||
Net Increase in Cash & Cash Equivalents | (8,589 | ) | 1,035 | |||||
Cash & Cash Equivalents Beginning of Period | 59,333 | 43,576 | ||||||
Cash & Cash Equivalents End of Period | $ | 50,744 | $ | 44,611 | ||||
See accompanying notes to consolidated financial statements.
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SUFFOLK BANCORP AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated financial statements of Suffolk Bancorp (Suffolk) 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 (“GAAP”) 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 on Form 10-K, for the year ended December 31, 2007.
The results of operations for the three months ended March 31, 2008 are not necessarily indicative of the results of operations to be expected for the remainder of the year.
At March 31, 2008, Suffolk had one stock-based employee compensation plan, a Stock Option Plan (“the Plan”), under which 1,200,000 shares of Suffolk’s common stock were originally reserved for issuance to key employees, and of which 1,020,500 remained available at that date. Options are awarded by a committee appointed by the Board of Directors. The Plan provides that the option price shall not be less than the fair value of the common stock on the date the option is granted. All options are exercisable for a period of ten years or less. The Plan provides for but does not require the grant of stock appreciation rights that the holder may exercise instead of the underlying option. When the stock appreciation right is exercised, the underlying option is canceled. The optionee receives shares of common stock with a fair market value equal to the excess of the fair value of the shares subject to the option at the time of exercise (or the portion thereof so exercised) over the aggregate option price of the shares set forth in the option agreement. The exercise of stock appreciation rights is treated as the exercise of the underlying option. Options vest after one year and expire after ten years.
Suffolk accounts for stock based compensation in accordance with SFAS No. 123(R), “Share-Based Payment” (SFAS 123(R)). This statement requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. During the three months ended March 31, 2008, $30,000 of compensation expense, net of a tax benefit of $20,000, was recorded for stock-based compensation. As of March 31, 2008, there was $147,000 of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested options under the Plan. That cost is expected to be recognized over a weighted-average period of 6.59 months.
The following table presents the options granted, exercised, or expired during the three months ended March 31, 2008:
Shares | Wtd. Avg. Exercise | ||||
Balance at December 31, 2007 | 141,500 | $ | 27.61 | ||
Options granted | 17,000 | 31.18 | |||
Options exercised | — | — | |||
Options expired or terminated | — | — | |||
Balance at March 31, 2008 | 158,500 | $ | 27.99 | ||
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The following table presents certain information about the valuation of options granted during the quarter ended March 31, 2008 and the year ended December 31, 2007:
At, or during, | Quarter Ended 3/31/2008 | Year Ended 12/31/2007 | ||||||
Average remaining contractual life in years | 6.14 | 5.95 | ||||||
Exercisable options (vested) | 141,500 | 117,500 | ||||||
Weighted average fair value of options (Black-Scholes model) at date of grant: | $ | 10.38 | $ | 10.07 | ||||
Black-Scholes Assumptions: | ||||||||
Risk-free interest rate | 3.59 | % | 4.89 | % | ||||
Expected dividend yield | 2.82 | % | 2.43 | % | ||||
Expected life in years | 10 | 10 | ||||||
Expected volatility | 35.40 | % | 25.20 | % | ||||
The following table details contractual weighted-average lives of outstanding options at various prices:
By range of exercise prices | |||||||||
from | 13.13 | 31.18 | 34.39 | ||||||
to | 15.50 | 32.90 | 34.95 | ||||||
Outstanding stock options | 42,000 | 77,500 | 39,000 | ||||||
Weighted-average remaining life | 2.35 | 7.75 | 7.06 | ||||||
Weighted-average exercise price | $ | 14.60 | $ | 31.85 | $ | 34.73 | |||
Exercisable stock options | 42,000 | 60,500 | 39,000 | ||||||
Weighted-average remaining life | 2.35 | 7.16 | 7.06 | ||||||
Weighted-average exercise price | $ | 14.60 | $ | 32.04 | $ | 34.39 | |||
At all prices | Options | Weighted-average | |||||||
price | life (yrs) | ||||||||
Total outstanding | 158,500 | $ | 27.99 | 6.14 | |||||
Total exerciseable | 141,500 | $ | 27.61 | 5.70 | |||||
(3) Recent Accounting Pronouncements
On July 13, 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109” (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of FIN 48 are to be applied to all tax positions upon initial adoption of this standard. Only tax positions that meet a “more-likely-than-not” recognition threshold at the effective date may be recognized or continue to be recognized upon adoption of FIN 48. Suffolk has adopted the provisions of FIN 48 as of January 1, 2007. The cumulative effect of applying the provisions of FIN 48 was recorded as a credit adjustment to the 2007 opening balance of retained earnings in the amount of $2,013,000. As of March 31, 2008, Suffolk had a liability for unrecognized tax benefits in the amount of $106,000. There have been no material changes in unrecognized tax benefits since January 1, 2008. Suffolk recognizes interest and penalties accrued relating to unrecognized tax benefits in income tax expense.
In September 2006, FASB issued Statement No. 157, “Fair Value Measurements (SFAS No. 157).” This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The definition of fair value retains the exchange price notion, however this statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the principal market for the asset or liability. This statement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, therefore a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. This statement clarifies that market participant assumptions include assumptions about risk, the risk inherent in a particular valuation technique used to measure fair value and/or the risk inherent in the inputs to the valuation technique, as well as the effect of credit risk on the fair value of liabilities. This statement also expands disclosures about the use of fair value to measure assets and liabilities in interim and annual periods, focusing on the inputs used to measure fair value. The three levels of the fair value inputs under SFAS No. 157 are described below:
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Basis of Fair Value Measurement:
Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2—Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3—Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
Suffolk has adopted the provisions of SFAS 157 as of January 1, 2008. The following table summarizes fair value measurements as of March 31, 2008: (in thousands)
Description | Fair Value Measurements Using | |||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||
3/31/2008 | (Level 1) | (Level 2) | (Level 3) | |||||
Held to maturity securities | 20,301 | — | 20,301 | — | ||||
Available-for-sale securities | 413,793 | 116,554 | 297,239 | — | ||||
Impaired Loans | 778 | — | — | 778 | ||||
Total | 434,872 | 116,554 | 317,540 | 778 | ||||
The types of instruments valued based on quoted market prices in active markets include most U.S. Government debt and agency debt securities. Such instruments are generally classified within level 1 or level 2 of the fair value hierarchy. As required by SFAS No. 157, Suffolk does not adjust the quoted price for such instruments.
The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include state and municipal obligations, mortgage backed securities and collateralized mortgage obligations. Such instruments are generally classified within level 2 of the fair value hierarchy.
Impaired loans are evaluated and valued at the time the loan is identified as impaired, at the lower of cost or market value, and classified at level 3 in the fair value hierarchy. Market value is measured based on the value of the collateral securing these loans or techniques that are not supported by market activity for loans that are not collateral dependent and require management’s judgment. Collateral may be real estate and/or business assets including equipment, inventory and/or accounts receivable. The value of real estate collateral is determined based on appraisals by qualified licensed appraisers hired by Suffolk. The value of business equipment may be based on an appraisal by qualified licensed appraisers hired by Suffolk if significant, or may be valued based on the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral may be valued based on independent field examiner review or aging reports, if significant. Field examiner reviews may be conducted based on the loan exposure and reliance on this type of collateral. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above.
In September 2006, FASB issued Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132(R).” This statement requires an employer that is a business entity and sponsors one or more single-employer defined benefit plans to recognize the funded status of a benefit plan in its statement of financial position; recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to FASB No. 87 or No. 106; measure defined benefit plan assets and obligation as of the date of the employer’s fiscal year-end statement of financial position (with limited exceptions); and disclose in the notes to
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financial statements additional information about certain effects of net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset and obligation. Upon initial application of this statement and subsequently, an employer should continue to apply the provisions in Statements 87, 88, and 106 in measuring plan assets and benefit obligations as of the date of its statement of financial position and in determining the amount of net periodic benefit cost. An employer with publicly traded equity securities was required to recognize initially the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. Suffolk has adopted the provisions of FAS. No. 158, which have been recorded in the accompanying consolidated statement of condition and disclosures.
In February 2007, FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115” (SFAS No. 159). This statement permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. The statement defines items eligible for the measurement option. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Suffolk has adopted the provision of SFAS No. 159, which did not have a material impact on the company’s financial condition, results of operations and disclosures.
In December 2007, FASB revised Statement No. 141, “Business Combinations” (SFAS No.141R). This statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. This statement recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. This statement also defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquiree achieves control. Additionally this statement determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement is effective for fiscal years beginning after December 15, 2008. Suffolk is currently evaluating the impact of SFAS No. 141R on its financial condition, results of operations and disclosures.
In December 2007, FASB issued Statement No. 160, “Non-controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (SFAS No.160). This statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding non-controlling interest in one or more subsidiaries or that deconsolidate a subsidiary. This statement amends ARB No. 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years beginning after January 1, 2009. Suffolk is currently evaluating the impact of SFAS No. 160 on its financial condition, results of operations and disclosures.
In March 2008, FASB issued Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133” (SFAS No. 161). This statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement is effective for fiscal years and interim periods beginning after November 15, 2008. Suffolk is currently evaluating the impact of SFAS No. 161 on its financial condition, results of operations and disclosures.
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Three-Month Periods ended March 31, 2008 and 2007
Recent Developments
The yield curve for interest rates continued to slope upward during the first quarter of 2008. However, interest rates continued to decline during the first quarter of 2008, in part as a result of reductions to the federal funds and discount target rates set by the Federal Reserve Board. In the second half of 2007, financial markets developed increased volatility as certain investors reported losses in sub-prime mortgages and securities backed by those mortgages. Declining values of residential real estate and an increasing number of foreclosures amplified volatility during the first quarter of 2008. Interest income was flat, and offset by increased interest expense, resulting in slightly lower net interest income despite an increase in total net loans. The net interest margin decreased to 4.78 percent in the first quarter of 2008, down from 5.13 percent, in the first quarter of 2007.
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Return on average equity increased to 27.44 percent for the first quarter in 2008, up from 19.43 percent during the first quarter of 2007, and earnings-per-share increased from $.51 in the first quarter of 2007 to $.79 in the first quarter of 2008. The increase in return on average equity and earnings per share is the result of a net gain on sale of securities, the proceeds of which were realized from the sale of shares issued by VISA, Inc. in connection with its initial public offering. Suffolk’s subsidiary, Suffolk County National Bank, was a member of the former VISA payments organization and was issued shares when VISA Inc.’s was organized. Approximately 39 percent of those shares were redeemed in connection with the initial public offering. The remaining shares are restricted because of unsettled litigation pending against VISA, Inc. VISA, Inc., at its discretion, may redeem additional restricted shares in order to resolve pending litigation. The restriction expires upon resolution of the pending litigation. Accordingly, Suffolk has recorded these shares at $0 in the accompanying statement of condition. Upon expiration of the restriction, Suffolk expects to record the fair value of the remaining shares.
Key to maintaining performance was close management of the balance sheet. Steps included:
• | Continued repositioning of the investment portfolio to purchase certain carefully evaluated collateralized mortgage obligations to take advantage of the current market, purchased to provide downside protection from falling rates, and municipal securities, currently providing liquidity as well as higher returns, and some protection from falling interest rates. |
• | Pursuing ongoing program of capital management, which applies leverage to shareholders’ investment by means of the selective repurchase of shares, while maintaining “well-capitalized” status with regulatory agencies. |
• | Maintaining emphasis on both commercial and personal demand deposits, while responding to increased call for time certificates of $100,000 or more. |
• | Managing net loan charge-offs aggressively. During the first quarter of 2008, net charge-offs amounted to 1 basis point of average net loans, on an annualized basis. |
• | Consistent underwriting for lending to preserve both credit quality and yields in face of competition. Emphasis on preservation of margins over less profitable growth. |
Net Income
Net income was $7,559,000 for the quarter, up 46.8 percent from $5,149,000 posted during the same period last year. Earnings per share for the quarter were $0.79 versus $0.51, an increase of 54.9 percent. Included in net income is $2,429,000 attributed to the VISA transaction, net of income taxes.
Interest Income
Interest income was $21,967,000 for the first quarter of 2008, down .3 percent from $22,032,000 posted for the same quarter in 2007. Average net loans during the first quarter of 2008 totaled $969,473,000 compared to $881,671,000 for the same period of 2007. During the first quarter of 2008, the yield on a fully taxable-equivalent basis was 6.53 percent on average earning assets of $1,393,158,000 down from 6.95 percent on average earning assets of $1,304,254,000 during the first quarter of 2007. Interest income remained flat from quarter to quarter.
Interest Expense
Interest expense for the first quarter of 2008 was $6,104,000, up 2.6 percent from $5,950,000 for the same period of 2007. During the first quarter of 2008, the cost of funds was 2.59 percent on average interest-bearing liabilities of $944,243,000, down from 2.80 percent on average interest-bearing liabilities of $851,058,000 during the first quarter of 2007. Interest expense increased slightly due to increased rates paid for Savings, N.O.W. and Money Market deposits.
A portion of the Bank’s demand deposits are reclassified as savings accounts on a daily basis. The purpose of the reclassification is to reduce the non-interest-bearing reserve balances that the Bank is required to maintain with the Federal Reserve Bank, and thereby increase funds available for investment. Although these balances are classified as savings accounts for regulatory purposes, they are included in demand deposits in the accompanying consolidated statements of condition.
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Net Interest Income
Net interest income, before the provision for loan losses, is the largest component of Suffolk’s earnings. It was $15,863,000 for the first quarter of 2008, down 1.4 percent from $16,082,000 during the same period of 2007. The net interest margin for the quarter, on a fully taxable-equivalent basis, was 4.78 percent compared to 5.13 percent for the same period of 2007.
The following table details the components of Suffolk’s net interest income on a taxable-equivalent basis: (in thousands)
March 31, | 2008 | 2007 | ||||||||||||||||||
Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | |||||||||||||||
INTEREST-EARNING ASSETS | ||||||||||||||||||||
U.S. Treasury securities | $ | 10,017 | $ | 101 | 4.03 | % | $ | 9,455 | $ | 101 | 4.27 | % | ||||||||
Collateralized mortgage obligations | 137,980 | 1,818 | 5.27 | 153,634 | 2,013 | 5.24 | ||||||||||||||
Mortgage backed securities | 834 | 14 | 6.71 | 1,008 | 17 | 6.75 | ||||||||||||||
Obligations of states and political subdivisions | 159,634 | 2,295 | 5.75 | 126,104 | 1,864 | 5.91 | ||||||||||||||
U.S. govt. agency obligations | 105,958 | 1,058 | 3.99 | 122,983 | 1,217 | 3.96 | ||||||||||||||
Corporate bonds and other securities | 9,159 | 181 | 7.90 | 5,804 | 100 | 6.89 | ||||||||||||||
Federal funds sold and securities purchased under agreements to resell | 103 | 1 | 3.88 | 3,595 | 49 | 5.45 | ||||||||||||||
Loans, including non-accrual loans | ||||||||||||||||||||
Commercial, financial & agricultural loans | 211,118 | 3,812 | 7.22 | 187,418 | 3,946 | 8.42 | ||||||||||||||
Commercial real estate mortgages | 321,384 | 5,785 | 7.20 | 286,757 | 5,389 | 7.52 | ||||||||||||||
Real estate construction loans | 88,137 | 1,938 | 8.80 | 84,513 | 2,254 | 10.67 | ||||||||||||||
Residential mortgages (1st and 2nd liens) | 182,968 | 2,886 | 6.31 | 147,694 | 2,399 | 6.50 | ||||||||||||||
Home equity loans | 66,299 | 1,131 | 6.82 | 72,890 | 1,585 | 8.70 | ||||||||||||||
Consumer loans | 97,639 | 1,733 | 7.10 | 99,858 | 1,736 | 6.95 | ||||||||||||||
Other loans (overdrafts) | 1,928 | — | — | 2,541 | — | — | ||||||||||||||
Total interest-earning assets | $ | 1,393,158 | $ | 22,753 | 6.53 | % | $ | 1,304,254 | $ | 22,670 | 6.95 | % | ||||||||
Cash and due from banks | $ | 46,556 | $ | 45,975 | ||||||||||||||||
Other non-interest-earning assets | 52,613 | 52,832 | ||||||||||||||||||
Total assets | $ | 1,492,327 | $ | 1,403,061 | ||||||||||||||||
INTEREST-BEARING LIABILITIES | ||||||||||||||||||||
Saving, N.O.W. and money market deposits | $ | 414,194 | $ | 1,318 | 1.27 | % | $ | 426,379 | $ | 1,179 | 1.11 | % | ||||||||
Time deposits | 318,978 | 3,016 | 3.78 | 294,159 | 3,028 | 4.12 | ||||||||||||||
Total saving and time deposits | 733,172 | 4,334 | 2.36 | 720,538 | 4,207 | 2.34 | ||||||||||||||
Federal funds purchased and securities sold under agreement to repurchase | 57,147 | 516 | 3.61 | 53,586 | 715 | 5.34 | ||||||||||||||
Other borrowings | 153,924 | 1,254 | 3.26 | 76,934 | 1,028 | 5.34 | ||||||||||||||
Total interest-bearing liabilities | $ | 944,243 | $ | 6,104 | 2.59 | % | $ | 851,058 | $ | 5,950 | 2.80 | % | ||||||||
Rate spread | 3.95 | % | 4.16 | % | ||||||||||||||||
Non-interest-bearing deposits | $ | 410,498 | $ | 418,425 | ||||||||||||||||
Other non-interest-bearing liabilities | 27,397 | 27,567 | ||||||||||||||||||
Total liabilities | $ | 1,382,138 | $ | 1,297,050 | ||||||||||||||||
Stockholders’ equity | 110,189 | 106,011 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,492,327 | $ | 1,403,061 | ||||||||||||||||
Net-interest income (taxable-equivalent basis) and effective interest rate differential | $ | 16,649 | 4.78 | % | $ | 16,720 | 5.13 | % | ||||||||||||
Less: taxable-equivalent basis adjustment | (786 | ) | (638 | ) | ||||||||||||||||
Net-interest income | $ | 15,863 | $ | 16,082 | ||||||||||||||||
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The table below presents a summary of changes in interest income, interest expense, and the resulting net interest income on a taxable equivalent basis for the periods presented. Because of numerous, simultaneous changes in volume and rate during the period, it is not possible to allocate precisely the changes between volumes and rates. In this table changes not due solely to volume or to rate have been allocated to these categories based on percentage changes in average volume and average rate as they compare to each other: (in thousands)
In 2008 over 2007 Changes Due to | ||||||||||||
Volume | Rate | Net Change | ||||||||||
Interest-earning assets | ||||||||||||
U.S. Treasury securities | $ | 6 | $ | (6 | ) | $ | — | |||||
Collateralized mortgage obligations | (206 | ) | 11 | (195 | ) | |||||||
Mortgage-backed securities | (3 | ) | — | (3 | ) | |||||||
Obligations of states & political subdivisions | 483 | (52 | ) | 431 | ||||||||
U.S. government agency obligations | (170 | ) | 11 | (159 | ) | |||||||
Corporate bonds & other securities | 65 | 16 | 81 | |||||||||
Federal funds sold & securities purchased under agreements to resell | (37 | ) | (11 | ) | (48 | ) | ||||||
Loans, including non-accrual loans | 1,641 | (1,665 | ) | (24 | ) | |||||||
Total interest-earning assets | $ | 1,779 | $ | (1,696 | ) | $ | 83 | |||||
Interest-bearing liabilities | ||||||||||||
Saving, N.O.W., & money market deposits | $ | (35 | ) | $ | 174 | $ | 139 | |||||
Time deposits | 245 | (257 | ) | (12 | ) | |||||||
Federal funds purchased & securities sold under agreements to repurchase | 45 | (244 | ) | (199 | ) | |||||||
Other borrowings | 740 | (514 | ) | 226 | ||||||||
Total interest-bearing liabilities | $ | 995 | $ | (841 | ) | $ | 154 | |||||
Net change in net interest income (taxable-equivalent basis) | $ | 784 | $ | (855 | ) | $ | (71 | ) | ||||
Other Income
Other income increased to $6,350,000 for the three months compared to $2,371,000 the previous year, primarily due to net securities gains. Proceeds received in connection with shares redeemed as part of the VISA, Inc. initial public offering resulted in a net securities gain of $3,737,000. There were no net gains on the sale of securities for the first quarter of 2007. Service charges on deposits were up 4.4 percent. Service charges, including commissions and fees other than for deposits, increased by 17.3 percent. Trust revenue was up 16.3 percent. Other operating income increased by 21.1 percent.
Other Expense
Other expense for the first quarter of 2008 was $10,354,000, up .3 percent from $10,323,000 for the comparable period in 2007. Employee compensation increased by 2.7 percent, net occupancy expense increased 7.8 percent, equipment expense decreased by 9.5 percent, and other operating expense decreased by 6.4 percent.
In accordance with the requirements of Statement of Financial Accounting Standards 132R (SFAS 132R), Suffolk presents information concerning net periodic defined benefit pension expense for the three months ended March 31, 2008 and 2007, including the following components:
3 months 3/31/2008 | 3 months 3/31/2007 | |||||||
Service cost | $ | 338,452 | $ | 345,431 | ||||
Interest cost | 408,165 | 370,522 | ||||||
Expected return on plan assets | (520,474 | ) | (470,830 | ) | ||||
Amortization of prior service cost | (995 | ) | (995 | ) | ||||
Amortization of unrecognized net actuarial loss | — | 33,732 | ||||||
Net periodic benefit expense | $ | 225,148 | $ | 277,859 | ||||
Management currently expects to contribute approximately $983,000 to the pension plan in June of 2008. There were no additional contributions required to be made to the plan in the three months ended March 31, 2008.
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Capital Resources
Stockholders’ equity totaled $115,543,000 on March 31, 2008, an increase of 6.0 percent from $108,981,000 on December 31, 2007. This was the result of net income and the appreciation in the market value of securities available for sale, offset by cash dividends and the repurchase of shares. The ratio of equity to assets was 7.5 percent at March 31, 2008 and 7.4 percent at December 31, 2007. The following table details amounts and ratios of Suffolk’s regulatory capital: (in thousands of dollars except ratios)
Actual | For capital adequacy | To be well capitalized under prompt corrective action provisions | ||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||
As of March 31, 2008 | ||||||||||||||||||
Total Capital (to risk-weighted assets) | $ | 119,339 | 10.06 | % | $ | 94,946 | 8.00 | % | $ | 118,682 | 10.00 | % | ||||||
Tier 1 Capital (to risk-weighted assets) | 111,487 | 9.39 | % | 47,473 | 4.00 | % | 71,209 | 6.00 | % | |||||||||
Tier 1 Capital (to average assets) | 111,487 | 7.48 | % | 59,656 | 4.00 | % | 74,569 | 5.00 | % | |||||||||
As of December 31, 2007 | ||||||||||||||||||
Total Capital (to risk-weighted assets) | $ | 114,858 | 10.21 | % | $ | 89,991 | 8.00 | % | $ | 112,488 | 10.00 | % | ||||||
Tier 1 Capital (to risk-weighted assets) | 107,186 | 9.53 | % | 44,995 | 4.00 | % | 67,493 | 6.00 | % | |||||||||
Tier 1 Capital (to average assets) | 107,186 | 7.60 | % | 56,449 | 4.00 | % | 70,562 | 5.00 | % | |||||||||
Credit Risk
Suffolk makes loans based on the best evaluation possible of the creditworthiness of the borrower. Even with careful underwriting, some loans may not be repaid as originally agreed. To provide for this possibility, Suffolk maintains an allowance for loan losses, based on an analysis of the performance of the loans in its portfolio. The analysis includes subjective factors based on management’s judgment as well as quantitative evaluation. Prudent, conservative estimates should produce an allowance that will provide for a range of losses. According to generally accepted accounting principles (“GAAP”) a financial institution should record its best estimate. Appropriate factors contributing to the estimate may include changes in the composition of the institution’s assets, or potential economic slowdowns or downturns. Also important is the geographical or political environment in which the institution operates. Suffolk’s management considers all of these factors when determining the provision for loan losses.
The provision for the allowance for loan losses was $225,000 for the first quarter of 2008, and $112,000 for the comparable period in 2007. Net charge-offs were $30,000 for the first quarter of 2008 compared to $11,000 for the first quarter of 2007.
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The following table presents information about the allowance for loan losses: (in thousands of dollars except for ratios)
For the last 12 months | For the three months ended | |||||||||||||||||||
Mar. 31 2008 | Dec. 31 2007 | Sept. 30 2007 | June 30 2007 | |||||||||||||||||
Allowance for loan losses | ||||||||||||||||||||
Beginning balance | $ | 7,286 | $ | 7,672 | $ | 7,459 | $ | 7,397 | $ | 7,286 | ||||||||||
Total charge-offs | (165 | ) | (95 | ) | (30 | ) | (22 | ) | (18 | ) | ||||||||||
Total recoveries | 280 | 65 | 42 | 62 | 111 | |||||||||||||||
Reclass to Allowance for Contingent Liabilities | (39 | ) | (15 | ) | (24 | ) | — | — | ||||||||||||
Provision for loan losses | 490 | 225 | 225 | 22 | 18 | |||||||||||||||
Ending balance | $ | 7,852 | $ | 7,852 | $ | 7,672 | $ | 7,459 | $ | 7,397 | ||||||||||
Coverage ratios | ||||||||||||||||||||
Loans, net of discounts: average | $ | 934,279 | $ | 977,243 | $ | 931,292 | $ | 919,791 | $ | 908,791 | ||||||||||
at end of period | 957,201 | 1,009,350 | 958,800 | 934,102 | 926,552 | |||||||||||||||
Non-performing assets | 1,320 | 1,743 | 1,648 | 952 | 935 | |||||||||||||||
Non-performing assets/total loans (net of discount) | 0.14 | % | 0.17 | % | 0.17 | % | 0.10 | % | 0.10 | % | ||||||||||
Net charge-offs/average net loans (annualized) | (0.01 | )% | 0.01 | % | (0.01 | )% | (0.02 | )% | (0.04 | )% | ||||||||||
Allowance/non-accrual, restructured, & OREO | 622.66 | % | 450.49 | % | 465.53 | % | 783.51 | % | 791.12 | % | ||||||||||
Allowance for loan losses/net loans | 0.79 | % | 0.78 | % | 0.80 | % | 0.80 | % | 0.80 | % | ||||||||||
Suffolk has financial and performance letters of credit. Financial letters of credit require Suffolk to make payment if the customer’s financial condition deteriorates, as defined in the agreements. Performance letters of credit require Suffolk to make payments if the customer fails to perform certain non-financial contractual obligations. The maximum potential undiscounted amount of future payments of these letters of credit as of March 31, 2008 is $23,456,000 and they expire as follows: (in thousands)
2008 | $ | 16,090 | |
2009 | 6,947 | ||
2010 | 245 | ||
2011 | 102 | ||
Thereafter | 72 | ||
$ | 23,456 | ||
Amounts due under these letters of credit would be reduced by any proceeds that Suffolk would be able to obtain in liquidating the collateral for the loans, which varies depending on the customer. The allowance for contingent liabilities includes a provision of $35,000 for losses based on the letters of credit outstanding as of March 31, 2008.
Critical Accounting Policies, Judgments and Estimates
Suffolk’s accounting and reporting policies conform to the accounting principles generally accepted in the United States of America and general practices within the financial services industry. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.
Allowance for Loan Losses
Suffolk considers that the determination of the allowance for loan losses involves a higher degree of judgment and complexity than its other significant accounting policies. The balance in the allowance for loan losses is determined based on management’s review and evaluation of the loan portfolio in relation to past loss experience, the size and composition of the portfolio, current economic events and conditions, and other pertinent factors, including management’s assumptions as to future delinquencies, recoveries and losses. All of these factors may change significantly. To the extent actual performance differs from management’s estimates, additional provisions for loan losses may be required that would reduce earnings in future periods.
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Income Taxes
Under the liability method, deferred tax assets and liabilities are determined by the difference between the financial statement, and the tax bases of assets and liabilities. Deferred tax assets are subject to management’s judgment of available evidence that future realization is more likely than not. If management determines that Suffolk may be unable to realize all or part of the net deferred tax assets in the future, a direct charge to income tax expense may be required to reduce the recorded value of the net deferred tax asset to the amount management expects can be realized. On January 1, 2007, Suffolk adopted FIN 48. Suffolk determined, under the guidance of FIN 48 and the information available at the time, that is was not likely that the dividend received from its Real Estate Investment Trust subsidiary, would be included in full in taxable income as calculated for purposes of New York State corporate income tax. Accordingly, the cumulative effect of applying the provisions of FIN 48 were recorded as a credit adjustment to retained earnings in the amount of $2,013,000, as a result of the review, recognition, and measurement of uncertain tax positions. As of March 31, 2008, Suffolk had a liability for unrecognized tax benefits in the amount of $106,000. There have been no material changes in unrecognized tax benefits since January 1, 2008. Suffolk recognizes interest and penalties accrued relating to unrecognized tax benefits in income tax expense.
Quantitative and Qualitative Disclosures about Market Risk
Market Risk
Suffolk originates and invests in interest-earning assets and solicits interest-bearing deposit accounts. Suffolk’s operations are subject to market risk resulting from fluctuations in interest rates to the extent that there is a difference between the amounts of interest-earning assets and interest-bearing liabilities that are prepaid, withdrawn, mature, or re-priced in any given period of time. Suffolk’s earnings or the net value of its portfolio (the present value of expected cash flows from liabilities) will change when interest rates change. The principal objective of Suffolk’s asset/liability management program is to maximize net interest income while keeping risks acceptable. These risks include both the effect of changes in interest rates, and risks to liquidity. The program also provides guidance to management in funding Suffolk’s investment in loans and securities. Suffolk’s exposure to interest-rate risk has not changed substantially since December 31, 2007.
Business Risks and Uncertainties
This report contains some statements that look to the future. These may include remarks about Suffolk Bancorp, the banking industry, and the economy in general. 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. Further, it could take Suffolk longer than anticipated to implement its strategic plans to increase revenue and manage non-interest expense, or it may not be possible to implement those plans at all. Finally, new and unanticipated legislation, regulation, or accounting standards may require Suffolk to change its practices in ways that materially change the results of operation. Each of the factors may change in ways that management does not now foresee. 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.
Controls and Procedures
Suffolk’s Chief Executive Officer and Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for establishing and maintaining disclosure controls and procedures as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934 for Suffolk. Based upon their evaluation of these controls and procedures as of March 31, 2008, the Certifying Officers have concluded that Suffolk’s disclosure controls and procedures are effective.
In addition, there has been no significant change in Suffolk’s internal controls over financial reporting that occurred during Suffolk’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Suffolk’s internal controls over financial reporting.
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Unregistered Sales of Equity Securities and Use of Proceeds
The following table details repurchases of common stock during the first quarter of 2008:
Quarter ending | Total shares repurchased | Average price per share | Aggregate cost | |||||
March 31, 2008 | 42,000 | $ | 29.84 | $ | 1,253,160 | |||
Submission of Matters to a Vote of Security Holders
The annual meeting of the shareholders was held at 1:00 PM on April 8, 2008 at the Administrative Center of the Suffolk County National Bank in Riverhead, New York. Two directors were elected for a term of three years; and the appointment of Grant Thornton, L.L.P. as independent auditors for the fiscal year ending December 31, 2008 was ratified. The following table details the vote:
Shares Voted | |||||||
Nominees for Director for a term of 3 years | For | Withheld | |||||
Joseph A. Gaviola | 7,514,380 | 328,035 | |||||
John D. Stark Jr. | 7,517,719 | 324,695 | |||||
Ratification of Independent Auditors | For | Against | Abstain | ||||
Grant Thornton, L.L.P. | 7,777,355 | 29,120 | 35,940 | ||||
Summary | |||||||
Outstanding | # Voted | % Voted | |||||
At Date of Record | 9,577,730 | 7,842,415 | 81.9 | % | |||
Exhibits and Reports on Form 8-K
CERTIFICATION OF PERIODIC REPORT - Exhibit 31.1
CERTIFICATION OF PERIODIC REPORT - Exhibit 31.2
CERTIFICATION OF PERIODIC REPORT - Exhibit 32.1
CERTIFICATION OF PERIODIC REPORT - Exhibit 32.2
The following reports were filed on Form 8-K during the three month period ended March 31, 2008.
Current Report on Form 8-K – the Company’s press release titled, “Suffolk Bancorp Announces Earnings for the Fourth Quarter and the Full Year of 2007,” dated January 15, 2008.
Current Report on Form 8-K – the Company’s press release titled “Suffolk Bancorp Announces Regular Quarterly Dividend,” dated February 26, 2008.
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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 5, 2008 | /s/ Thomas S. Kohlmann | |
Thomas S. Kohlmann | ||
President & Chief Executive Officer | ||
Date: May 5, 2008 | ||
/s/ J. Gordon Huszagh | ||
J. Gordon Huszagh | ||
Executive Vice President & Chief Financial Officer |
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