Fourth Quarter and
Full Year 2016 Highlights
- Net income increased by 12.1% to
$19.8 million in 2016 versus full year 2015
- Core net income increased by 20.3%
to $21.5 million in 2016 versus full year 2015
- Net income in the fourth quarter of
$3.7 million, including merger-related charges, increased by 2.6%
versus fourth quarter 2015; core net income in the fourth quarter
increased by 6.4% to $5.0 million versus fourth quarter
2015
- Demand deposits, representing 47% of
total deposits at December 31, 2016, increased by 10.1% versus
fourth quarter 2015
- Fourth quarter 2016 total cost of
funds was an extraordinarily low 0.18%
- Return on average assets (ROA) and
return on average stockholders’ equity (ROE) for full year 2016
improved to 0.90% and 9.54%; core ROA and core ROE improved to
0.98% and 10.32% for full year 2016
- Tangible book value per share grew
by 8.6% to $17.88 per share from $16.47 per share at December 31,
2015
Suffolk Bancorp (the “Company”) (NYSE:SCNB), parent company of
Suffolk County National Bank (the “Bank”), today reported net
income of $3.7 million, or $0.31 per diluted common share, for the
fourth quarter of 2016 compared to $3.6 million, or $0.31 per
diluted common share, a year ago. For the year ended December 31,
2016, the Company recorded net income of $19.8 million, or $1.66
per diluted common share, versus $17.7 million, or $1.49 per
diluted common share for the comparable 2015 full year period.
Excluding merger-related charges, net non-accrual interest received
and other real estate owned (“OREO”) expenses incurred in 2016,
core net income was $5.0 million and $21.5 million in the fourth
quarter and full year 2016 periods, respectively.
The 2.6% increase in fourth quarter 2016 earnings versus the
comparable 2015 period resulted from a $239 thousand increase in
net interest income and a $400 thousand reduction in the provision
for loan losses. Based upon consideration of many factors,
including credit risk grades and economic conditions, in its
evaluation of the various classes of the loan portfolio, the
Company recorded in total a $400 thousand credit to the provision
for loan losses in the fourth quarter of 2016. No provision expense
was recorded in the comparable 2015 period. Partially offsetting
these improvements was a $378 thousand increase in total operating
expenses in 2016 when compared to the fourth quarter of 2015.
The Company is also pleased that the Office of the Comptroller
of the Currency has approved the merger of the Bank with People's
United Bank, N.A., the bank subsidiary of People's United
Financial, Inc., in connection with the previously announced merger
of the Company and People's United Financial, Inc. The merger
transaction, which was previously approved by the Company's
shareholders, remains subject to the approval of the Board of
Governors of the Federal Reserve System and other customary
conditions to closing, and is currently expected to be completed
during the first quarter.
President & CEO Howard C. Bluver stated: “I am pleased to
report a strong fourth quarter. Most importantly, we made
significant progress during the quarter toward ensuring a smooth
and successful integration in connection with our pending merger
with People’s United Financial. When the merger was announced on
June 27, 2016, I stated my belief that we could leverage the
strengths of our combined institutions for the benefit of all our
current and future stakeholders. After seeing how closely and
cooperatively our respective teams have worked together over the
past seven months, I am even more confident today that we will hit
the ground running on day one. It is also gratifying to see that
our continued Company-wide focus on high quality execution has not
been compromised as a result of the pending merger.
“First, our deposit businesses performed well during the
quarter. While linked-quarter commercial and municipal deposit
levels reflect the winter seasonality that is inherent in many of
our markets, particularly in the Hamptons on the east end of Long
Island, we continue to grow deposit levels year over year,
particularly with respect to non-interest bearing demand deposits.
Total non-interest bearing demand deposits at December 31, 2016
were $867 million, compared to $788 million at December 31, 2015,
an increase of $79 million, or 10.1%. At the end of 2016, 47% of
our total deposits were demand deposits, resulting in an
extraordinarily low cost of funds of 18 basis points during the
fourth quarter and an attractive net interest margin of 3.68% for
the quarter.
“Second, we experienced modest loan growth in 2016 compared to
2015, which is not surprising given our previously announced
decision to temporarily pull back from certain commercial lending
markets during the middle of the year. In addition, we sold $77
million in multi-family loans during the year, including
approximately $28 million during the fourth quarter, in order to
generate non-interest income, protect our net interest margin and
avoid becoming too concentrated in a single product line.
Notwithstanding these factors, I am pleased to report that we are
building a very strong and diversified loan pipeline for the future
and, once the merger with People’s United closes, we will no longer
be subject to the growth constraints that come from operating with
a relatively small balance sheet.
“Finally, credit quality continues to be strong in all
categories. Total non-accrual loans at December 31, 2016 were $5.6
million, or 0.33% of total loans, compared to $6.3 million, or
0.37% of total loans, at September 30, 2016. All other key credit
metrics remain solid and reflect our steadfast commitment to a
strong and highly disciplined credit culture. Early delinquencies
(30-89 days past due), which we manage aggressively as a harbinger
of future credit issues, remain extremely low at $1.2 million, or
0.07% of total loans, at December 31, 2016, compared to $2.0
million, or 0.12% of total loans, at September 30, 2016. Given the
continuous improvement we have seen in our credit profile, we also
believe we are well reserved. Our allowance for loan losses at
December 31, 2016 was $20.1 million, or 1.20% of total loans and
362% of total non-accrual loans.”
Performance and Other
Highlights
- Asset
Quality – Total non-accrual loans were $5.6 million or 0.33%
of loans outstanding at December 31, 2016 versus $5.5 million or
0.33% of loans outstanding at December 31, 2015. Total accruing
loans delinquent 30 days or more were $1.2 million or 0.07% of
loans outstanding at December 31, 2016 compared to $1.0 million or
0.06% of loans outstanding at December 31, 2015. The Company
recorded net loan recoveries of $52 thousand in the fourth quarter
of 2016 versus net loan charge-offs of $150 thousand in the third
quarter of 2016 and net loan recoveries of $370 thousand in the
fourth quarter of 2015. The allowance for loan losses totaled $20.1
million at December 31, 2016 versus $20.7 million at December 31,
2015, representing 1.20% and 1.24% of total loans, respectively, at
such dates. The allowance for loan losses as a percentage of
non-accrual loans was 362% and 374% at December 31, 2016 and 2015,
respectively. The Company held OREO amounting to $650 thousand at
December 31, 2016. The Company held no OREO at December 31,
2015.
- Capital
Strength – The Company’s capital ratios continue to exceed
all regulatory requirements, including the individual minimum
capital requirements that the OCC established for the Bank. The
Company’s tier 1 leverage ratio was 10.31% at December 31, 2016
versus 9.77% at December 31, 2015. The Company’s tier 1 risk-based
capital ratio was 13.50% at December 31, 2016 versus 11.68% at
December 31, 2015. The Company’s total risk-based capital ratio was
14.73% at December 31, 2016 as compared to 12.89% at December 31,
2015. The Company’s total stockholders’ equity to total assets
ratio and the Company’s tangible common equity to tangible assets
ratio (“TCE ratio”) were 10.34% and 10.22%, respectively, at
December 31, 2016 versus 9.10% and 8.98%, respectively, at December
31, 2015. The ratio of total stockholders’ equity to total assets
is the most comparable U.S. GAAP measure to the non-GAAP TCE ratio
presented herein.
- Core
Deposits – Core deposits, consisting of demand, N.O.W.,
savings and money market accounts, totaled $1.64 billion at
December 31, 2016 versus $1.56 billion at December 31, 2015. Core
deposits represented 89% and 87% of total deposits at December 31,
2016 and 2015, respectively. Demand deposits were $867 million at
December 31, 2016, reflecting an increase of 10.1% from $788
million at December 31, 2015. Demand deposits represented 47% and
44% of total deposits at December 31, 2016 and 2015,
respectively.
- Loans –
Loans outstanding at December 31, 2016 increased by $10 million, or
0.6%, to $1.68 billion when compared to December 31, 2015.
- Net Interest
Margin – Net interest margin was 3.68% in the fourth quarter
of 2016 versus 3.72% in the third quarter of 2016 and 3.84% in the
fourth quarter of 2015. Adjusting for the impact of net non-accrual
interest received in each period, the Company’s core net interest
margin was 3.66% in the fourth quarter of 2016 as compared to 3.71%
in the third quarter of 2016 and 3.82% in the fourth quarter of
2015. The average cost of funds was 0.18% in the fourth quarter of
2016 versus 0.19% in the third quarter of 2016 and 0.21% in the
fourth quarter of 2015.
- Performance
Ratios – Return on average assets and return on average
common stockholders’ equity were 0.68% and 6.90%, respectively, in
the fourth quarter of 2016 versus 0.99% and 10.21%, respectively,
in the third quarter of 2016, and 0.69% and 7.33%, respectively, in
the fourth quarter of 2015. Excluding merger-related charges, net
non-accrual interest received and OREO expenses incurred, fourth
quarter 2016 core return on average assets was 0.91% and core
return on average stockholders’ equity was 9.18%.
Earnings Summary for the Quarter Ended
December 31, 2016
The Company recorded net income of $3.7 million during the
fourth quarter of 2016 versus $3.6 million in the comparable
quarter a year ago. Excluding merger-related charges, net
non-accrual interest received and OREO expenses incurred, core net
income was $5.0 million in the fourth quarter of 2016. The 2.6%
improvement in reported fourth quarter 2016 net income versus the
comparable 2015 period resulted from a $239 thousand increase in
net interest income and a $400 thousand reduction in the provision
for loan losses. The Company recorded a $400 thousand credit to the
provision for loan losses in the fourth quarter of 2016. Partially
offsetting these positive factors was a $378 thousand increase in
total operating expenses in the fourth quarter of 2016 versus 2015.
The Company’s effective tax rate was 26.8% in the fourth quarter of
2016 versus 24.8% a year ago.
The $239 thousand or 1.3% improvement in fourth quarter 2016 net
interest income resulted from a $101 million (5.3%) increase in
average total interest-earning assets. Partially offsetting the
earning asset growth was a 16 basis point decline in the Company’s
net interest margin to 3.68% in 2016 from 3.84% in 2015. The
Company’s fourth quarter 2016 average total interest-earning asset
yield was 3.85% versus 4.05% in the comparable 2015 quarterly
period. The decrease in the interest-earning asset yield in 2016
resulted from a two basis point decline in the average loan yield
to 4.15% in 2016 along with a shift in the average asset mix to a
greater percentage of Fed funds sold, securities purchased under
agreements to resell and interest-bearing deposits due from banks
(short-term investments) in 2016. Average loans increased by $95
million (6.0%) versus fourth quarter 2015. The average securities
portfolio decreased by $107 million to $204 million in the fourth
quarter of 2016 versus the comparable 2015 period. The average
yield on the investment portfolio was 3.54% in 2016 versus 3.62% a
year ago. At December 31, 2016, mortgage-backed securities, at 44%,
made up the largest component of the Company’s investment
portfolio. The available for sale securities portfolio had an
unrealized pre-tax gain of $172 thousand and the entire securities
portfolio had an estimated weighted average life of 3.4 years at
December 31, 2016. Average short-term investments grew by $115
million in 2016 at an average yield of 0.49%.
The Company’s average cost of total interest-bearing liabilities
decreased by four basis points to 0.33% in the fourth quarter of
2016 versus 0.37% in the comparable 2015 quarter. The Company’s
total cost of funds, among the lowest in the industry, was 0.18% in
the fourth quarter of 2016 versus 0.21% a year ago. Average core
deposits increased $146 million (9.3%) to $1.7 billion during the
fourth quarter of 2016 versus the fourth quarter of 2015, with
average demand deposits representing 46% of fourth quarter 2016
average total deposits. Total deposits increased by $58 million or
3.2% to $1.8 billion at December 31, 2016 versus the comparable
2015 date. Core deposit balances, which represented 89% of total
deposits at December 31, 2016, grew by $85 million or 5.5% during
the same period. Average borrowings decreased by $49 million
(76.4%) during the fourth quarter of 2016 compared to 2015. Total
borrowings at December 31, 2016 were $15 million versus $165
million at the comparable 2015 date.
Non-interest income was unchanged in the fourth quarter of 2016
versus the comparable 2015 period. A reduction in service charges
on deposit accounts (down $187 thousand) was offset by increases in
other service charges, commissions and fees (up $117 thousand) and
net gain on sale of securities available for sale (up $70
thousand).
Total operating expenses increased by $378 thousand or 2.5% in
the fourth quarter of 2016 versus 2015 principally the result of
$1.8 million of merger-related expenses incurred in 2016. Excluding
these merger-related costs and $1.4 million in systems conversion
expenses recorded in the fourth quarter of 2015, core operating
expenses increased by $31 thousand or 0.2% in 2016 when compared to
the fourth quarter of 2015. Growth in employee compensation and
benefits of $1.0 million was the primary reason for the nominal
increase in core operating expenses in 2016. Partially offsetting
this increase were reductions in 2016 in other operating expenses,
data processing costs and FDIC assessment expenses of $328
thousand, $291 thousand and $214 thousand, respectively, versus the
comparable 2015 period. Consulting and professional fees were also
lower by $118 thousand in the fourth quarter of 2016 from the year
ago period. The increase in employee compensation and benefits
expense in 2016 resulted principally from an increase in incentive
compensation expense coupled with a higher deferred expense credit
in 2015 due to last year’s increased fourth quarter loan
production. The improvement in data processing costs resulted from
lower core systems expenses in 2016 resulting from the conversion
to Fiserv in the second quarter of 2016. The Company’s operating
efficiency ratio was 73.6% in the fourth quarter of 2016 versus
71.9% a year ago. Excluding merger-related expenses, systems
conversion expenses, net non-accrual interest received and OREO
related expenses, the Company’s core operating efficiency ratio was
65.3% in 2016 versus 65.2% in 2015.
The Company recorded a $400 thousand credit to the provision for
loan losses in the fourth quarter of 2016. The Company did not
record a provision for loan losses in the fourth quarter of
2015.
The Company recorded income tax expense of $1.4 million in the
fourth quarter of 2016 resulting in an effective tax rate of 26.8%
versus an income tax expense of $1.2 million and an effective tax
rate of 24.8% in the comparable period a year ago.
Earnings Summary for the Year Ended
December 31, 2016
The Company recorded net income of $19.8 million during the full
year ended December 31, 2016 versus $17.7 million in the comparable
2015 period. Excluding merger-related charges, net non-accrual
interest received and OREO expenses incurred, core net income was
$21.5 million for the full year of 2016. The improvement in
reported 2016 net income resulted principally from a $4.3 million
increase in net interest income coupled with a $1.1 million
reduction in the provision for loan losses. Partially offsetting
these positive factors was a $1.4 million increase in total
operating expenses, a $111 thousand reduction in non-interest
income, and an increase in the Company’s effective tax rate in
2016. Excluding merger-related expenses incurred in 2016 and
systems conversion expenses incurred in 2015, total operating
expenses increased by $375 thousand or 0.7% versus 2015.
The $4.3 million or 6.1% improvement in full year 2016 net
interest income resulted from a $201 million increase in average
total interest-earning assets, offset in part by a 21 basis point
contraction of the Company’s net interest margin to 3.77% in 2016
from 3.98% in 2015. The Company’s full year 2016 average total
interest-earning asset yield was 3.96% versus 4.15% in the
comparable 2015 period. A lower average yield on the Company’s loan
portfolio in 2016 versus the comparable 2015 period, down 13 basis
points to 4.17%, was the primary driver of the reduction in the
interest-earning asset yield. Excluding the impact of net
non-accrual interest received in each full year period, the
Company’s core net interest margin was 3.71% in 2016 versus 3.91%
in 2015. The Company’s average loan portfolio increased by $230
million (15.6%) versus 2015 while the average securities portfolio
decreased by $86 million (25.4%) to $251 million in the same
period. The average yield on the investment portfolio was 3.58% in
2016 versus 3.71% a year ago.
The Company’s average cost of total interest-bearing liabilities
increased by three basis points to 0.35% in 2016 versus 0.32% in
the comparable 2015 full year period. The Company’s total cost of
funds increased by two basis points to 0.20% in 2016 versus 2015.
Average core deposits increased by $214 million (14.6%) to $1.7
billion during the 2016 full year period compared to 2015, with
average demand deposits representing 44% of full year 2016 average
total deposits. Average total deposits increased by $205 million or
12.1% to $1.9 billion during in 2016 versus 2015. Average core
deposit balances represented 88% of average total deposits in 2016
compared to 86% in the year ago period.
The Company recorded a $500 thousand credit to the provision for
loan losses during 2016 versus a provision expense of $600 thousand
a year ago.
Total operating expenses increased by $1.4 million (2.5%) in the
full year 2016 versus 2015 principally due to $2.4 million in
merger-related expenses coupled with growth in employee
compensation and benefits expense (up $1.6 million), offset in part
by reductions in non-recurring project costs (systems conversion
expenses) and data processing costs of $1.4 million and $1.3
million, respectively. The Company’s operating efficiency ratio
improved to 64.5% in 2016 from 65.6% a year ago. Excluding
merger-related costs, systems conversion costs, net non-accrual
interest received and OREO related expenses, the Company’s core
operating efficiency ratio improved to 61.9% in 2016 versus 64.9% a
year ago.
The Company recorded income tax expense of $7.6 million in the
2016 full year period resulting in an effective tax rate of 27.8%
versus income tax expense of $5.9 million and an effective tax rate
of 25.0% in the comparable 2015 period.
Asset Quality
Non-accrual loans totaled $5.6 million or 0.33% of loans
outstanding at December 31, 2016 versus $5.5 million or 0.33% of
loans outstanding at December 31, 2015. The allowance for loan
losses as a percentage of total non-accrual loans amounted to 362%
and 374% at December 31, 2016 and December 31, 2015, respectively.
Total accruing loans delinquent 30 days or more amounted to $1.2
million or 0.07% of loans outstanding at December 31, 2016 compared
to $1.0 million or 0.06% of loans outstanding at December 31,
2015.
Total criticized and classified loans were $30 million at
December 31, 2016 versus $21 million at December 31, 2015.
Criticized loans are those loans that are not classified but
require some degree of heightened monitoring. Classified loans were
$25 million at December 31, 2016 as compared to $12 million at
December 31, 2015. The allowance for loan losses as a percentage of
total classified loans was 82% and 170%, respectively, at the same
dates.
At December 31, 2016, the Company had $12 million in troubled
debt restructurings (“TDRs”), primarily consisting of commercial
and industrial loans, commercial real estate loans, residential
mortgages and home equity loans totaling $4 million, $2 million, $5
million and $1 million, respectively. The Company had TDRs
amounting to $12 million at December 31, 2015.
At December 31, 2016, the Company’s allowance for loan losses
amounted to $20.1 million or 1.20% of period-end total loans
outstanding. The allowance as a percentage of loans outstanding was
1.24% at December 31, 2015. The Company recorded net loan
recoveries of $52 thousand in the fourth quarter of 2016 versus net
loan charge-offs of $150 thousand in the third quarter of 2016 and
net loan recoveries of $370 thousand in the fourth quarter of 2015.
As a percentage of average total loans outstanding, these net
amounts represented, on an annualized basis, (0.01%) for the fourth
quarter of 2016, 0.03% for the third quarter of 2016 and (0.09%)
for the fourth quarter of 2015.
The Company held OREO amounting to $650 thousand at December 31,
2016. The Company held no OREO at December 31, 2015.
Capital
Total stockholders’ equity was $216 million at December 31, 2016
compared to $197 million at December 31, 2015. The increase in
stockholders’ equity versus December 31, 2015 was due principally
to net income recorded during 2016, net of dividends paid. The
Company’s return on average common stockholders’ equity was 6.90%
and 9.54% for the three and twelve months ended December 31, 2016
versus 7.33% and 9.27%, respectively, for the comparable 2015
periods. Excluding merger-related expenses, net non-accrual
interest received and OREO related expenses, the Company’s 2016
core return on average common stockholders’ equity was 9.18% and
10.32%, respectively, for the three and twelve-month periods ended
December 31, 2016.
The Bank’s tier 1 leverage, common equity tier 1 risk-based,
tier 1 risk-based and total risk-based capital ratios were 10.25%,
13.42%, 13.42% and 14.65%, respectively, at December 31, 2016. Each
of these ratios exceeds the regulatory guidelines for a “well
capitalized” institution, the highest regulatory capital
category.
The Company’s capital ratios also exceeded all regulatory
requirements, including the individual minimum capital requirements
that the OCC established for the Bank, at December 31, 2016. The
Company’s total stockholders’ equity to total assets ratio and the
Company’s TCE ratio were 10.34% and 10.22%, respectively, at
December 31, 2016 versus 9.10% and 8.98%, respectively, at December
31, 2015. The ratio of total stockholders’ equity to total assets
is the most comparable U.S. GAAP measure to the non-GAAP TCE ratio
presented herein.
Corporate Information
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
and Suffolk Bancorp’s wholly owned subsidiary. Organized in 1890,
the Bank has 27 branch offices in Nassau, Suffolk and Queens
Counties, New York. For more information about the Bank and its
products and services, please visit www.scnb.com.
Non-GAAP Disclosure
This discussion includes non-GAAP financial measures of the
Company’s TCE ratio, tangible common equity, tangible assets, core
net income, core fully taxable equivalent (“FTE”) net interest
income, core FTE net interest margin, core operating expenses, core
non-interest income, core FTE non-interest income, core returns on
average assets and stockholders’ equity and core operating
efficiency ratio. A non-GAAP financial measure is a numerical
measure of historical or future financial performance, financial
position or cash flows that excludes or includes amounts that are
required to be disclosed in the most directly comparable measure
calculated and presented in accordance with generally accepted
accounting principles in the United States (“U.S. GAAP”). The
Company believes that these non-GAAP financial measures provide
both management and investors a more complete understanding of the
underlying operational results and trends and the Company’s
marketplace performance. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the numbers prepared in accordance with U.S. GAAP
and may not be comparable to similarly titled measures used by
other financial institutions.
With respect to the calculations of core net income, core FTE
net interest income and core FTE net interest margin for the
periods presented in this discussion, reconciliations to the most
comparable U.S. GAAP measures are provided in the following tables.
Such reconciliations for the TCE ratio, tangible common equity,
tangible assets, core operating expenses, core non-interest income,
core FTE non-interest income, core returns on average assets and
stockholders’ equity and core operating efficiency ratio are
provided elsewhere herein.
Three Months Ended December 31,
Years Ended December 31, (in thousands)
2016
2015 2016 2015
CORE NET
INCOME:
Net income, as reported $ 3,733 $ 3,637 $ 19,831
$ 17,687 Adjustments: Net non-accrual interest
adjustment (114 ) (75 ) (298 ) (1,248 ) Merger costs 1,790 - 2,434
- Nonrecurring project costs - 1,443 - 1,443 OREO-related expenses
8 - 113 -
Total adjustments, before income taxes 1,684 1,368 2,249 195
Adjustment for reported effective income tax rate 452
340 624 49 Total
adjustments, after income taxes 1,232 1,028
1,625 146 Core net income
$ 4,965 $ 4,665 $ 21,456 $ 17,833
Three Months Ended December 31,
Years Ended December 31, ($ in thousands)
2016
2015 2016 2015
CORE NET INTEREST
INCOME/MARGIN:
Net interest income/margin (FTE) $
18,724 3.68 % $ 18,618 3.84 % $ 76,841 3.77 % $ 73,093 3.98 %
Net non-accrual interest adjustment (114 )
(0.02 %) (75 ) (0.02 %) (298 ) (0.06 %)
(1,248 ) (0.07 %) Core net interest
income/margin (FTE) $ 18,610 3.66 % $ 18,543
3.82 % $ 76,543 3.71 % $ 71,845
3.91 %
Safe Harbor Statement Pursuant to the
Private Securities Litigation Reform Act of 1995
Certain statements contained in this document are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These can include remarks
about the Company, the proposed merger with People’s United
Financial, Inc. (“People’s United”), the banking industry, the
economy in general, expectations of the business environment in
which the Company operates, projections of future performance, and
potential future credit experience. These remarks are based upon
current management expectations, and may, therefore, involve risks
and uncertainties that cannot be predicted or quantified, that are
beyond the Company’s control and that could cause future results to
vary materially from the Company’s historical performance or from
current expectations. These remarks may be identified by such
forward-looking statements as “should,” “expect,” “believe,”
“view,” “opportunity,” “allow,” “continues,” “reflects,”
“typically,” “usually,” “anticipate,” or similar statements or
variations of such terms. Factors that could affect the Company
include particularly, but are not limited to: the ability to obtain
regulatory approvals and meet other closing conditions to the
merger with People’s United, including the risk that regulatory
approvals required for the merger are not obtained or are obtained
subject to conditions that are not anticipated; delay in closing
the merger; difficulties and delays in integrating the Company’s
business or fully realizing cost savings and other benefits of the
merger; business disruption following the merger; increased capital
requirements mandated by the Company’s regulators, including the
individual minimum capital requirements that the OCC established
for the Bank; the Bank’s temporary limitation on the growth of its
commercial real estate (“CRE”) portfolio and the potentially
adverse impact thereof on the Company’s overall business, financial
condition and results of operation due to the importance of the
Bank’s CRE business to the Company’s overall business, financial
condition and results of operation; any failure by the Bank to
comply with the individual minimum capital ratios (including as a
result of increases to the Bank’s allowance for loan losses), which
may result in regulatory enforcement actions; the duration of the
Bank’s limitation on the growth of its CRE portfolio, and the
potentially adverse impact thereof on the Company’s overall
business, financial condition and results of operation; the cost of
compliance and significant amount of time required of management to
comply with regulatory requirements; results of changes in law,
regulations or regulatory practices; the Company’s ability to raise
capital; competitive factors, including price competition; changes
in interest rates; increases or decreases in retail and commercial
economic activity in the Company’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; the Company’s ability to attract and retain key
management and staff; any failure by the Company to maintain
effective internal control over financial reporting;
larger-than-expected losses from the sale of assets; and the
potential that net charge-offs are higher than expected or for
increases in our provision for loan losses. Further, it could take
the Company 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 the Company to change its practices in ways that
materially change the results of operations. We have no obligation
to update any forward-looking statements to reflect events or
circumstances after the date of this document. For more
information, see the risk factors described in the Company’s Annual
Report on Form 10-K and other filings with the Securities and
Exchange Commission.
Financial Highlights Follow
CONSOLIDATED STATEMENTS OF CONDITION
(unaudited, dollars in thousands, except per share data)
December 31, 2016 December 31, 2015
ASSETS Cash and cash equivalents Cash and
non-interest-bearing deposits due from banks $ 37,572 $ 75,272
Interest-bearing deposits due from banks 87,282
22,814 Total cash and cash equivalents 124,854 98,086
Federal Reserve and Federal Home Loan Bank stock and other
investments 4,524 10,756 Investment securities: Available for sale,
at fair value 179,242 247,099 Held to maturity (fair value $19,259
and $63,272, respectively) 18,780 61,309
Total investment securities 198,022
308,408 Loans 1,676,564 1,666,447 Allowance for loan losses
20,117 20,685 Net loans 1,656,447
1,645,762 Loans held for sale - 1,666 Premises and equipment, net
24,725 23,240 Bank-owned life insurance 53,756 52,383 Deferred tax
assets, net 13,595 15,845 Accrued interest and loan fees receivable
5,742 5,859 Goodwill and other intangibles 2,722 2,864 Other real
estate owned ("OREO") 650 - Other assets 6,465
3,723
TOTAL ASSETS $ 2,091,502 $ 2,168,592
LIABILITIES & STOCKHOLDERS' EQUITY Demand
deposits $ 867,404 $ 787,944 Savings, N.O.W. and money market
deposits 774,075 768,036 Subtotal core
deposits 1,641,479 1,555,980 Time deposits 196,703
224,643 Total deposits 1,838,182 1,780,623 Borrowings
15,000 165,000 Unfunded pension liability 6,072 6,428 Capital
leases 4,261 4,395 Other liabilities 11,823
14,888
TOTAL LIABILITIES 1,875,338
1,971,334
COMMITMENTS AND CONTINGENT
LIABILITIES STOCKHOLDERS' EQUITY Common stock (par value
$2.50; 15,000,000 shares authorized; issued 14,102,617 and
13,966,292, respectively; outstanding 11,936,879 and 11,800,554,
respectively) 35,256 34,916 Surplus 49,532 46,239 Retained earnings
145,173 130,093 Treasury stock at par (2,165,738 shares) (5,414 )
(5,414 ) Accumulated other comprehensive loss, net of tax
(8,383 ) (8,576 )
TOTAL STOCKHOLDERS' EQUITY
216,164 197,258
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 2,091,502 $ 2,168,592
CONSOLIDATED STATEMENTS OF INCOME (unaudited,
dollars in thousands, except per share data)
Three Months Ended December 31, Years Ended
December 31, 2016 2015 2016 2015
INTEREST INCOME Loans and loan fees $ 17,320 $ 16,552 $
70,128 $ 62,914 U.S. Government agency obligations 14 477 676 2,079
Obligations of states and political subdivisions 691 1,049 3,400
4,774 Collateralized mortgage obligations 83 86 353 593
Mortgage-backed securities 445 438 1,846 1,767 Corporate bonds 161
132 630 311 Federal funds sold, securities purchased under
agreements to resell and interest-bearing deposits due from banks
163 12 354 62 Dividends 57 59 332
280 Total interest income 18,934
18,805 77,719 72,780
INTEREST EXPENSE
Savings, N.O.W. and money market deposits 522 477 2,084 1,383 Time
deposits 290 379 1,305 1,422 Borrowings 66 132
540 442 Total interest expense 878
988 3,929 3,247 Net interest
income 18,056 17,817 73,790 69,533 (Credit) provision for loan
losses (400 ) - (500 ) 600 Net interest
income after (credit) provision for loan losses 18,456
17,817 74,290 68,933
NON-INTEREST INCOME Service charges on deposit accounts 536
723 2,449 3,042 Other service charges, commissions and fees 803 686
2,891 2,718 Net gain on sale of securities available for sale 70 -
617 319 Net gain on sale of portfolio loans - - 457 568 Net gain on
sale of mortgage loans originated for sale 45 66 292 356 Income
from bank-owned life insurance 338 356 1,373 1,274 Other operating
income 236 195 404 317
Total non-interest income 2,028 2,026
8,483 8,594
OPERATING EXPENSES Employee
compensation and benefits 9,363 8,344 35,029 33,446 Occupancy
expense 1,351 1,439 5,476 5,675 Equipment expense 488 437 1,829
1,636 Consulting and professional services 550 668 2,128 2,159 FDIC
assessment 66 280 953 1,082 Data processing 242 533 811 2,123
Merger costs 1,790 - 2,434 - Nonrecurring project costs - 1,443 -
1,443 Other operating expenses 1,532 1,860
6,660 6,390 Total operating expenses
15,382 15,004 55,320 53,954
Income before income tax expense 5,102 4,839 27,453 23,573 Income
tax expense 1,369 1,202 7,622
5,886
NET INCOME $ 3,733 $ 3,637 $ 19,831
$ 17,687
EARNINGS PER COMMON SHARE - BASIC $
0.31 $ 0.31 $ 1.67 $ 1.50
EARNINGS PER COMMON SHARE -
DILUTED $ 0.31 $ 0.31 $ 1.66 $ 1.49
CASH DIVIDENDS DECLARED
PER COMMON SHARE $ 0.10 $ 0.10 $ 0.40 $ 0.32
CONSOLIDATED STATEMENTS OF INCOME QUARTERLY TREND
(unaudited, dollars in thousands, except per share data)
Three Months Ended
December 31, September 30, June 30, March
31, December 31, 2016 2016 2016
2016 2015 INTEREST INCOME Loans and loan fees
$ 17,320 $ 17,545 $ 18,041 $ 17,222 $ 16,552 U.S. Government agency
obligations 14 47 197 418 477 Obligations of states and political
subdivisions 691 791 924 994 1,049 Collateralized mortgage
obligations 83 91 100 79 86 Mortgage-backed securities 445 464 473
464 438 Corporate bonds 161 161 162 146 132 Federal funds sold,
securities purchased under agreements to resell and
interest-bearing deposits due from banks 163 133 29 29 12 Dividends
57 92 108 75 59
Total interest income 18,934 19,324
20,034 19,427 18,805
INTEREST EXPENSE
Savings, N.O.W. and money market deposits 522 539 510 513 477 Time
deposits 290 331 336 348 379 Borrowings 66 66
166 242 132 Total interest expense
878 936 1,012 1,103
988 Net interest income 18,056 18,388 19,022 18,324 17,817
(Credit) provision for loan losses (400 ) (350 )
- 250 - Net interest income after (credit)
provision for loan losses 18,456 18,738
19,022 18,074 17,817
NON-INTEREST
INCOME Service charges on deposit accounts 536 523 614 776 723
Other service charges, commissions and fees 803 793 684 611 686 Net
gain on sale of securities available for sale 70 523 18 6 - Net
gain on sale of portfolio loans - - 457 - - Net gain on sale of
mortgage loans originated for sale 45 100 73 74 66 Income from
bank-owned life insurance 338 344 345 346 356 Other operating
income 236 39 50 79
195 Total non-interest income 2,028
2,322 2,241 1,892 2,026
OPERATING
EXPENSES Employee compensation and benefits 9,363 8,518 8,482
8,666 8,344 Occupancy expense 1,351 1,337 1,346 1,442 1,439
Equipment expense 488 494 461 386 437 Consulting and professional
services 550 476 619 483 668 FDIC assessment 66 303 291 293 280
Data processing 242 156 234 179 533 Merger costs 1,790 644 - - -
Nonrecurring project costs - - - - 1,443 Other operating expenses
1,532 1,539 1,886 1,703
1,860 Total operating expenses 15,382
13,467 13,319 13,152 15,004 Income
before income tax expense 5,102 7,593 7,944 6,814 4,839 Income tax
expense 1,369 2,118 2,159
1,976 1,202
NET INCOME $ 3,733 $ 5,475
$ 5,785 $ 4,838 $ 3,637
EARNINGS PER COMMON SHARE - BASIC $
0.31 $ 0.46 $ 0.49 $ 0.41 $ 0.31
EARNINGS PER COMMON SHARE -
DILUTED $ 0.31 $ 0.46 $ 0.48 $ 0.41 $ 0.31
CASH DIVIDENDS
DECLARED PER COMMON SHARE $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
STATISTICAL SUMMARY (unaudited, dollars in
thousands, except per share data)
Three Months Ended December 31, Years Ended
December 31, 2016 2015 2016
2015
AVERAGE
BALANCES:
Total assets $ 2,173,076 $ 2,080,471 $ 2,194,399 $ 1,984,580 Loans
and performing loans held for sale 1,683,655 1,589,016 1,706,263
1,475,773 Investment securities 204,001 310,619 251,319 337,050
Interest-earning assets 2,023,344 1,922,330 2,038,513 1,837,977
Demand deposits 880,804 799,925 832,266 742,876 Core deposits (1)
1,709,917 1,564,058 1,678,809 1,464,865 Total deposits 1,918,448
1,795,597 1,900,504 1,695,411 Borrowings 15,008 63,713 62,318
74,746 Stockholders' equity 215,239 196,947 207,893 190,785
FINANCIAL
PERFORMANCE RATIOS:
Return on average assets 0.68 % 0.69 % 0.90 % 0.89 % Core return on
average assets (2) 0.91 % 0.89 % 0.98 % 0.90 % Return on average
stockholders' equity 6.90 % 7.33 % 9.54 % 9.27 % Core return on
average stockholders' equity (3) 9.18 % 9.40 % 10.32 % 9.35 %
Average loans/average deposits 87.76 % 88.50 % 89.78 % 87.05 %
Average core deposits/average deposits 89.13 % 87.11 % 88.33 %
86.40 % Average demand deposits/average deposits 45.91 % 44.55 %
43.79 % 43.82 % Net interest margin (FTE) 3.68 % 3.84 % 3.77 % 3.98
% Operating efficiency ratio (4) 73.55 % 71.87 % 64.49 % 65.64 %
Core operating efficiency ratio (5) 65.34 % 65.19 % 61.86 % 64.87 %
(1) Demand, savings, N.O.W. and money market deposits. (2)
Core return on average assets, the ratio of core net income to
average total assets, is a non-GAAP measure and should not be
considered as a substitute for or superior to financial measures
determined in accordance with U.S. GAAP. (3) Core return on average
stockholders' equity, the ratio of core net income to average total
stockholders' equity, is a non-GAAP measure and should not be
considered as a substitute for or superior to financial measures
determined in accordance with U.S. GAAP. (4) The operating
efficiency ratio is calculated by dividing operating expenses less
OREO-related expenses by the sum of fully taxable equivalent
("FTE") net interest income and non-interest income, excluding net
gains and losses on sales of available for sale securities. (5) The
core operating efficiency ratio is not required by U.S. GAAP or by
applicable bank regulatory requirements, but is a metric used by
management to evaluate core operating efficiency. Since there is no
authoritative requirement to calculate this ratio, our ratio is not
necessarily comparable to similar efficiency measures disclosed or
used by other companies in the financial services industry. The
core operating efficiency ratio is a non-GAAP financial measure and
should be considered in addition to, not as a substitute for or
superior to, financial measures determined in accordance with U.S.
GAAP. The reconciliation of core operating expenses to U.S. GAAP
total operating expenses and core non-interest income to U.S. GAAP
total non-interest income and the calculation of the core operating
efficiency ratio are set forth below:
Core operating
expenses:
Total operating expenses
$ 15,382 $ 15,004 $
55,320 $ 53,954 Adjust
for merger costs (1,790 ) - (2,434 ) - Adjust for nonrecurring
project costs - (1,443 ) - (1,443 ) Adjust for OREO-related
expenses (8 )
- (113 )
- Core operating expenses
13,584 13,561
52,773
52,511
Core non-interest
income:
Total non-interest income 2,028 2,026 8,483 8,594 Adjustments
- -
-
- Core non-interest income 2,028 2,026 8,483 8,594
Adjust for tax-equivalent basis 222
233
898 833 Core FTE
non-interest income 2,250
2,259 9,381
9,427
Core operating
efficiency ratio:
Core operating expenses 13,584
13,561
52,773 52,511 Core
FTE net interest income 18,610 18,543 76,543 71,845 Core FTE
non-interest income 2,250 2,259 9,381 9,427 Adjust for net gain on
sale of securities available for sale
(70 ) -
(617 ) (319 ) Core total FTE
revenue 20,790
20,802 85,307
80,953 Core operating
expenses/core total FTE revenue 65.34 %
65.19 %
61.86 % 64.87 %
STATISTICAL SUMMARY (continued) (unaudited, dollars in
thousands)
RECONCILIATION OF
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Three Months Ended December 31, Years Ended
December 31, 2016 2015 2016 2015
Weighted average common shares outstanding 11,810,620
11,688,069 11,766,912 11,649,240 Weighted average unvested
restricted shares 112,702 108,073 115,735 107,211 Weighted average
shares for basic earnings per share 11,923,322 11,796,142
11,882,647 11,756,451 Additional diluted shares: Stock options
107,928 83,677 89,725 77,053 Weighted average shares for diluted
earnings per share 12,031,250 11,879,819 11,972,372 11,833,504
CAPITAL
RATIOS:
December 31, September 30,
June 30, March 31, December
31, 2016 2016 2016 2016 2015
Suffolk
Bancorp:
Tier 1 leverage ratio 10.31% 10.04% 9.66% 9.52% 9.77% Common equity
tier 1 risk-based capital ratio 13.50% 12.73% 12.04% 11.48% 11.68%
Tier 1 risk-based capital ratio 13.50% 12.73% 12.04% 11.48% 11.68%
Total risk-based capital ratio 14.73% 13.93% 13.24% 12.65% 12.89%
Tangible common equity ratio (1) 10.22% 9.66% 9.46% 8.91% 8.98%
Total stockholders' equity/total assets (2) 10.34% 9.77% 9.58%
9.03% 9.10%
Suffolk County
National Bank:
Tier 1 leverage ratio 10.25% 9.94% 9.55% 9.30% 9.58% Common equity
tier 1 risk-based capital ratio 13.42% 12.61% 11.90% 11.21% 11.45%
Tier 1 risk-based capital ratio 13.42% 12.61% 11.90% 11.21% 11.45%
Total risk-based capital ratio 14.65% 13.81% 13.10% 12.38% 12.66%
Tangible common equity ratio (1) 10.15% 9.57% 9.35% 8.70% 8.79%
Total stockholders' equity/total assets (2) 10.27% 9.68% 9.46%
8.81% 8.91% (1) The ratio of tangible common equity to
tangible assets, or TCE ratio, is calculated by dividing total
common stockholders’ equity by total assets, after reducing both
amounts by intangible assets. The TCE ratio is not required by U.S.
GAAP or by applicable bank regulatory requirements, but is a metric
used by management to evaluate the adequacy of our capital levels.
Since there is no authoritative requirement to calculate the TCE
ratio, our TCE ratio is not necessarily comparable to similar
capital measures disclosed or used by other companies in the
financial services industry. Tangible common equity and tangible
assets are non-GAAP financial measures and should be considered in
addition to, not as a substitute for or superior to, financial
measures determined in accordance with U.S. GAAP. With respect to
the calculation of the actual unaudited TCE ratios at December 31,
2016, reconciliations of tangible common equity to U.S. GAAP total
common stockholders’ equity and tangible assets to U.S. GAAP total
assets are set forth below:
Suffolk
Bancorp:
Total stockholders' equity $ 216,164 Total assets $ 2,091,502 10.34
% Less: intangible assets (2,722 ) Less: intangible assets
(2,722 ) Tangible common equity $ 213,442 Tangible
assets $ 2,088,780 10.22 %
Suffolk County
National Bank:
Total stockholders' equity $ 214,735 Total assets $ 2,091,105 10.27
% Less: intangible assets (2,722 ) Less: intangible assets
(2,722 ) Tangible common equity $ 212,013 Tangible
assets $ 2,088,383 10.15 % (2) The ratio of total
stockholders' equity to total assets is the most comparable U.S.
GAAP measure to the non-GAAP tangible common equity ratio presented
herein.
STATISTICAL SUMMARY (continued)
(unaudited, dollars in thousands, except per share data)
Periods Ended December
31, September 30, June 30, March 31,
December 31, 2016 2016 2016 2016
2015
LOAN DISTRIBUTION
(1):
Commercial and industrial $ 189,410 $ 210,510 $ 215,960 $ 195,321 $
189,769 Commercial real estate 731,986 728,562 734,586 718,934
696,787 Multifamily 402,935 418,108 426,367 480,678 426,549 Mixed
use commercial 78,807 82,527 84,070 83,421 78,787 Real estate
construction 41,028 43,190 40,452 37,373 37,233 Residential
mortgages 185,112 180,831 178,504 181,649 186,313 Home equity
42,419 42,407 44,655 45,447 44,951 Consumer 4,867
4,651 5,280 5,249
6,058 Total loans $ 1,676,564 $ 1,710,786 $
1,729,874 $ 1,748,072 $ 1,666,447 Sequential
quarter growth rate (2.00 %) (1.10 %) (1.04 %)
4.90 % 6.86 % Period-end loans/deposits ratio
91.21 % 87.99 % 88.76 % 93.46 % 93.59 %
FUNDING
DISTRIBUTION:
Demand $ 867,404 $ 867,178 $ 863,048 $ 790,678 $ 787,944 N.O.W.
118,683 127,128 134,562 143,862 130,968 Savings 355,931 362,269
350,565 337,657 326,469 Money market 299,461
368,393 374,926 368,331
310,599 Total core deposits 1,641,479 1,724,968 1,723,101
1,640,528 1,555,980 Time 196,703 219,232
225,918 229,841 224,643
Total deposits 1,838,182 1,944,200 1,949,019 1,870,369
1,780,623 Borrowings 15,000 15,000
15,000 160,000 165,000
Total funding sources $ 1,853,182 $ 1,959,200 $
1,964,019 $ 2,030,369 $ 1,945,623 Sequential
quarter growth rate - total deposits (5.45 %) (0.25
%) 4.21 % 5.04 % (0.85 %) Period-end core
deposits/total deposits ratio 89.30 % 88.72 %
88.41 % 87.71 % 87.38 % Period-end demand
deposits/total deposits ratio 47.19 % 44.60 %
44.28 % 42.27 % 44.25 % Cost of funds for the quarter
0.18 % 0.19 % 0.20 % 0.23 % 0.21
%
EQUITY:
Common shares outstanding 11,936,879 11,907,421 11,892,254
11,853,564 11,800,554 Stockholders' equity $ 216,164 $ 214,698 $
210,307 $ 203,717 $ 197,258 Book value per common share 18.11 18.03
17.68 17.19 16.72 Tangible common equity 213,442 211,937 207,551
200,883 194,394 Tangible book value per common share 17.88 17.80
17.45 16.95 16.47 (1) Excluding loans held for sale.
ASSET QUALITY ANALYSIS (unaudited, dollars in
thousands)
Three
Months Ended December 31, September 30, June
30, March 31, December 31, 2016
2016 2016 2016 2015
Non-performing
assets (1):
Non-accrual loans: Commercial and industrial $ 3,288 $ 3,602 $
4,118 $ 4,128 $ 1,954 Commercial real estate 1,964 2,167 2,174
1,959 1,733 Residential mortgages 143 361 421 724 1,358 Home equity
164 185 185 186 406 Consumer 1 -
- 1 77 Total non-accrual loans
5,560 6,315 6,898
6,998 5,528 Loans 90 days or more past due and
still accruing - - -
- - Total non-performing loans
5,560 6,315 6,898 6,998
5,528 Non-accrual loans held for sale - - - -
- OREO 650 650 650
650 - Total non-performing assets $ 6,210
$ 6,965 $ 7,548 $ 7,648 $ 5,528
Additions to non-accrual loans during the quarter $ 545 $ -
$ 259 $ 2,519 $ 50 Total non-accrual
loans/total loans (2) 0.33 % 0.37 % 0.40 % 0.40 % 0.33 % Total
non-performing loans/total loans (2) 0.33 % 0.37 % 0.40 % 0.40 %
0.33 % Total non-performing assets/total assets 0.30 % 0.32 % 0.34
% 0.34 % 0.25 %
Troubled debt
restructurings ("TDRs") (2):
Total TDRs $ 12,339 $ 12,176 $ 10,156 $ 11,343 $ 11,563 Performing
TDRs 7,991 7,971 8,125 9,267 9,239
Criticized and
classified loans (2):
Special mention $ 5,833 $ 17,754 $ 14,862 $ 6,637 $ 9,197
Substandard/doubtful 24,584 15,126
10,296 11,218 12,190
Total criticized and classified loans $ 30,417 $ 32,880
$ 25,158 $ 17,855 $ 21,387
Activity in the
allowance for loan losses:
Balance at beginning of period $ 20,465 $ 20,965 $ 20,930 $ 20,685
$ 20,315 Less: charge-offs 318 217 9 66 3 Recoveries 370 67 44 61
373 (Credit) provision for loan losses (400 ) (350 )
- 250 - Balance at end of
period $ 20,117 $ 20,465 $ 20,965 $ 20,930
$ 20,685 Allowance for loan losses/non-accrual loans
(1) (2) 362 % 324 % 304 % 299 % 374 % Allowance for loan
losses/non-performing loans (1) (2) 362 % 324 % 304 % 299 % 374 %
Allowance for loan losses/total loans (1) (2) 1.20 % 1.20 % 1.21 %
1.20 % 1.24 %
Net (recoveries)
charge-offs:
Commercial and industrial $ 57 $ 168 $ (28 ) $ (45 ) $ (350 )
Commercial real estate (75 ) (14 ) (8 ) (10 ) (11 ) Residential
mortgages (37 ) - (3 ) (2 ) (1 ) Home equity 7 (4 ) (3 ) 6 (5 )
Consumer (4 ) - 7 56
(3 ) Total net (recoveries) charge-offs $ (52 ) $ 150
$ (35 ) $ 5 $ (370 ) Net (recoveries) charge-offs
(annualized)/average loans (0.01 %) 0.03 % (0.01 %) 0.00 % (0.09 %)
Delinquencies and non-accrual loans
as a % of total
loans (1):
Loans 30 - 59 days past due 0.07 % 0.12 % 0.04 % 0.05 % 0.05 %
Loans 60 - 89 days past due 0.00 % 0.00 % 0.04 % 0.02 % 0.01 %
Loans 90 days or more past due and still accruing -
- - - -
Total accruing past due loans 0.07 % 0.12 % 0.08 % 0.07 % 0.06 %
Non-accrual loans 0.33 % 0.37 % 0.40 %
0.40 % 0.33 % Total delinquent and non-accrual loans
0.40 % 0.49 % 0.48 % 0.47 % 0.39 %
(1) At period end. (2) Excluding loans held for sale.
NET
INTEREST INCOME ANALYSIS For the Three Months Ended December
31, 2016 and 2015 (unaudited, dollars in thousands)
2016 2015 Average Average
Average Average Balance Interest
Yield/Cost Balance Interest
Yield/Cost
Assets:
Interest-earning assets: Investment securities (1) $ 204,001 $
1,815 3.54 % $ 310,619 $ 2,832 3.62 % Federal Reserve and Federal
Home Loan Bank stock and other investments 4,528 57 5.01 6,197 59
3.78 Federal funds sold, securities purchased under agreements to
resell and interest-bearing deposits due from banks 131,160 163
0.49 16,498 12 0.29 Loans and performing loans held for sale (2)
1,683,655 17,567 4.15
1,589,016 16,703 4.17
Total interest-earning assets 2,023,344 $ 19,602
3.85 % 1,922,330 $ 19,606
4.05 % Non-interest-earning assets 149,732 158,141
Total assets $ 2,173,076 $ 2,080,471
Liabilities and
stockholders' equity:
Interest-bearing liabilities: Savings, N.O.W. and money market
deposits $ 829,113 $ 522 0.25 % $ 764,133 $ 477 0.25 % Time
deposits 208,531 290 0.55
231,539 379 0.65 Total
savings and time deposits 1,037,644 812
0.31 995,672 856
0.34 Borrowings 15,008 66
1.76 63,713 132 0.82
Total interest-bearing liabilities 1,052,652
878 0.33 1,059,385
988 0.37 Demand deposits 880,804 799,925 Other
liabilities 24,381 24,214 Total liabilities 1,957,837
1,883,524 Stockholders' equity 215,239 196,947 Total
liabilities and stockholders' equity $ 2,173,076 $ 2,080,471
Total cost of funds 0.18 % 0.21 %
Net interest rate
spread 3.52 % 3.68 %
Net interest income/margin 18,724
3.68 % 18,618 3.84 % Less tax-equivalent basis adjustment
(668 ) (801 ) Net interest income $ 18,056 $ 17,817
(1) Interest on securities includes the effects of
tax-equivalent basis adjustments of $421 and $650 in 2016 and 2015,
respectively. (2) Interest on loans includes the effects of
tax-equivalent basis adjustments of $247 and $151 in 2016 and 2015,
respectively.
NET INTEREST INCOME ANALYSIS For the Years Ended December
31, 2016 and 2015 (unaudited, dollars in thousands)
2016 2015 Average Average
Average Average Balance Interest
Yield/Cost Balance Interest
Yield/Cost
Assets:
Interest-earning assets: Investment securities (1) $ 251,319 $
8,995 3.58 % $ 337,050 $ 12,502 3.71 % Federal Reserve and Federal
Home Loan Bank stock and other investments 6,488 332 5.12 6,505 280
4.30 Federal funds sold, securities purchased under agreements to
resell and interest-bearing deposits due from banks 74,443 354 0.48
18,649 62 0.33 Loans and performing loans held for sale (2)
1,706,263 71,089 4.17
1,475,773 63,496 4.30 Total
interest-earning assets 2,038,513 $ 80,770
3.96 % 1,837,977 $ 76,340 4.15 %
Non-interest-earning assets 155,886 146,603 Total
assets $ 2,194,399 $ 1,984,580
Liabilities and
stockholders' equity:
Interest-bearing liabilities: Savings, N.O.W. and money market
deposits $ 846,543 $ 2,084 0.25 % $ 721,989 $ 1,383 0.19 % Time
deposits 221,695 1,305 0.59
230,546 1,422 0.62
Total savings and time deposits 1,068,238
3,389 0.32 952,535 2,805
0.29 Borrowings 62,318
540 0.87 74,746 442
0.59 Total interest-bearing liabilities
1,130,556 3,929 0.35
1,027,281 3,247 0.32 Demand
deposits 832,266 742,876 Other liabilities 23,684
23,638 Total liabilities 1,986,506 1,793,795 Stockholders' equity
207,893 190,785 Total liabilities and stockholders'
equity $ 2,194,399 $ 1,984,580
Total cost of funds 0.20 %
0.18 %
Net interest rate spread 3.61 % 3.83 %
Net
interest income/margin 76,841 3.77 % 73,093 3.98 % Less
tax-equivalent basis adjustment (3,051 ) (3,560 ) Net
interest income $ 73,790 $ 69,533 (1) Interest
on securities includes the effects of tax-equivalent basis
adjustments of $2,090 and $2,978 in 2016 and 2015, respectively.
(2) Interest on loans includes the effects of tax-equivalent basis
adjustments of $961 and $582 in 2016 and 2015, respectively.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170207005399/en/
Suffolk BancorpInvestor and Press:Brian K. FinneranExecutive
Vice President & Chief Financial Officer631-208-2400
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