(Source: Business Wire)Suffolk Bancorp (NASDAQ:SUBK) today released the results of its operations during the third quarter of 2009. Earnings-per-share were $0.63, an increase of 6.8 percent from $0.59 during the comparable period of 2008. Net income was $6,028,000, up 6.3 percent from $5,673,000 during the same quarter last year. Earnings-per-share for the year to date were $1.81, down 8.6 percent from $1.98 a year ago. Net income for the year to date was $17,395,000, down 8.2 percent from $18,946,000 posted during the first three quarters of 2008. However, earnings for the first three quarters of 2008 included a non-recurring gain from the proceeds of the sale of shares of VISA, Inc. to the public on March 19, 2008. These shares had been acquired as a result of Suffolk's membership in the VISA payments organization prior to the offering. The transaction added $2,429,000 to Suffolk's net income during the first quarter of 2008, net of provision for income taxes, and amounted to $0.25 per share. Accordingly, to compare the first three quarters of 2009 to the first three quarters of 2008 exclusive of the VISA transaction, earnings-per-share were $1.81, an increase of 4.6 percent from $1.73 during the comparable period of 2008. Net income for the year to date was $17,395,000, up 5.3 percent from $ 16,517,000 last year. A detailed financial summary follows the text.

J. Gordon Huszagh, President and Chief Executive Officer commented, "Suffolk's performance this past quarter would be gratifying in any economy, and is even more so considering the ongoing sluggishness both regionally and nationally. We are humble enough about our prospects for the future in an economy that remains distinctly uncertain, but I would like to take a few words to outline how we were able to maintain return on average equity of 19.34 percent, not far from our traditional performance, in a turbulent economy while at the same time increasing our capital ratios significantly since last year, with total risk-based capital at 11.73 percent in comparison to 10.34 percent last year. This helps position us to be ready to meet any increased regulatory requirements currently under discussion, as well as any unanticipated deterioration in the quality of our assets."

He went on to say, "The most important component of our success has been our net interest margin, which at 5.06 percent, remains among the highest in the industry. This is primarily attributable to the low cost of funds, mostly as a result of historically low market rates of interest on deposits as well as the ˜flight-to-safety' of bank deposits in response to the recession, but also as a result of our employment of the ˜marginal-cost-of-funds-approach' where we analyze carefully where each additional dollar of funding will come from, making judicious use of borrowed funds to maintain the lowest possible cost of funds while still responding to our customers' needs. Net interest income was up 10.5 percent for the quarter from last year. We were also able to hold non-interest expense to an increase of 6.1 percent, quarter to comparable quarter of last year, even allowing for a six-fold increase in FDIC assessments for deposit insurance in comparison with the same quarter last year. This only slightly ahead of the rate of growth in average total assets, which increased by 4.8 percent to $1,683,916,000 for the quarter from $1,606,389,000 a year ago. The increase in non-interest expense for the year to date of 12.8 percent includes a special FDIC assessment of approximately $800,000 during the second quarter which, fortunately, was not repeated during the third quarter."

He continued, "Growth in lending slowed during the third quarter of 2009, with total loans amounting to $1,121,348,000, up 5.6 percent from a year ago, but up at a lesser rate than during the previous six quarters. We attribute this to ongoing weakness in the commercial real estate market on Long Island, and a tapering of our early success in attracting prime customers of competitors that stumbled badly in the early stages of the recession. As a number of economists and other observers make the tentative call that the economy has bottomed and will begin to recover albeit slowly, we are cautiously optimistic about our prospects in the long run. But we are not unconcerned about our loan portfolio in the quarters to come as our customers cope with continuing lethargy in their businesses. While Long Island has not been as badly affected as markets in the south and far west, economic indicators of all types are significantly behind where they were this time last year, and we cannot imagine that this will not affect Suffolk as well. Our net charge-offs remain comparatively low at 5 basis points, or approximately one quarter of the 19 basis points written off by banks in the New York metropolitan area during the second quarter of 2009, one tenth of the 50 basis points at banks nationwide, and one sixteenth of the 81 basis points at banks of $1-5 billion in assets (Source: SNL Securities). At September 30, 2009, total non-performing and restructured loans more than 90 days past due represented 2.1 percent of the loan portfolio, up slightly from the second quarter but significantly from last year. The actual exposure that presents to Suffolk is as follows: of the $24,100,000, $21,917,000 is secured by collateral valued at about $36,059,000 having a cumulative loan-to-value of approximately 61 percent. The unsecured portion of $2,183,000 amounts to only 20 basis points (20/10,000ths) of net loans at quarter end. Throughout the business cycle, Suffolk follows a consistent methodology and analysis to determine what the allowance for loan losses should be, and makes the appropriate provision to maintain it at that level. Certain aspects of the analysis reflect the stress in our economy and the potential impact that it could have on our borrowers, resulting in a quarterly provision substantially higher than in the previous year, although lower than during the second quarter. We have maintained our underwriting standards for new loans and our loan officers monitor our existing credits closely. When necessary, possible, and prudent, and based on a viable business plan, we work with our customers to restructure loan agreements on mutually beneficial terms. Our focus is always on ensuring the best possible outcome in the long run for both Suffolk and its customers."

Mr. Huszagh finished saying, "As we so often emphasize in our press releases but inside our business as well, steady discipline is the route to reliable earnings. While we are sophisticated in our analysis of our business and our opportunities, we do not tangle ourselves up in ˜innovative' financial products, and wherever possible use the sophistication of our analyses to find the simplest possible way to execute our fundamental strategy, which is to build relationships with our customers for the long run and to share the profits of those relationships with our shareholders. I call it ˜sticking to our knitting' and doing so through economic thick and thin. We at Suffolk believe that this is the reason that we can continue to perform respectably in times like these, and even allowing for the challenges that still lie ahead in our path with this recession, well along into the future."

Suffolk Bancorp is a one-bank holding company engaged in the commercial banking business through Suffolk County National Bank, a full service commercial bank headquartered in Riverhead, New York. Organized in 1890, Suffolk County National Bank has 29 offices in Suffolk County, New York.

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

This press release may include statements which look to the future. These can include remarks about Suffolk Bancorp, the banking industry, and the economy in general. These remarks are based on current plans and expectations. They are subject, however, to a variety of uncertainties that could cause future results to vary materially from Suffolk's historical performance, or from current expectations. Factors affecting Suffolk Bancorp include particularly, but are not limited to: changes in interest rates; increases or decreases in retail and commercial economic activity in Suffolk's market area; variations in the ability and propensity of consumers and businesses to borrow, repay, or deposit money, or to use other banking and financial services; and changes in government regulations.

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                                                      3rd Qtr 2009      3rd Qtr 2008      Change         9 Mos. 2009       9 Mos.