Things are looking up for Suffolk Bancorp. The Riverhead-based parent company of Suffolk County National Bank this week reported a 36.2 percent increase in second quarter net income compared to the second quarter of 2013, fueled by a $1.7 million in net interest income, increases in demand deposits and loans.
Suffolk Bancorp had net income of $3.8 million, or 32 cents per diluted common share, for the second quarter of 2014 compared to $2.8 million, or $0.24 per diluted common share, a year ago.
For the six months ended June 30, 2014, the Company recorded net income of $7.5 million, or $0.64 per diluted common share, versus $5.5 million, or $0.47 per diluted common share for the comparable 2013 June year-to-date period.
President and CEO Howard C. Bluver said the once-troubled financial institution is “accelerating momentum.”
Bluver was hired in 2012 to turn things around at Suffolk Bancorp, which in 2010 had been determined by federal regulators to be in “troubled condition” and in 2011 was threatened with delisting by NASDAQ for failing to meet SEC filing deadlines as it re-examined its financial records. Bluver’s hiring was part of a major shakeup at the bank’s upper management level. In 2011 and 2012 Suffolk Bancorp, in addition to replacing its president and chief executive officer, named a new chief lending officer, a new chief financial officer, a new chief information officer, and new heads of its loan administration and residential lending departments.
The bank had to issue restated results of operations for the third quarter of 2010 and for the year ending Dec. 31, 2010, for which it posted a net income of $6.26 million, down more than 72 percent compared to its net income for 2009. It posted a net loss of $7.57 million in the first quarter of 2011. Though it returned to profitability during subsequent quarters of 2011, it still posted a net loss of $76,000 for the year, down more than 100 percent compared to its restated results for 2010.
Suffolk Bancorp’s condition turned around in 2012 and in May 2013, the Office of the Comptroller of the Currency released the company from its formal written oversight agreement entered into on Oct. 25, 2010.
Announcing the release by OCC on June 3, 2013, Bluver said his two most important short-term priorities since taking the helm at Suffok Bancorp were to “build a premier senior management team” and “clean up” the company’s balance sheet.
“With both of those short-term goals accomplished,” Bluver said at the time, “we are now in a position to leverage our exceptional core deposit franchise and focus on future growth and financial performance.”
That’s exactly what the company has done, Bluver said this week.
“The expansion strategies we have consistently articulated for both our lending and deposit businesses are working as envisioned,” Bluver said.
“First, our lending businesses continued the strong performance that began in 2013. Quarter over quarter sequential growth in our total loan portfolio was approximately $66 million in the second quarter, from $1.13 billion on March 31, 2014 to $1.20 billion on June 30, 2014, a 5.8 percent increase. Total loans at the end of the second quarter represented a 33.5 percent increase from the comparable period in 2013,” Bluver said.
“It is also gratifying to report that our pipeline of potential new business is quite robust in both our traditional markets on the east end of Long Island, as well as in the Melville and Garden City loan production offices that we opened as the initial phase of our western expansion,” the CEO continued. “In addition, we see signs of economic strength and recovery in our core markets, which is encouraging for the future.”
The bank’s deposit businesses experienced a “particularly strong second quarter,” Bluver said. Total demand deposits at June 30, 2014 were $676 million, up 6.8 percent since the end of the first quarter and 13.2 percent year over year. The growth came from the bank’s traditional branch network on the East End, deposits from the bank’s new commercial loan customers and expansion into “attractive markets to the west,” Bluver said in the press release.
The CEO said the company continues to make progress on reducing its expenses as well.
“The many initiatives we have completed over the past two years to reduce expenses are bearing fruit and we are seeing improvement in operating efficiency notwithstanding the investments we have made in people, office space and technology upgrades to support our western expansion,” Bluver said. “Our management team is committed to continued expense reductions and improvement in our efficiency ratio, and we are confident in our ability to continue to deliver in these areas over time.”
The company’s stock, trading as high as near $40 per share before the 2008 economic collapse, fell to a low of $7.63 in October 2011. It closed yesterday at $21.21 per share.
Second Quarter 2014 Highlights
• Net income increases by 36.2 percent to $3.8 million versus second quarter 2013
• Total loans outstanding increase by 5.8 percent versus first quarter 2014 and 33.5 percent versus second quarter 2013
• Total demand deposits increase by 6.8 percent versus first quarter 2014 and 13.2 percent versus second quarter 2013
• Average cost of funds declines to 0.16 percent in second quarter 2014 from 0.17 percent in first quarter 2014 and 0.21 percent in second quarter 2013
• Tangible book value per share increases by 12.8percent to $15.22 at June 30, 2014 versus comparable 2013 date
Suffolk Bancorp Q2 2014 Earnings Release
