Suffolk Bancorp, the Riverhead company that owns Suffolk County National Bank, reported year-end earnings of $15 million, down 33.4 percent from the previous year.
Company officials attributed the decline to having to set aside more money to cover potential bad loans, which continue to rise. At the end of the year, the bank had $35.2 million in bad loans, up almost 20 percent from a year ago.
Setting aside more money to cover potential losses was one of the steps ordered by the federal Office of the Comptroller of the Currency, the bank's federal regulator. The bank reported that complying with the agency's order issued last year to improve its practices has cost about $500,000 so far.
Despite the costs of increasing bad loans and continued economic uncertainty in Suffolk County, company chief executive J. Gordon Huszagh said in a statement that the company has done well to remain profitable and still outperforms many banks of similar size.
"We believe that economic improvement on Main Street will be at a pace slower than we had all hoped for, and will require considerable financial discipline on the part of individuals and businesses until there is clear evidence of recovery," Huszagh said. "This has been a challenging year, not alone for those of us here at Suffolk Bancorp, but for our customers and the communities we serve."
The bank has assets of $1.6 billion and 30 branches in Suffolk County.