Nasdaq threatens to boot Suffolk County National Bank

11/16/2011 9:45 AM |

BARBARAELLEN KOCH PHOTO | Suffolk County National Bank headquarters on Second Street in Riverhead.

To prevent its stock from being taken off a public exchange, Riverhead-based Suffolk County National Bank filed an appeal Tuesday with Nasdaq, thereby gaining more than two more weeks to file required documents and avoid the delisting process.

Because the 30-branch bank has not yet officially filed first- or second-quarter results for this year, documenting its profits and losses, it received notice from Nasdaq last week about an impending delisting action, a process that removes the institution’s stock from the public market, according to a press release. But, according to Suffolk spokesperson Doug Shaw, the bank filed an appeal Tuesday, asking NASDAQ to hold off at least until a hearing on the matter is held.

As soon as the appeal was filed, the delisting was delayed until Nov. 30, Mr. Shaw said, adding that SCNB may be able to file its first- and second-quarter results before that date arrives. If they do file all the required documentation by Nov. 30 the threat of delisting.

Better?: The bank delayed filing quarterly results for the first half of 2011 while it combed through loan files to determine whether its reserves are adequate. That review has taken longer than anticipated, forcing the bank to work on re-casting quarterly income statements dating as far back as Sept. 30, 2010, according to the release.

A panel of Wall Street executives and securities industry personnel will consider SCNB’s appeal, said Art Loomis, an Albany-based bank analyst and consultant who works with a number of East End and Long Island banks. He said the delisting threat is Nasdaq’s way of saying it has given the bank long enough to sort through its problems.

“They’re saying, ‘You told us you’re working on it, but we can’t hold the door open forever,’ ” Mr. Loomis explained.

Although SCNB has come under Nasdaq scrutiny — and was told a year ago by another regulator to shore up credit management — the effect of the loan review process and the potential delisting will have a negligible effect on local personal and business account holders, Mr. Shaw said.

“People’s experience at the bank, their safety and security, and any services they’re used to getting will be unchanged,” Mr. Shaw said. “Other than changes in the market price of the stock, we can’t control that.”

But the story is different for the bank’s investors.

SCNB’s stock price has fallen by about 64 percent since the beginning of the year, from almost $26 in January to Tuesday’s close at $9.15, according to Yahoo Finance, which tracks public markets. The price hit a low Tuesday of $8.69, according to Yahoo Finance.

Mr. Loomis said the stock price rallied Tuesday , a sign that the institution may have gotten to the bottom of its troubles.

Suffolk has not yet disclosed its methodology for allocating loan loss reserves, which are tapped when currently extended loans go bad, or how it has changed the practice, Mr. Shaw said. About $433 million in commercial real estate mortgages make up the bulk of the bank’s $1 billion loan portfolio, according to preliminary unaudited third-quarter results. Its commercial, financial and agricultural loans, made primarily to small Long Island-based businesses, totaled $214 million as of Sept. 30 and made up 22 percent of the portfolio.

Although some businesses delist from public exchanges because they’re bankrupt or have failed, Mr. Loomis said delisting from Nasdaq is not catastrophic for SCNB. The current action is a sign of a different problem at the institution, he said.

Of 200 banks headquartered in New York State, only 30 are listed on a public exchange, Mr. Loomis said. The rest are traded privately over-the-counter or on pink sheets, he said.
“The actual act of delisting, even if they went to it at that point in time, would be a blemish, not fatal,” Mr. Loomis said.