Safe Harbor Statement Pursuant to the Private Securities Litigation Reform Act of 1995
Certain statements contained in this discussion are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.These can include remarks about the Company, 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 and are beyond the Company's control and are subject to a variety of uncertainties 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: a failure by the Company to meet the deadlines under SEC rules for filing its periodic reports (or any permitted extension thereof); 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; results of regulatory examinations; any failure by the Company to comply with our written agreement with the OCC (the "Agreement") or the individual minimum capital ratios for the Bank established by the OCC; the cost of compliance with the Agreement; any failure by the Company to maintain effective internal controls over financial reporting; larger-than-expected losses from the sale of assets; potential litigation or regulatory action relating to the matters resulting in the Company's failure to file on time its Quarterly Report on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011 or resulting from the revisions to earnings previously announced on April 12, 2011 or the restatement of its financial statements for the quarterly period ended September 30, 2010 and year ended December 31, 2010; and the potential that net charge-offs are higher than expected or for further 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.

Non-GAAP Disclosure
This discussion includes a non-GAAP financial measure of the Company's tangible common equity 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 by generally accepted accounting principles in the United States (GAAP). The Company believes that this non-GAAP financial measure provides 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 GAAP.

Executive Summary
Suffolk Bancorp (the "Company") is a one-bank holding company engaged in the commercial banking business through the Suffolk County National Bank (the "Bank"), a full service commercial bank headquartered in Riverhead, New York and the Company's wholly owned subsidiary. Organized in 1890, the Bank has 30 offices in Suffolk County, New York.

As of June 30, 2012, the Company, on a consolidated basis, had total assets of $1.6 billion, total deposits of $1.4 billion and stockholders' equity of $139 million. The Company recorded net income of $4.2 million, or $0.43 per diluted common share, for the second quarter of 2012, compared to net income of $3.3 million, or $0.34 per diluted common share, for the second quarter of 2011. The improvement in second quarter earnings in 2012 was primarily the result of a $5.6 million reduction in the provision for loan losses, which includes a $2.4 million credit to the provision in 2012, and an $891 thousand (5.9%) decrease in total operating expenses. The decrease in the provision for loan losses resulted from a significant reduction in the level of criticized and classified assets in 2012 coupled with continued positive results from ongoing workout and non-performing asset disposition activities. Partially offsetting the foregoing improvements was a $3.0 million (16.8%) contraction in net interest income and a $1.7 million (41.5%) decrease in total non-interest income in 2012 versus 2011.

The Company's return on average assets at 1.10% for the second quarter of 2012 compares favorably to 0.80% for the second quarter of 2011, while return on average common stockholders' equity increased to 12.39% for the second quarter of 2012 from 9.92% for the second quarter of 2011. The Company's net interest margin decreased by 48 basis points to 4.39% for the second quarter of 2012 from 4.87% for the second quarter of 2011. The decrease in the net interest margin was due to the continued low level of interest rates, a shift in the Company's balance sheet mix from loans into lower-yielding overnight interest-bearing deposits, due principally to ongoing loan workout activity, and the level of non-accrual loans still present in

2012. Generally, the Company's net interest margin is impacted not only by the average balance and mix of the Company's interest-earning assets and interest-bearing liabilities, but also by the level of market interest rates. These rates are significantly influenced by the actions of the Federal Open Market Committee of the Board of Governors of the Federal Reserve System (the "FOMC") policy makers.

                                Financial Performance of Suffolk Bancorp
                              (dollars in thousands, except per share data)
                  As of or for the quarters and six months ended June 30, 2012 and 2011

                        Quarters ended June 30,                       Six Months ended June 30,
                                                Over/                                          Over/
                                              (under)                                        (under)
                       2012         2011         2011                2012         2011          2011
Revenue (1)        $ 17,279     $ 21,991        (21.4 %)         $ 33,742     $ 42,619         (20.8 %)
Operating
expenses           $ 14,139     $ 15,030         (5.9 %)         $ 28,744     $ 28,803          (0.2 %)
(Credit)
provision for
loan losses        $ (2,400 )   $  3,217          N/M  (2)       $ (2,400 )   $ 23,188           N/M  (2)
Net income
(loss)             $  4,200     $  3,270         28.4 %          $  5,368     $ (4,304 )      (224.7 %)
Net income
(loss) per
common share -
diluted            $   0.43     $   0.34         26.5 %          $   0.55     $  (0.44 )         N/M  (2)
Return on
average assets         1.10 %       0.80 %         30  bp            0.71 %      (0.53 %)        124  bp
Return on
average
stockholders'
equity                12.39 %       9.92 %        247  bp            7.91 %      (6.46 %)      1,437  bp
Tier 1 leverage
ratio                  8.89 %       8.03 %         86  bp            8.89 %       8.03 %          86  bp
Tier 1
risk-based
capital ratio         14.32 %      11.66 %        266  bp           14.32 %      11.66 %         266  bp
Total risk-based
capital ratio         15.59 %      12.95 %        264  bp           15.59 %      12.95 %         264  bp
Tangible common
equity ratio
(non-GAAP)             8.78 %       8.43 %         35  bp            8.78 %       8.43 %          35  bp

bp - denotes basis points;
100 bp equals 1%.

(1) Represents net interest income plus total non-interest income.
(2) N/M - denotes % variance not meaningful for statistical purposes.

The Company's Tier 1 leverage ratio was 8.89% at June 30, 2012 versus 8.85% at December 31, 2011 and 8.03% at June 30, 2011. The Company's total risk-based capital ratio was 15.59% at June 30, 2012 versus 14.26% at December 31, 2011 and 12.95% at June 30, 2011. The Company's tangible common equity ratio (non-GAAP financial measure) was 8.78% at June 30, 2012 versus 9.05% at December 31, 2011 and 8.43% at June 30, 2011.

Total non-accrual loans, excluding loans categorized as held-for-sale, decreased to $54 million or 6.38% of loans outstanding at June 30, 2012 versus $81 million or 8.33% of loans outstanding at December 31, 2011 and $59 million or 5.53% of loans outstanding at June 30, 2011. Total accruing loans delinquent 30 days or more amounted to 1.62% of loans outstanding at June 30, 2012 versus 3.56% of loans outstanding at December 31, 2011 and 3.85% of loans outstanding at June 30, 2011. Net loan charge-offs of $8.4 million, including $7.0 million related to loans sold and transferred to held-for-sale during the quarter, were recorded in the second quarter of 2012 versus net recoveries of $50 thousand in the first quarter of 2012 and net charge-offs of $845 thousand in the second quarter of 2011. The allowance for loan losses totaled $29.2 million at June 30, 2012, $40.0 million at December 31, 2011 and $49.9 million at June 30, 2011, representing 3.45%, 4.12% and 4.71% of total loans, respectively, at such dates. The allowance for loan losses as a percentage of non-accrual loans, excluding non-accrual loans categorized as held-for-sale, was 54%, 49% and 85% at June 30, 2012, December 31, 2011 and June 30, 2011, respectively. The Company held other real estate owned of $2 million at June 30, 2012, December 31, 2011 and June 30, 2011.

The Company was able to make significant progress this quarter in reducing levels of both non-performing loans and criticized and classified loans. This reduction resulted from loans that were sold in the quarter, and still includes $7.5 million in non-performing loans that were reclassified as held-for-sale that are subject to a definitive sales agreement with an anticipated August 2012 closing. These positive results were achieved via very focused and aggressive workout activities, including working with existing borrowers where warranted, and selling or contracting to sell loans either individually or in bulk on attractive terms. During the quarter, the Company sold or transferred loans to held-for-sale at an aggregate price of 77% of book value, resulting in a $7.0 million charge to the allowance for loan losses. Similarly, the Company was able to achieve accelerated improvement in total criticized and classified loan levels during the quarter, from $247 million at the end of the first quarter 2012 to $175 million at June 30, 2012. Improvements in these key credit metrics were achieved while maintaining both strong capital ratios and a healthy allowance for loan losses. With critical staff complete and in place, the Company will continue to implement aggressive credit remediation strategies throughout 2012, and expect to see additional improvements in key credit metrics as the year moves on.

The Company's core deposit franchise continues to be among the best in the region and performed very well in the second quarter of 2012. Core deposits, consisting of demand, N.O.W., savings and money market accounts, totaled $1.1 billion at June 30, 2012, December 31, 2011 and June 30, 2011. Core deposits represented 81% of total deposits at June 30, 2012 and December 31, 2011 and 79% of total deposits at June 30, 2011. Demand deposits increased by 8.4% to $570 million at June 30, 2012 versus $525 million at December 31, 2011 and by 8.7% from $524 million at June 30, 2011. Demand deposits represented 41% of total deposits at June 30, 2012, 40% at December 31, 2011 and 37% at June 30, 2011. The deposit product mix continues to be a primary strength of the Company, and resulted in a total cost of funds of approximately 29 basis points during the second quarter of 2012.

Critical Accounting Policies, Judgments and Estimates The Company's accounting and reporting policies conform to U.S. GAAP and general practices within the financial services industry. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

Allowance for Loan Losses - In management's opinion, one of the most critical accounting policies impacting the Company's financial statements is the evaluation of the allowance for loan losses ("ALLL"). The Company considers the determination of the ALLL to involve a higher degree of judgment and complexity than its other significant accounting policies. The ALLL is determined by continuous analysis of the loan portfolio. That analysis includes changes in the size and composition of the portfolio, historical loan losses, industry-wide losses, current and anticipated economic trends, and details about individual loans. It also includes estimates of the actual value of collateral, other possible sources of repayment and estimates that are susceptible to significant changes due to changes in appraisal values of collateral, national and regional economic conditions and other factors. The Company maintains an ALLL at a level management believes will be adequate to absorb probable losses on existing loans that may become uncollectible, based on an evaluation of their collectibility. However, the determination of the ALLL is inherently subjective, as it requires estimates, all of which may be subject to significant change. When a loan, in full or in part, is deemed uncollectible, it is charged against the ALLL. This happens when it is past due and the borrower has not shown the ability or intent to make the loan current, or the borrower does not have enough assets to pay the debt, or the value of the collateral is less than the balance of the loan and not likely to improve soon. To the extent actual performance differs from management's estimates, additional provisions for loan losses may be required that would reduce or may substantially reduce earnings in future periods, and no assurances can be given that the Company will not sustain loan losses, in any particular period, that are sizable in relation to the ALLL. Residential real estate and consumer loans are analyzed as a group and not individually because of the large number of loans, small balances, and historically low losses. In the future, the provision for loan losses may change as a percentage of total loans.

The Company's underwriting standards generally require a loan-to-value ratio of 75 percent or less, and when applicable, a debt coverage ratio of at least 120 percent, at the time a loan is originated. The Company has not been directly affected by the increase in defaults of sub-prime mortgages as the Company does not originate, or hold in portfolio, sub-prime mortgages. The ALLL analysis also considers the loan loss history of the Company's peers with similar characteristics. In assessing the adequacy of the ALLL, the Company reviews its loan portfolio by separate classes which have similar risk and collateral characteristics; e.g. commercial loans, commercial real estate, construction loans, residential mortgages, home equity loans, and consumer loans. Management conducts a monthly analysis of the loan portfolio which evaluates any loan designated as having a high risk profile including but not limited to, loans classified as "Substandard" or "Doubtful" as defined by regulation, loans criticized internally or designated as "Special Mention," delinquencies, expirations, overdrafts, loans to customers having experienced recent operating losses and loans identified by management as impaired. The analysis is performed to determine the amount of the ALLL which would be adequate to absorb probable losses contained in the loan

portfolio. The analytical process is regularly reviewed and adjustments may be made based on the assessments of internal and external influences on credit quality.

Deferred Tax Assets and Liabilities - The Company recognizes deferred tax assets and liabilities. Deferred income taxes occur when income taxes are allocated over time and result from differences in the timing of a transaction under generally accepted accounting principles, and the computation for income tax return purposes. Examples include the future tax effects of temporary differences for such items as deferred compensation and the provision for loan losses. Estimates of net deferred tax assets are based upon evidence available to management that future realization is more likely than not. If management determines that the Company may be unable to realize all or part of its net deferred tax assets in the future, a direct charge to income tax expense may be required to reduce the recorded value of the net deferred tax asset to the amount that management expects to realize. At June 30, 2012, the Company believes the net deferred tax asset is fully realizable.

Other-Than-Temporary Impairment ("OTTI") of Investment Securities - Current guidance requires an entity to assess whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to other factors, which is recognized in other comprehensive income and 2) OTTI related to credit loss, which must be recognized in the statement of income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

Material Changes in Financial Condition
Total assets of the Company were $1.6 billion at June 30, 2012. When compared to December 31, 2011, total assets increased by $74 million. This change primarily reflects an increase in cash and cash equivalents of $173 million, partially offset by a decrease in loans, net of unearned discount, of $122 million, largely representing a shift in the Company's balance sheet mix from loans into lower-yielding overnight interest-bearing deposits. Loans, net of unearned discount, were $848 million at June 30, 2012 as compared to $970 million at December 31, 2011. Total investment securities were $316 million at June 30, 2012, an increase of $7 million from $309 million at December 31, 2011.

At June 30, 2012, total deposits were $1.4 billion, an increase of $70 million when compared to December 31, 2011, primarily due to growth in core deposit balances which consist of demand, N.O.W., savings and money market accounts. Core deposit balances increased by $65 million including an increase of $44 million in demand deposits. Core deposit balances represented approximately 81% of total deposits at both June 30, 2012 and year end 2011. The Company had no short-term borrowed funds outstanding at either June 30, 2012 or at year end 2011.

Liquidity and Capital Resources
Liquidity is measured by the ability to raise funds through deposits, borrowed funds, capital or cash flow from the repayment of loans and securities. These funds are used to fund loans, meet deposit withdrawals, maintain reserve requirements and operate the Company. Liquidity is primarily achieved through deposits and liquid assets such as securities available for sale, matured and called securities, federal funds sold and interest-bearing balances.

Liquidity is continuously monitored, thereby allowing management to better understand and react to emerging balance sheet trends, including temporary mismatches with regard to sources and uses of funds. After assessing actual and projected cash flow needs, management seeks to obtain funding at the most economical cost. These funds can be obtained by converting liquid assets to cash or by attracting new deposits or other sources of funding. Many factors affect the Company's ability to meet liquidity needs, including variations in the markets served, loan demand, its asset/liability mix, its reputation and credit standing in its markets and general economic conditions. Borrowings and the scheduled amortization of investment securities and loans are more predictable funding sources. Deposit flows and securities prepayments are somewhat less predictable as they are often subject to external factors. Among these are changes in the local and national economies, competition from other financial institutions and changes in market interest rates.

Stockholders' equity is a noninterest-bearing source of funds that can provide support for asset growth. Stockholders' equity was $139 million at June 30, 2012, compared to $137 million at December 31, 2011. The $2 million increase for the first six months of 2012 is primarily due to net income of $5.4 million, partially offset by a $3 million decline in the unrealized gain of the Company's available for sale securities portfolio.

The Company's tangible common equity to tangible assets ratio was 8.78% at June 30, 2012 compared to 9.05% at December 31, 2011 and 8.43% at June 30, 2011. 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 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 GAAP or as required by bank regulatory agencies. Set forth below are the reconciliations of tangible common equity to GAAP total common stockholders' equity and tangible assets to GAAP total assets at June 30, 2012 (in thousands):

Total stockholders' equity   $ 139,104   Total assets              $ 1,558,402
Less: intangible assets          2,438   Less: intangible assets         2,438
Tangible common equity       $ 136,666   Tangible assets           $ 1,555,964

The following table details the Bank's regulatory capital amounts and ratios (dollars in thousands):

                                                                 Minimum                 Minimum to be "Well
                                                               for capital            Capitalized" under prompt
                           Actual capital ratios                adequacy             corrective action provisions
                           Amount            Ratio        Amount         Ratio          Amount            Ratio
As of June 30, 2012
Total Capital (to
risk-weighted assets)   $     145,547          15.57 %   $  74,800          8.00 %   $     93,500           10.00 %
Tier 1 Capital (to
risk-weighted assets)         133,638          14.29 %      37,400          4.00 %         56,100            6.00 %
Tier 1 Capital (to
average assets)               133,638           8.88 %      60,218          4.00 %         75,272            5.00 %
As of December 31,
2011
Total Capital (to
risk-weighted assets)   $     146,990          14.21 %   $  82,756          8.00 %   $    103,445           10.00 %
Tier 1 Capital (to
risk-weighted assets)         133,716          12.93 %      41,378          4.00 %         62,067            6.00 %
Tier 1 Capital (to
average assets)               133,716           8.81 %      60,726          4.00 %         75,907            5.00 %

The Bank is subject to individual minimum capital ratios ("IMCR's") established by the OCC requiring Tier 1 leverage capital equal to at least 8.00% of adjusted total assets; Tier 1 risk-based capital equal to at least 10.50% of risk-weighted assets; and total risk-based capital equal to at least 12.00% of risk-weighted assets. At June 30, 2012, management believes the Bank met all of the IMCR's.

At June 30, 2012 the Company's Tier 1 leverage ratio was 8.89%. The Company's Tier 1 risk-based capital and total risk-based capital ratios were 14.32% and 15.59%, respectively, at the same reported period. At June 30, 2012, management believes the Company's capital ratios exceed current regulatory minimum guidelines.

Off-Balance Sheet Arrangements
The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and documentary letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated financial statements. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the customer. Collateral required varies, but may include accounts receivable, inventory, equipment, real estate and income-producing commercial properties. At June 30, 2012 and December 31, 2011, commitments to originate loans and commitments under unused lines of credit for which the Bank is obligated amounted to approximately $104 million and $118 million, respectively.

Letters of credit are conditional commitments guaranteeing payments of drafts in accordance with the terms of the letter of credit agreements. Commercial letters of credit are used primarily to facilitate trade or commerce and are also issued to support public and private borrowing arrangements, bond financing and similar transactions. Collateral may be required to

support letters of credit based upon management's evaluation of the creditworthiness of each customer. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Most letters of credit expire within one year. At June 30, 2012 . . .