Suffolk Bancorp (SUBK) is looking to growth after raising capital and purging a large block of troubled loans.

The Riverhead, N.Y., company said Thursday morning that it had completed a $25 million private placement with unnamed institutional investors. It also announced that it had sold a portfolio of nonperforming and classified assets at a $12 million loss.

The moves should allow Suffolk to further distance itself from a turbulent 2011, when it took big hits on real estate loans and had to delay reporting some of its financial results. The company ended up revising or restating three quarters of results dating back to 2010. Suffolk hired Howard Bluver to become its chief executive in January, charging him with righting the ship.

"We no longer have to look backward," Bluver said in an interview. "You will now see a growth and diversification story. It will take a little bit of time because we want to do it very carefully."

Suffolk has largely focused its lending efforts on the east side of Suffolk County in New York with a historical focus on real estate lending. Bluver said the company will expand across the county and into Nassau County and will place a greater emphasis on commercial lending, particularly small business and middle-market loans. Multifamily lending and mortgages will also play a role in the company's growth story.

Acquisitions are not a priority for the $1.6 billion-asset company as it rebuilds, said Bluver, a former deputy chief counsel for the Office of Thrift Supervision who served as an outside consultant to Suffolk before succeeding J. Gordon Huszagh as CEO.

Bluver would not disclose the names of any institution investors, though he is among the company insiders who participated in the capital raise. Outside investors were able to buy stock at $13.50 a share, or a 16% discount from the company's closing price on Wednesday; insiders did not get the same discount.

"Capital is no longer a concern for this bank," Bluver said. "We think we have more than adequate capital to grow the bank and cover any future rules that may come into place, like Basel III."

Suffolk said in a press release that it received $31 million in proceeds for the troubled loans, which had a book value of $51 million. Bluver would not comment on expected third-quarter results, though the $12 million loss from the portfolio sale compares to $5.2 million in earnings for the first half of this year.

Rather, the company pointed to improvements in nonperforming asset and capital ratios. Nonperforming loans now make up 1.8% of total loans, compared to 8.3% at the end of last year. The moves, had they taken place in the second quarter, would have raised Suffolk's tangible common equity to 9.46%, compared to an actual ratio of 8.78% at June 30.

"During the second quarter, we made progress" on credit quality, Bluver said. "This sale cleans up the rest, so that all the problems from the recession are behind us."

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