SB One Bancorp (SBBX) 8-K Sussex Bancorp Announces Third Quarter 2006 Earnings

EXHIBIT 99.1

Sussex Bancorp

200 Munsonhurst Road, Rt. 517

Franklin, NJ 07416

973-827-2914

FOR IMMEDIATE RELEASE

SUSSEX BANCORP ANNOUNCES THIRD QUARTER 2006 EARNINGS

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DECLARES $0.07 CASH DIVIDEND

FRANKLIN, NEW JERSEY - October 19, 2006- Sussex Bancorp (NASDAQ: “SBBX”) today announced its financial results for the third quarter and nine months ending September 30, 2006.

For the quarter ended September 30, 2006, the Company earned net income of $578,000 compared to net income of $752,000 reported for the third quarter of 2005. For the nine months ended September 30, 2006, the Company earned net income of $1,826,000 compared to net income of $1,938,000 reported for the same period last year. Basic earnings per share for the three and nine months ended September 30, 2006 were $0.18 and $0.58 respectively, compared to $0.24 and $0.61 for the respective comparable periods of 2005. Diluted earnings per share were $0.18 and $0.57 respectively for the three and nine months ended September 30, 2006, compared to $0.23 and $0.61 for the respective comparable periods of 2005. While the Company’s net interest income increased for the nine month period ended September 30, 2006 compared to the prior year, the Company incurred expenses related to its acquisition of a new office in Port Jervis, New York on March 24 and additional consulting fees and other expenses associated with preparing for compliance with Sarbannes-Oxley Section 404. For the quarter ended September 30, 2006, the Company not only incurred the additional expense associated with Sarbanes-Oxley compliance and the Port Jervis office, but also experienced a decline in net interest income, as the Company’s interest expense increased significantly due to the offering of time deposits at higher interest rates to provide additional liquidity.

The Company’s net interest income decreased to $2,852,000 for the quarter ended September 30, 2006 from $2,885,000 for the third quarter of 2005. The Company’s interest income increased to $5,123,000 for the quarter ended September 30, 2006 from $4,023,000 for the third quarter of 2005. The Company’s interest expense increased to $2,271,000 for the three months ended September 30, 2006 from $1,338,000 for the third quarter of 2005. During 2006 the bank offered competitive time deposits as part of management’s overall strategy to fund new loan originations from deposits rather than borrowed funds. For the nine months ended September 30, 2006, the Company’s net interest income increased to $8,818,000 from the $8,263,000 earned for the same period last year. For the nine months ended September 30, 2006, the Company’s interest income increased to $14,580,000 from $11,130,000 for the period ended September 30, 2005. The Company’s total deposits increased to $291.6 million at September 30, 2006 from $245.1 million at September 30, 2005. At September 30, 2006 the Company had total assets of $346.5 million, compared to total assets of $304.0 million at September 30, 2005. The decrease in borrowed funds of $4.7 million at September 30, 2006 compared to the period ended September 30, 2005 is due to maturing FHLB advances, and the Company’s decision to fund new loan originations the through deposits rather than borrowed funds, as rates on FHLB advances increased.

The loan loss provision for the third quarter was $117,000 compared to $206,000 for the same period last year, as loan growth has slowed in the third quarter of 2006 from the same period in 2005. For the nine month period, the provision increased by $15,000, to $562,000. The Company’s total loans increased $50.6 million to $254.2 million at September 30, 2006 from $203.7 million at September 30, 2005.

The Company experienced increases in non-interest income in both the current quarter and year to date periods compared to 2005. The Company reported non-interest income of $1,299,000 and $3,959,000 for the current three and nine month periods, respectively, compared to non-interest income of $1,267,000 and $3,692,000 for the three and nine month periods ending September 30, 2005.

The Company’s other expenses increased in the three and nine month periods of 2006 compared to the prior year periods. For the three month period ending September 30, 2006 other expenses increased by $334,000, or 11.7%, while other expense increased by $867,000, or 10.0%, for the nine months ended September 30, 2006 compared to the prior year periods. On March 24^th the bank purchased a branch of NBT bank in Port Jervis, New York. The increases in other expenses related to increases in salaries and employee benefits, occupancy expenses, furniture and equipment expense and professional fees increased due to compliance costs attributable to Sarbannes-Oxley section 404.

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Donald L. Kovach, Chairman and Chief Executive Officer of the Company, stated, “third quarter results illustrate our continued efforts to grow the balance sheet while continuing expansion into contiguous markets.”

Sussex Bancorp also announced that its Board of Director’s declared a cash dividend of $0.07 per share, payable November 24, 2006 to shareholders of record as of November 3, 2006.

Effective October 4, 2006, the Company began trading on the NASDAQ Global Market under the symbol SBBX. The Company’s common stock had previously traded on the American Stock Exchange.

Sussex Bancorp is the holding company for Sussex Bank, which operates through its eight New Jersey offices and one Orange County office and for the Tri-State Insurance Agency, Inc., a full service insurance agency located in Sussex County, New Jersey. Also pending is the opening of a branch office in Warwick, New York during the fourth quarter of this year.

SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
ASSETS	September 30, 2006		September 30, 2005		December 31, 2005
	(unaudited)		(unaudited)
Cash and due from banks	$	12,958	$	9,800	$	11,395
Federal funds sold		3,110		8,900		13,385
Cash and cash equivalents		16,068		18,700		24,780
Interest bearing time deposits with other banks		100		500		500
Securities available for sale		59,632		66,203		61,180
Federal Home Loan Bank Stock, at cost		964		900		1,025
Loans receivable, net of unearned income		254,211		203,653		211,335
Less: allowance for loan losses		3,166		2,394		2,615
Net loans receivable		251,045		201,259		208,720
Premises and equipment, net		7,484		5,806		6,619
Accrued interest receivable		1,638		1,523		1,778
Other assets		9,580		9,062		8,580
Total Assets	$	346,511	$	303,953	$	313,182
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	31,931	$	37,355	$	39,148
Interest bearing		259,624		207,767		217,699
Total Deposits		291,555		245,122		256,847
Borrowings		13,264		18,000		16,300
Accrued interest payable and other liabilities		2,422		2,652		1,956
Junior subordinated debentures		5,155		5,155		5,155
Total Liabilities		312,396		270,929		280,258
Total Stockholders' Equity		34,115		33,024		32,924
Total Liabilities and Stockholders' Equity	$	346,511	$	303,953	$	313,182

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SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2006		2005		2006		2005
INTEREST INCOME
Loans receivable, including fees	$	4,374	$	3,259	$	12,404	$	8,748
Securities:
Taxable		365		400		1,067		1,280
Tax-exempt		263		285		783		877
Federal funds sold		120		65		315		184
Interest bearing deposits		1		14		11		41
Total Interest Income		5,123		4,023		14,580		11,130
INTEREST EXPENSE
Deposits		1,987		877		4,907		2,150
Borrowings		167		169		526		461
Junior subordinated debentures		117		92		329		256
Total Interest Expense		2,271		1,138		5,762		2,867
Net Interest Income		2,852		2,885		8,818		8,263
PROVISION FOR LOAN LOSSES		117		206		562		547
Net Interest Income after Provision for Loan Losses		2,735		2,679		8,256		7,716
OTHER INCOME
Service fees on deposit accounts		349		334		1,017		885
ATM and debit card fees		97		90		276		259
Insurance commissions and fees		600		536		2,021		1,753
Investment brokerage fees		74		104		214		234
Net gain on sale of securities, available for sale		-		42		-		42
Other		179		161		431		519
Total Other Income		1,299		1,267		3,959		3,692
OTHER EXPENSES
Salaries and employee benefits		1,759		1,610		5,154		4,813
Occupancy, net		280		246		810		734
Furniture, equipment and data processing		300		267		875		789
Stationary and supplies		47		43		143		131
Professional fees		153		136		498		385
Advertising and promotion		110		108		440		374
Insurance		47		33		151		121
Postage and freight		52		41		164		131
Amortization of intangible assets		40		61		113		188
Other		402		311		1,200		1,015
Total Other Expenses		3,190		2,856		9,548		8,681
Income before Income Taxes		844		1,090		2,667		2,727
PROVISION FOR INCOME TAXES		266		338		841		789
Net Income	$	578	$	752	$	1,826	$	1,938
EARNINGS PER SHARE
Basic	$	0.18	$	0.24	$	0.58	$	0.61
Diluted	$	0.18	$	0.23	$	0.57	$	0.61

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SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
	Nine Months Ended September 30,
(dollars in thousands)	2006								2005
	Average					Average			Average					Average
Earning Assets:	Balance			Interest (1)		Rate (2)			Balance			Interest (1)		Rate (2)
Securities:
Tax exempt (3)	$	24,258		$	1,056		5.82	%	$	27,326		$	1,245		6.09	%
Taxable		35,647			1,067		4.00	%		46,527			1,280		3.68	%
Total securities		59,905			2,123		4.74	%		73,853			2,525		4.57	%
Total loans receivable (4)		234,212			12,404		7.08	%		177,891			8,748		6.57	%
Other interest-earning assets		9,118			326		4.78	%		10,427			225		2.89	%
Total earning assets		303,235		$	14,853		6.55	%		262,171		$	11,498		5.86	%
Non-interest earning assets		25,713								23,982
Allowance for loan losses		(2,910	)							(2,118	)
Total Assets	$	326,038							$	284,035
Sources of Funds:
Interest bearing deposits:
NOW	$	55,333		$	885		2.14	%	$	43,028		$	200		0.62	%
Money market		29,122			845		3.88	%		20,746			326		2.10	%
Savings		47,571			307		0.86	%		64,110			345		0.72	%
Time		95,957			2,870		4.00	%		66,419			1,279		2.57	%
Total interest bearing deposits		227,983			4,907		2.88	%		194,303			2,150		1.48	%
Borrowed funds		14,274			526		4.86	%		13,189			461		4.61	%
Junior subordinated debentures		5,155			329		8.42	%		5,155			256		6.55	%
Total interest bearing liabilities		247,412		$	5,762		3.11	%		212,647		$	2,867		1.80	%
Non-interest bearing liabilities:
Demand deposits		43,242								37,545
Other liabilities		1,902								1,682
Total non-interest bearing liabilities		45,144								39,227
Stockholders' equity		33,482								32,161
Total Liabilities and Stockholders' Equity	$	326,038							$	284,035
Net Interest Income and Margin (5)				$	9,091		4.01	%				$	8,631		4.40	%
(1) Includes loan fee income
(2) Average rates on securities are calculated on amortized costs
(3) Full taxable equivalent basis, using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance
(4) Loans outstanding include non-accrual loans
(5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets

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