SB One Bancorp (SBBX) 8-K Sussex Bancorp Announces Third Quarter and Nine Months 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 AND NINE MONTHS EARNINGS

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DECLARES $0.07 CASH DIVIDEND

FRANKLIN, NEW JERSEY– October 18, 2007– Sussex Bancorp (NASDAQ: “SBBX”) today announced its financial results for the third quarter and nine months ending September 30, 2007.

For the quarter ended September 30, 2007, the Company earned net income of $533,000 compared to net income of $578,000 reported for the third quarter of 2006.  For the nine months ended September 30, 2007, the Company earned net income of $1,551,000 compared to net income of $1,826,000 reported for the same period last year.   Basic earnings per share for the three and nine months ended September 30, 2007 were $0.17 and $0.49 respectively, compared to $0.18 and $0.58 for the respective comparable periods of 2006.  Diluted earnings per share were $0.17 and $0.49 respectively for the three and nine months ended September 30, 2007, compared to $0.18 and $0.57 for the respective comparable periods of 2006.  The decline in net income and earnings per share reflects continued pressure on the Company’s net interest margin, as well as an increase in the Company’s provision for loan losses.

 The Company’s net interest income increased to $2,911,000 for the quarter ended September 30, 2007 from $2,852,000 for the third quarter of 2006.  The Company’s interest income increased to $5,926,000 for the quarter ended September 30, 2007 from $5,123,000 for the third quarter of 2006. The increase in interest income reflects an increase of $47.4 million in earning assets over the third quarter of 2006. The Company’s interest expense increased to $3,015,000 for the three months ended September 30, 2007 from $2,271,000 for the third quarter of 2006.  During 2007 the Company 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, 2007, the Company’s net interest income decreased to $8,654,000 from the $8,818,000 earned for the same period last year, as the Company’s interest expense increased more rapidly than its interest income.  For the nine months ended September 30, 2007, the Company’s interest income increased to $16,931,000 from $14,580,000 for the period ended September 30, 2006, as the Company’s average earning assets increased by $43.0 million and its yield on earning assets increased by 8 basis points.  The Company’s interest expense increased from $5,762,000 for the nine months ended September 30, 2006 to $8,277,000 for the current nine month period. The Company’s average deposits increased by $40.5 million in the first nine months of 2007 compared to the prior year, and the Company’s cost of interest bearing liabilities increased by 63 basis points.

The loan loss provision for the third quarter was $324,000 compared to $117,000 for the same period last year.  For the nine month period, the provision increased by $306,000, to $868,000. The increases in the provision in both the three and nine month periods reflect an increase in the Company’s non-performing assets and potential problem loans. At September 30, 2007, non-performing assets totaled $7,865,000 compared to $2,871,000 at September 30, 2006. In addition, at September 30, 2007, the Company had $3.4 million in loans that due to current market conditions caused management to have concerns regarding the borrowers’ continued ability to comply with their loan documents.

At September 30, 2007 the Company had total assets of $391.9 million, compared to total assets of $346.5 million at September 30, 2006.  The Company’s total loans increased $39.7 million to $293.9 million at September 30, 2007 from $254.2 million at September 30, 2006.

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The Company experienced increases in non-interest income in both the current quarter and year to date periods compared to 2006.  The Company reported non-interest income of $1,468,000 and $4,289,000 for the current three and nine month periods, respectively, compared to non-interest income of $1,299,000 and $3,959,000 for the three and nine month periods ending September 30, 2006. The increases reflect holding gains on trading securities of $194,000 and $192,000 in the three and nine month periods, respectively, due the adoption of FAS 159 on January 1, 2007.

The Company’s other expenses increased in the three and nine month periods of 2007 compared to the prior year periods.  For the three month period ending September 30, 2007 other expenses increased by $94,000, or 3.0%, while other expenses increased by $312,000, or 3.3%, for the nine months ended September 30, 2007 compared to the prior year periods.

Sussex Bancorp also announced that its Board of Director’s declared a cash dividend of $0.07 per share, payable November 26, 2007 to shareholders of record as of November 5, 2007.

Sussex Bancorp is the holding company for Sussex Bank, which operates through its eight New Jersey offices and two Orange County offices and for the Tri-State Insurance Agency, Inc., a full service insurance agency located in Sussex County, New Jersey.

SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
(Unaudited)
ASSETS	September 30, 2007		September 30, 2006		December 31, 2006
Cash and due from banks	$	10,056	$	12,958	$	10,170
Federal funds sold		11,255		3,110		11,995
Cash and cash equivalents		21,311		16,068		22,165
Interest bearing time deposits with other banks		100		100		100
Trading securities		11,865		-		-
Securities available for sale		46,248		59,632		54,635
Federal Home Loan Bank Stock, at cost		1,358		964		1,188
Loans receivable, net of unearned income		293,906		254,211		262,276
Less:  allowance for loan losses		4,098		3,166		3,340
Net loans receivable		289,808		251,045		258,936
Premises and equipment, net		8,897		7,484		7,794
Accrued interest receivable		2,046		1,638		1,910
Goodwill		2,820		2,820		2,820
Other assets		7,481		6,760		6,749
Total Assets	$	391,934	$	346,511	$	356,297
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	38,315	$	42,147	$	40,083
Interest bearing		282,116		249,408		255,687
Total Deposits		320,431		291,555		295,770
Borrowings		20,213		13,264		18,251
Accrued interest payable and other liabilities		3,158		2,422		2,529
Junior subordinated debentures		12,887		5,155		5,155
Total Liabilities		356,689		312,396		321,705
Total Stockholders' Equity		35,245		34,115		34,592
Total Liabilities and Stockholders' Equity	$	391,934	$	346,511	$	356,297

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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,
	2007			2006		2007			2006
INTEREST INCOME
Loans receivable, including fees	$	5,038		$	4,374	$	14,572		$	12,404
Securities:
Taxable		439			365		1,239			1,067
Tax-exempt		255			263		762			783
Federal funds sold		193			120		354			315
Interest bearing deposits		1			1		4			11
Total Interest Income		5,926			5,123		16,931			14,580
INTEREST EXPENSE
Deposits		2,548			1,987		7,111			4,907
Borrowings		241			167		706			526
Junior subordinated debentures		226			117		460			329
Total Interest Expense		3,015			2,271		8,277			5,762
Net Interest Income		2,911			2,852		8,654			8,818
PROVISION FOR LOAN LOSSES		324			117		868			562
Net Interest Income after Provision for Loan Losses		2,587			2,735		7,786			8,256
OTHER INCOME
Service fees on deposit accounts		362			349		1,016			1,017
ATM and debit card fees		109			97		300			276
Insurance commissions and fees		618			600		2,136			2,021
Investment brokerage fees		26			74		239			214
Holding gains on trading securities		194			-		192			-
Gain (loss) on sale of securities, available for sale		10			-		10			-
Gain (loss) on sale of fixed assets		(1	)		-		(1	)		-
Other		150			179		397			431
Total Other Income		1,468			1,299		4,289			3,959
OTHER EXPENSES
Salaries and employee benefits		1,792			1,759		5,403			5,154
Occupancy, net		319			280		932			810
Furniture, equipment and data processing		372			300		1,066			875
Stationary and supplies		46			47		138			143
Professional fees		120			153		424			498
Advertising and promotion		174			110		415			440
Insurance		41			47		135			151
Postage and freight		36			52		124			164
Amortization of intangible assets		15			40		78			113
Other		369			402		1,145			1,200
Total Other Expenses		3,284			3,190		9,860			9,548
Income before Income Taxes		771			844		2,215			2,667
PROVISION FOR INCOME TAXES		238			266		664			841
Net Income	$	533		$	578	$	1,551		$	1,826

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SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
	Nine Months Ended September 30,
	2007								2006
	Average					Average			Average					Average
Earning Assets:	Balance			Interest (1)		Rate (2)			Balance			Interest (1)		Rate (2)
Securities:
Tax exempt  (3)	$	24,083		$	992		5.51	%	$	24,258		$	1,056		5.82	%
Taxable		34,773			1,239		4.76	%		35,647			1,067		4.00	%
Total securities		58,856			2,231		5.07	%		59,905			2,123		4.74	%
Total loans receivable (4)		278,102			14,572		7.01	%		234,212			12,404		7.08	%
Other interest-earning assets		9,283			358		5.16	%		9,118			326		4.78	%
Total earning assets		346,241		$	17,161		6.63	%		303,235		$	14,853		6.55	%
Non-interest earning assets		28,420								25,713
Allowance for loan losses		(3,626	)							(2,910	)
Total Assets	$	371,035							$	326,038
Sources of Funds:
Interest bearing deposits:
NOW	$	59,130		$	971		2.20	%	$	55,333		$	885		2.14	%
Money market		38,379			1,097		3.82	%		29,122			845		3.88	%
Savings		38,860			264		0.91	%		47,571			307		0.86	%
Time		132,081			4,779		4.84	%		95,957			2,870		4.00	%
Total interest bearing deposits		268,450			7,111		3.54	%		227,983			4,907		2.88	%
Borrowed funds		19,785			706		4.70	%		14,274			526		4.86	%
Junior subordinated debentures		8,052			460		7.54	%		5,155			329		8.42	%
Total interest bearing liabilities		296,287		$	8,277		3.74	%		247,412		$	5,762		3.11	%
Non-interest bearing liabilities:
Demand deposits		37,454								43,242
Other liabilities		2,252								1,902
Total non-interest bearing liabilities		39,706								45,144
Stockholders' equity		35,042								33,482
Total Liabilities and Stockholders' Equity	$	371,035							$	326,038
Net Interest Income and Margin (5)				$	8,884		3.43	%				$	9,091		4.01	%

(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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