| Sussex Bancorp | Contact: Donald L. Kovach |
| 200 Munsonhurst Rd., | President/CEO |
| Franklin, NJ 07416 | (973) 827-2914 |
| SUSSEX BANCORP ANNOUNCES 2007 RESULTS OF OPERATIONS |
FRANKLIN, NEW JERSEY– February 6, 2008– Sussex Bancorp (NASDAQ “SBBX”) today announced its results of operations for the year ended December 31, 2007. For the year, the Company had net income of $1,509,000 compared to net income of $2,464,000 for the prior year, a decrease of 38.8%. Basic and diluted earnings per share for the year ended December 31, 2007 were $0.48 and $0.47 respectively, compared to $0.78 and $0.77 respectively, in the year ago period. The decline in net income reflects increased interest expense, non-interest expense and provision for loan losses exceeding increased interest and non-interest income.
The Company’s total interest income increased to $22.8 million for the year ended December 31, 2007 from $20.0 million for the same period last year. For the year ended December 31, 2007, the Company’s non-interest income increased by $372,000, or 7.1%, to $5.6 million from $5.2 million for the same period last year.
The Company’s interest expense increased to $11.4 million for the year ended December 31, 2007 from $8.2 million for the same period last year. The increase reflects both an increase in the average volume of interest bearing liabilities to $304.1 million for 2007 from $254.2 for 2006 and an increase in the cost of liabilities to 3.74% from 3.24% in 2006. The Company’s total non-interest expense increased by $500,000, or 4.0%, reflecting increases associated with the Company’s growth. At December 31, 2007 the Company had total loans of $300.6 million, compared to total loans of $262.3 million at December 31, 2006.
The Company’s loan loss provision for the year ended December 31, 2007 increased to $1.9 million from $733,000 last year. The increase in the provision largely reflects a $1.1 million reserve for one non-accrual loan. The loan is secured by real estate in the process of build out as a residential development. In the current market, the value of the collateral has declined, leading to the increased reserve. The increased provision also reflects the increase in the Company’s total loan portfolio and management’s view of the risk inherent in the portfolio during a slowing economy.
During 2007, the Company’s non-accrual loans increased to $12.3 million at December 31, 2007 from $6.8 million at September 30, 2007 and $1.4 million at year end 2006. The increase in non-accrual loans since third quarter 2007 primarily reflects the migration to non-accrual status of one loan with a principal balance of $3.3 million, which the Company had previously disclosed as performing but potentially troubled. The balance of the increase reflects a number of individual loans being placed on non-accrual status, all of which the Company believes are adequately secured.
At December 31, 2007 the Company had total assets of $393.5 million, compared to total assets of $356.3 million at December 31, 2006. In addition, the Company had total deposits of $308.5 million at December 31, 2007, compared to total deposits of $295.8 million at December 31, 2006.
Sussex Bancorp is the holding company for the Sussex Bank, which operates through ten branch offices, eight located in Sussex County, New Jersey and two in Orange County, New York and for Tri-State Insurance Agency, Inc, a full service insurance agency located in Sussex County, New Jersey.
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| SUSSEX BANCORP | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Dollars In Thousands) | ||||||||
| ASSETS | December 31, 2007 | December 31, 2006 | ||||||
| Cash and due from banks | $ | 7,985 | $ | 10,170 | ||||
| Federal funds sold | 3,790 | 11,995 | ||||||
| Cash and cash equivalents | 11,775 | 22,165 | ||||||
| Interest bearing time deposits with other banks | 100 | 100 | ||||||
| Trading securities | 14,259 | - | ||||||
| Securities available for sale | 48,397 | 54,635 | ||||||
| Federal Home Loan Bank Stock, at cost | 2,032 | 1,188 | ||||||
| Loans receivable, net of unearned income | 300,646 | 262,276 | ||||||
| Less: allowance for loan losses | 5,140 | 3,340 | ||||||
| Net loans receivable | 295,506 | 258,936 | ||||||
| Premises and equipment, net | 9,112 | 7,794 | ||||||
| Accrued interest receivable | 2,035 | 1,910 | ||||||
| Goodwill | 2,820 | 2,820 | ||||||
| Other assets | 7,496 | 6,749 | ||||||
| Total Assets | $ | 393,532 | $ | 356,297 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 36,625 | $ | 40,083 | ||||
| Interest bearing | 271,913 | 255,687 | ||||||
| Total Deposits | 308,538 | 295,770 | ||||||
| Borrowings | 35,200 | 18,251 | ||||||
| Accrued interest payable and other liabilities | 2, 467 | 2,529 | ||||||
| Junior subordinated debentures | 12,887 | 5,155 | ||||||
| Total Liabilities | 359,092 | 321,705 | ||||||
| Total Stockholders' Equity | 34,440 | 34,592 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 393, 532 | $ | 356,297 | ||||
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| SUSSEX BANCORP | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (Dollars In Thousands Except Per Share Data) | ||||||||
| Years Ended December 31, | ||||||||
| 2007 | 2006 | |||||||
| INTEREST INCOME | ||||||||
| Loans receivable, including fees | $ | 19,524 | $ | 17,009 | ||||
| Securities: | ||||||||
| Taxable | 1,696 | 1,455 | ||||||
| Tax-exempt | 1,014 | 1,032 | ||||||
| Federal funds sold | 569 | 490 | ||||||
| Interest bearing deposits | 5 | 12 | ||||||
| Total Interest Income | 22,808 | 19,998 | ||||||
| INTEREST EXPENSE | ||||||||
| Deposits | 9,734 | 7,097 | ||||||
| Borrowings | 966 | 707 | ||||||
| Junior subordinated debentures | 687 | 445 | ||||||
| Total Interest Expense | 11,387 | 8,249 | ||||||
| Net Interest Income | 11,421 | 11,749 | ||||||
| PROVISION FOR LOAN LOSSES | 1,930 | 733 | ||||||
| Net Interest Income after Provision for Loan Losses | 9,491 | 11,016 | ||||||
| OTHER INCOME | ||||||||
| Service fees on deposit accounts | 1,396 | 1,370 | ||||||
| ATM fees | 412 | 374 | ||||||
| Insurance commissions and fees | 2,688 | 2,576 | ||||||
| Investment brokerage fees | 282 | 265 | ||||||
| Holding gains on trading securities | 258 | - | ||||||
| Gain on sale of securities, available for sale | 10 | 90 | ||||||
| Other | 570 | 569 | ||||||
| Total Other Income | 5,616 | 5,244 | ||||||
| OTHER EXPENSES | ||||||||
| Salaries and employee benefits | 7,153 | 6,872 | ||||||
| Occupancy, net | 1,246 | 1,077 | ||||||
| Furniture, equipment and data processing | 1,462 | 1,210 | ||||||
| Stationary and supplies | 187 | 199 | ||||||
| Professional fees | 599 | 668 | ||||||
| Advertising and promotion | 556 | 518 | ||||||
| Insurance | 176 | 197 | ||||||
| Postage and freight | 167 | 208 | ||||||
| Amortization of intangible assets | 93 | 150 | ||||||
| Other | 1,509 | 1,549 | ||||||
| Total Other Expenses | 13,148 | 12,648 | ||||||
| Income before Income Taxes | 2,409 | 3,612 | ||||||
| PROVISION FOR INCOME TAXES | 450 | 1,148 | ||||||
| Net Income | $ | 1,509 | $ | 2,464 | ||||
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| SUSSEX BANCORP | ||||||||||||||||||||||||
| COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES | ||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Twelve Months Ended December 31, | ||||||||||||||||||||||||
| (dollars in thousands) | 2007 | 2006 | ||||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||||
| Earning Assets: | Balance | Interest (1) | Rate (2) | Balance | Interest (1) | Rate (2) | ||||||||||||||||||
| Securities: | ||||||||||||||||||||||||
| Tax exempt (3) | $ | 24,033 | $ | 1,317 | 5.48 | % | $ | 24,018 | $ | 1,383 | 5.76 | % | ||||||||||||
| Taxable | 35,214 | 1,696 | 4.82 | % | 35,687 | 1,455 | 4.08 | % | ||||||||||||||||
| Total securities | 59,247 | 3,013 | 5.09 | % | 59,705 | 2,838 | 4.75 | % | ||||||||||||||||
| Total loans receivable (4) | 283,346 | 19,524 | 6.89 | % | 239,831 | 17,009 | 7.09 | % | ||||||||||||||||
| Other interest-earning assets | 11,603 | 574 | 4.95 | % | 10,244 | 502 | 4.90 | % | ||||||||||||||||
| Total earning assets | 354,196 | $ | 23,111 | 6.52 | % | 309,780 | $ | 20,349 | 6.57 | % | ||||||||||||||
| Non-interest earning assets | 28,738 | 26,126 | ||||||||||||||||||||||
| Allowance for loan losses | (3,779 | ) | (2,994 | ) | ||||||||||||||||||||
| Total Assets | $ | 379,155 | $ | 332,912 | ||||||||||||||||||||
| Sources of Funds: | ||||||||||||||||||||||||
| Interest bearing deposits: | ||||||||||||||||||||||||
| NOW | $ | 60,377 | $ | 1,282 | 2.12 | % | $ | 57,974 | $ | 1,306 | 2.25 | % | ||||||||||||
| Money market | 37,317 | 1,378 | 3.69 | % | 30,773 | 1,200 | 3.90 | % | ||||||||||||||||
| Savings | 38,142 | 348 | 0.91 | % | 45,916 | 401 | 0.87 | % | ||||||||||||||||
| Time | 138,633 | 6,726 | 4.85 | % | 100,061 | 4,190 | 4.19 | % | ||||||||||||||||
| Total interest bearing deposits | 274,469 | 9,734 | 3.55 | % | 234,724 | 7,097 | 3.02 | % | ||||||||||||||||
| �� Borrowed funds | 20,397 | 966 | 4.74 | % | 14,359 | 707 | 4.92 | % | ||||||||||||||||
| Junior subordinated debentures | 9,271 | 687 | 7.41 | % | 5,155 | 445 | 8.63 | % | ||||||||||||||||
| Total interest bearing liabilities | 304,137 | $ | 11,387 | 3.74 | % | 254,238 | $ | 8,249 | 3.24 | % | ||||||||||||||
| Non-interest bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 37,663 | 43,036 | ||||||||||||||||||||||
| Other liabilities | 2,309 | 1,928 | ||||||||||||||||||||||
| Total non-interest bearing liabilities | 39,972 | 44,964 | ||||||||||||||||||||||
| Stockholders' equity | 35,046 | 33,710 | ||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 379,155 | $ | 332,912 | ||||||||||||||||||||
| Net Interest Income and Margin (5) | $ | 11,724 | 3.31 | % | $ | 12,100 | 3.91 | % | ||||||||||||||||
| (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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