200 Munsonhurst Road
Franklin, NJ 07416
SUSSEX BANCORP REPORTS SECOND QUARTER RESULTS AND IMPROVED ASSET QUALITY FOR 2012
FRANKLIN, NEW JERSEY – July 30, 2012 – Sussex Bancorp (the “Company”) (NasdaqGM: SBBX), the holding company for Sussex Bank (the “Bank”) today announced net income of $481 thousand, or $0.15 per basic and $0.14 per diluted share, for the quarter ended June 30, 2012, as compared to $727 thousand, or $0.22 per basic and diluted share, for the same period last year. For the six months ended June 30, 2012, the Company reported net income of $286 thousand, or $0.09 per basic and diluted share, as compared to $1.4 million, or $0.44 per basic share and $0.43 per diluted share, for the same period last year. The Company attributed the decrease in net income for the six months ended June 30, 2012 largely to the write-down and expenses related to the prospective sale of one of our largest foreclosed assets. Expenses related to additional commercial lending staff, technology upgrades, increased advertising and promotion and FDIC assessment costs (due to deposit growth) also added to the increase.
The Company is beginning to see the results of its growth initiatives as loan growth for the second quarter of 2012, on a linked quarter basis, was the highest in at least three years. “Our enhanced commercial lending division has substantially improved our loan production, which has helped us positively change the mix of the balance sheet. This shift has had a positive impact on our operating results by offsetting some of the downward pressure on our net interest margin due to the low level of interest rates,” said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bank.
For June 30, 2012, asset quality improved as non-performing assets (“NPA’s”) declined 10.2% and overall problem assets (total classified/criticized/foreclosed assets) have declined 31.9% to $42.7 million at June 30, 2012 from a historical high of $62.8 million at March 31, 2010. “Reducing our legacy problem assets is one of our primary focuses for 2012 and we see significant progress in this area. This quarter, we have reduced our NPA’s by 10.2 percent and our classified/criticized/foreclosed assets by 13.8 percent. With the pending sale of one of our largest foreclosed real estate properties we are hopeful that this momentum will continue into the third quarter,” said Mr. Labozzetta.
Second Quarter 2012 Highlights
| · | Return on average assets decreased to 0.37% for the three months ended June 30, 2012, from 0.61% for the same period in 2011. |
| · | Net interest income on a tax equivalent basis decreased for the second quarter and six months ended June 30, 2012, by 2.6% and 5.7%, respectively, as compared to the same periods last year. The declines for 2012 were mostly due to declines in loan yields, lower average balances for loans and an increase in liquidity resulting from deposit growth outpacing loans. |
| · | Net interest marginon a tax equivalent basis increased for the second quarter and six months ended June 30, 2012 to 3.59% and 3.55%, respectively, as compared to 3.98% and 4.06% for the same periods last year. |
| · | Provision for loan losses decreased $154 thousand, or 13.8%, in the second quarter of 2012, as compared to the second quarter of 2011 and declined $133 thousand, or 6.8%, for the six month period ended June 30, 2012, as compared to the same period one year earlier. |
| · | Non-interest income decreased $82 thousand, or 5.5%, to $1.4 million in the second quarter of 2012 over the prior year and declined $3 thousand, or 0.1%, for the six month period ended June 30, 2012, as compared to the same period one year earlier. The decreases were driven by declines in security gains and service fees on deposits. |
| · | Non-interest expenseincreased $366 thousand to $4.1 million in the second quarter of 2012, compared to the same period in 2011 and grew by $1.4 million, or 18.7%, for the six month period ended June 30, 2012, as compared to the same period one year earlier. The increases were largely attributed to growth in commercial lenders and certain operating expenses attributed to supporting the growth of the Company. |
| o | Our insurance subsidiary, Tri-state Insurance Agency, Inc., reported an 8.0% increase in revenues to $609 thousand for the second quarter of 2012 as compared to the same period last year. Net income before taxes was 47.9% higher for the second quarter 2012 as compared to the same period last year |
| o | For the first half of 2012 revenues increased by 2.5%. When adjusting for a decline in contingency income for 2012, core revenues were up 8.1% for year to date 2012 as compared to the same period last year. Net income before taxes for the six months ended June 30, 2012, declined $48 thousand as compared to the same period last year largely due to a $67 thousand decrease in contingency income. |
| o | Gross loans increased $7.2 million, or 2.1%, at June 30, 2012 as compared to December 31, 2011. The Company began closing loans during the second quarter of 2012 from the loan pipeline that was built earlier in the year and continues to be strong. |
| o | Total deposits increased $4.7 million, or 1.1%, due to an increase in core deposits of $10.1 million, or 3.2%, offset by a decrease in time deposits of $5.4 million, or 4.9%, compared to December 31, 2011. |
| o | Total classified/criticized/foreclosed assets decreased $6.9 million, or 13.8%, to $42.7 million at June 30, 2012 from $49.6 million at December 31, 2011, which resulted in a cumulative decline of 31.9% from the historical high of $62.8 million at March 31, 2010. |
| o | Non-performing assets declined by $3.5 million, or 10.2% for June 30, 2012, as compared to December 31, 2011. Non-performing assets as a percent of total assets were 5.96% at June 30, 2012 down from 6.71% at December 31, 2011. |
| o | The allowance for loan losses totaled $6.3 million at June 30, 2012, or 1.8% of total loans as compared to $7.2 million, or 2.1% of total loans, at December 31, 2011. |
| o | At June 30, 2012, the leverage, Tier I risk-based capital and total risk-based capital ratios for the Bank were 9.10%, 12.77% and 14.02%, respectively, all in excess of the ratios required to be deemed “well-capitalized.” |
Second Quarter 2012 Financial Results
The Company reported net income of $481 thousand for the second quarter of 2012 as compared to net income of $727 thousand for the same period in 2011. Basic and diluted loss per share for the three months ended June 30, 2012, were $0.15 and $0.14, respectively, compared to the basic and diluted earnings per share of $0.22 for the comparable period of 2011. The decline in net income was largely due to operating costs resulting from growth initiatives of the Company, a decline in the net interest margin and write-downs on foreclosed assets.
Net Interest Income
Net interest income, on a fully tax equivalent basis, declined $116 thousand, or 2.6%, to $4.3 million for the quarter ended June 30, 2011, as compared to $4.4 million for same period in 2011. The decrease in net interest income was largely due to the Company’s net interest margin declining 39 basis points to 3.59% for the second quarter of 2012. The decline in the net interest margin was mostly due to a 39 basis point decline in the average rate earned on loans. This decline in net interest income was partially offset by a decrease in the average rate paid on total interest bearing liabilities, which decreased 21 basis points to 0.90% for the second quarter of 2011 from 1.11% for the same period in 2011. The decline was in part offset by a $37.2 million, or 8.4%, increase in average interest earning assets, principally securities.
Provision for Loan Losses
Provision for loan losses decreased $154 thousand to $958 thousand for the quarter ended June 30, 2012, as compared to $1.1 million for the same period in 2011.
Non-interest Income
The Company reported a decrease in non-interest income of $82 thousand, or 5.5%, to $1.4 million for the quarter ended June 30, 2012, as compared to the same period last year. The decrease in non-interest income was largely due to a $134 thousand decline in gain on the sale of securities and a $53 thousand decrease in service fees on deposit accounts. These decreases were partly offset by increases in other income and insurance commissions and fees of $67 thousand and $45 thousand, respectively.
Non-interest Expense
The Company’s non-interest expenses increased $366 thousand, or 9.9%, to $4.1 million for the quarter ended June 30, 2012, as compared to the same period last year. The increase for the second quarter of 2012 versus the same period in 2011 was largely due to an increase of $138 thousand in salaries and employee benefits. The increase was mostly attributed to approximate costs of $110 thousand related to the hiring of additional commercial lenders and support staff. In addition, furniture, equipment and data processing, advertising and promotion and FDIC assessments increased $46 thousand, $42 thousand and $46 thousand, respectively, for the second quarter of 2012 versus the same period in 2011.
Year to Date 2012 Financial Results
The Company reported net income of $286 thousand for the six months ended June 30, 2012, as compared to net income of $1.4 million for the same period in 2011. Basic and diluted loss per share for the six months ended June 30, 2012, were $0.09 compared to the basic and diluted earnings per share of $0.44 and $0.43, respectively, for the comparable period of 2011. The decline in net income was largely due to operating costs resulting from growth initiatives of the Company, costs related to the resolution of one of our largest foreclosed assets of the Company and a decline in the net interest margin.
Net Interest Income
Net interest income, on a fully taxable equivalent basis, decreased $511 thousand, or 5.7%, to $8.4 million for the six months ended June 30, 2012, as compared to $8.9 million for same period in 2011. The Company’s net interest margin declined 51 basis points to 3.55% for the first half of 2012, compared to 4.06% for the first half of 2011. The decline was mostly attributed to a 37 basis point decline in the average rate earned on loans to 5.24%, which was partly offset by a 16 basis point decrease in the average rate paid on interest bearing liabilities to 0.95% for the six month periods ended June 30, 2012, as compared to the same period last year. The decline was in part offset by a $33.1 million, or 7.5%, increase in average interest earning assets, principally securities.
Provision for Loan Losses
Provision for loan losses decreased $133 thousand to $1.8 million for the first half of 2012, as compared to $2.0 million for the same period in 2011.
Non-interest Income
The Company reported a decrease in non-interest income of $3 thousand, or 0.1%, to $2.7 million for the six months ended June 30, 2012, as compared to the same period last year. The decrease in non-interest income was largely due to a $94 thousand decrease in service fees on deposits and a $75 thousand decline in gain on sale of securities. Increases in other income and gain on sale of loans of $64 thousand and $47 thousand, respectively, mostly offset the aforementioned declines.
Non-interest Expense
The Company’s non-interest expenses increased $1.4 million, or 18.7%, to $9.0 million for the six months ended June 30, 2012, as compared to the same period last year. The increase for the first half of 2012 compared to the same period in 2011 was largely due to increases in salaries and benefits and write-downs on foreclosed real estate of $555 thousand and $539 thousand, respectively, between the first six months of 2012 and 2011. The increase in write-downs and expenses related to foreclosed real estate was principally due to the prospective sale of one of our largest foreclosed assets, which is scheduled to close during the third quarter. The increase in salaries and employee benefits was mostly attributed to costs of $270 thousand related to the hiring of additional commercial lenders and support staff, higher medical benefit costs and severance costs of $110 thousand for a former executive during the first quarter of 2012.
Financial Condition Comparison
At June 30, 2012, the Company’s total assets were $512.2 million, an increase of $5.2 million, or 1.0%, as compared to total assets of $507.0 million at December 31, 2011. The increase in total assets was largely driven by loan growth ($7.2 million, or 2.1%) funded by deposit growth ($4.7 million, or 1.1%) and cash and cash equivalents.
Total loans receivable, net of unearned income, increased $7.2 million, or 2.1%, to $346.9 million at June 30, 2012 from $339.7 million at year-end 2011. The Company’s security portfolio, which includes securities available for sale and securities held to maturity, increased $20.1 million, or 20.0%, to $120.7 million at June 30, 2012, as compared to $100.6 million at December 31, 2011.
The Company’s total deposits increased 1.1% to $430.1 million at June 30, 2012, from $425.4 million at December 31, 2011. The increase in deposits was driven by growth in core deposits (non-interest bearing deposits, NOW, savings and money market accounts) of $10.1 million, or 3.2%, offset by a decrease in time deposits of $5.4 million, or 4.9%, for June 30, 2012, as compared to December 31, 2011.
At June 30, 2012, the Company’s total stockholders’ equity was $40.5 million, an increase of $620 thousand when compared to December 31, 2011.
Asset and Credit Quality
The overall credit quality of the Company continues to show signs of improvement as our classified/criticized/foreclosed assets declined $6.9 million, or 13.8% from December 31, 2011. Our classified/criticized/foreclosed assets totaled $42.7 million at June 30, 2012, as compared to $49.6 million at December 31, 2011, and have declined 31.9% from a historical high of $62.8 million at March 31, 2010. Loans internally rated “Substandard,” “Doubtful” or “Loss” are considered classified assets, while loans rated as “Special Mention” are considered criticized. Such risk ratings are consistent with the classification system used by regulatory agencies and are consistent with industry practices.
Non-performing assets, which include non-accrual loans, 90 days past due and still accruing, performing troubled debt restructured loans and foreclosed assets, decreased $3.5 million, or 10.2%, to $30.5 million at June 30, 2012, as compared to $34.0 million at December 31, 2011. The ratio of non-performing assets to total assets for June 30, 2012 and December 31, 2011 were 5.96% and 6.71%, respectively. The allowance for loan losses was $6.3 million, or 1.8% of total loans, at June 30, 2012, compared to $7.2 million, or 2.1% of total loans, at December 31, 2011.
About Sussex Bancorp
Sussex Bancorp is the holding company for Sussex Bank, which operates through its main office in Franklin, New Jersey and through its nine branch offices located in Andover, Augusta, Newton, Montague, Sparta, Vernon and Wantage, New Jersey, Port Jervis and Warwick, New York; a loan production office in Rochelle Park, New Jersey and for the Tri-State Insurance Agency, Inc., a full service insurance agency with locations in Augusta and Rochelle Park, New Jersey. For additional information, please visit the company's Web site at www.sussexbank.com.
Forward-Looking Statements
This press release contains statements that are forward looking and are made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such statements may be identified by the use of words such as "expect," "estimate," “assume,” "believe," "anticipate," "will," "forecast," "plan," "project," or similar words. Such statements are based on the Company’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, changes to interest rates, the ability to control costs and expenses, general economic conditions, the success of the Company’s efforts to diversify its revenue base by developing additional sources of non-interest income while continuing to manage its existing fee based business, risks associated with the quality of the Company’s assets and the ability of its borrowers to comply with repayment terms. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and in subsequent filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the results of any revisions to those forward looking statements that may be made to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.
| Contacts: | Anthony Labozzetta, President/CEO |
Steven Fusco, SVP/CFO
973-827-2914
| SUSSEX BANCORP |
| SUMMARY FINANCIAL HIGHLIGHTS |
| (In Thousands, Except Percentages and Per Share Data) |
| (Unaudited) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 6/30/12 VS. | |
| | | 6/30/2012 | | | 12/31/2011 | | | 6/30/2011 | | | 6/30/2011 | | | 12/31/2011 | |
| BALANCE SHEET HIGHLIGHTS - Period End Balances | | | | | | | | | | | | | | | |
| Total securities | | $ | 120,676 | | | $ | 100,581 | | | $ | 73,855 | | | | 63.4 | % | | | 20.0 | % |
| Total loans | | | 346,884 | | | | 339,705 | | | | 339,564 | | | | 2.2 | % | | | 2.1 | % |
| Allowance for loan losses | | | (6,260 | ) | | | (7,210 | ) | | | (7,536 | ) | | | (16.9 | )% | | | (13.2 | )% |
| Total assets | | | 512,190 | | | | 506,953 | | | | 473,164 | | | | 8.2 | % | | | 1.0 | % |
| Total deposits | | | 430,082 | | | | 425,376 | | | | 392,914 | | | | 9.5 | % | | | 1.1 | % |
| Total borrowings and junior subordinated debt | | | 38,887 | | | | 38,887 | | | | 38,887 | | | | - | % | | | - | % |
| Total shareholders' equity | | | 40,522 | | | | 39,902 | | | | 38,615 | | | | 4.9 | % | | | 1.6 | % |
| | | | | | | | | | | | | | | | | | | | | |
| FINANCIAL DATA - QUARTER ENDED: | | | | | | | | | | | | | | | | | | | | |
| Net interest income (tax equivalent) (a) | | $ | 4,300 | | | $ | 4,251 | | | $ | 4,416 | | | | (2.6 | )% | | | 1.2 | % |
| Provision for loan losses | | | 958 | | | | 618 | | | | 1,112 | | | | (13.8 | )% | | | 55.0 | % |
| Total other income | | | 1,419 | | | | 1,331 | | | | 1,501 | | | | (5.5 | )% | | | 6.6 | % |
| Total other expenses | | | 4,065 | | | | 4,199 | | | | 3,699 | | | | 9.9 | % | | | (3.2 | )% |
| Income before provision for income taxes (tax equivalent) | | | 696 | | | | 765 | | | | 1,106 | | | | (37.1 | )% | | | (9.1 | )% |
| Provision for income taxes | | | 65 | | | | 102 | | | | 229 | | | | (71.6 | )% | | | (36.3 | )% |
| Taxable equivalent adjustment (a) | | | 150 | | | | 148 | | | | 150 | | | | (0.2 | )% | | | 1.3 | % |
| Net income | | $ | 481 | | | $ | 515 | | | $ | 727 | | | | (33.8 | )% | | | (6.7 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Net income per common share - Basic | | $ | 0.15 | | | $ | 0.16 | | | $ | 0.22 | | | | (31.8 | )% | | | (6.3 | )% |
| Net income per common share - Diluted | | $ | 0.14 | | | $ | 0.15 | | | $ | 0.22 | | | | (36.4 | )% | | | (6.7 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.37 | % | | | 0.41 | % | | | 0.61 | % | | | (39.3 | )% | | | (9.3 | )% |
| Return on average equity | | | 4.76 | % | | | 5.22 | % | | | 7.63 | % | | | (37.6 | )% | | | (8.7 | )% |
| Net interest margin (tax equivalent) | | | 3.59 | % | | | 3.59 | % | | | 3.98 | % | | | (9.9 | )% | | | (0.2 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| FINANCIAL DATA - YEAR TO DATE: | | | | | | | | | | | | | | | | | | | | |
| Net interest income (tax equivalent) (a) | | $ | 8,412 | | | | | | | $ | 8,923 | | | | (5.7 | )% | | | | |
| Provision for loan losses | | | 1,818 | | | | | | | | 1,951 | | | | (6.8 | )% | | | | |
| Total other income | | | 2,743 | | | | | | | | 2,746 | | | | (0.1 | )% | | | | |
| Total other expenses | | | 8,975 | | | | | | | | 7,559 | | | | 18.7 | % | | | | |
| Income before provision for income taxes (tax equivalent) | | | 86 | | | | | | | | 2,159 | | | | (96.0 | )% | | | | |
| Provision for income taxes | | | (200 | ) | | | | | | | 438 | | | | (145.7 | )% | | | | |
| Taxable equivalent adjustment (a) | | | 276 | | | | | | | | 300 | | | | (8.0 | )% | | | | |
| Net income | | $ | 286 | | | | | | | $ | 1,421 | | | | (79.9 | )% | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income per common share - Basic | | $ | 0.09 | | | | | | | $ | 0.44 | | | | (79.5 | )% | | | | |
| Net income per common share - Diluted | | $ | 0.09 | | | | | | | $ | 0.43 | | | | (79.1 | )% | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.11 | % | | | | | | | 0.60 | % | | | (81.4 | )% | | | | |
| Return on average equity | | | 1.42 | % | | | | | | | 7.57 | % | | | (81.2 | )% | | | | |
| Net interest margin (tax equivalent) | | | 3.55 | % | | | | | | | 4.06 | % | | | (12.5 | )% | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| SHARE INFORMATION: | | | | | | | | | | | | | | | | | | | | |
| Book value per common share | | $ | 11.89 | | | $ | 11.83 | | | $ | 11.45 | | | | 3.8 | % | | | 0.5 | % |
| Outstanding shares- period ending | | | 3,409 | | | | 3,373 | | | | 3,373 | | | | 1.1 | % | | | 1.1 | % |
| Average diluted shares outstanding (year to date) | | | 3,318 | | | | 3,326 | | | | 3,323 | | | | (0.2 | )% | | | (0.2 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| CAPITAL RATIOS: | | | | | | | | | | | | | | | | | | | | |
| Total equity to total assets | | | 7.91 | % | | | 7.87 | % | | | 8.16 | % | | | (3.1 | )% | | | 0.5 | % |
| Leverage ratio (b) | | | 9.10 | % | | | 9.29 | % | | | 9.56 | % | | | (4.8 | )% | | | (2.0 | )% |
| Tier 1 risk-based capital ratio (b) | | | 12.77 | % | | | 12.98 | % | | | 12.84 | % | | | (0.5 | )% | | | (1.6 | )% |
| Total risk-based capital ratio (b) | | | 14.02 | % | | | 14.24 | % | | | 14.10 | % | | | (0.6 | )% | | | (1.5 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| ASSET QUALITY AND RATIOS: | | | | | | | | | | | | | | | | | | | | |
| Non-accrual loans | | $ | 24,243 | | | $ | 24,283 | | | $ | 25,062 | | | | (3.3 | )% | | | (0.2 | )% |
| Loans 90 days past due and still accruing | | | 118 | | | | 803 | | | | 1,029 | | | | (88.5 | )% | | | (85.3 | )% |
| Troubled debt restructured loans (c) | | | 604 | | | | 3,411 | | | | 1,314 | | | | (54.1 | )% | | | (82.3 | )% |
| Foreclosed real estate | | | 5,566 | | | | 5,509 | | | | 4,545 | | | | 22.5 | % | | | 1.0 | % |
| Non-performing assets | | $ | 30,531 | | | $ | 34,006 | | | $ | 31,950 | | | | (4.4 | )% | | | (10.2 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Foreclosed real estate, Criticized and Classified Assets | | $ | 42,736 | | | $ | 49,584 | | | $ | 53,403 | | | | (20.0 | )% | | | (13.8 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Charge-offs, net (quarterly) | | $ | 2,306 | | | $ | 803 | | | $ | 802 | | | | 187.5 | % | | | 187.2 | % |
| Charge-offs, net as a % of average loans (annualized) | | | 2.70 | % | | | 0.96 | % | | | 0.93 | % | | | 189.1 | % | | | 182.4 | % |
| Non-accrual loans to total loans | | | 6.99 | % | | | 7.15 | % | | | 7.38 | % | | | (5.3 | )% | | | (2.2 | )% |
| Non-performing assets to total assets | | | 5.96 | % | | | 6.71 | % | | | 6.75 | % | | | (11.7 | )% | | | (11.1 | )% |
| Allowance for loan losses as a % of non-performing loans | | | 25.19 | % | | | 26.03 | % | | | 28.57 | % | | | (11.8 | )% | | | (3.2 | )% |
| Allowance for loan losses to total loans | | | 1.80 | % | | | 2.12 | % | | | 2.22 | % | | | (18.7 | )% | | | (15.0 | )% |
(a) Full taxable equivalent basis, using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance
(b) Sussex Bank capital ratios
(c) Troubled debt restructured loans currently performing in accordance with renegotiated terms
| SUSSEX BANCORP |
| CONSOLIDATED BALANCE SHEETS |
| (Dollars In Thousands) |
| (Unaudited) |
| | | | | | | |
| ASSETS | | June 30, 2012 | | | December 31, 2011 | |
| | | | | | | |
| Cash and due from banks | | $ | 5,553 | | | $ | 3,903 | |
| Interest-bearing deposits with other banks | | | 6,978 | | | | 33,597 | |
| Cash and cash equivalents | | | 12,531 | | | | 37,500 | |
| | | | | | | | | |
| Interest bearing time deposits with other banks | | | 100 | | | | 100 | |
| Securities available for sale, at fair value | | | 115,508 | | | | 96,361 | |
| Securities held to maturity | | | 5,168 | | | | 4,220 | |
| Federal Home Loan Bank Stock, at cost | | | 1,943 | | | | 1,837 | |
| | | | | | | | | |
| Loans receivable, net of unearned income | | | 346,884 | | | | 339,705 | |
| Less: allowance for loan losses | | | 6,260 | | | | 7,210 | |
| Net loans receivable | | | 340,624 | | | | 332,495 | |
| | | | | | | | | |
| Foreclosed real estate | | | 5,566 | | | | 5,509 | |
| Premises and equipment, net | | | 6,784 | | | | 6,778 | |
| Accrued interest receivable | | | 1,688 | | | | 1,735 | |
| Goodwill | | | 2,820 | | | | 2,820 | |
| Bank owned life insurance | | | 11,346 | | | | 11,142 | |
| Other assets | | | 8,112 | | | | 6,456 | |
| | | | | | | | | |
| Total Assets | | $ | 512,190 | | | $ | 506,953 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| Liabilities: | | | | | | | | |
| Deposits: | | | | | | | | |
| Non-interest bearing | | $ | 48,089 | | | $ | 44,762 | |
| Interest bearing | | | 381,993 | | | | 380,614 | |
| Total Deposits | | | 430,082 | | | | 425,376 | |
| | | | | | | | | |
| Borrowings | | | 26,000 | | | | 26,000 | |
| Accrued interest payable and other liabilities | | | 2,699 | | | | 2,788 | |
| Junior subordinated debentures | | | 12,887 | | | | 12,887 | |
| | | | | | | | | |
| Total Liabilities | | | 471,668 | | | | 467,051 | |
| | | | | | | | | |
| Total Stockholders' Equity | | | 40,522 | | | | 39,902 | |
| | | | | | | | | |
| Total Liabilities and Stockholders' Equity | | $ | 512,190 | | | $ | 506,953 | |
| SUSSEX BANCORP |
| CONSOLIDATED STATEMENTS OF INCOME |
| (Dollars In Thousands Except Per Share Data) |
| (Unaudited) |
| | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| INTEREST INCOME | | | | | | | | | | | | | | | | |
| Loans receivable, including fees | | $ | 4,375 | | | $ | 4,739 | | | $ | 8,825 | | | $ | 9,523 | |
| Securities: | | | | | | | | | | | | | | | | |
| Taxable | | | 433 | | | | 310 | | | | 753 | | | | 675 | |
| Tax-exempt | | | 290 | | | | 291 | | | | 535 | | | | 583 | |
| Federal funds sold | | | - | | | | 2 | | | | - | | | | 3 | |
| Interest bearing deposits | | | 9 | | | | 10 | | | | 26 | | | | 13 | |
| Total Interest Income | | | 5,107 | | | | 5,352 | | | | 10,139 | | | | 10,797 | |
| | | | | | | | | | | | | | | | | |
| INTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Deposits | | | 632 | | | | 767 | | | | 1,351 | | | | 1,536 | |
| Borrowings | | | 264 | | | | 264 | | | | 529 | | | | 529 | |
| Junior subordinated debentures | | | 61 | | | | 55 | | | | 123 | | | | 109 | |
| Total Interest Expense | | | 957 | | | | 1,086 | | | | 2,003 | | | | 2,174 | |
| | | | | | | | | | | | | | | | | |
| Net Interest Income | | | 4,150 | | | | 4,266 | | | | 8,136 | | | | 8,623 | |
| PROVISION FOR LOAN LOSSES | | | 958 | | | | 1,112 | | | | 1,818 | | | | 1,951 | |
| Net Interest Income after Provision for Loan Losses | | | 3,192 | | | | 3,154 | | | | 6,318 | | | | 6,672 | |
| | | | | | | | | | | | | | | | | |
| OTHER INCOME | | | | | | | | | | | | | | | | |
| Service fees on deposit accounts | | | 275 | | | | 328 | | | | 550 | | | | 644 | |
| ATM and debit card fees | | | 151 | | | | 138 | | | | 288 | | | | 260 | |
| Bank owned life insurance | | | 101 | | | | 105 | | | | 204 | | | | 209 | |
| Insurance commissions and fees | | | 609 | | | | 564 | | | | 1,208 | | | | 1,179 | |
| Investment brokerage fees | | | 36 | | | | 39 | | | | 72 | | | | 70 | |
| Gain on sale of loans, held for sale | | | - | | | | - | | | | 47 | | | | - | |
| Gain on sale of securities, available for sale | | | 135 | | | | 269 | | | | 194 | | | | 269 | |
| Loss on sale of fixed assets | | | (7 | ) | | | - | | | | (6 | ) | | | - | |
| Gain (loss) on sale of foreclosed real estate | | | 1 | | | | 7 | | | | 3 | | | | (4 | ) |
| Other | | | 118 | | | | 51 | | | | 183 | | | | 119 | |
| Total Other Income | | | 1,419 | | | | 1,501 | | | | 2,743 | | | | 2,746 | |
| | | | | | | | | | | | | | | | | |
| OTHER EXPENSES | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 2,124 | | | | 1,986 | | | | 4,548 | | | | 3,993 | |
| Occupancy, net | | | 354 | | | | 336 | | | | 716 | | | | 717 | |
| Furniture, equipment and data processing | | | 334 | | | | 288 | | | | 688 | | | | 588 | |
| Advertising and promotion | | | 88 | | | | 46 | | | | 159 | | | | 89 | |
| Professional fees | | | 145 | | | | 149 | | | | 303 | | | | 276 | |
| Director fees | | | 74 | | | | 72 | | | | 180 | | | | 139 | |
| FDIC assessment | | | 172 | | | | 126 | | | | 339 | | | | 382 | |
| Insurance | | | 58 | | | | 54 | | | | 111 | | | | 110 | |
| Stationary and supplies | | | 39 | | | | 40 | | | | 84 | | | | 83 | |
| Loan collection costs | | | 201 | | | | 177 | | | | 335 | | | | 292 | |
| Write-down on foreclosed real estate | | | 69 | | | | - | | | | 684 | | | | 145 | |
| Expenses related to foreclosed real estate | | | 33 | | | | 79 | | | | 126 | | | | 103 | |
| Amortization of intangible assets | | | 1 | | | | 2 | | | | 3 | | | | 5 | |
| Other | | | 373 | | | | 344 | | | | 699 | | | | 637 | |
| Total Other Expenses | | | 4,065 | | | | 3,699 | | | | 8,975 | | | | 7,559 | |
| | | | | | | | | | | | | | | | | |
| Income before Income Taxes | | | 546 | | | | 956 | | | | 86 | | | | 1,859 | |
| PROVISION (BENEFIT) FOR INCOME TAXES | | | 65 | | | | 229 | | | | (200 | ) | | | 438 | |
| Net Income | | $ | 481 | | | $ | 727 | | | $ | 286 | | | $ | 1,421 | |
| | | | | | | | | | | | | | | | | |
| OTHER COMPREHENSIVE INCOME: | | | | | | | | | | | | | | | | |
| Net unrealized gains on available for sale securities arising during the period | | $ | 303 | | | $ | 855 | | | $ | 720 | | | $ | 1,072 | |
| Reclassification adjustment for gain on sales included in net income | | | (135 | ) | | | (269 | ) | | | (194 | ) | | | (269 | ) |
| Income tax expense related to other comprehensive income | | | (67 | ) | | | (234 | ) | | | (210 | ) | | | (321 | ) |
| Other comprehensive income, net of income taxes | | | 101 | | | | 352 | | | | 316 | | | | 482 | |
| Comprehensive income | | $ | 582 | | | $ | 1,079 | | | $ | 602 | | | $ | 1,903 | |
| | | | | | | | | | | | | | | | | |
| EARNINGS PER SHARE | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.15 | | | $ | 0.22 | | | $ | 0.09 | | | $ | 0.44 | |
| Diluted | | $ | 0.14 | | | $ | 0.22 | | | $ | 0.09 | | | $ | 0.43 | |
| SUSSEX BANCORP |
| COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES |
| (Dollars In Thousands) |
| (Unaudited) |
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest (1) | | | Rate (2) | | | Balance | | | Interest (1) | | | Rate (2) | |
| Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax exempt (3) | | $ | 31,416 | | | $ | 440 | | | | 5.64 | % | | $ | 29,805 | | | $ | 441 | | | | 5.94 | % |
| Taxable | | | 90,026 | | | | 433 | | | | 1.93 | % | | | 48,992 | | | | 310 | | | | 2.54 | % |
| Total securities | | | 121,442 | | | | 873 | | | | 2.89 | % | | | 78,797 | | | | 751 | | | | 3.83 | % |
| Total loans receivable (4) | | | 341,426 | | | | 4,375 | | | | 5.15 | % | | | 343,333 | | | | 4,739 | | | | 5.54 | % |
| Other interest-earning assets | | | 19,162 | | | | 9 | | | | 0.18 | % | | | 22,674 | | | | 12 | | | | 0.20 | % |
| Total earning assets | | | 482,030 | | | $ | 5,257 | | | | 4.39 | % | | | 444,804 | | | $ | 5,502 | | | | 4.96 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest earning assets | | | 41,691 | | | | | | | | | | | | 36,421 | | | | | | | | | |
| Allowance for loan losses | | | (7,798 | ) | | | | | | | | | | | (7,602 | ) | | | | | | | | |
| Total Assets | | $ | 515,923 | | | | | | | | | | | $ | 473,623 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Sources of Funds: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
| NOW | | $ | 95,817 | | | $ | 42 | | | | 0.17 | % | | $ | 78,439 | | | $ | 106 | | | | 0.54 | % |
| Money market | | | 18,849 | | | | 15 | | | | 0.33 | % | | | 14,504 | | | | 20 | | | | 0.55 | % |
| Savings | | | 164,106 | | | | 154 | | | | 0.38 | % | | | 169,086 | | | | 296 | | | | 0.70 | % |
| Time | | | 108,124 | | | | 421 | | | | 1.57 | % | | | 91,804 | | | | 345 | | | | 1.51 | % |
| Total interest bearing deposits | | | 386,896 | | | | 632 | | | | 0.66 | % | | | 353,833 | | | | 767 | | | | 0.87 | % |
| Borrowed funds | | | 26,000 | | | | 264 | | | | 4.02 | % | | | 26,000 | | | | 264 | | | | 4.08 | % |
| Junior subordinated debentures | | | 12,887 | | | | 61 | | | | 1.86 | % | | | 12,887 | | | | 55 | | | | 1.71 | % |
| Total interest bearing liabilities | | | 425,783 | | | $ | 957 | | | | 0.90 | % | | | 392,720 | | | $ | 1,086 | | | | 1.11 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 47,801 | | | | | | | | | | | | 40,402 | | | | | | | | | |
| Other liabilities | | | 1,931 | | | | | | | | | | | | 2,370 | | | | | | | | | |
| Total non-interest bearing liabilities | | | 49,732 | | | | | | | | | | | | 42,772 | | | | | | | | | |
| Stockholders' equity | | | 40,408 | | | | | | | | | | | | 38,131 | | | | | | | | | |
| Total Liabilities and Stockholders' Equity | | $ | 515,923 | | | | | | | | | | | $ | 473,623 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Income and Margin (5) | | | | | | | 4,300 | | | | 3.59 | % | | | | | | | 4,416 | | | | 3.98 | % |
| Tax-equivalent basis adjustment | | | | | | | (150 | ) | | | | | | | | | | | (150 | ) | | | | |
| Net Interest Income | | | | | | $ | 4,150 | | | | | | | | | | | $ | 4,266 | | | | | |
(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
| SUSSEX BANCORP |
| COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES |
| (Dollars In Thousands) |
| (Unaudited) |
| | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, | |
| | | | | | 2012 | | | 2011 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest (1) | | | Rate (2) | | | Balance | | | Interest (1) | | | Rate (2) | |
| Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax exempt (3) | | $ | 28,051 | | | $ | 811 | | | | 5.81 | % | | $ | 29,913 | | | $ | 883 | | | | 5.95 | % |
| Taxable | | | 83,766 | | | | 753 | | | | 1.81 | % | | | 54,181 | | | | 675 | | | | 2.51 | % |
| Total securities | | | 111,817 | | | | 1,564 | | | | 2.81 | % | | | 84,094 | | | | 1,558 | | | | 3.74 | % |
| Total loans receivable (4) | | | 338,492 | | | | 8,825 | | | | 5.24 | % | | | 342,511 | | | | 9,523 | | | | 5.61 | % |
| Other interest-earning assets | | | 26,499 | | | | 26 | | | | 0.20 | % | | | 17,111 | | | | 16 | | | | 0.19 | % |
| Total earning assets | | | 476,808 | | | $ | 10,415 | | | | 4.39 | % | | | 443,716 | | | $ | 11,097 | | | | 5.04 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest earning assets | | | 41,447 | | | | | | | | | | | | 36,425 | | | | | | | | | |
| Allowance for loan losses | | | (7,670 | ) | | | | | | | | | | | (7,209 | ) | | | | | | | | |
| Total Assets | | $ | 510,585 | | | | | | | | | | | $ | 472,932 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Sources of Funds: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
| NOW | | $ | 94,055 | | | $ | 93 | | | | 0.20 | % | | $ | 79,558 | | | $ | 220 | | | | 0.56 | % |
| Money market | | | 18,204 | | | | 36 | | | | 0.39 | % | | | 13,960 | | | | 38 | | | | 0.56 | % |
| Savings | | | 163,619 | | | | 359 | | | | 0.44 | % | | | 169,839 | | | | 594 | | | | 0.71 | % |
| Time | | | 109,037 | | | | 863 | | | | 1.59 | % | | | 90,919 | | | | 684 | | | | 1.52 | % |
| Total interest bearing deposits | | | 384,915 | | | | 1,351 | | | | 0.71 | % | | | 354,276 | | | | 1,536 | | | | 0.87 | % |
| Borrowed funds | | | 26,000 | | | | 529 | | | | 4.03 | % | | | 27,295 | | | | 529 | | | | 3.86 | % |
| Junior subordinated debentures | | | 12,887 | | | | 123 | | | | 1.88 | % | | | 12,887 | | | | 109 | | | | 1.69 | % |
| Total interest bearing liabilities | | | 423,802 | | | $ | 2,003 | | | | 0.95 | % | | | 394,458 | | | $ | 2,174 | | | | 1.11 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 44,557 | | | | | | | | | | | | 38,616 | | | | | | | | | |
| Other liabilities | | | 1,972 | | | | | | | | | | | | 2,332 | | | | | | | | | |
| Total non-interest bearing liabilities | | | 46,529 | | | | | | | | | | | | 40,948 | | | | | | | | | |
| Stockholders' equity | | | 40,254 | | | | | | | | | | | | 37,526 | | | | | | | | | |
| Total Liabilities and Stockholders' Equity | | $ | 510,585 | | | | | | | | | | | $ | 472,932 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Income and Margin (5) | | | | | | $ | 8,412 | | | | 3.55 | % | | | | | | $ | 8,923 | | | | 4.06 | % |
| Tax-equivalent basis adjustment | | | | | | | (276 | ) | | | | | | | | | | | (300 | ) | | | | |
| Net Interest Income | | | | | | $ | 8,136 | | | | | | | | | | | $ | 8,623 | | | | | |
(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
