Exhibit 99.1
100 Enterprise Dr.
Rockaway, NJ 07866
SUSSEX BANCORP REPORTS A 49% INCREASE IN NET INCOME FOR THE THIRD QUARTER 2017 AND DECLARED A CASH DIVIDEND
ROCKAWAY, NEW JERSEY – October 30, 2017 – Sussex Bancorp (the “Company”) (Nasdaq: SBBX), the holding company for Sussex Bank (the “Bank”), today announced a 49.1% increase in net income to $2.0 million, or $0.33 per basic and diluted common share, for the quarter ended September 30, 2017, as compared to $1.3 million, or $0.28 per basic and diluted share, for the same period last year. Also, the Company announced a 29.5% increase in net income or $1.00 per diluted common share for the nine months ended September 30, 2017 as compared to $0.86 for the same period last year. During the nine months ended September 30, 2017, net income and earnings per share were impacted by costs related to the pending acquisition of Community Bank of Bergen County, NJ (“Community”) and expenses incurred in connection with aS-3 registration statement(“S-3 registration”) filed in the second quarter of 2017 with the Securities and Exchange Commission. Diluted earnings per share, excluding expenses net of tax related to the pending acquisition of Community, expenses related to theS-3 registration net of tax and the weighted average number of shares issued in the capital raise completed in the second quarter of 2017, increased 36.1%, or $0.31, to $1.18 for the nine months ended September 30, 2017.
“I am very excited about the momentum in our business units. As a result, I am pleased to report a 49% increase in net income, which was driven by 20% and 19% growth in loans and deposits, respectively,” said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bancorp and Bank. Mr. Labozzetta also stated, “We continue to execute our plan to build a better bank and as such we have a couple of strategic initiatives that we expect to complete within the next few months: first, our partnership with Community, which we expect to close in early January; second, we are also very excited about the future opening of our newest regional banking and lending center in Weehawken, NJ (Hudson County NJ). Much like our successful banking centers in Oradell, NJ and Astoria, NY, it is a market that we are familiar with and in which we are already doing business. Once we have a physical presence, we expect more rapid growth in that market.”
Previously Announced Merger with Community Bank of Bergen County, NJ (OTCMKTS: CMTB)
The Company has received regulatory approvals from The New Jersey Department of Banking and Insurance and the FDIC to complete the previously announced merger of Community with and into Sussex Bank.
The merger is still subject to a number of conditions, including shareholder and final regulatory approval and other customary closing conditions. Sussex Bancorp has filed aS-4 registration and joint proxy statement with the Securities Exchange Commission (“SEC”). The merger is expected to be completed in the first quarter of 2018.
The Company, Sussex Bank and Community entered into the merger agreement on April 10, 2017. Under the terms of the merger agreement Community will merge with and into Sussex Bank and each outstanding share of Community common stock will be exchanged for 0.97 shares of the Company’s common stock.
The merger will enhance and expand Sussex Bank’s presence in Bergen County, New Jersey with the addition of 3 full service branch locations in that county, which will complement Sussex Bank’s existing location in Oradell, New Jersey. As of December 31, 2016, Community headquartered in Maywood, New Jersey, had approximately $341 million of total assets, $229 million of loans and $304 million of deposits. Based on financials as of December 31, 2016, the combined company will have approximately $1.2 billion in assets, $925 million in gross loans, and $965 million in deposits upon completion of the transaction.
Declaration of Quarterly Dividend
On October 27, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.06 per share, which is payable on November 24, 2017 to common shareholders of record as of the close of business on November 10, 2017.
Financial Performance
Net Income. For the quarter ended September 30, 2017, the Company reported net income of $2.0 million, or $0.33 per basic and diluted share, as compared to net income of $1.3 million, or $0.28 per basic and diluted share, for the same period last year. The increase in net income for the quarter ended September 30, 2017 was driven by a $1.2 million, or 19.3%, increase in net interest income resulting from strong loan and deposit growth of 19.9% and 18.7%, respectively, which is partially offset by a $454 thousand increase in overall interest expense partly related to the $15.0 million private placement of subordinated notes completed in the fourth quarter of 2016 and an increase in interest expense related to growth and higher costs for interest bearing deposits. The aforementioned growth in net interest income was partly offset by an increase innon-interest expenses of $643 thousand mostly due to costs to support the Company’s growth and expenses and write-downs related to foreclosed real estate.
For the nine months ended September 30, 2017, the Company reported net income of $5.2 million, or $1.00 per diluted share, or a 29.5% increase, as compared to net income of $4.0 million, or $0.86 per diluted share, for the same period last year. The increase in net income for the nine months ended September 30, 2017 was largely due to an increase in net interest income of $3.4 million, which was partially offset by an increase innon-interest expenses of $1.9 million. The increase innon-interest expenses was largely due to an $1.3 million increase in salaries and employee benefits and expenses related to the pending acquisition of Community of $482 thousand. Excluding expenses net of tax related to the pending acquisition of Community and expenses related to theS-3 registration net of tax, net income increased $1.6 million, or 39.2%, for the nine months ended September 30, 2017.
Net Interest Income. Net interest income on a fully tax equivalent basis increased $1.3 million, or 19.8%, to $7.7 million for the third quarter of 2017, as compared to $6.5 million for the same period in 2016. The increase in net interest income was largely due to a $131.7 million, or 17.2%, increase in average interest earning assets, principally loans receivable, which increased $126.0 million, or 19.3%. The net interest margin increased by 8 basis points to 3.42% for the third quarter of 2017, as compared to the same period in 2016. The net interest margin increase was attributed to $205 thousand in prepayment penalties.
Net interest income on a fully tax equivalent basis increased $3.6 million, or 19.8%, to $21.7 million for the first nine months of 2017 as compared to $18.1 million for the same period in 2016. Included in the increase in net interest income was $457 thousand in prepayment penalties on $31.4 million of commercial loans. For the nine months of 2017 and 2016, net interest margin was unchanged at 3.37%.
Provision for Loan Losses.Provision for loan losses decreased $118 thousand to $340 thousand for the third quarter of 2017, as compared to $458 thousand for the same period in 2016.
Provision for loan losses increased $73 thousand, or 6.9%, to $1.1 million for the first nine months of 2017, as compared to the same period in 2016.
Non-interest Income.Non-interest income increased $255 thousand, or 14.4%, to $2.0 million for the third quarter of 2017, as compared to the same period last year. The increase was principally due to growth of $173 thousand in insurance commissions and fees relating toTri-State Insurance Agency, $71 thousand in other income and $70 thousand in bank owned life insurance. The aforementioned was partly offset by a reduction in gain on sales of securities of approximately $115 thousand.
The Company’snon-interest income increased $200 thousand, or 3.3%, to $6.3 million for the first nine months of 2017 as compared to the same period last year. The increase was principally due to growth of $303 thousand in insurance commissions and fees relating toTri-State Insurance Agency and an increase of $153 thousand in bank owned life insurance, mostly due to an increase in investments in bank owned life insurance. The aforementioned was partly offset by a reduction in gain on sales of securities of approximately $310 thousand.
Non-interest Expense. The Company’snon-interest expenses increased $643 thousand, or 11.4%, to $6.3 million for the third quarter of 2017, as compared to the same period last year. The increase for the third quarter of 2017, as compared to the same period in 2016, was largely due to increases in salaries and employee benefits of $512 thousand and expenses and write-downs related to foreclosed real estate of $123 thousand.
The Company’snon-interest expenses increased $1.9 million, or 11.5%, to $18.8 million for the first nine months of 2017 as compared to the same period last year. The increase for the first nine months of 2017, as compared to the same period in 2016, was largely due to increases in salaries and employee benefits of $1.3 million, expenses of $482 thousand related to the pending acquisition of Community, other expenses of $317 thousand which includes $75 thousand related toS-3 registration, and professional fees of $208 thousand and was partly offset by a decrease of $186 thousand in FDIC assessment.
The increase in salaries and employee benefits for the third quarter and first nine months of 2017 as compared to the same periods in 2016 was largely due to an increase in personnel to support our growth.
Financial Condition
At September 30, 2017, the Company’s total assets were $956.8 million, an increase of $108.1 million, or 12.7%, as compared to total assets of $848.7 million at December 31, 2016. The increase in total assets was largely driven by growth in loans receivable of $99.9 million, or 14.4%.
Total loans receivable, net of unearned income, increased $99.9 million, or 14.4%, to $795.1 million at September 30, 2017, as compared to $695.3 million at December 31, 2016. During the nine months ended September 30, 2017, the Company had $139.5 million in commercial loan production, which was partly offset by $31.4 million in commercial loan payoffs.
The Company’s total deposits increased $81.0 million, or 12.3%, to $741.9 million at September 30, 2017, from $660.9 million at December 31, 2016. The growth in deposits was primarily due to an increase in interest bearing deposits of $64.6 million, or 12.2%, at September 30, 2017, as compared to December 31, 2016. Included in the aforementioned deposit total is $85.3 million with a cost of 0.59% attributed to our branch in Oradell, New Jersey, which opened in the beginning of March 2016, an increase of $25.3 million or 42.2% from December 31, 2016. Additionally, the Company’s wholesale deposits increased $23.4 million, or 27.7%, to $108.0 million at September 30, 2017 from $84.6 at December 31, 2016.
At September 30, 2017, the Company’s total stockholders’ equity was $93.9 million, an increase of $33.9 million when compared to December 31, 2016. The increase was largely due to the capital raise of $28.0 million and net income for the nine months ended September 30, 2017. The Company completed the capital raise on June 21, 2017 which was the primary driver in the book value increase of 22.7% from $12.67 to $15.55. At September 30, 2017, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 12.14%, 14.82%, 15.80% and 14.82%, respectively, all in excess of the ratios required to be deemed “well-capitalized.”
Asset and Credit Quality
The ratio of NPAs, which includenon-accrual loans, loans 90 days past due and still accruing, troubled debt restructured loans currently performing in accordance with renegotiated terms and foreclosed real estate, to total assets decreased to 1.03% at September 30, 2017 from 1.10% at December 31, 2016. NPAs increased $471 thousand, or 5.0%, to $9.8 million at September 30, 2017, as compared to $9.3 million at December 31, 2016. There were no loans 90 days past due and still accruing at September 30, 2017 as compared to $468 thousand at December 31, 2016.Non-accrual loans increased $771 thousand, or 13.2%, to $6.6 million at September 30, 2017, as compared to $5.8 million at December 31, 2016. Loans past due 30 to 89 days totaled $1.6 million at September 30, 2017, representing a decrease of $212 thousand, or 11.5%, as compared to $1.8 million at December 31, 2016.
The Company continues to actively market its foreclosed real estate properties, which decreased $92 thousand to $2.3 million at September 30, 2017 as compared to $2.4 million at December 31, 2016. At September 30, 2017, the Company’s foreclosed real estate properties had an average carrying value of approximately $253 thousand per property.
The allowance for loan losses increased by $806 thousand, or 12.0%, to $7.5 million, or 0.94% of total loans, at September 30, 2017, compared to $6.7 million, or 0.96% of total loans, at December 31, 2016. The Company recorded $1.1 million in provision for loan losses for the nine months ended September 30, 2017 and 2016. Additionally, the
Company recorded net charge-offs of $321 thousand for the nine months ended September 30, 2017, as compared to $313 thousand in net charge-offs for the nine months ended September 30, 2016. The allowance for loan losses as a percentage ofnon-accrual loans decreased to 113.6% at September 30, 2017 from 114.8% at December 31, 2016.
About Sussex Bancorp
Sussex Bancorp is the holding company for Sussex Bank, which operates through its regional offices and corporate centers in Wantage and Rockaway, New Jersey, its eleven branch offices located in Andover, Augusta, Franklin, Hackettstown, Newton, Montague, Sparta, Vernon, Oradell and Wantage, New Jersey, and Astoria, New York, and a loan production office in Oradell, New Jersey, and for theTri-State Insurance Agency, Inc., a full service insurance agency with locations in Augusta and Oradell, New Jersey. In November 2016, SBBX earned the honor of being named one of the 50 Fastest Growing Companies in New Jersey by NJBIZ Magazine and was the highest ranked bank on the list. Anthony Labozzetta, President and Chief Executive Officer of Sussex Bancorp, was named American Banker’s Community Banker of the Year in 2016 and in February 2017, was recognized by Forbes magazine as one of America’s Business Leaders in Banking. In October 2017, Sussex Bancorp was recognized as one of the top 29 banks and thrifts nationwide and one of three from New Jersey that comprise the Sandler O’Neill Sm-All Stars Class of 2017. For additional information, please visit the Company’s website 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. 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 ofnon-interest income while continuing to manage its existingfee-based business, risks associated with the quality of the Company’s assets, the ability of its borrowers to comply with repayment terms, failure to complete the proposed acquisition of Community, the imposition of adverse regulatory conditions in connection with regulatory approval of the proposed acquisition of Community, disruption to the parties’ businesses as a result of the announcement and pendency of the acquisition of Community, the inability to realize expected cost savings or to implement integration plans and other adverse consquences associated with the acquisition of Community. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2016 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, SEVP/CFO
844-256-7328
SUSSEX BANCORP
SUMMARY FINANCIAL HIGHLIGHTS
(In Thousands, Except Percentages and Per Share Data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 9/30/2017 VS. | |
| | | 9/30/2017 | | | 12/31/2016 | | | 9/30/2016 | | | 9/30/2016 | | | 12/31/2016 | |
BALANCE SHEET HIGHLIGHTS - Period End Balances | | | | | | | | | | | | | | | | | | | | |
Total securities | | $ | 109,053 | | | $ | 100,229 | | | $ | 98,258 | | | | 11.0 | % | | | 8.8 | % |
Total loans | | | 795,124 | | | | 695,257 | | | | 663,258 | | | | 19.9 | % | | | 14.4 | % |
Allowance for loan losses | | | (7,502 | ) | | | (6,696 | ) | | | (6,331 | ) | | | 18.5 | % | | | 12.0 | % |
Total assets | | | 956,802 | | | | 848,728 | | | | 808,987 | | | | 18.3 | % | | | 12.7 | % |
Total deposits | | | 741,928 | | | | 660,921 | | | | 624,921 | | | | 18.7 | % | | | 12.3 | % |
Total borrowings and junior subordinated debt | | | 116,556 | | | | 123,645 | | | | 120,387 | | | | (3.2 | )% | | | (5.7 | )% |
Total shareholders’ equity | | | 93,944 | | | | 60,072 | | | | 58,633 | | | | 60.2 | % | | | 56.4 | % |
| | | | | |
FINANCIAL DATA - QUARTER ENDED: | | | | | | | | | | | | | | | | | | | | |
Net interest income (tax equivalent) (a) | | $ | 7,732 | | | $ | 6,704 | | | $ | 6,453 | | | | 19.8 | % | | | 15.3 | % |
Provision for loan losses | | | 340 | | | | 237 | | | | 458 | | | | (25.8 | )% | | | 43.5 | % |
Total other income | | | 2,029 | | | | 1,705 | | | | 1,774 | | | | 14.4 | % | | | 19.0 | % |
Total other expenses | | | 6,294 | | | | 5,726 | | | | 5,651 | | | | 11.4 | % | | | 9.9 | % |
Income before provision for income taxes (tax equivalent) | | | 3,127 | | | | 2,446 | | | | 2,118 | | | | 47.6 | % | | | 27.8 | % |
Provision for income taxes | | | 1,006 | | | | 806 | | | | 696 | | | | 44.5 | % | | | 24.8 | % |
Taxable equivalent adjustment (a) | | | 158 | | | | 117 | | | | 105 | | | | 50.5 | % | | | 35.0 | % |
| | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 1,963 | | | $ | 1,523 | | | $ | 1,317 | | | | 49.1 | % | | | 28.9 | % |
| | | | | | | | | | | | | | | | | | | | |
Net income per common share - Basic | | $ | 0.33 | | | $ | 0.33 | | | $ | 0.28 | | | | 17.9 | % | | | - | % |
Net income per common share - Diluted | | $ | 0.33 | | | $ | 0.32 | | | $ | 0.28 | | | | 17.9 | % | | | 3.1 | % |
| | | | | |
Return on average assets | | | 0.84 | % | | | 0.74 | % | | | 0.66 | % | | | 27.5 | % | | | 14.0 | % |
Return on average equity | | | 8.40 | % | | | 10.14 | % | | | 9.06 | % | | | (7.3 | )% | | | (17.1 | )% |
Efficiency ratio (b) | | | 65.54 | % | | | 69.05 | % | | | 69.58 | % | | | (5.8 | )% | | | (5.1 | )% |
Net interest margin (tax equivalent) | | | 3.42 | % | | | 3.35 | % | | | 3.34 | % | | | 2.4 | % | | | 2.1 | % |
Avg. interest earning assets/Avg. interest bearing liabilities | | | 1.29 | | | | 1.25 | | | | 1.25 | | | | 3.1 | % | | | 2.9 | % |
| | | | | |
FINANCIAL DATA - YEAR TO DATE: | | | | | | | | | | | | | | | | | | | | |
Net interest income (tax equivalent) (a) | | $ | 21,694 | | | | | | | $ | 18,109 | | | | 19.8 | % | | | | |
Provision for loan losses | | | 1,127 | | | | | | | | 1,054 | | | | 6.9 | % | | | | |
Total other income | | | 6,324 | | | | | | | | 6,124 | | | | 3.3 | % | | | | |
Total other expenses | | | 18,797 | | | | | | | | 16,859 | | | | 11.5 | % | | | | |
Income before provision for income taxes (tax equivalent) | | | 8,094 | | | | | | | | 6,320 | | | | 28.1 | % | | | | |
Provision for income taxes | | | 2,440 | | | | | | | | 2,022 | | | | 20.7 | % | | | | |
Taxable equivalent adjustment (a) | | | 476 | | | | | | | | 298 | | | | 59.7 | % | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 5,178 | | | | | | | $ | 4,000 | | | | 29.5 | % | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net income per common share - Basic | | $ | 1.00 | | | | | | | $ | 0.87 | | | | 14.9 | % | | | | |
Net income per common share - Diluted | | $ | 1.00 | | | | | | | $ | 0.86 | | | | 16.3 | % | | | | |
| | | | | |
Return on average assets | | | 0.77 | % | | | | | | | 0.71 | % | | | 8.2 | % | | | | |
Return on average equity | | | 9.33 | % | | | | | | | 9.41 | % | | | (0.9 | )% | | | | |
Efficiency ratio (b) | | | 68.25 | % | | | | | | | 70.44 | % | | | (3.1 | )% | | | | |
Net interest margin (tax equivalent) | | | 3.37 | % | | | | | | | 3.37 | % | | | - | % | | | | |
Avg. interest earning assets/Avg. interest bearing liabilities | | | 1.26 | | | | | | | | 1.24 | | | | 1.2 | % | | | | |
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SHARE INFORMATION: | | | | | | | | | | | | | | | | | | | | |
Book value per common share | | $ | 15.55 | | | $ | 12.67 | | | $ | 12.37 | | | | 25.8 | % | | | 22.8 | % |
Tangible book value per common share | | | 15.09 | | | | 12.08 | | | | 11.77 | | | | 28.2 | % | | | 24.9 | % |
Outstanding shares- period ending | | | 6,040,180 | | | | 4,741,068 | | | | 4,741,720 | | | | 27.4 | % | | | 27.4 | % |
Average diluted shares outstanding (year to date) | | | 5,200,466 | | | | 4,651,108 | | | | 4,633,473 | | | | 12.2 | % | | | 11.8 | % |
| | | | | |
CAPITAL RATIOS: | | | | | | | | | | | | | | | | | | | | |
Total equity to total assets | | | 9.82 | % | | | 7.08 | % | | | 7.25 | % | | | 35.5 | % | | | 38.7 | % |
Leverage ratio (c) | | | 12.14 | % | | | 10.41 | % | | | 8.98 | % | | | 35.2 | % | | | 16.6 | % |
Tier 1 risk-based capital ratio (c) | | | 14.82 | % | | | 12.87 | % | | | 11.02 | % | | | 34.5 | % | | | 15.2 | % |
Total risk-based capital ratio (c) | | | 15.80 | % | | | 13.86 | % | | | 11.99 | % | | | 31.8 | % | | | 14.0 | % |
Common equity Tier 1 capital ratio (c) | | | 14.82 | % | | | 12.87 | % | | | 11.02 | % | | | 34.5 | % | | | 15.2 | % |
| | | | | |
ASSET QUALITY: | | | | | | | | | | | | | | | | | | | | |
Non-accrual loans | | $ | 6,604 | | | $ | 5,833 | | | $ | 4,583 | | | | 44.1 | % | | | 13.2 | % |
Loans 90 days past due and still accruing | | | — | | | | 468 | | | | 386 | | | | - | % | | | (100.0 | )% |
Troubled debt restructured loans (“TDRs”) (d) | | | 939 | | | | 679 | | | | 1,142 | | | | (17.8 | )% | | | 38.3 | % |
Foreclosed real estate | | | 2,275 | | | | 2,367 | | | | 3,005 | | | | (24.3 | )% | | | (3.9 | )% |
| | | | | | | | | | | | | | | | | | | | |
Non-performing assets (“NPAs”) | | $ | 9,818 | | | $ | 9,347 | | | $ | 9,116 | | | | 7.7 | % | | | 5.0 | % |
| | | | | | | | | | | | | | | | | | | | |
Foreclosed real estate, criticized and classified assets | | $ | 20,285 | | | $ | 20,450 | | | $ | 19,777 | | | | 2.6 | % | | | (0.8 | )% |
Loans past due 30 to 89 days | | $ | 1,628 | | | $ | 1,840 | | | $ | 7,580 | | | | (78.5 | )% | | | (11.5 | )% |
Charge-offs (Recoveries), net (quarterly) | | $ | 3 | | | $ | (128 | ) | | $ | 115 | | | | (97.4 | )% | | | (102.3 | )% |
Charge-offs (Recoveries), net as a % of average loans (annualized) | | | 0.00 | % | | | (0.08 | )% | | | 0.07 | % | | | (97.8 | )% | | | (102.0 | )% |
Non-accrual loans to total loans | | | 0.83 | % | | | 0.84 | % | | | 0.69 | % | | | 20.2 | % | | | (1.0 | )% |
NPAs to total assets | | | 1.03 | % | | | 1.10 | % | | | 1.13 | % | | | (8.9 | )% | | | (6.8 | )% |
NPAs excluding TDR loans (d) to total assets | | | 0.93 | % | | | 1.02 | % | | | 0.99 | % | | | (5.9 | )% | | | (9.1 | )% |
Non-accrual loans to total assets | | | 0.69 | % | | | 0.69 | % | | | 0.57 | % | | | 21.8 | % | | | 0.4 | % |
Allowance for loan losses as a % ofnon-accrual loans | | �� | 113.60 | % | | | 114.80 | % | | | 138.14 | % | | | (17.8 | )% | | | (1.0 | )% |
Allowance for loan losses to total loans | | | 0.94 | % | | | 0.96 | % | | | 0.95 | % | | | (1.2 | )% | | | (2.0 | )% |
| (a) | Full taxable equivalent basis, using a 34% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance |
| (b) | Efficiency ratio calculatednon-interest expense divided by net interest income plusnon-interest income |
| (c) | Sussex Bank capital ratios |
| (d) | Troubled debt restructured loans currently performing in accordance with renegotiated terms |
SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
| | | | | | | | |
| | | September 30, 2017 | | | December 31, 2016 | |
ASSETS | | | | | | | | |
Cash and due from banks | | $ | 3,028 | | | $ | 2,847 | |
Interest-bearing deposits with other banks | | | 7,741 | | | | 11,791 | |
| | | | | | | | |
Cash and cash equivalents | | | 10,769 | | | | 14,638 | |
| | |
Interest bearing time deposits with other banks | | | 100 | | | | 100 | |
Securities available for sale, at fair value | | | 100,978 | | | | 88,611 | |
Securities held to maturity | | | 8,075 | | | | 11,618 | |
Federal Home Loan Bank Stock, at cost | | | 5,081 | | | | 5,106 | |
| | |
Loans receivable, net of unearned income | | | 795,124 | | | | 695,257 | |
Less: allowance for loan losses | | | 7,502 | | | | 6,696 | |
| | | | | | | | |
Net loans receivable | | | 787,622 | | | | 688,561 | |
Foreclosed real estate | | | 2,275 | | | | 2,367 | |
Premises and equipment, net | | | 7,683 | | | | 8,728 | |
Accrued interest receivable | | | 2,562 | | | | 2,058 | |
Goodwill | | | 2,820 | | | | 2,820 | |
Bank-owned life insurance | | | 21,910 | | | | 16,532 | |
Other assets | | | 6,927 | | | | 7,589 | |
| | | | | | | | |
Total Assets | | $ | 956,802 | | | $ | 848,728 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Liabilities: | | | | | | | | |
Deposits: | | | | | | | | |
Non-interest bearing | | $ | 148,861 | | | $ | 132,434 | |
Interest bearing | | | 593,067 | | | | 528,487 | |
| | | | | | | | |
Total Deposits | | | 741,928 | | | | 660,921 | |
Borrowings | | | 88,710 | | | | 95,805 | |
Accrued interest payable and other liabilities | | | 4,374 | | | | 4,090 | |
Subordinated debentures | | | 27,846 | | | | 27,840 | |
| | | | | | | | |
Total Liabilities | | | 862,858 | | | | 788,656 | |
Total Stockholders’ Equity | | | 93,944 | | | | 60,072 | |
| | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 956,802 | | | $ | 848,728 | |
| | | | | | | | |
SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
INTEREST INCOME | | | | | | | | | | | | | | | | |
Loans receivable, including fees | | $ | 8,556 | | | $ | 6,971 | | | $ | 24,030 | | | $ | 19,575 | |
Securities: | | | | | | | | | | | | | | | | |
Taxable | | | 379 | | | | 396 | | | | 1,064 | | | | 1,116 | |
Tax-exempt | | | 314 | | | | 201 | | | | 943 | | | | 592 | |
Interest bearing deposits | | | 6 | | | | 7 | | | | 28 | | | | 17 | |
| | | | | | | | | | | | | | | | |
Total Interest Income | | | 9,255 | | | | 7,575 | | | | 26,065 | | | | 21,300 | |
| | | | | | | | | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | |
Deposits | | | 963 | | | | 619 | | | | 2,532 | | | | 1,830 | |
Borrowings | | | 398 | | | | 508 | | | | 1,358 | | | | 1,393 | |
Junior subordinated debentures | | | 320 | | | | 100 | | | | 957 | | | | 266 | |
| | | | | | | | | | | | | | | | |
Total Interest Expense | | | 1,681 | | | | 1,227 | | | | 4,847 | | | | 3,489 | |
| | | | | | | | | | | | | | | | |
Net Interest Income | | | 7,574 | | | | 6,348 | | | | 21,218 | | | | 17,811 | |
PROVISION FOR LOAN LOSSES | | | 340 | | | | 458 | | | | 1,127 | | | | 1,054 | |
| | | | | | | | | | | | | | | | |
Net Interest Income after Provision for Loan Losses | | | 7,234 | | | | 5,890 | | | | 20,091 | | | | 16,757 | |
| | | | | | | | | | | | | | | | |
OTHER INCOME | | | | | | | | | | | | | | | | |
Service fees on deposit accounts | | | 274 | | | | 245 | | | | 812 | | | | 726 | |
ATM and debit card fees | | | 198 | | | | 190 | | | | 578 | | | | 577 | |
Bank owned life insurance | | | 144 | | | | 74 | | | | 378 | | | | 225 | |
Insurance commissions and fees | | | 1,263 | | | | 1,090 | | | | 4,153 | | | | 3,850 | |
Investment brokerage fees | | | 9 | | | | (10 | ) | | | 12 | | | | 67 | |
(Loss) gain on securities transactions | | | (26 | ) | | | 89 | | | | 51 | | | | 361 | |
(Loss) on disposal of fixed assets | | | — | | | | — | | | | — | | | | (19 | ) |
Other | | | 167 | | | | 96 | | | | 340 | | | | 337 | |
| | | | | | | | | | | | | | | | |
Total Other Income | | | 2,029 | | | | 1,774 | | | | 6,324 | | | | 6,124 | |
| | | | | | | | | | | | | | | | |
OTHER EXPENSES | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 3,755 | | | | 3,243 | | | | 10,990 | | | | 9,672 | |
Occupancy, net | | | 462 | | | | 463 | | | | 1,418 | | | | 1,399 | |
Data processing | | | 565 | | | | 529 | | | | 1,643 | | | | 1,626 | |
Furniture and equipment | | | 231 | | | | 248 | | | | 705 | | | | 764 | |
Advertising and promotion | | | 64 | | | | 63 | | | | 259 | | | | 254 | |
Professional fees | | | 303 | | | | 219 | | | | 778 | | | | 570 | |
Director fees | | | 94 | | | | 159 | | | | 290 | | | | 378 | |
FDIC assessment | | | 49 | | | | 138 | | | | 193 | | | | 379 | |
Insurance | | | 70 | | | | 67 | | | | 202 | | | | 213 | |
Stationary and supplies | | | 42 | | | | 47 | | | | 118 | | | | 149 | |
Merger-related expenses | | | 1 | | | | — | | | | 482 | | | | — | |
Loan collection costs | | | 23 | | | | 24 | | | | 75 | | | | 109 | |
Expenses and write-downs related to foreclosed real estate | | | 221 | | | | 98 | | | | 298 | | | | 317 | |
Other | | | 414 | | | | 353 | | | | 1,346 | | | | 1,029 | |
| | | | | | | | | | | | | | | | |
Total Other Expenses | | | 6,294 | | | | 5,651 | | | | 18,797 | | | | 16,859 | |
| | | | | | | | | | | | | | | | |
Income before Income Taxes | | | 2,969 | | | | 2,013 | | | | 7,618 | | | | 6,022 | |
INCOME TAX EXPENSE | | | 1,006 | | | | 696 | | | | 2,440 | | | | 2,022 | |
| | | | | | | | | | | | | | | | |
Net Income | | $ | 1,963 | | | $ | 1,317 | | | $ | 5,178 | | | $ | 4,000 | |
| | | | | | | | | | | | | | | | |
OTHER COMPREHENSIVE INCOME (LOSS): | | | | | | | | | | | | | | | | |
Unrealized (loss) gains on available for sale securities arising during the period | | $ | (10 | ) | | $ | (575 | ) | | $ | 1,810 | | | $ | 1,986 | |
Fair value adjustments on derivatives | | | (63 | ) | | | 190 | | | | (478 | ) | | | (1,359 | ) |
Reclassification adjustment for net loss (gain) on securities transactions included in net income | | | 26 | | | | (89 | ) | | | (51 | ) | | | (361 | ) |
Income tax related to items of other comprehensive income (loss) | | | 18 | | | | 190 | | | | (513 | ) | | | (106 | ) |
| | | | | | | | | | | | | | | | |
Other comprehensive income, net of income taxes | | | (29 | ) | | | (284 | ) | | | 768 | | | | 160 | |
| | | | | | | | | | | | | | | | |
Comprehensive income | | $ | 1,934 | | | $ | 1,033 | | | $ | 5,946 | | | $ | 4,160 | |
| | | | | | | | | | | | | | | | |
EARNINGS PER SHARE | | | | | | | | | | | | | | | | |
Basic | | $ | 0.33 | | | $ | 0.28 | | | $ | 1.00 | | | $ | 0.87 | |
Diluted | | $ | 0.33 | | | $ | 0.28 | | | $ | 1.00 | | | $ | 0.86 | |
SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | |
| | | 2017 | | | 2016 | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balance | | | Interest | | | Rate (2) | | | Balance | | | Interest | | | Rate (2) | |
Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
Tax exempt (3) | | $ | 45,252 | | | $ | 472 | | | | 4.14 | % | | $ | 31,849 | | | $ | 306 | | | | 3.81 | % |
Taxable | | | 66,235 | | | | 379 | | | | 2.27 | % | | | 71,496 | | | | 396 | | | | 2.20 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total securities | | | 111,487 | | | | 851 | | | | 3.03 | % | | | 103,345 | | | | 702 | | | | 2.69 | % |
Total loans receivable (1) (4) | | | 778,809 | | | | 8,556 | | | | 4.36 | % | | | 652,766 | | | | 6,971 | | | | 4.24 | % |
Other interest-earning assets | | | 6,945 | | | | 6 | | | | 0.34 | % | | | 9,445 | | | | 7 | | | | 0.29 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total earning assets | | | 897,241 | | | | 9,413 | | | | 4.16 | % | | | 765,556 | | | | 7,680 | | | | 3.98 | % |
| | | | | | |
Non-interest earning assets | | | 46,944 | | | | | | | | | | | | 41,759 | | | | | | | | | |
Allowance for loan losses | | | (7,237 | ) | | | | | | | | | | | (6,141 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Assets | | $ | 936,948 | | | | | | | | | | | $ | 801,174 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Sources of Funds: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
NOW | | $ | 181,631 | | | $ | 150 | | | | 0.33 | % | | $ | 144,840 | | | $ | 78 | | | | 0.21 | % |
Money market | | | 99,547 | | | | 243 | | | | 0.97 | % | | | 37,881 | | | | 39 | | | | 0.41 | % |
Savings | | | 137,559 | | | | 72 | | | | 0.21 | % | | | 137,455 | | | | 72 | | | | 0.21 | % |
Time | | | 173,553 | | | | 498 | | | | 1.14 | % | | | 166,847 | | | | 430 | | | | 1.02 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest bearing deposits | | | 592,290 | | | | 963 | | | | 0.65 | % | | | 487,023 | | | | 619 | | | | 0.50 | % |
Borrowed funds | | | 74,939 | | | | 398 | | | | 2.11 | % | | | 111,493 | | | | 508 | | | | 1.81 | % |
Subordinated debentures | | | 27,845 | | | | 320 | | | | 4.56 | % | | | 12,887 | | | | 100 | | | | 3.08 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total interest bearing liabilities | | | 695,074 | | | | 1,681 | | | | 0.96 | % | | | 611,403 | | | | 1,227 | | | | 0.80 | % |
| | | | | | |
Non-interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | | 144,231 | | | | | | | | | | | | 126,783 | | | | | | | | | |
Other liabilities | | | 4,193 | | | | | | | | | | | | 4,843 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Totalnon-interest bearing liabilities | | | 148,424 | | | | | | | | | | | | 131,626 | | | | | | | | | |
Stockholders’ equity | | | 93,450 | | | | | | | | | | | | 58,145 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 936,948 | | | | | | | | | | | $ | 801,174 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Interest Income and Margin (5) | | | | | | | 7,732 | | | | 3.42 | % | | | | | | | 6,453 | | | | 3.34 | % |
Tax-equivalent basis adjustment | | | | | | | (158 | ) | | | | | | | | | | | (105 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Interest Income | | | | | | $ | 7,574 | | | | | | | | | | | $ | 6,348 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (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 includenon-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)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | |
| | | 2017 | | | 2016 | |
| | | Average
Balance | | | Interest | | | Average
Rate (2) | | | Average
Balance | | | Interest | | | Average
Rate (2) | |
Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
Tax exempt (3) | | $ | 46,188 | | | $ | 1,419 | | | | 4.11 | % | | $ | 30,402 | | | $ | 890 | | | | 3.91 | % |
Taxable | | | 65,169 | | | | 1,064 | | | | 2.18 | % | | | 70,195 | | | | 1,116 | | | | 2.12 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total securities | | | 111,357 | | | | 2,483 | | | | 2.98 | % | | | 100,597 | | | | 2,006 | | | | 2.66 | % |
Total loans receivable (1) (4) | | | 740,451 | | | | 24,030 | | | | 4.34 | % | | | 607,044 | | | | 19,575 | | | | 4.31 | % |
Other interest-earning assets | | | 8,976 | | | | 28 | | | | 0.42 | % | | | 9,154 | | | | 17 | | | | 0.25 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total earning assets | | | 860,784 | | | | 26,541 | | | | 4.12 | % | | | 716,795 | | | | 21,598 | | | | 4.02 | % |
| | | | | | |
Non-interest earning assets | | | 44,474 | | | | | | | | | | | | 40,063 | | | | | | | | | |
Allowance for loan losses | | | (6,974 | ) | | | | | | | | | | | (5,894 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Assets | | $ | 898,284 | | | | | | | | | | | $ | 750,964 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Sources of Funds: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
NOW | | $ | 180,378 | | | $ | 399 | | | | 0.30 | % | | $ | 142,911 | | | $ | 229 | | | | 0.21 | % |
Money market | | | 91,614 | | | | 593 | | | | 0.87 | % | | | 34,902 | | | | 105 | | | | 0.40 | % |
Savings | | | 137,901 | | | | 215 | | | | 0.21 | % | | | 138,174 | | | | 214 | | | | 0.21 | % |
Time | | | 165,861 | | | | 1,325 | | | | 1.07 | % | | | 157,235 | | | | 1,282 | | | | 1.09 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest bearing deposits | | | 575,754 | | | | 2,532 | | | | 0.59 | % | | | 473,222 | | | | 1,830 | | | | 0.52 | % |
Borrowed funds | | | 79,999 | | | | 1,358 | | | | 2.27 | % | | | 89,803 | | | | 1,393 | | | | 2.07 | % |
Subordinated debentures | | | 27,842 | | | | 957 | | | | 4.60 | % | | | 12,887 | | | | 266 | | | | 2.76 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest bearing liabilities | | | 683,595 | | | | 4,847 | | | | 0.95 | % | | | 575,912 | | | | 3,489 | | | | 0.81 | % |
| | | | | | |
Non-interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | | 136,642 | | | | | | | | | | | | 113,504 | | | | | | | | | |
Other liabilities | | | 4,050 | | | | | | | | | | | | 4,890 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Totalnon-interest bearing liabilities | | | 140,692 | | | | | | | | | | | | 118,394 | | | | | | | | | |
Stockholders’ equity | | | 73,997 | | | | | | | | | | | | 56,658 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 898,284 | | | | | | | | | | | $ | 750,964 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Interest Income and Margin (5) | | | | | | | 21,694 | | | | 3.37 | % | | | | | | | 18,109 | | | | 3.37 | % |
Tax-equivalent basis adjustment | | | | | | | (476 | ) | | | | | | | | | | | (298 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Interest Income | | | | | | $ | 21,218 | | | | | | | | | | | $ | 17,811 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (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 includenon-accrual loans |
| (5) | Represents the difference between interest earned and interest paid, divided by average total interest-earning assets |
SUSSEX BANCORP
Segment Reporting
(Dollars In Thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, 2017 | | | Three Months Ended September 30, 2016 | |
| | | Banking and
Financial
Services | | | Insurance
Services | | | Total | | | Banking and
Financial
Services | | | Insurance
Services | | | Total | |
Net interest income from external sources | | $ | 7,574 | | | $ | — | | | $ | 7,574 | | | $ | 6,348 | | | $ | — | | | $ | 6,348 | |
Other income from external sources | | | 756 | | | | 1,273 | | | | 2,029 | | | | 707 | | | | 1,067 | | | | 1,774 | |
Depreciation and amortization | | | 255 | | | | 6 | | | | 261 | | | | 283 | | | | 8 | | | | 291 | |
Income before income taxes | | | 2,775 | | | | 194 | | | | 2,969 | | | | 1,848 | | | | 165 | | | | 2,013 | |
Income tax expense(1) | | | 928 | | | | 78 | | | | 1,006 | | | | 630 | | | | 66 | | | | 696 | |
Total assets | | | 950,661 | | | | 6,141 | | | | 956,802 | | | | 803,032 | | | | 5,955 | | | | 808,987 | |
| | |
| | | Nine Months Ended September 30, 2017 | | | Nine Months Ended September 30, 2016 | |
| | | Banking and
Financial
Services | | | Insurance
Services | | | Total | | | Banking and
Financial
Services | | | Insurance
Services | | | Total | |
Net interest income from external sources | | $ | 21,218 | | | $ | — | | | $ | 21,218 | | | $ | 17,811 | | | $ | — | | | $ | 17,811 | |
Other income from external sources | | | 2,141 | | | | 4,183 | | | | 6,324 | | | | 2,274 | | | | 3,850 | | | | 6,124 | |
Depreciation and amortization | | | 780 | | | | 19 | | | | 799 | | | | 816 | | | | 21 | | | | 837 | |
Income before income taxes | | | 6,424 | | | | 1,194 | | | | 7,618 | | | | 4,918 | | | | 1,104 | | | | 6,022 | |
Income tax expense(1) | | | 1,962 | | | | 478 | | | | 2,440 | | | | 1,580 | | | | 442 | | | | 2,022 | |
Total assets | | | 950,661 | | | | 6,141 | | | | 956,802 | | | | 803,032 | | | | 5,955 | | | | 808,987 | |
| (1) | Calculated at statutory tax rate of 40% for the insurance services segment |
SUSSEX BANCORP
Non-GAAP Reporting
(Dollars In Thousands)
(Unaudited)
| | | | | | | | |
| | | Nine Months Ended September 30, | |
| | | 2017 | | | 2016 | |
Net income (GAAP) | | $ | 5,178 | | | $ | 4,000 | |
Merger related expenses net of tax(1) | | | 345 | | | | — | |
S-3 Registration filing expenses net of tax (1) | | | 45 | | | | — | |
Net income, as adjusted | | $ | 5,568 | | | $ | 4,000 | |
Average diluted shares outstanding (GAAP) | | | 5,200,466 | | | | 4,633,473 | |
Average diluted shares from capital raise (2) | | | 462,454 | | | | — | |
Average diluted shares outstanding, as adjusted | | | 4,738,012 | | | | 4,633,473 | |
Diluted EPS, as adjusted | | $ | 1.18 | | | $ | 0.86 | |
Return on average assets, as adjusted | | | 0.83 | % | | | 0.71 | % |
Return on average equity, as adjusted | | | 10.03 | % | | | 9.41 | % |
| (1) | Merger related expenses net of tax expenses of $136 thousand;S-3 registration filing net of tax expenses of $30 thousand. |
| (2) | Calculation is based on 1,249,999 common stock shares issued and outstanding as part of the capital raise completed on June 21, 2017 divided by the number of days in the period. |
