FRANKLIN, N.J., July 24, 2007 (PRIME NEWSWIRE) -- Sussex Bancorp (Nasdaq:SBBX) today announced its financial results for the second quarter ending June 30, 2007.
For the quarter ended June 30, 2007, the Company earned net income of $294,000 compared to net income of $652,000 reported for the second quarter of 2006. For the six months ended June 30, 2007, the Company earned net income of $1,018,000, a decline from the $1,248,000 earned for the same period last year. Basic earnings per share for the three and six months ended June 30, 2007 were $0.09 and $0.32, respectively, compared to $0.21 and $0.40 for the respective comparable periods of 2006. Diluted earnings per share were $0.09 and $0.32 respectively for the three and six months ended June 30, 2007, compared to $0.20 and $0.39 in the respective comparable periods of 2006. The decline in both net income and earnings per share reflects continued pressure on the Company's net interest margin, as well as an increase in the Company's provision for loan losses related to certain loans performing at quarter end that management deems necessary at this time based upon the present loan repayment terms and the ability of the borrowers to comply with the present repayment terms.
The Company's net interest income decreased to $2,894,000 for the quarter ended June 30, 2007 from $3,051,000 for the second quarter of 2006. The decrease reflects the Company's interest expense increasing at a faster rate than its interest income, due in large measure to the competitive environment for deposits in the Company's trade area. The Company's interest income increased to $5,613,000 for the quarter ended June 30, 2007 from $4,876,000 for the second quarter of 2006. The Company's interest expense increased to $2,719,000 for the three months ended June 30, 2007 from $1,825,000 for the second quarter of 2006. For the six months ended June 30, 2007, the Company's net interest income decreased to $5,743,000 from the $5,966,000 earned for the same period last year. For the six months ended June 30, 2007, the Company's interest income increased to $11,005,000 from $9,457,000 for the period ended June 30, 2006, while the Company's interest expense increased to $5,262,000 from $3,491,000 for the six months ended June 30, 2006. As a result of these changes, the Company's net interest margin declined to 3.46% and 3.53% for the three and six months ended June 30, 2007, respectively, from 4.22% and 4.19% for the three and six months ended June 30, 2006, respectively.
Management has sought to address the margin compression in several ways. The Company recently refinanced $5.0 million in its outstanding trust preferred securities. The securities called for redemption bore a rate of 9.01%, while the newly issued trust preferred securities have a current rate of 6.80%. Management is also closely monitoring rates offered on deposit products. In addition, the Company is seeking to enhance its yield on its interest earning assets, primarily its loan portfolio. The Company will no longer seek to compete on rate for all potential customers, but only on its more profitable relationships. This may lead to a slowing in the rate of growth of the Company's loan portfolio, as certain borrowers elect to obtain credit products from competing institutions. However, management believes this will benefit the Company's net interest margin and profitability.
The loan loss provision for the second quarter was $436,000 compared to $229,000 for the same period last year. The increase is related both to the continued growth in the Company's loan portfolio and two construction loans dependent upon residential unit sales that due to market conditions have not kept pace with the expected loan amortization schedules. Subsequent to quarter end, one of these loans, with an outstanding balance of $4.4 million, reached maturity, but has not been paid off. Considering the underlying collateral value of both loans and the continuing economic environment, management therefore determined that an additional provision was prudent at this time.
The Company reported non-interest income of $1,235,000 and $2,821,000 for the current three and six month periods ended June 30, 2007, respectively, compared to non-interest income of $1,369,000 and $2,660,000 for the three and six month periods ending June 30, 2006. Insurance commissions for the three and six month periods ended June 30, 2007 were $664,000 and $1,518,000, respectively.
The Company's other expenses increased in the three and six month periods of 2007 compared to the prior year periods. For the three month period ending June 30, 2007 other expenses increased by $107,000 thousand, or 3.3%, while other expenses increased by $218,000 thousand, or 3.4%, for the six months ended June 30, 2007 compared to the prior year periods.
At June 30, 2007 the Company had total assets of $387.3 million, compared to total assets of $331.3 million at June 30, 2006. The Company's total deposits increased to $311.3 million at June 30, 2007 from $277.3 million at June 30, 2006, and the Company's total loan portfolio, net of unearned income, increased to $284.6 million at June 30, 2007 from $244.1 million at June 30, 2006.
Sussex Bancorp also announced that its Board of Directors declared a cash dividend of $0.07 per share, payable on August 24, 2007 to shareholders of record as of August 6, 2007.
Sussex Bancorp is the holding company for Sussex Bank, which operates through its main office in Franklin, New Jersey and branch offices in Andover, Augusta, Newton, Montague, Sparta, Vernon and Wantage, New Jersey, Port Jervis and Warwick, New York and for the Tri-State Insurance Agency, Inc., a full service insurance agency located in Sussex County, New Jersey.
SUSSEX BANCORP CONSOLIDATED BALANCE SHEETS (Dollars In Thousands) (Unaudited) ASSETS June 30, June 30, Dec. 31, ------ 2007 2006 2006 ------------------------------ Cash and due from banks $ 9,240 $ 10,442 $ 10,170 Federal funds sold 16,795 2,670 11,995 -------- -------- -------- Cash and cash equivalents 26,035 13,112 22,165 Interest bearing time deposits with other banks 100 100 100 Trading securities 12,282 -- -- Securities available for sale 45,703 57,814 54,635 Federal Home Loan Bank Stock, at cost 1,358 964 1,188 Loans receivable, net of unearned income 284,640 244,061 262,276 Less: allowance for loan losses 3,860 3,040 3,340 -------- -------- -------- Net loans receivable 280,780 241,021 258,936 Premises and equipment, net 8,606 6,909 7,794 Accrued interest receivable 1,804 1,497 1,910 Goodwill 2,820 2,780 2,820 Other assets 7,766 7,062 6,749 -------- -------- -------- Total Assets $387,254 $331,259 $356,297 ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Deposits: Non-interest bearing $ 37,818 $ 34,234 $ 40,083 Interest bearing 273,517 243,063 255,687 -------- -------- -------- Total Deposits 311,335 277,297 295,770 Borrowings 20,226 13,276 18,251 Accrued interest payable and other liabilities 2,663 2,077 2,529 Junior subordinated debentures 18,042 5,155 5,155 -------- -------- -------- Total Liabilities 352,266 297,805 321,705 Total Stockholders' Equity 34,988 33,454 34,592 -------- -------- -------- Total Liabilities and Stockholders' Equity $387,254 $331,259 $356,297 ======== ======== ======== SUSSEX BANCORP CONSOLIDATED STATEMENTS OF INCOME (Dollars In Thousands Except Per Share Data) (Unaudited) Three Months Six Months Ended June 30, Ended June 30, ---------------- ---------------- 2007 2006 2007 2006 ------- ------- ------- ------- INTEREST INCOME Loans receivable, including fees $ 4,881 $ 4,217 $ 9,534 $ 8,030 Securities: Taxable 404 349 800 702 Tax-exempt 257 259 507 520 Federal funds sold 69 46 161 195 Interest bearing deposits 2 5 3 10 ------- ------- ------- ------- Total Interest Income 5,613 4,876 11,005 9,457 ------- ------- ------- ------- INTEREST EXPENSE Deposits 2,355 1,548 4,563 2,920 Borrowings 243 168 465 359 Junior subordinated debentures 121 109 234 212 ------- ------- ------- ------- Total Interest Expense 2,719 1,825 5,262 3,491 ------- ------- ------- ------- Net Interest Income 2,894 3,051 5,743 5,966 PROVISION FOR LOAN LOSSES 436 229 544 445 ------- ------- ------- ------- Net Interest Income after Provision for Loan Losses 2,458 2,822 5,199 5,521 ------- ------- ------- ------- OTHER INCOME Service fees on deposit accounts 335 348 654 668 ATM and debit card fees 104 97 191 179 Insurance commissions and fees 664 688 1,518 1,421 Investment brokerage fees 56 88 213 140 Trading revenue (48) -- (2) -- Other 124 148 247 252 ------- ------- ------- ------- Total Other Income 1,235 1,369 2,821 2,660 ------- ------- ------- ------- OTHER EXPENSES Salaries and employee benefits 1,829 1,756 3,611 3,395 Occupancy, net 300 259 613 530 Furniture, equipment and data processing 356 297 694 575 Stationary and supplies 46 45 92 96 Professional fees 165 167 304 345 Advertising and promotion 137 145 241 330 Insurance 48 46 94 104 Postage and freight 48 60 88 112 Amortization of intangible assets 26 40 63 73 Other 381 414 776 798 ------- ------- ------- ------- Total Other Expenses 3,336 3,229 6,576 6,358 ------- ------- ------- ------- Income before Income Taxes 357 962 1,444 1,823 PROVISION FOR INCOME TAXES 63 310 426 575 ------- ------- ------- ------- Net Income $ 294 $ 652 $ 1,018 $ 1,248 ======= ======= ======= ======= SUSSEX BANCORP COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES (Unaudited) Six Months Ended June 30, ----------------------------------------------------- (Dollars in thousands) 2007 2006 --------------------------------------------------------------------- Average Interest Average Average Interest Average Earning Assets: Balance (a) Rate (b) Balance (a) Rate (b) --------------------------------------------------------------------- Securities: Tax exempt (c) $ 24,030 $ 663 5.57% $ 24,171 $ 708 5.91% Taxable 34,135 800 4.73% 35,752 702 3.96% --------------------------------------------------------------------- Total securities 58,166 1,463 5.07% 59,923 1,410 4.74% Total loans receivable (d) 272,678 9,534 7.05% 227,472 8,030 7.12% Other interest- earning assets 6,397 164 5.16% 9,083 205 4.55% --------------------------------------------------------------------- Total earning assets 337,242 $ 11,161 6.67% 296,478 $ 9,645 6.56% Non-interest earning assets 28,098 25,213 Allowance for loan losses (3,496) (2,804) ---------------------------------- -------- Total Assets $361,844 $318,887 ================================= ======== Sources of Funds: Interest bearing deposits: NOW $ 58,221 $ 642 2.22% $ 52,470 $ 500 1.92% Money market 36,731 704 3.87% 27,873 511 3.70% Savings 39,655 178 0.91% 49,171 206 0.84% Time 127,386 3,039 4.81% 91,556 1,703 3.75% --------------------------------------------------------------------- Total interest bearing deposits 261,993 4,563 3.51% 221,070 2,920 2.66% Borrowed funds 19,565 465 4.73% 14,786 359 4.83% Junior subordinated debentures 5,366 234 8.66% 5,155 212 8.20% --------------------------------------------------------------------- Total interest bearing liabilities 286,924 $ 5,262 3.70% 241,011 $ 3,491 2.92% Non-interest bearing liabilities: Demand deposits 37,647 42,561 Other liabilities 2,218 1,965 ---------------------------------- -------- Total non- interest bearing liabilities 39,865 44,526 Stockholders' equity 35,055 33,350 ---------------------------------- -------- Total Liabilities and Stockholders' Equity $361,844 $318,887 ================================= ======== ---------------- -------------- --------------- Net Interest Income and Margin (e) $ 5,899 3.53% $ 6,154 4.19% ================ ============== =============== (a) Includes loan fee income (b) Average rates on securities are calculated on amortized costs (c) Full taxable equivalent basis, using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance (d) Loans outstanding include non-accrual loans (e) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets