FRANKLIN, N.J., Oct. 16, 2008 (GLOBE NEWSWIRE) -- Sussex Bancorp (Nasdaq:SBBX) today announced its financial results for the third quarter and nine months ended September 30, 2008.
As previously announced in an 8-K filing on September 8, 2008, Sussex Bancorp held Fannie Mae and Freddie Mac perpetual preferred stock at September 30, 2008 with a cost basis of approximately $3.8 million. These securities are subject to an other than temporary impairment ("OTTI") charge. On September 7, 2008, the Federal Housing Finance Agency placed both Fannie Mae and Freddie Mac under conservatorship. Although this action did not eliminate the equity in Fannie Mae and Freddie Mac represented by the perpetual preferred stock, it has negatively impacted the value of the perpetual preferred stock. The estimated fair value of these securities at September 30, 2008 was $300 thousand. The OTTI charge that was taken amounted to $3.5 million.
As a result of the OTTI charge, for the quarter ended September 30, 2008, the Company had a net loss of $3.0 million compared to net income of $533 thousand reported for the third quarter of 2007. For the nine months ended September 30, 2008, the Company had a net loss of $2.0 million compared to net income of $1.6 million reported for the same period last year. Basic and diluted loss per share for the three and nine months ended September 30, 2008, were ($0.92) and ($0.62), respectively, compared to basic and diluted earnings per share of $0.16 and $0.46 for the respective comparable periods of 2007. All per share numbers have been adjusted to reflect the stock dividend discussed below.
While the reported results for the three and nine month periods reflect the effects of the OTTI charge, they do not reflect the change in tax treatment enacted as part of the Emergency Economic Stabilization Act of 2008 (the "Act"), which was adopted on October 3, 2008. Under the Act, the Company is permitted to deduct the loss as an ordinary loss for tax purposes, thereby offsetting a portion of the Company's ordinary income. However, since the Act was not enacted until the fourth quarter, the Company can not recognize this tax benefit as part of its third quarter results. The tax benefit will be recognized in the fourth quarter, and it is expected to amount to approximately $1.3 million or $0.40 per share, based on the average shares outstanding for the quarter ended September 30, 2008 and adjusted for the stock dividend discussed below.
Mr. Donald Kovach, the Company's Chairman and CEO, stated: "Although the Company can not be immune from the turbulence effecting our financial markets and financial institutions, our core business remains strong, and we remain a well capitalized institution, exceeding all regulatory capital requirements. We have money to lend, and remain committed to serving the banking needs of our local communities."
The Company's net interest income increased to $3.1 million for the quarter ended September 30, 2008 from $2.9 million for the third quarter of 2007. The Company's interest income was unchanged at $5.9 million for the quarter ended September 30, 2008 compared to same for the third quarter of 2007. The Company's interest expense decreased to $2.7 million for the three months ended September 30, 2008 from $3.0 million for the third quarter of 2007. For the nine months ended September 30, 2008, the Company's net interest income increased to $9.0 million from the $8.7 million earned for the same period last year. For the nine months ended September 30, 2008, the Company's interest income was $17.0 million as compared to $16.9 million for the nine months ended September 30, 2007. As the Company's average earning assets increased by $41.5 million, its yield on earning assets decreased by 66 basis points. The Company's interest expense decreased to $8.0 million for the nine months ended September 30, 2008 from $8.3 million for the nine month period ended September 30, 2007. The Company's average interest bearing liabilities increased by $40.7 million in the first nine months of 2008 compared to the prior year, and the Company's cost of interest bearing liabilities decreased by 56 basis points.
The loan loss provision for the third quarter was $279 thousand compared to $324 thousand for the same period last year. For the nine month period the provision was $569 thousand, compared to $868 thousand for the same period last year.
At September 30, 2008, non-performing assets totaled $14.8 million compared to $7.3 million at September 30, 2007 and $12.9 million at December 31, 2007.
At September 30, 2008 the Company had total assets of $439.1 million, compared to total assets of $391.9 million at September 30, 2007. The Company's total loans increased $18.4 million to $312.3 million at September 30, 2008 from $293.9 million at September 30, 2007.
The Company reported non-interest income for the three and nine month periods ending September 30, 2008 of ($2.3) million and $632 thousand compared to $1.5 million and $4.3 million for the three and nine month periods ending September 30, 2007. The reduction in non-interest income for the three and nine month periods reflects the OTTI charge discussed above, which is recognized in non-interest income.
Sussex Bancorp also announced that its Board of Director's declared a 6.5% stock dividend on October 15, 2008 payable November 12, 2008 to shareholders of record as of October 29, 2008.
Sussex Bancorp is the holding company for Sussex Bank, which operates through its eight New Jersey offices and two Orange County offices and for the Tri-State Insurance Agency, Inc., a full service insurance agency located in Sussex County, New Jersey.
SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
(Unaudited)
Sept. 30, Sept. 30, Dec. 31,
ASSETS 2008 2007 2007
------ ----------------------------
Cash and due from banks $10,537 $10,056 $7,985
Federal funds sold 15,470 11,255 3,790
-------- -------- --------
Cash and cash equivalents 26,007 21,311 11,775
Interest bearing time deposits with
other banks 100 100 100
Trading securities 13,519 11,865 14,259
Securities available for sale 64,487 46,248 48,397
Federal Home Loan Bank Stock, at cost 2,111 1,358 2,032
Loans receivable, net of unearned income 312,330 293,906 300,646
Less: allowance for loan losses 5,080 4,098 5,140
-------- -------- --------
Net loans receivable 307,250 289,808 295,506
Foreclosed real estate 3,931 -- --
Premises and equipment, net 8,697 8,897 9,112
Accrued interest receivable 2,058 2,046 2,035
Goodwill 2,820 2,820 2,820
Other assets 8,099 7,481 7,496
-------- -------- --------
Total Assets $439,079 $391,934 $393,532
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits:
Non-interest bearing $40,430 $38,315 $36,625
Interest bearing 316,231 282,116 271,913
-------- -------- --------
Total Deposits 356,661 320,431 308,538
Borrowings 36,160 20,213 35,200
Accrued interest payable and other
liabilities 2,572 3,158 2,467
Junior subordinated debentures 12,887 12,887 12,887
-------- -------- --------
Total Liabilities 408,280 356,689 359,092
Total Stockholders' Equity 30,799 35,245 34,440
-------- -------- --------
Total Liabilities and Stockholders'
Equity $439,079 $391,934 $393,532
======== ======== ========
SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands)
(Unaudited)
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
INTEREST INCOME
Loans receivable, including fees $4,887 $5,038 $14,335 $14,572
Securities:
Taxable 631 439 1,698 1,239
Tax-exempt 248 255 710 762
Federal funds sold 111 193 223 354
Interest bearing deposits 1 1 2 4
------- ------- ------- -------
Total Interest Income 5,878 5,926 16,968 16,931
------- ------- ------- -------
INTEREST EXPENSE
Deposits 2,219 2,548 6,417 7,111
Borrowings 377 241 1,132 706
Junior subordinated debentures 135 226 459 460
------- ------- ------- -------
Total Interest Expense 2,731 3,015 8,008 8,277
------- ------- ------- -------
Net Interest Income 3,147 2,911 8,960 8,654
PROVISION FOR LOAN LOSSES 279 324 569 868
------- ------- ------- -------
Net Interest Income after
Provision for Loan Losses 2,868 2,587 8,391 7,786
------- ------- ------- -------
OTHER INCOME
Service fees on deposit accounts 409 362 1,111 1,016
ATM and debit card fees 123 109 348 300
Insurance commissions and fees 576 618 1,972 2,136
Investment brokerage fees 22 26 117 239
Holding gains on trading
securities (8) 194 13 192
Gain (loss) on sale of securities,
available for sale -- 10 152 10
Impairment writedowns on equity
securities (3,526) -- (3,526) --
Other 129 149 445 396
------- ------- ------- -------
Total Other Income (2,275) 1,468 632 4,289
------- ------- ------- -------
OTHER EXPENSES
Salaries and employee benefits 1,842 1,792 5,697 5,403
Occupancy, net 315 319 977 932
Furniture, equipment and data
processing 372 372 1,119 1,066
Stationary and supplies 50 46 141 138
Professional fees 140 120 337 424
Advertising and promotion 92 174 379 415
Insurance 42 41 127 135
FDIC assessment 95 9 280 26
Postage and freight 34 36 118 124
Amortization of intangible assets 14 15 43 78
Other 443 360 1,261 1,119
------- ------- ------- -------
Total Other Expenses 3,439 3,284 10,479 9,860
------- ------- ------- -------
Income (loss) before Income
Taxes (2,846) 771 (1,456) 2,215
PROVISION FOR INCOME TAXES 181 238 575 664
------- ------- ------- -------
Net Income (Loss) (3,027) $533 ($2,031) $1,551
======= ======= ======= =======
SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
Nine Months Ended September 30,
2008 2007
-------------------------- -------------------------
Average Inte- Average Average Inte- Average
Earning Assets: Balance rest(1) Rate(2) Balance rest(1) Rate(2)
----------------------------------------------------
Securities:
Tax exempt(3) $22,906 $1,061 6.19% $24,083 $992 5.51%
Taxable 45,576 1,698 4.98% 34,773 1,239 4.76%
----------------------------------------------------
Total securities 68,482 2,759 5.38% 58,856 2,231 5.07%
Total loans
receivable(4) 304,859 14,335 6.28% 278,102 14,572 7.01%
Other interest-
earning assets 14,350 225 2.10% 9,283 358 5.16%
----------------------------------------------------
Total earning
assets 387,691 $17,319 5.97% 346,241 $17,161 6.63%
Non-interest
earning assets 30,837 28,420
Allowance for
loan losses (5,188) (3,626)
-------- --------
Total Assets $413,340 $371,035
======== ========
Sources of Funds:
Interest bearing
deposits:
NOW $58,277 $604 1.38% $59,130 $971 2.20%
Money market 26,346 451 2.29% 38,379 1,097 3.82%
Savings 73,098 1,376 2.51% 38,860 264 0.91%
Time 130,380 3,986 4.08% 132,081 4,779 4.84%
----------------------------------------------------
Total interest
bearing deposits 288,101 6,417 2.98% 268,450 7,111 3.54%
Borrowed funds 35,998 1,132 4.13% 19,785 706 4.70%
Junior
subordinated
debentures 12,887 459 4.68% 8,052 460 7.54%
----------------------------------------------------
Total interest
bearing
liabilities 336,986 $8,008 3.17% 296,287 $8,277 3.74%
Non-interest
bearing
liabilities:
Demand deposits 39,721 37,454
Other
liabilities 2,207 2,252
-------- --------
Total non-interest
bearing
liabilities 41,928 39,706
Stockholders'
equity 34,426 35,042
-------- --------
Total Liabilities
and Stockholders'
Equity $413,340 $371,035
======== ========
Net Interest
Income and --------------- ---------------
Margin(5) $9,311 3.21% $8,884 3.43%
=============== ===============
(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