Sussex Bancorp Announces 154% Increase in First Quarter 2010 Earnings

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| Source: Sussex Bancorp

FRANKLIN, N.J., April 28, 2010 (GLOBE NEWSWIRE) -- Sussex Bancorp (Nasdaq:SBBX) today announced its financial results for the first quarter ended March 31, 2010.

For the quarter ended March 31, 2010, the Company earned net income of $643 thousand, an increase of 154.2% from net income of $253 thousand for the first quarter of 2009. Basic and diluted earnings per share were $0.20 in the first quarter of 2010 compared to $0.08 for the first quarter of 2009.  "We are encouraged by our first quarter results," said Anthony Labozzetta, Sussex's President and Chief Executive Officer.  "With the continued strengthening of our core earnings and strong capital, we believe that we are well positioned to execute our community bank strategy of delivering an extraordinary experience for our customers while assisting with their financial needs," added Mr. Labozzetta.

The Company's net interest income increased $855 thousand, to $4.0 million for the quarter ended March 31, 2010 from $3.1 million for the first quarter of 2009. This, in large part, is a product of management's effort to reduce funding costs, which helped improve the Company's net interest margin by 81 basis points to 3.84% in the first quarter of 2010 as compared to the same period in 2009. The average rate paid on interest bearing liabilities declined 115 basis points to 1.57% in the first three months of 2010 compared to 2.72% in the same period one year earlier.

Excluding holding gains on trading securities, the Company's non-interest income decreased $132 thousand, or 10.1%, to $1.2 million for the quarter ended March 31, 2010 from $1.3 million for the first quarter of 2009. The decrease in non-interest income is attributable to lower insurance commissions and lower service charges on deposit accounts.

The Company's non-interest expenses remained unchanged at $3.5 million for the quarters ended March 31, 2010 and 2009. The Company incurred higher expenses for FDIC assessments and salary and benefits in the first quarter of 2010 as compared to the same period a year ago. Offsetting the overall impact of these items was a decrease in foreclosed real estate expenses and other expense savings resulting from cost control initiatives implemented during 2009. Maintaining non-interest expenses at the first quarter 2009 level, coupled with the increase in net interest income, resulted in a 12.1% decrease in the Company's efficiency ratio to 65.1% for the first three months of 2010 compared to the first quarter of 2009. 

At March 31, 2010, non-performing assets, which include non-accrual loans and foreclosed real estate, increased $5.4 million, to $26.4 million compared to $21.0 million at December 31, 2009, as foreclosed real estate increased by $486 thousand and non-accrual loans increased $4.9 million. As a result of this increase in non-performing assets, the ratio of non-performing assets to total assets increased to 5.59% at March 31, 2010 from 4.61% at December 31, 2009. Mr. Labozzetta noted that the increase in nonperforming assets reflects, among other things, management's aggressive approach to identifying and resolving the Bank's troubled assets.

At March 31, 2010 the Company's total assets were $471.8 million, an increase of $17.0 million, or 3.7%, compared to total assets of $454.8 million at December 31, 2009. The Company's total deposits increased $16.0 million, or 4.3%, to $388.1 million at March 31, 2010 from $372.1 million at December 31, 2009.  The growth in deposits was primarily in core deposits, as they increased $13.2 million and time deposits grew $2.8 million between the two periods.  The Company's gross loans, net of unearned income decreased $3.2 million to $329.8 million at March 31, 2010 from $333.0 million at December 31, 2009. At March 31, 2010, the leverage capital, tier 1 capital to risk weighted assets and total capital to risk weighted assets ratios of Sussex Bank, the Company's bank subsidiary, were 9.03%, 12.13% and 13.38%, respectively, all in excess of the 5%, 6% and 10% ratios required to be deemed "well capitalized" under regulatory requirements.

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.

 
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 (Dollars in thousands, except share data) March 31, 2010 December 31, 2009
     
ASSETS    
Cash and due from banks $15,694 $8,779
Federal funds sold 25,705 14,300
Cash and cash equivalents 41,399 23,079
     
Interest bearing time deposits with other banks 600 100
Trading securities 2,573 2,955
Securities available for sale 73,761 71,315
Federal Home Loan Bank Stock, at cost 2,045 2,045
     
Loans receivable, net of unearned income 329,782 332,959
Less: allowance for loan losses 6,225 5,496
Net loans receivable 323,557 327,463
     
Foreclosed real estate 4,329 3,843
Premises and equipment, net 7,067 7,065
Accrued interest receivable 1,857 1,943
Goodwill 2,820 2,820
Other assets 11,753 12,213
     
Total Assets $471,761 $454,841
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Liabilities:    
Deposits:    
Non-interest bearing $37,812 $34,155
Interest bearing 350,259 337,920
Total Deposits 388,071 372,075
     
Borrowings 33,075 33,090
Accrued interest payable and other liabilities 2,408 2,262
Junior subordinated debentures 12,887 12,887
     
Total Liabilities 436,441 420,314
     
Total Stockholders' Equity 35,320 34,527
     
Total Liabilities and Stockholders' Equity $471,761 $454,841
 
SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
     
   Three Months Ended March 31,
(Dollars in thousands) 2010 2009
     
INTEREST INCOME    
Loans receivable, including fees $4,680 $4,808
Securities:    
Taxable 514 627
Tax-exempt 263 273
Federal funds sold 7 12
Interest bearing deposits 2 7
Total Interest Income 5,466 5,727
     
INTEREST EXPENSE    
Deposits 1,104 2,169
Borrowings 352 352
Junior subordinated debentures 53 104
Total Interest Expense 1,509 2,625
     
Net Interest Income 3,957 3,102
PROVISION FOR LOAN LOSSES 737 639
Net Interest Income after Provision for Loan Losses 3,220 2,463
     
OTHER INCOME    
Service fees on deposit accounts 334 367
ATM fees 115 107
Insurance commissions and fees 547 614
Investment brokerage fees 60 47
Holding gains on trading securities 11 35
Loss on sale of foreclosed real estate 4 (1)
Other 110 168
Total Other Income 1,181 1,337
     
OTHER EXPENSES    
Salaries and employee benefits 1,841 1,783
Occupancy, net 347 352
Furniture, equipment and data processing 299 340
Stationary and supplies 44 45
Professional fees 159 183
Advertising and promotion 51 59
Insurance 56 41
FDIC Assessment 224 150
Postage and freight 31 42
Amortization of intangible assets 4 5
Write-down on foreclosed real estate 29 --
Expenses related to foreclosed real estate 69 183
Other 382 365
Total Other Expenses 3,536 3,548
     
Income before Income Taxes 865 252
PROVISION (BENEFIT) FOR INCOME TAXES 222 (1)
Net Income $643 $253
 
SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Unaudited)
 
  Three Months Ended March 31,
(Dollars in thousands) 2010   2009
   Average   Average    Average   Average
Interest earning assets:  Balance  Interest (1) Rate (2)    Balance  Interest (1) Rate (2)
 Securities:              
 Tax exempt (3) $26,817 $394 5.96%   $26,709 $408 6.19%
 Taxable 48,949 514 4.26%   56,817 627 4.48%
 Total securities 75,766 908 4.86%   83,526 1,035 5.02%
 Total loans receivable (4) 330,709 4,680 5.74%   322,535 4,808 6.05%
 Other interest-earning assets 25,656 9 0.14%   26,676 19 0.29%
 Total interest earning assets 432,131 $5,597 5.25%   432,737 $5,862 5.49%
               
Non-interest earning assets 37,836       34,491    
Allowance for loan losses (5,808)       (6,000)    
 Total Assets $464,159       $461,228    
               
Interest bearing liabilities:              
 Interest bearing deposits:              
 NOW $61,623 $143 0.94%   $57,897 $159 1.11%
 Money market 12,435 24 0.78%   14,703 48 1.33%
 Savings 167,546 494 1.20%   159,739 1,026 2.61%
 Time 103,096 443 1.74%   112,901 936 3.36%
 Total interest bearing deposits 344,699 1,104 1.30%   345,240 2,169 2.55%
 Borrowed funds 33,081 352 4.25%   33,138 352 4.25%
 Junior subordinated debentures 12,887 53 1.64%   12,887 104 3.22%
 Total interest bearing liabilities 390,667 $1,509 1.57%   391,265 $2,625 2.72%
               
Non-interest bearing liabilities:              
 Demand deposits 36,840       36,479    
 Other liabilities 1,705       1,261    
 Total non-interest bearing liabilities 38,545       37,740    
 Stockholders' equity 34,947       32,223    
 Total Liabilities and Stockholders' Equity $464,159       $461,228    
               
Net Interest Income and Margin (5)   $4,088 3.84%     $3,237 3.03%
               
 (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
Anthony Labozzetta, President/CEO
Candace Leatham, SVP/CFO
973-827-2914