Sussex Bancorp Announces First Quarter Results for 2011

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| Source: Sussex Bancorp

FRANKLIN, N.J., April 27, 2011 (GLOBE NEWSWIRE) -- Sussex Bancorp (the "Company") (Nasdaq:SBBX), the holding company for Sussex Bank (the "Bank") today announced net income available to shareholders of $694 thousand, or $0.21 per basic and diluted share, for the quarter ended March 31, 2011, which amounted to a 7.9% increase in net income over the same period in 2010 and a 16.2% increase from the prior quarter. The Company attributed the increase in net income to a 10.1% increase in net interest income as compared to the first quarter last year, which was largely due to a stronger net interest margin.

Mr. Anthony Labozzetta, Sussex Bancorp's President and Chief Executive Officer, commented, "We are experiencing positive momentum in our two top priorities. First, we continue to place a lot of effort on resolving our nonperforming and criticized assets and, while it is difficult to discern from our present ratios, we expect our workout efforts to have a positive impact in subsequent quarters. Also, we are organically building our business through qualitative loan and deposit growth. This has helped us enhance the composition of our balance sheet, which has been the foundation for increased revenues and an improved margin."

First Quarter 2011 Highlights

  • Total assets declined 1.1%; however, there were positive shifts in asset and liability composition.
  • Loans as a percent of total assets increased to 73.3% for March 31, 2011, compared to 71.4% for March 31, 2010.
  • Securities and cash equivalents as a percent of total assets decreased to 21.9% for March 31, 2011, compared to 23.4% for March 31, 2010.
  • Core deposits increased by $6.0 million, or 2.1%, driven by a 10.0% increase in non-interest bearing deposits, which was partly offset by a decline in time deposits of $1.8 million.
  • Net interest income (tax equivalent basis) increased $419 thousand to $4.5 million at March 31, 2011, compared to the first quarter of 2010.
  • Net interest margin (tax equivalent basis) was 4.13% for the first quarter of 2011, up from 3.84% one year earlier, due to a decline in funding costs in the first quarter of 2011 compared to the same period in 2010.
  • Provision for loan losses increased $102 thousand, or 13.8%, in the first quarter of 2011, as compared to the first quarter of 2010.
  • Non-interest income increased $69 thousand, or 5.9%, to $1.2 million in the first three months of 2011 over the prior year. The increase was driven by increases in insurance commissions and fees and income on bank owned life insurance, offset by declines in income from investment brokerage fees and service fees on deposit accounts. 
  • Non-interest expense increased $329 thousand to $3.9 million in the first quarter of 2011, compared to the same period in 2010. The increase was largely attributed to a $166 thousand, or 9.0%, increase in salaries and employee benefits and a $116 thousand increase in write-downs on foreclosed real estate.
  • Segment Reporting
  • Our insurance subsidiary (Tri-state Insurance Agency, Inc.) reported its strongest quarter in almost three years. Net income before taxes for the first quarter of 2011 was $110 thousand, which was an increase of $95 thousand, or 633%, over the same period last year.
  • Credit quality:
  • Nonperforming assets increased $2.1 million, or 7.9%, and nonperforming assets as a percent of total assets were 6.07% and 5.57% at March 31, 2011 and December 31, 2010, respectively. The increase was largely attributed to one loan.
  • The allowance for loan losses totaled $7.2 million at March 31, 2011, or 2.10% of total loans, as compared to $6.4 million, or 1.89% of total loans, at December 31, 2010.
  • Return on Average Assets increased to 0.59% for the first quarter of 2011 from 0.49% for the quarter ended December 31, 2010.
  • Capital Adequacy: At March 31, 2011, the leverage, Tier I risk-based capital and total risk-based capital ratios for the Bank were 9.41%, 12.55% and 13.81%, respectively, all in excess of the ratios required to be deemed "well-capitalized."

First Quarter 2011 Financial Results

Net Interest Income

Net interest income, on a fully taxable equivalent basis, increased $419 thousand, or 10.3%, to $4.5 million for the quarter ended March 31, 2011, as compared to $4.1 million for same period in 2010. The increase in net interest income was largely due to the Company's net interest margin improving 29 basis points to 4.13% for the first quarter of 2011, which was largely due to a 46 basis point decrease in the average rate paid on interest bearing liabilities. This improvement in net interest income was partially offset by a decline in the average rate earned on total earning assets, which decreased 12 basis points to 5.13% for the first quarter of 2011 from 5.25% for the same period in 2010. In addition, growth of $10.5 million in total average earning assets to $442.6 million for the quarter ended March 31, 2011 from $432.1 million for the quarter ended March 31, 2010. 

Provision for Loan Losses

Provision for loan losses increased $102 thousand to $839 thousand for the quarter ended March 31, 2011, as compared to $737 thousand for the same period in 2010. The increase in the provision for loan losses reflects the changes to non-performing asset levels as compared to the same period last year, which are discussed below in "Asset and Credit Quality."

Non-interest Income

The Company reported an increase in non-interest income of $69 thousand, or 5.9%, to $1.2 million for the quarter ended March 31, 2011. The increase in non-interest income was largely due to a $68 thousand, or 12.4%, increase in insurance commissions and fees and a $68 thousand, or 188.9%, increase in bank owned life insurance income in the first quarter of 2011, compared to the same period in 2010. The aforementioned increases were partly offset by a $29 thousand decrease in investment brokerage fees and an $18 thousand decline in service fees on deposit accounts between the two first quarter periods. 

Non-interest Expense

The Company's non-interest expenses increased $329 thousand, or 9.3%, to $3.9 million for the quarter ended March 31, 2011. The growth for the first quarter of 2011 versus the same period in 2010 was largely due to an increase of $166 thousand in salaries and employee benefits. The increase was mostly attributed to higher benefit costs resulting from an increase in employer 401(k) expenses due to the reinstatement of the Company's contribution in the first quarter of 2011, as compared to a forfeiture benefit in 2010 as well as the Company did not make any contributions in the first quarter of 2010. Write-downs on foreclosed real estate also increased $116 thousand to $145 thousand, as compared $29 thousand in the first quarter of 2010.

Financial Condition Comparison for March 31, 2011 versus December 31, 2010

Balance Sheet

At March 31, 2011, the Company's total assets were $468.9 million, a decrease of $5.1 million, or 1.1%, as compared to total assets of $474.0 million at December 31, 2010. The decrease in assets was largely driven by the repayment of a $10.0 million short term advance, offset by growth in deposits of $4.3 million. The Company's total deposits increased 1.1% to $390.2 million at March 31, 2011 from $386.0 million at December 31, 2010. The growth in core deposits (non-interest bearing deposits, NOW, savings and money market accounts) was $6.0 million, offset by a decline in time deposits of $1.8 million, at March 31, 2011, as compared to December 31, 2010. Non-interest bearing deposits increased $3.5 million, or 10.0%, at March 31, 2011 to $38.9 million from $35.4 million at December 31, 2010.

Total loans receivable, net of unearned income, increased $5.3 million, or 1.6%, to $343.5 million at March 31, 2011 from $338.2 million at year-end 2010. The growth in deposits was used to fund this loan growth. The Company's security portfolio, which includes securities available for sale, securities held to maturity and Federal Home Loan Bank stock, decreased $9.1 million, or 9.8%, to $83.5 million at March 31, 2011, as compared to $92.6 million at December 31, 2010. 

Capital

At March 31, 2011, the Company's total stockholders' equity was $37.5 million, an increase of $845 thousand, or 2.3%, as compared $36.7 million at December 31, 2010. 

Asset and Credit Quality

Non-performing assets, which include non-accrual loans, renegotiated loans and foreclosed real estate, increased by $2.1 million, or 7.9%, to $28.5 million at March 31, 2011, as compared to $26.4 million at December 31, 2010, as non-accrual loans increased $2.4 million to $25.1 million and foreclosed real estate decreased $317 thousand from year-end 2010. The increase was largely due to one loan for $1.3 million, which the Company had identified as a potential problem loan at December 31, 2010. The ratio of non-performing assets to total assets for March 31, 2011 and December 31, 2010 were 6.07% and 5.57%, respectively. The allowance for loan losses was $7.2 million, or 2.10% of total loans, at March 31, 2011, as compared to $6.4 million, or 1.89% of total loans, at December 31, 2010.   

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, and for the Tri-State Insurance Agency, Inc., a full service insurance agency located in Sussex County, New Jersey. For additional information, please visit the company's Web site at www.sussexbank.com.

The Sussex Bancorp logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9580

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, 2010, 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.

SUSSEX BANCORP
SUMMARY FINANCIAL HIGHLIGHTS
(In Thousands, Except Percentages and Per Share Data)
(Unaudited)
 
        Q/E 3/31/11 VS.  
  3/31/2011 3/31/2010 12/31/2010 Q/E 3/31/10 Q/E 12/31/10
 BALANCE SHEET HIGHLIGHTS - Period End Balances           
 Total securities   $ 83,503  $ 78,379  $ 92,615 6.5% (9.8)%
 Total loans  343,474 329,782 338,234 4.2% 1.5%
 Allowance for loan losses   (7,226)  (6,225)  (6,397) 16.1% 13.0%
 Total assets  468,892 471,761 474,024 (0.6)% (1.1)%
 Total deposits  390,231 388,071 385,967 0.6% 1.1%
 Total borrowings and junior subordinated debt   38,887  45,962  48,887 (15.4)% (20.5)%
 Total shareholders' equity   37,511  35,320  36,666 6.2% 2.3%
           
 FINANCIAL DATA - QUARTER ENDED:           
 Net interest income (tax equivalent) (a)   $ 4,507  $ 4,088  $ 4,511 10.2% (0.1)%
 Provision for loan losses  839 737 916 13.8% (8.4)%
 Total other income   1,245  1,181  1,111 5.5% 12.1%
 Total other expenses  3,860 3,536 3,810 9.2% 1.3%
 Provision (benefit) for income taxes  209 222  154 (5.7)% 35.7%
 Taxable equivalent adjustment (a)  150 131 145 14.8% 3.9%
 Net income   $ 694  $ 643  $ 597 7.9% 16.2%
             
 Net income per common share - Basic   $ 0.21  $ 0.20  $ 0.18 5.0% 16.7%
 Net income per common share - Diluted   $ 0.21  $ 0.20  $ 0.18 5.0% 16.7%
             
 Return on average assets  0.59% 0.55% 0.49% 6.0% 19.1%
 Return on average equity  7.52% 7.36% 6.44% 2.1% 16.6%
 Efficiency ratio (b)  68.91% 68.82% 69.56% 0.1% (0.9)%
 Net interest margin (tax equivalent)  4.13% 3.84% 3.95% 7.6% 4.5%
             
             
 SHARE INFORMATION:           
 Book value per common share   $ 11.16  $ 10.65  $ 10.94 4.7% 2.0%
 Outstanding shares- period ending 3,362 3,318 3,352 1.3% 0.3%
 Average diluted shares outstanding (Year to date) 3,318 3,290 3,300 0.9% 0.5%
             
 CAPITAL RATIOS:           
 Total equity to total assets  8.00% 7.50% 7.74% 6.6% 3.4%
 Leverage ratio (c)  9.41% 9.03% 9.04% 4.2% 4.1%
 Tier 1 risk-based capital ratio (c)  12.55% 12.13% 12.37% 3.5% 1.5%
 Total risk-based capital ratio (c)  13.81% 13.38% 13.63% 3.2% 1.3%
             
 ASSET QUALITY AND RATIOS:           
 Non-accrual loans   $ 25,086  $ 22,062  $ 22,682 13.7% 10.6%
 Renegotiated loans (d)  1,316 20 1,318 6,480.0% (0.2)%
 Foreclosed real estate   2,080  4,329  2,397 (52.0)% (13.2)%
 Non-performing assets   $ 28,482  $ 26,391  $ 26,397 7.9% 7.9%
           
 Loans 90 days past due and still accruing   $ 136  $ 419  $ 49 (67.5)% 177.6%
 Charge-offs, net (quarterly)   $ 10  $ 8  $ 616 25.0% (98.4)%
 Charge-offs, net as a % of average loans (annualized)  0.01% 0.01% 0.74% 21.0% (98.4)%
 Non-accrual loans to total loans  7.30% 6.69% 6.71% 9.17% 8.91%
 Non-performing assets to total assets  6.07% 5.59% 5.57% 8.6% 9.1%
 Allowance for loan losses as a % of non-performing loans  27.37% 27.63% 26.65% (0.94)% 2.68%
 Allowance for loan losses to total loans  2.10% 1.85% 1.89% 13.8% 11.2%
           
(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) Efficiency ratio calculated non-interest expense divided by net interest income plus non-interest income 
(c) Sussex Bank capital ratios 
(d) Renegotiated loans currently performing in accordance with renegotiated terms 
 
SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
(Unaudited)
     
ASSETS March 31, 2011 December 31, 2010
     
Cash and due from banks $ 6,401 $ 4,672
Interest-bearing deposits with other banks 9,120 10,077
Federal funds sold 3,000 3,000
 Cash and cash equivalents 18,521 17,749
     
Interest bearing time deposits with other banks 600 600
Securities available for sale, at fair value 80,385 89,380
Securities held to maturity 1,333 1,000
Federal Home Loan Bank Stock, at cost 1,785 2,235
     
Loans receivable, net of unearned income 343,474 338,234
 Less: allowance for loan losses 7,226 6,397
 Net loans receivable 336,248 331,837
     
Foreclosed real estate 2,080 2,397
Premises and equipment, net 6,629 6,749
Accrued interest receivable 1,836 1,916
Goodwill 2,820 2,820
Bank owned life insurance 10,277 10,173
Other assets 6,378 7,168
     
Total Assets $ 468,892 $ 474,024
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Liabilities:    
 Deposits:    
 Non-interest bearing  $ 38,893 $ 35,362
 Interest bearing  351,338 350,605
 Total Deposits 390,231 385,967
     
Borrowings 26,000 36,000
Accrued interest payable and other liabilities 2,263 2,504
Junior subordinated debentures 12,887 12,887
     
Total Liabilities 431,381 437,358
     
Total Stockholders' Equity 37,511 36,666
     
Total Liabilities and Stockholders' Equity $ 468,892 $ 474,024
 
SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
 
  Three Months Ended March 31,
  2011 2010
INTEREST INCOME     
 Loans receivable, including fees $ 4,784 $ 4,680
 Securities:    
 Taxable 365 514
 Tax-exempt 292 263
 Federal funds sold 1 7
 Interest bearing deposits  3  2
 Total Interest Income 5,445 5,466
     
INTEREST EXPENSE    
 Deposits 769 1,104
 Borrowings 265 352
 Junior subordinated debentures 54 53
 Total Interest Expense 1,088 1,509
     
 Net Interest Income 4,357 3,957
PROVISION FOR LOAN LOSSES 839 737
 Net Interest Income after Provision for Loan Losses 3,518 3,220
     
OTHER INCOME    
 Service fees on deposit accounts 316 334
 ATM and debit card fees 122 115
 Bank owned life insurance 104 36
 Insurance commissions and fees 615 547
 Investment brokerage fees 31 60
 Realized holding gains on trading securities -- 11
 Gain (loss) on sale of foreclosed real estate  (11)  4
 Other 68 69
 Total Other Income 1,245 1,176
     
OTHER EXPENSES    
 Salaries and employee benefits 2,007 1,841
 Occupancy, net 381 344
 Furniture, equipment and data processing 300 299
 Advertising and promotion 43 51
 Professional fees 127 133
 Director Fees 67 58
 FDIC assessment 256 224
 Insurance 56 56
 Stationary and supplies 43 44
 Loan collection costs 115 77
 Write-down on foreclosed real estate  145  29
 Expenses related to foreclosed real estate   24  28
 Amortization of intangible assets 3 4
 Other  293 343
 Total Other Expenses 3,860 3,531
     
 Income before Income Taxes 903 865
PROVISION FOR INCOME TAXES 209 222
 Net Income $ 694 $ 643
     
EARNINGS PER SHARE    
 Basic $ 0.21 $ 0.20
 Diluted $ 0.21 $ 0.20
 
SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
 
  Three Months Ended March 31,
  2011 2010
Earning Assets: Average
Balance
 
Interest (1)
Average 
Rate (2)
Average
Balance

 Interest (1)
Average
Rate (2)
Securities:            
 Tax exempt (3) $ 30,023 $ 441 5.96% $ 26,817 $ 394 5.96%
 Taxable  59,427 366 2.49% 48,949 514 4.26%
Total securities 89,450 807 3.66% 75,766 908 4.86%
Total loans receivable (4) 341,682 4,784 5.68% 330,709 4,680 5.74%
Other interest-earning assets 11,485 4 0.15% 25,656 9 0.14%
Total earning assets 442,617 $ 5,595 5.13% 432,131 $ 5,597 5.25%
             
Non-interest earning assets 36,429     37,836    
Allowance for loan losses (6,813)     (5,806)    
Total Assets $ 472,233     $ 464,161    
             
Sources of Funds:            
Interest bearing deposits:            
 NOW  $ 80,689 $ 114 0.57% $ 61,623 $ 143 0.94%
 Money market  13,410 19 0.56% 12,435 24 0.78%
 Savings  170,601 297 0.71% 167,545 494 1.20%
 Time  90,024 339 1.53% 103,096 443 1.74%
Total interest bearing deposits 354,724 769 0.88% 344,699 1,104 1.30%
 Borrowed funds 28,604 265 3.70% 33,081 352 4.25%
 Junior subordinated debentures 12,887 54 1.69% 12,887 53 1.64%
Total interest bearing liabilities 396,215 $ 1,088 1.11% 390,667 $ 1,509 1.57%
             
Non-interest bearing liabilities:            
 Demand deposits 36,810     36,840    
 Other liabilities 2,293     1,706    
Total non-interest bearing liabilities 39,103     38,546    
Stockholders' equity 36,915     34,948    
Total Liabilities and Stockholders' Equity $ 472,233     $ 464,161    
             
Net Interest Income and Margin (5)   $ 4,507 4.13%   $ 4,088 3.84%
             
(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
Anthony Labozzetta, President/CEO
Steven Fusco, SVP/CFO
973-827-2914