ROCKAWAY, N.J., April 28, 2015 (GLOBE NEWSWIRE) -- Sussex Bancorp (the "Company") (Nasdaq:SBBX), the holding company for Sussex Bank (the "Bank"), today announced reported net income of $952 thousand, or $0.21 per basic and diluted share, for the quarter ended March 31, 2015, as compared to net income of $678 thousand, or $0.15 per basic and diluted share, for the same period last year. This increase equates to a 40.0% increase in net income per diluted common share for the quarter ended March 31, 2015, as compared to the same period last year. The improvement for 2015 was driven by increased interest income related to loan growth and a 10.2% decline in credit quality costs (provision for loan losses, loan collection costs and expenses and write-downs related to foreclosed real estate) as a result of improved credit quality as non-performing assets ("NPAs") (excluding performing troubled debt restructured loans) fell to 1.57% of total assets at March 31, 2015 from 2.50% at March 31, 2014.
"The benefits of growing our businesses are having a positive effect on our earnings, which is illustrated by the 40.0% increase in net income per diluted common share for the quarter ended March 31, 2015, as compared to the same period last year and a 31.3% increase in net income per diluted common share on a linked quarter basis. An item of note is that despite the heightened competition we managed to keep our net interest margin stable at 3.53%. Our quarterly loan growth was low due to pay-offs and lower production; however, our loan pipeline remains strong and we expect increased loan production in subsequent quarters," said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bank.
"In March 2015, we opened our new branch in Astoria, Queens, which utilizes a new branch model that includes more technology, a smaller branch footprint and a new approach to staffing. To date, the Astoria branch opening is exceeding our expectation. The efficiency and productivity of the new branch model are very promising and if it continues as we expect we will reach break-even sooner than anticipated," stated Mr. Labozzetta.
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.04 per share, which is payable on May 26, 2015 to common shareholders of record as of the close of business on May 12, 2015.
Financial Performance
Net Income. For the quarter ended March 31, 2015, the Company reported net income of $952 thousand, or $0.21 per basic and diluted share, as compared to net income of $678 thousand, or $0.15 per basic and diluted share, for the same period last year. The increase in net income for the quarter ended March 31, 2015 was primarily due to increases in net interest income of $496 thousand and other income of $310 thousand, and a decline in the provision for loan losses of $148 thousand. The aforementioned were partially offset by an increase in non-interest expenses of $602 thousand.
Net Interest Income. Net interest income on a fully tax equivalent basis increased $471 thousand, or 10.6%, to $4.9 million for the first quarter of 2015, as compared to $4.4 million for the same period in 2014. The increase in net interest income was largely due to a $54.2 million, or 10.6%, increase in average interest earning assets, principally loans receivable, which increased $68.1 million, or 16.9%, and was partially offset by a decrease in the average balance on the securities portfolio of $15.6 million, or 15.4%.
Provision for Loan Losses. Provision for loan losses decreased $148 thousand, or 32.7%, to $305 thousand for the first quarter of 2015, as compared to $453 thousand for the same period in 2014.
Non-interest Income. Non-interest income increased $310 thousand, or 19.5%, to $1.9 million for the first quarter of 2015, as compared to the same period last year. For the first quarter of 2015, insurance commissions and fees and gains on securities transactions increased $182 thousand and $168 thousand, respectively, as compared to the same period in 2014. The increases were offset by a decline in service fees on deposit accounts of $51 thousand for the first quarter of 2015, as compared to the same period in 2014.
Non-interest Expense. The Company's non-interest expenses increased $602 thousand, or 13.5%, to $5.1 million for the first quarter of 2015, as compared to the same period last year. The increase for the first quarter of 2015, as compared to the same period in 2014, was largely due to increases in salaries and employee benefits of $362 thousand, other expenses of $139 thousand, expenses and write-downs related to foreclosed real estate of $64 thousand and furniture and equipment expenses of $46 thousand, which were partially offset by a decrease in FDIC fees of $52 thousand. The increase in salaries and employee benefits expense was partially due to an increase in personnel to support our growth initiative in new markets, including the opening of our Astoria branch in the first quarter of 2015 and the addition of commercial lending staff.
Financial Condition
At March 31, 2015, the Company's total assets were $604.3 million, an increase of $8.3 million, or 1.4%, as compared to total assets of $595.9 million at December 31, 2014. The increase in total assets was largely driven by growth in the securities portfolio of $7.1 million, or 8.4%, which was partially offset by a decline in foreclosed real estate of $1.6 million, or 35.9%.
Total loans receivable, net of unearned income, increased $1.3 million, or 0.3%, to $473.3 million at March 31, 2015, as compared to $472.0 million at December 31, 2014. The increase in loans was primarily in the residential real estate portfolio, which increased $3.2 million, or 2.8%, to $114.7 million at March 31, 2015, as compared to $111.5 million at December 31, 2014. The aforementioned increase was partially offset by a decrease in the commercial and industrial portfolio of $1.7 million, or 8.4%, to $18.8 million at March 31, 2015, as compared to $20.5 million at December 31, 2014. In addition, during the first quarter of 2015, the Company had $6.2 million in prepayments within the commercial loan portfolio.
The Company's total deposits increased $15.2 million, or 3.3%, to $473.5 million at March 31, 2015, from $458.3 million at December 31, 2014. The increase in deposits was due to increases in both non-interest bearing deposits of $6.3 million, or 8.9%, and interest bearing deposits of $9.0 million, or 2.3%, for March 31, 2015, as compared to December 31, 2014. Included in the aforementioned increase is approximately $5.0 million in new deposits attributed to the opening of our Astoria branch.
At March 31, 2015, the Company's total stockholders' equity was $52.0 million, an increase of $740 thousand when compared to December 31, 2014. The increase was largely due to net income for the quarter ended March 31, 2015. At March 31, 2015, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 9.97%, 12.67%, 13.90% and 12.67%, respectively, all in excess of the ratios required to be deemed "well-capitalized."
Asset and Credit Quality
The Company continued to improve its asset credit quality as total problem assets and NPAs continued to decline. Total problem assets (foreclosed real estate, criticized assets and classified assets) were down 9.8% from December 31, 2014, and the ratio of NPAs to total assets improved to 1.83% at March 31, 2015 from 2.02% at December 31, 2014.
NPAs, which include non-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, decreased $983 thousand, or 8.2%, to $11.1 million at March 31, 2015, as compared to $12.0 million at December 31, 2014. Non-accrual loans increased $708 thousand, or 12.0%, to $6.6 million at March 31, 2015, as compared to $5.9 million at December 31, 2014. The top five non-accrual loan relationships total $3.8 million, which equates to 56.6% of total non-accrual loans and 33.9% of total NPAs at March 31, 2015. The remaining non-accrual loans at March 31, 2015 have an average loan balance of $93 thousand. Loans past due 30 to 89 days decreased $1.5 million, or 25.9%, to $4.2 million at March 31, 2015, as compared to $5.6 million at December 31, 2014.
The Company continues to actively market its foreclosed real estate properties, which decreased $1.6 million to $2.9 million at March 31, 2015, as compared to $4.4 million at December 31, 2014. The decrease was primarily due to the sale of $1.5 million in foreclosed real estate properties and write-downs of $97 thousand during 2015, which were partially offset by $39 thousand in new foreclosed real estate properties. At March 31, 2015, the Company's foreclosed real estate properties had an average carrying value of approximately $259 thousand per property.
The allowance for loan losses increased $122 thousand, or 2.2%, to $5.8 million, or 1.22% of total loans, at March 31, 2015, compared to $5.6 million, or 1.20% of total loans, at December 31, 2014. The Company recorded $305 thousand in provision for loan losses, which was partially offset by $183 thousand in net charge-offs for the quarter ended March 31, 2015. The allowance for loan losses as a percentage of non-accrual loans decreased to 86.9% at March 31, 2015 from 95.2% at December 31, 2014.
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 and Wantage, New Jersey, and Port Jervis and Astoria, New York, and a loan production office in Rochelle Park, New Jersey, and for the Tri-State Insurance Agency, Inc., a full service insurance agency with locations in Augusta and Rochelle Park, New Jersey. 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 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, 2014 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) | |||||
| 3/31/2015 VS. | |||||
| 3/31/2015 | 12/31/2014 | 3/31/2014 | 3/31/2014 | 12/31/2014 | |
| BALANCE SHEET HIGHLIGHTS - Period End Balances | |||||
| Total securities | $ 91,064 | $ 83,982 | $ 94,073 | (3.2)% | 8.4% |
| Total loans | 473,303 | 471,973 | 412,724 | 14.7% | 0.3% |
| Allowance for loan losses | (5,763) | (5,641) | (5,437) | 6.0% | 2.2% |
| Total assets | 604,251 | 595,915 | 546,972 | 10.5% | 1.4% |
| Total deposits | 473,512 | 458,270 | 425,837 | 11.2% | 3.3% |
| Total borrowings and junior subordinated debt | 74,087 | 82,387 | 68,887 | 7.5% | (10.1)% |
| Total shareholders' equity | 51,969 | 51,229 | 48,213 | 7.8% | 1.4% |
| FINANCIAL DATA - QUARTER ENDED: | |||||
| Net interest income (tax equivalent) (a) | $ 4,906 | $ 4,778 | $ 4,435 | 10.6% | 2.7% |
| Provision for loan losses | 305 | 306 | 453 | (32.7)% | (0.3)% |
| Total other income | 1,901 | 1,411 | 1,591 | 19.5% | 34.7% |
| Total other expenses | 5,070 | 4,765 | 4,468 | 13.5% | 6.4% |
| Income before provision for income taxes (tax equivalent) | 1,432 | 1,118 | 1,105 | 29.6% | 28.1% |
| Provision for income taxes | 376 | 330 | 298 | 26.2% | 13.9% |
| Taxable equivalent adjustment (a) | 104 | 65 | 129 | (19.4)% | 60.0% |
| Net income | $ 952 | $ 723 | $ 678 | 40.4% | 31.7% |
| Net income per common share - Basic | $ 0.21 | $ 0.16 | $ 0.15 | 40.0% | 31.3% |
| Net income per common share - Diluted | $ 0.21 | $ 0.16 | $ 0.15 | 40.0% | 31.3% |
| Return on average assets | 0.64% | 0.50% | 0.50% | 26.4% | 27.3% |
| Return on average equity | 7.31% | 5.65% | 5.74% | 27.4% | 29.5% |
| Net interest margin (tax equivalent) | 3.53% | 3.46% | 3.53% | --% | 2.0% |
| Avg. interest earning assets/Avg. interest bearing liabilities | 1.19 | 1.22 | 1.18 | 1.4% | (1.9)% |
| SHARE INFORMATION: | |||||
| Book value per common share | $ 11.13 | $ 10.99 | $ 10.35 | 7.5% | 1.3% |
| Outstanding shares- period ending | 4,669,597 | 4,662,606 | 4,657,856 | 0.3% | 0.1% |
| Average diluted shares outstanding (year to date) | 4,602,910 | 4,580,350 | 4,564,600 | 0.8% | 0.5% |
| CAPITAL RATIOS: | |||||
| Total equity to total assets | 8.60% | 8.60% | 8.81% | (2.4)% | 0.0% |
| Leverage ratio (b) | 9.97% | 10.19% | 10.49% | (5.0)% | (2.2)% |
| Tier 1 risk-based capital ratio (b) | 12.67% | 12.79% | 13.77% | (8.0)% | (0.9)% |
| Total risk-based capital ratio (b) | 13.90% | 14.02% | 15.02% | (7.5)% | (0.9)% |
| Common equity Tier 1 capital ratio (b) | 12.67% | --% | --% | --% | --% |
| ASSET QUALITY: | |||||
| Non-accrual loans | $ 6,632 | $ 5,924 | $ 10,554 | (37.2)% | 12.0% |
| Loans 90 days past due and still accruing | 1 | 85 | 2 | (50.0)% | (98.8)% |
| Troubled debt restructured loans ("TDRs") (c) | 1,580 | 1,590 | 1,620 | (2.5)% | (0.6)% |
| Foreclosed real estate | 2,852 | 4,449 | 3,140 | (9.2)% | (35.9)% |
| Non-performing assets ("NPAs") | $ 11,065 | $ 12,048 | $ 15,316 | (27.8)% | (8.2)% |
| Foreclosed real estate, criticized and classified assets | $ 19,762 | $ 21,899 | $ 24,692 | (20.0)% | (9.8)% |
| Loans past due 30 to 89 days | $ 4,178 | $ 5,635 | $ 3,089 | 35.3% | (25.9)% |
| Charge-offs, net (quarterly) | $ 183 | $ 374 | $ 437 | (58.1)% | (51.1)% |
| Charge-offs, net as a % of average loans (annualized) | 0.16% | 0.33% | 0.43% | (64.2)% | (52.5)% |
| Non-accrual loans to total loans | 1.40% | 1.26% | 2.56% | (45.2)% | 11.6% |
| NPAs to total assets | 1.83% | 2.02% | 2.80% | (34.6)% | (9.4)% |
| NPAs excluding TDR loans (c) to total assets | 1.57% | 1.75% | 2.50% | (37.3)% | (10.6)% |
| Non-accrual loans to total assets | 1.10% | 0.99% | 1.93% | (43.1)% | 10.4% |
| Allowance for loan losses as a % of non-accrual loans | 86.90% | 95.22% | 51.52% | 68.7% | (8.7)% |
| Allowance for loan losses to total loans | 1.22% | 1.20% | 1.32% | (7.6)% | 1.9% |
| (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) Sussex Bank capital ratios | |||||
| (c) Troubled debt restructured loans currently performing in accordance with renegotiated terms | |||||
| SUSSEX BANCORP | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (Dollars In Thousands) | ||
| (Unaudited) | ||
| ASSETS | March 31, 2015 | December 31, 2014 |
| Cash and due from banks | $ 2,606 | $ 2,953 |
| Interest-bearing deposits with other banks | 4,360 | 2,906 |
| Cash and cash equivalents | 6,966 | 5,859 |
| Interest bearing time deposits with other banks | 100 | 100 |
| Securities available for sale, at fair value | 84,573 | 77,976 |
| Securities held to maturity | 6,491 | 6,006 |
| Federal Home Loan Bank Stock, at cost | 3,539 | 3,908 |
| Loans receivable, net of unearned income | 473,303 | 471,973 |
| Less: allowance for loan losses | 5,763 | 5,641 |
| Net loans receivable | 467,540 | 466,332 |
| Foreclosed real estate | 2,852 | 4,449 |
| Premises and equipment, net | 8,750 | 8,650 |
| Accrued interest receivable | 1,908 | 1,796 |
| Goodwill | 2,820 | 2,820 |
| Bank-owned life insurance | 12,289 | 12,211 |
| Other assets | 6,423 | 5,808 |
| Total Assets | $ 604,251 | $ 595,915 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Liabilities: | ||
| Deposits: | ||
| Non-interest bearing | $ 76,765 | $ 70,490 |
| Interest bearing | 396,747 | 387,780 |
| Total Deposits | 473,512 | 458,270 |
| Borrowings | 61,200 | 69,500 |
| Accrued interest payable and other liabilities | 4,683 | 4,029 |
| Junior subordinated debentures | 12,887 | 12,887 |
| Total Liabilities | 552,282 | 544,686 |
| Total Stockholders' Equity | 51,969 | 51,229 |
| Total Liabilities and Stockholders' Equity | $ 604,251 | $ 595,915 |
| SUSSEX BANCORP | ||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||
| (Dollars In Thousands Except Per Share Data) | ||
| (Unaudited) | ||
| Three Months Ended March 31, | ||
| 2015 | 2014 | |
| INTEREST INCOME | ||
| Loans receivable, including fees | $ 5,172 | $ 4,623 |
| Securities: | ||
| Taxable | 267 | 217 |
| Tax-exempt | 208 | 254 |
| Interest bearing deposits | 4 | 3 |
| Total Interest Income | 5,651 | 5,097 |
| INTEREST EXPENSE | ||
| Deposits | 416 | 390 |
| Borrowings | 380 | 348 |
| Junior subordinated debentures | 53 | 53 |
| Total Interest Expense | 849 | 791 |
| Net Interest Income | 4,802 | 4,306 |
| PROVISION FOR LOAN LOSSES | 305 | 453 |
| Net Interest Income after Provision for Loan Losses | 4,497 | 3,853 |
| OTHER INCOME | ||
| Service fees on deposit accounts | 213 | 264 |
| ATM and debit card fees | 174 | 167 |
| Bank owned life insurance | 78 | 83 |
| Insurance commissions and fees | 1,155 | 973 |
| Investment brokerage fees | 22 | 31 |
| Gain (loss) on securities transactions | 168 | -- |
| Other | 91 | 73 |
| Total Other Income | 1,901 | 1,591 |
| OTHER EXPENSES | ||
| Salaries and employee benefits | 2,780 | 2,418 |
| Occupancy, net | 477 | 453 |
| Furniture and equipment | 210 | 164 |
| Advertising and promotion | 70 | 44 |
| Professional fees | 146 | 153 |
| Director fees | 166 | 137 |
| FDIC assessment | 124 | 176 |
| Insurance | 52 | 76 |
| Stationary and supplies | 56 | 55 |
| Loan collection costs | 97 | 77 |
| Data processing | 354 | 380 |
| Expenses and write-downs related to foreclosed real estate | 164 | 100 |
| Other | 374 | 235 |
| Total Other Expenses | 5,070 | 4,468 |
| Income before Income Taxes | 1,328 | 976 |
| INCOME TAX EXPENSE (BENEFIT) | 376 | 298 |
| Net Income | $ 952 | $ 678 |
| OTHER COMPREHENSIVE INCOME (LOSS): | ||
| Unrealized gains (losses) on available for sale securities arising during the period | $ 315 | $ 1,717 |
| Reclassification adjustment for net gain on securities transactions included in net income | (168) | -- |
| Income tax (expense) benefit related to items of other comprehensive income (loss) | (59) | (687) |
| Other comprehensive income (loss), net of income taxes | 88 | 1,030 |
| Comprehensive income (loss) | $ 1,040 | $ 1,708 |
| EARNINGS PER SHARE | ||
| Basic | $ 0.21 | $ 0.15 |
| Diluted | $ 0.21 | $ 0.15 |
| SUSSEX BANCORP | ||||||
| COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES | ||||||
| (Dollars In Thousands) | ||||||
| (Unaudited) | ||||||
| Three Months Ended March 31, | ||||||
| 2015 | 2014 | |||||
| Average | Average | Average | Average | |||
| Balance | Interest | Rate (2) | Balance | Interest | Rate (2) | |
| Earning Assets: | ||||||
| Securities: | ||||||
| Tax exempt (3) | $ 31,339 | $ 312 | 4.04% | $ 30,767 | $ 383 | 5.05% |
| Taxable | 54,267 | 267 | 2.00% | 70,451 | 217 | 1.25% |
| Total securities | 85,606 | 579 | 2.74% | 101,218 | 600 | 2.40% |
| Total loans receivable (1) (4) | 470,870 | 5,172 | 4.45% | 402,757 | 4,623 | 4.66% |
| Other interest-earning assets | 7,118 | 4 | 0.23% | 5,420 | 3 | 0.22% |
| Total earning assets | 563,594 | 5,755 | 4.14% | 509,395 | 5,226 | 4.16% |
| Non-interest earning assets | 41,353 | 35,608 | ||||
| Allowance for loan losses | (5,742) | (5,650) | ||||
| Total Assets | $ 599,205 | $ 539,353 | ||||
| Sources of Funds: | ||||||
| Interest bearing deposits: | ||||||
| NOW | $ 128,160 | $ 50 | 0.16% | $ 115,661 | $ 39 | 0.14% |
| Money market | 14,511 | 5 | 0.14% | 12,573 | 4 | 0.13% |
| Savings | 140,497 | 71 | 0.20% | 146,082 | 75 | 0.21% |
| Time | 112,067 | 290 | 1.05% | 98,931 | 272 | 1.12% |
| Total interest bearing deposits | 395,235 | 416 | 0.43% | 373,247 | 390 | 0.42% |
| Borrowed funds | 63,715 | 380 | 2.42% | 46,222 | 348 | 3.05% |
| Junior subordinated debentures | 12,887 | 53 | 1.67% | 12,887 | 53 | 1.67% |
| Total interest bearing liabilities | 471,837 | 849 | 0.73% | 432,356 | 791 | 0.74% |
| Non-interest bearing liabilities: | ||||||
| Demand deposits | 71,695 | 57,541 | ||||
| Other liabilities | 3,595 | 2,194 | ||||
| Total non-interest bearing liabilities | 75,290 | 59,735 | ||||
| Stockholders' equity | 52,078 | 47,262 | ||||
| Total Liabilities and Stockholders' Equity | $ 599,205 | $ 539,353 | ||||
| Net Interest Income and Margin (5) | 4,906 | 3.53% | 4,435 | 3.53% | ||
| Tax-equivalent basis adjustment | (104) | (129) | ||||
| Net Interest Income | $ 4,802 | $ 4,306 | ||||
| (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 | ||||||