ROCKAWAY, N.J., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Sussex Bancorp (the “Company”) (Nasdaq:SBBX), the holding company for Sussex Bank (the “Bank”), today announced a 38.5% increase in net income to $1.3 million, or $0.28 per basic and diluted common share, for the quarter ended September 30, 2016 as compared to $951 thousand, or $0.21 per basic and diluted share, for the same period last year. Also, the Company announced a 43.5% increase in net income to $4.0 million, or $0.87 per basic and $0.86 per diluted share, for the nine months ended September 30, 2016 as compared to $2.8 million or $0.61 per basic and diluted share for the same period last year. The improvement for the third quarter of 2016 as compared to the same period last year was mostly driven by a 24.9% increase in net interest income on a fully tax equivalent basis as a result of strong growth in average loans and deposits, which increased $165.2 million, or 33.9%, and $115.9 million, or 23.3%, respectively. The aforementioned increase in net interest income was partly offset by higher provision for loan losses due to loan growth and an increase in income tax expense.
“I am pleased to report that we produced another quarter of strong financial performance for Sussex Bancorp. These results continue to be driven by our dedicated employees that helped our principal business lines achieve outstanding growth. This growth resulted in an impressive 24.9% increase in net interest income on a fully tax equivalent basis and helped improve our margin 3 basis points on a linked quarter basis,” said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bank. Mr. Labozzetta also stated, “We had exceptional growth in deposits, but even more noteworthy is the pace of growth in our noninterest bearing demand accounts, which grew 28% over last year and have a three year compounded annual growth rate 29%.”
Mr. Labozzetta also added, “It is wonderful that the efforts of our Team has led to Sussex Bank being recognized as one of the 50 Fastest Growing Companies in New Jersey by NJBIZ during the third quarter.”
Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share, which is payable on November 23, 2016 to common shareholders of record as of the close of business on November 9, 2016.
Financial Performance
Net Income. For the quarter ended September 30, 2016, the Company reported net income of $1.3 million, or $0.28 per basic and diluted share, as compared to net income of $951 thousand, or $0.21 per basic and diluted share, for the same period last year. The increase in net income for the quarter ended September 30, 2016 was driven by an $1.3 million, or 24.9%, increase in net interest income on a fully tax equivalent basis resulting from strong loan and deposit growth. The aforementioned was partly offset by an increase in provision for loan losses of $457 thousand due to loan growth and an increase in income taxes due to earnings growth and a higher effective tax rate. In addition, non-interest expenses increased 5.4% mostly due to costs attributed to support the Company’s growth.
Income before income taxes increased $672 thousand, or 51.1%, to $2.0 million for the quarter ended September 30, 2016 as compared to $1.3 million for the same period last year. The Company’s income before income taxes, excluding Tri-State Insurance Agency’s (“Tri-State”), increased $682 thousand, or 58.4%, to $1.8 million for the three months ended September 30, 2016 as compared to $1.2 million for the same period last year. Tri-State’s contribution to the Company’s income before income taxes for the quarter ended September 30, 2016 decreased $10 thousand, or 5.4%, to $164 thousand as compared to the same period last year.
For the nine months ended September 30, 2016, the Company reported a 43.5% increase in net income to $4.0 million, or $0.87 per basic and $0.86 per diluted share as compared to net income of $2.8 million, or $0.61 per basic and diluted share, for the same period last year. The increase in net income for the nine months ended September 30, 2016 was largely due to increases in net interest income on a fully tax equivalent basis of $3.0 million, or 19.8%, and non-interest income of $1.1 million, or 21.1%, which were partially offset by an increase in non-interest expenses of $1.5 million, or 9.8%, and a $548 thousand increase in provision for loan losses. The increase in non-interest expense was largely due to increases in salaries and employee benefits, mostly due to an increase in personnel to support our growth and higher incentive and commission costs related to the Bank’s and Tri-State’s performance, and data processing costs largely resulting from outsourcing of core processing systems.
Income before income taxes increased $2.0 million, or 51.4%, to $6.0 million for the nine months ended September 30, 2016 as compared to $4.0 million for the same period last year. Tri-State’s contribution to the Company’s income before income taxes for the nine months ended September 30, 2016 increased $502 thousand, or 83.4%, to $1.1 million as compared to $602 thousand for the same period last year. The growth was driven by an increase in Tri-State’s commissions and fees that was largely due to an increase in commissions of $496 thousand, or 25.6%, and contingency fee income of $418 thousand, or 124.7%. The aforementioned was partly offset by an increase in non-interest expense of $516 thousand, or 22.8%. The Company’s income before income taxes, excluding Tri-State, increased $1.5 million, or 45.7%, to $4.9 million for the nine months ended September 30, 2016 as compared to the same period last year.
Net Interest Income. Net interest income on a fully tax equivalent basis increased $1.3 million, or 24.9%, to $6.5 million for the third quarter of 2016, as compared to $5.2 million for the same period in 2015. The increase in net interest income was largely due to a $167.9 million, or 28.1%, increase in average interest earning assets, principally loans receivable, which increased $165.2 million, or 33.9%. The improvement in net interest income was partly offset by a decline in the net interest margin of 9 basis points to 3.34% for the third quarter of 2016, as compared to the same period in 2015. The decline in the net interest margin was mostly attributed to a 15 basis point decrease in the average rate earned on loans, which is mostly due to loan growth and loan repricing in a low rate environment. Also included in the net interest margin decrease is a 6 basis point increase in the average rate on interest bearing deposits, which was primarily due to an increase in wholesale funding.
Net interest income on a fully tax equivalent basis increased $3.0 million, or 19.8%, to $18.1 million for the first nine months of 2016 as compared to $15.1 million for the same period in 2015. The increase in net interest income was largely due to a $134.4 million, or 23.1%, increase in average interest earning assets, principally loans receivable and the securities portfolio, which increased $128.9 million, or 27.0% and $3.8 million, or 3.9%, respectively. The Company’s net interest margin was 3.37% and 3.47% for the first nine months of 2016 and 2015, respectively. The decline in net interest margin is due to loan growth and loan repricing in a low rate environment along with an increase in the average rate on interest bearing deposits, primarily due to an increase in wholesale funding.
Provision for Loan Losses. Provision for loan losses increased $457 thousand to $458 thousand for the third quarter of 2016, as compared to the same period in 2015.
Provision for loan losses increased $548 thousand, or 108.3%, to $1.1 million thousand for the first nine months of 2016, as compared to $506 thousand for the same period in 2015. The increases for both periods were mostly attributable to the Company’s loan growth.
Non-interest Income. Non-interest income increased $119 thousand, or 7.2%, to $1.8 million for the third quarter of 2016, as compared to the same period last year. The increase was primarily due to higher insurance commissions and fees, which increased $135 thousand, or 14.1%, for the third quarter of 2016 as compared to the same period in 2015.
The Company reported an increase in non-interest income of $1.1 million, or 21.1%, to $6.1 million for the first nine months of 2016 as compared to the same period last year. The increase in non-interest income was largely due to increases in insurance commissions and fees of $1.0 million. The growth in Tri-State’s commissions and fees was largely due to an increase in commissions of $496 thousand, or 25.6%, and contingency fee income of $418 thousand, or 124.7%.
Non-interest Expense. The Company’s non-interest expenses increased $288 thousand, or 5.4%, to $5.7 million for the third quarter of 2016, as compared to the same period last year. The increase for the third quarter of 2016, as compared to the same period in 2015, was largely due to an increase in salaries and employee benefits of $324 thousand. The aforementioned increases were partly offset by declines in expenses and write-downs related to foreclosed real estate and other expenses of $179 thousand and $127 thousand, respectively.
The Company’s non-interest expenses increased $1.5 million, or 9.8%, to $16.9 million for the first nine months of 2016 as compared to the same period last year. The increase for the first nine months of 2016, as compared to the same period in 2015, was largely due to increases in salaries and employee benefits of $1.2 million, data processing of $375 thousand and furniture and equipment of $119 thousand. The aforementioned increases were partly offset by declines in expenses and write-downs related to foreclosed real estate and other expenses of $159 thousand and $127 thousand, respectively.
The increase in salaries and employee benefits for the third quarter and first nine months of 2016 as compared to the same periods in 2015 was largely due to an increase in personnel to support our growth, including the opening of our Oradell, New Jersey branch in the first quarter of 2016, and higher incentive and commission costs related to the Bank’s and Tri-State’s performance. The aforementioned increases were partly offset by the elimination of our in-house data operations center during the fourth quarter of 2015 and the closing of our Port Jervis, New York branch during the second quarter of 2016. The increase in data processing was largely due to the costs associated with the outsourcing of core processing systems and higher costs related to the Company’s growth and introduction of new products and services during 2016.
Financial Condition
At September 30, 2016, the Company’s total assets were $809.0 million, an increase of $124.5 million, or 18.2%, as compared to total assets of $684.5 million at December 31, 2015. The increase in total assets was largely driven by growth in loans receivable of $119.8 million, or 22.1%.
Total loans receivable, net of unearned income, increased $119.8 million, or 22.1%, to $663.3 million at September 30, 2016, as compared to $543.4 million at December 31, 2015. During the nine months ended September 30, 2016, the Company had $163.5 million in commercial loan production, which was partly offset by $8.6 million in commercial loan payoffs.
The Company’s total deposits increased $107.1 million, or 20.7%, to $624.9 million at September 30, 2016, from $517.9 million at December 31, 2015. The growth in deposits was due to increases in both interest bearing deposits of $67.1 million, or 15.6%, and non-interest bearing deposits of $40.0 million, or 45.9%, at September 30, 2016, as compared to December 31, 2015. Additionally there was an increase in borrowings of $6.8 million, or 7.2%, to $102.5 million at September 30, 2016 from $95.7 million at December 31, 2015 due to substantial loan growth. Included in the aforementioned deposit total is $46.9 million in deposit balances with a cost of 0.59% attributed to our newest branch in Oradell, New Jersey, which opened in the beginning of March, 2016. Also, included is $69.0 million in deposit balances with a cost of 0.42% attributed to our branch in Astoria, New York, which opened in Mid-March of 2015.
At September 30, 2016, the Company’s total stockholders’ equity was $58.6 million, an increase of $4.7 million when compared to December 31, 2015. The increase was largely due to net income for the nine months ended September 30, 2016. At September 30, 2016, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 8.98%, 11.02%, 11.99% and 11.02%, respectively, all in excess of the ratios required to be deemed “well-capitalized.” During the quarter ended September 30, 2016 the Company entered into an unsecured revolving line of credit (“LOC”), in the amount of $5 million, with a floating rate of prime plus 50 basis points and a fee of 25 basis points. The LOC funds were contributed to the Bank’s capital in the third quarter of 2016.
Asset and Credit Quality
The ratio of 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, to total assets improved to 1.13% at September 30, 2016 from 1.49% at December 31, 2015. NPAs decreased $1.1 million, or 10.8%, to $9.1 million at September 30, 2016, as compared to $10.2 million at December 31, 2015. Non-accrual loans decreased $729 thousand, or 13.7%, to $4.6 million at September 30, 2016, as compared to $5.3 million at December 31, 2015. The top five non-accrual loan relationships total $3.0 million, which equates to 64.8% of total non-accrual loans and 32.6% of total NPAs at September 30, 2016. The remaining non-accrual loans at September 30, 2016 have an average loan balance of $85 thousand. Loans past due 30 to 89 days increased $4.8 million to approximately $7.6 million at September 30, 2016, as compared to $2.8 million at December 31, 2015. Included in the $4.8 million increase was $3.5 million in matured loans, of which $2.6 million were renewed in the fourth quarter of 2016.
The Company continues to actively market its foreclosed real estate properties, which decreased $349 thousand to $3.0 million at September 30, 2016, as compared to $3.4 million at December 31, 2015. At September 30, 2016, the Company’s foreclosed real estate properties had an average carrying value of approximately $300 thousand per property.
The allowance for loan losses increased by $741 thousand, or 13.3%, to $6.3 million, or 0.95% of total loans, at September 30, 2016, compared to $5.6 million, or 1.03% of total loans, at December 31, 2015. The Company recorded $1.1 million in provision for loan losses for the nine months ended September 30, 2016. Additionally, the Company recorded net charge-offs of $313 thousand for the nine months ended September 30, 2016, as compared to $506 thousand in net charge-offs for the nine months ended September 30, 2015. The allowance for loan losses as a percentage of non-accrual loans increased to 138.1% at September 30, 2016 from 105.2% at December 31, 2015.
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, Oradell and Wantage, New Jersey, and Astoria, New York, and a loan production office in Oradell, New Jersey, and for the Tri-State Insurance Agency, Inc., a full service insurance agency with locations in Augusta and Oradell, 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, 2015 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) | |||||||||||||||||||||||||||
| 9/30/2016 VS. | |||||||||||||||||||||||||||
| 9/30/2016 | 12/31/2015 | 9/30/2015 | 9/30/2015 | 12/31/2015 | |||||||||||||||||||||||
| BALANCE SHEET HIGHLIGHTS - Period End Balances | |||||||||||||||||||||||||||
| Total securities | $ | 98,258 | $ | 100,610 | $ | 100,559 | (2.3 | ) | % | (2.3 | ) | % | |||||||||||||||
| Total loans | 663,258 | 543,423 | 501,203 | 32.3 | % | 22.1 | % | ||||||||||||||||||||
| Allowance for loan losses | (6,331 | ) | (5,590 | ) | (5,641 | ) | 12.2 | % | 13.3 | % | |||||||||||||||||
| Total assets | 808,987 | 684,503 | 644,019 | 25.6 | % | 18.2 | % | ||||||||||||||||||||
| Total deposits | 624,921 | 517,856 | 502,509 | 24.4 | % | 20.7 | % | ||||||||||||||||||||
| Total borrowings and junior subordinated debt | 120,387 | 108,537 | 84,187 | 43.0 | % | 10.9 | % | ||||||||||||||||||||
| Total shareholders' equity | 58,633 | 53,941 | 53,146 | 10.3 | % | 8.7 | % | ||||||||||||||||||||
| FINANCIAL DATA - QUARTER ENDED: | |||||||||||||||||||||||||||
| Net interest income (tax equivalent) (a) | $ | 6,453 | $ | 5,414 | $ | 5,166 | 24.9 | % | 19.2 | % | |||||||||||||||||
| Provision for loan losses | 458 | 130 | 1 | 45,700.0 | % | 252.3 | % | ||||||||||||||||||||
| Total other income | 1,774 | 1,396 | 1,655 | 7.2 | % | 27.1 | % | ||||||||||||||||||||
| Total other expenses | 5,651 | 5,198 | 5,363 | 5.4 | % | 8.7 | % | ||||||||||||||||||||
| Income before provision for income taxes (tax equivalent) | 2,118 | 1,482 | 1,457 | 45.4 | % | 42.9 | % | ||||||||||||||||||||
| Provision for income taxes | 696 | 450 | 390 | 78.5 | % | 54.7 | % | ||||||||||||||||||||
| Taxable equivalent adjustment (a) | 105 | 119 | 116 | (9.5 | ) | % | (11.8 | ) | % | ||||||||||||||||||
| Net income | $ | 1,317 | $ | 913 | $ | 951 | 38.5 | % | 44.2 | % | |||||||||||||||||
| Net income per common share - Basic | $ | 0.28 | $ | 0.20 | $ | 0.21 | 33.3 | % | 40.0 | % | |||||||||||||||||
| Net income per common share - Diluted | $ | 0.28 | $ | 0.20 | $ | 0.21 | 33.3 | % | 40.0 | % | |||||||||||||||||
| Return on average assets | 0.66 | % | 0.55 | % | 0.60 | % | 8.9 | % | 19.7 | % | |||||||||||||||||
| Return on average equity | 9.06 | % | 6.79 | % | 7.22 | % | 25.4 | % | 33.5 | % | |||||||||||||||||
| Efficiency ratio (b) | 69.58 | % | 77.69 | % | 79.99 | % | (13.0 | ) | % | (10.4 | ) | % | |||||||||||||||
| Net interest margin (tax equivalent) | 3.34 | % | 3.39 | % | 3.43 | % | (2.6 | ) | % | (1.5 | ) | % | |||||||||||||||
| Avg. interest earning assets/Avg. interest bearing liabilities | 1.25 | 1.24 | 1.24 | 1.0 | % | 1.0 | % | ||||||||||||||||||||
| FINANCIAL DATA - YEAR TO DATE: | |||||||||||||||||||||||||||
| Net interest income (tax equivalent) (a) | $ | 18,109 | $ | 15,111 | 19.8 | % | |||||||||||||||||||||
| Provision for loan losses | 1,054 | 506 | 108.3 | % | |||||||||||||||||||||||
| Total other income | 6,124 | 5,057 | 21.1 | % | |||||||||||||||||||||||
| Total other expenses | 16,859 | 15,355 | 9.8 | % | |||||||||||||||||||||||
| Income before provision for income taxes (tax equivalent) | 6,320 | 4,307 | 46.7 | % | |||||||||||||||||||||||
| Provision for income taxes | 2,022 | 1,190 | 69.9 | % | |||||||||||||||||||||||
| Taxable equivalent adjustment (a) | 298 | 330 | (9.7 | ) | % | ||||||||||||||||||||||
| Net income | $ | 4,000 | $ | 2,787 | 43.5 | % | |||||||||||||||||||||
| Net income per common share - Basic | $ | 0.87 | $ | 0.61 | 42.6 | % | |||||||||||||||||||||
| Net income per common share - Diluted | $ | 0.86 | $ | 0.61 | 41.0 | % | |||||||||||||||||||||
| Return on average assets | 0.71 | % | 0.60 | % | 17.5 | % | |||||||||||||||||||||
| Return on average equity | 9.41 | % | 7.10 | % | 32.6 | % | |||||||||||||||||||||
| Efficiency ratio (b) | 70.44 | % | 77.40 | % | (9.0 | ) | % | ||||||||||||||||||||
| Net interest margin (tax equivalent) | 3.37 | % | 3.47 | % | (2.9 | ) | % | ||||||||||||||||||||
| Avg. interest earning assets/Avg. interest bearing liabilities | 1.24 | 1.22 | 1.7 | % | |||||||||||||||||||||||
| SHARE INFORMATION: | |||||||||||||||||||||||||||
| Book value per common share | $ | 12.37 | $ | 11.61 | $ | 11.44 | 8.1 | % | 6.5 | % | |||||||||||||||||
| Tangible book value per common share | 11.77 | 11.00 | 10.83 | 8.6 | % | 7.0 | % | ||||||||||||||||||||
| Outstanding shares- period ending | 4,741,720 | 4,646,238 | 4,645,387 | 2.1 | % | 2.1 | % | ||||||||||||||||||||
| Average diluted shares outstanding (year to date) | 4,633,473 | 4,591,822 | 4,591,700 | 0.9 | % | 0.9 | % | ||||||||||||||||||||
| CAPITAL RATIOS: | |||||||||||||||||||||||||||
| Total equity to total assets | 7.25 | % | 7.88 | % | 8.25 | % | (12.2 | ) | % | (8.0 | ) | % | |||||||||||||||
| Leverage ratio (c) | 8.98 | % | 9.45 | % | 9.82 | % | (8.6 | ) | % | (5.0 | ) | % | |||||||||||||||
| Tier 1 risk-based capital ratio (c) | 11.02 | % | 11.74 | % | 12.39 | % | (11.1 | ) | % | (6.1 | ) | % | |||||||||||||||
| Total risk-based capital ratio (c) | 11.99 | % | 12.79 | % | 13.52 | % | (11.3 | ) | % | (6.3 | ) | % | |||||||||||||||
| Common equity Tier 1 capital ratio (c) | 11.02 | % | 11.74 | % | 12.39 | % | (11.1 | ) | % | (6.1 | ) | % | |||||||||||||||
| ASSET QUALITY: | |||||||||||||||||||||||||||
| Non-accrual loans | $ | 4,583 | $ | 5,312 | $ | 5,682 | (19.3 | ) | % | (13.7 | ) | % | |||||||||||||||
| Loans 90 days past due and still accruing | 386 | - | - | - | % | - | % | ||||||||||||||||||||
| Troubled debt restructured loans ("TDRs") (d) | 1,142 | 1,553 | 1,562 | (26.9 | ) | % | (26.5 | ) | % | ||||||||||||||||||
| Foreclosed real estate | 3,005 | 3,354 | 3,335 | (9.9 | ) | % | (10.4 | ) | % | ||||||||||||||||||
| Non-performing assets ("NPAs") | $ | 9,116 | $ | 10,219 | $ | 10,579 | (13.8 | ) | % | (10.8 | ) | % | |||||||||||||||
| Foreclosed real estate, criticized and classified assets | $ | 19,777 | $ | 20,778 | $ | 20,167 | (1.9 | ) | % | (4.8 | ) | % | |||||||||||||||
| Loans past due 30 to 89 days | $ | 7,580 | $ | 2,823 | $ | 2,436 | 211.2 | % | 168.5 | % | |||||||||||||||||
| Charge-offs, net (quarterly) | $ | 115 | $ | 181 | $ | 112 | 2.7 | % | (36.5 | ) | % | ||||||||||||||||
| Charge-offs, net as a % of average loans (annualized) | 0.07 | % | 0.14 | % | 0.09 | % | (23.3 | ) | % | (49.3 | ) | % | |||||||||||||||
| Non-accrual loans to total loans | 0.69 | % | 0.98 | % | 1.13 | % | (39.0 | ) | % | (29.3 | ) | % | |||||||||||||||
| NPAs to total assets | 1.13 | % | 1.49 | % | 1.64 | % | (31.4 | ) | % | (24.5 | ) | % | |||||||||||||||
| NPAs excluding TDR loans (d) to total assets | 0.99 | % | 1.27 | % | 1.40 | % | (29.6 | ) | % | (22.1 | ) | % | |||||||||||||||
| Non-accrual loans to total assets | 0.57 | % | 0.78 | % | 0.88 | % | (35.8 | ) | % | (27.0 | ) | % | |||||||||||||||
| Allowance for loan losses as a % of non-accrual loans | 138.14 | % | 105.23 | % | 99.28 | % | 39.1 | % | 31.3 | % | |||||||||||||||||
| Allowance for loan losses to total loans | 0.95 | % | 1.03 | % | 1.13 | % | (15.2 | ) | % | (7.2 | ) | % | |||||||||||||||
| (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) Troubled debt restructured loans currently performing in accordance with renegotiated terms | |||||||||||||||||||||||||||
| SUSSEX BANCORP | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| (Dollars In Thousands) | |||||||||
| ASSETS | September 30, 2016 | December 31, 2015 | |||||||
| Cash and due from banks | $ | 4,355 | $ | 2,914 | |||||
| Interest-bearing deposits with other banks | 8,055 | 3,206 | |||||||
| Cash and cash equivalents | 12,410 | 6,120 | |||||||
| Interest bearing time deposits with other banks | 100 | 100 | |||||||
| Securities available for sale, at fair value | 91,630 | 93,776 | |||||||
| Securities held to maturity | 6,628 | 6,834 | |||||||
| Federal Home Loan Bank Stock, at cost | 5,633 | 5,165 | |||||||
| Loans receivable, net of unearned income | 663,258 | 543,423 | |||||||
| Less: allowance for loan losses | 6,331 | 5,590 | |||||||
| Net loans receivable | 656,927 | 537,833 | |||||||
| Foreclosed real estate | 3,005 | 3,354 | |||||||
| Premises and equipment, net | 8,945 | 8,879 | |||||||
| Accrued interest receivable | 1,797 | 1,764 | |||||||
| Goodwill | 2,820 | 2,820 | |||||||
| Bank-owned life insurance | 12,749 | 12,524 | |||||||
| Other assets | 6,343 | 5,334 | |||||||
| Total Assets | $ | 808,987 | $ | 684,503 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Liabilities: | |||||||||
| Deposits: | |||||||||
| Non-interest bearing | $ | 127,198 | $ | 87,209 | |||||
| Interest bearing | 497,723 | 430,647 | |||||||
| Total Deposits | 624,921 | 517,856 | |||||||
| Borrowings | 107,500 | 95,650 | |||||||
| Accrued interest payable and other liabilities | 5,046 | 4,169 | |||||||
| Junior subordinated debentures | 12,887 | 12,887 | |||||||
| Total Liabilities | 750,354 | 630,562 | |||||||
| Total Stockholders' Equity | 58,633 | 53,941 | |||||||
| Total Liabilities and Stockholders' Equity | $ | 808,987 | $ | 684,503 | |||||
| SUSSEX BANCORP | |||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||||||||||||||
| (Dollars In Thousands Except Per Share Data) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| INTEREST INCOME | |||||||||||||||
| Loans receivable, including fees | $ | 6,971 | $ | 5,390 | $ | 19,575 | $ | 15,837 | |||||||
| Securities: | |||||||||||||||
| Taxable | 396 | 321 | 1,116 | 890 | |||||||||||
| Tax-exempt | 201 | 231 | 592 | 660 | |||||||||||
| Interest bearing deposits | 7 | 1 | 17 | 8 | |||||||||||
| Total Interest Income | 7,575 | 5,943 | 21,300 | 17,395 | |||||||||||
| INTEREST EXPENSE | |||||||||||||||
| Deposits | 619 | 448 | 1,830 | 1,302 | |||||||||||
| Borrowings | 508 | 390 | 1,393 | 1,150 | |||||||||||
| Junior subordinated debentures | 100 | 55 | 266 | 162 | |||||||||||
| Total Interest Expense | 1,227 | 893 | 3,489 | 2,614 | |||||||||||
| Net Interest Income | 6,348 | 5,050 | 17,811 | 14,781 | |||||||||||
| PROVISION FOR LOAN LOSSES | 458 | 1 | 1,054 | 506 | |||||||||||
| Net Interest Income after Provision for Loan Losses | 5,890 | 5,049 | 16,757 | 14,275 | |||||||||||
| OTHER INCOME | |||||||||||||||
| Service fees on deposit accounts | 245 | 230 | 726 | 656 | |||||||||||
| ATM and debit card fees | 190 | 198 | 577 | 573 | |||||||||||
| Bank owned life insurance | 74 | 78 | 225 | 235 | |||||||||||
| Insurance commissions and fees | 1,090 | 955 | 3,850 | 2,846 | |||||||||||
| Investment brokerage fees | (10 | ) | 40 | 67 | 103 | ||||||||||
| Gain on securities transactions | 89 | 11 | 361 | 267 | |||||||||||
| (Loss) on disposal of fixed assets | - | - | (19 | ) | 8 | ||||||||||
| Other | 96 | 143 | 337 | 369 | |||||||||||
| Total Other Income | 1,774 | 1,655 | 6,124 | 5,057 | |||||||||||
| OTHER EXPENSES | |||||||||||||||
| Salaries and employee benefits | 3,243 | 2,919 | 9,672 | 8,488 | |||||||||||
| Occupancy, net | 463 | 410 | 1,399 | 1,330 | |||||||||||
| Data processing | 529 | 468 | 1,626 | 1,251 | |||||||||||
| Furniture and equipment | 248 | 221 | 764 | 645 | |||||||||||
| Advertising and promotion | 63 | 65 | 254 | 225 | |||||||||||
| Professional fees | 219 | 161 | 570 | 480 | |||||||||||
| Director fees | 159 | 105 | 378 | 418 | |||||||||||
| FDIC assessment | 138 | 120 | 379 | 368 | |||||||||||
| Insurance | 67 | 69 | 213 | 189 | |||||||||||
| Stationary and supplies | 47 | 49 | 149 | 154 | |||||||||||
| Loan collection costs | 24 | 19 | 109 | 175 | |||||||||||
| Expenses and write-downs related to foreclosed real estate | 98 | 277 | 317 | 476 | |||||||||||
| Other | 353 | 480 | 1,029 | 1,156 | |||||||||||
| Total Other Expenses | 5,651 | 5,363 | 16,859 | 15,355 | |||||||||||
| Income before Income Taxes | 2,013 | 1,341 | 6,022 | 3,977 | |||||||||||
| INCOME TAX EXPENSE | 696 | 390 | 2,022 | 1,190 | |||||||||||
| Net Income | $ | 1,317 | $ | 951 | $ | 4,000 | $ | 2,787 | |||||||
| OTHER COMPREHENSIVE INCOME (LOSS): | |||||||||||||||
| Unrealized gains on available for sale securities arising during the period | $ | (575 | ) | $ | 1,024 | $ | 1,986 | $ | 174 | ||||||
| Fair value adjustments on derivatives | 190 | - | (1,359 | ) | - | ||||||||||
| Reclassification adjustment for net gain on securities transactions included in net income | (89 | ) | (11 | ) | (361 | ) | (267 | ) | |||||||
| Income tax related to items of other comprehensive income (loss) | 190 | (405 | ) | (106 | ) | 37 | |||||||||
| Other comprehensive income, net of income taxes | (284 | ) | 608 | 160 | (56 | ) | |||||||||
| Comprehensive income | $ | 1,033 | $ | 1,559 | $ | 4,160 | $ | 2,731 | |||||||
| EARNINGS PER SHARE | |||||||||||||||
| Basic | $ | 0.28 | $ | 0.21 | $ | 0.87 | $ | 0.61 | |||||||
| Diluted | $ | 0.28 | $ | 0.21 | $ | 0.86 | $ | 0.61 | |||||||
| SUSSEX BANCORP | |||||||||||||||||||||||||
| COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES | |||||||||||||||||||||||||
| (Dollars In Thousands) | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||||||
| Balance | Interest | Rate (2) | Balance | Interest | Rate (2) | ||||||||||||||||||||
| Earning Assets: | |||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||
| Tax exempt (3) | $ | 31,849 | $ | 306 | 3.81 | % | $ | 34,371 | $ | 347 | 4.01 | % | |||||||||||||
| Taxable | 71,496 | 396 | 2.20 | % | 69,546 | 321 | 1.83 | % | |||||||||||||||||
| Total securities | 103,345 | 702 | 2.69 | % | 103,917 | 668 | 2.55 | % | |||||||||||||||||
| Total loans receivable (1) (4) | 652,766 | 6,971 | 4.24 | % | 487,545 | 5,390 | 4.39 | % | |||||||||||||||||
| Other interest-earning assets | 9,445 | 7 | 0.29 | % | 6,236 | 1 | 0.06 | % | |||||||||||||||||
| Total earning assets | 765,556 | 7,680 | 3.98 | % | 597,698 | 6,059 | 4.02 | % | |||||||||||||||||
| Non-interest earning assets | 41,759 | 37,918 | |||||||||||||||||||||||
| Allowance for loan losses | (6,141 | ) | (5,677 | ) | |||||||||||||||||||||
| Total Assets | $ | 801,174 | $ | 629,939 | |||||||||||||||||||||
| Sources of Funds: | |||||||||||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||||||||||
| NOW | $ | 144,840 | $ | 78 | 0.21 | % | $ | 129,487 | $ | 57 | 0.17 | % | |||||||||||||
| Money market | 37,881 | 39 | 0.41 | % | 18,504 | 10 | 0.21 | % | |||||||||||||||||
| Savings | 137,455 | 72 | 0.21 | % | 138,020 | 70 | 0.20 | % | |||||||||||||||||
| Time | 166,847 | 430 | 1.02 | % | 120,397 | 311 | 1.02 | % | |||||||||||||||||
| Total interest bearing deposits | 487,023 | 619 | 0.50 | % | 406,408 | 448 | 0.44 | % | |||||||||||||||||
| Borrowed funds | 111,493 | 508 | 1.81 | % | 62,586 | 390 | 2.47 | % | |||||||||||||||||
| Junior subordinated debentures | 12,887 | 100 | 3.07 | % | 12,887 | 55 | 1.69 | % | |||||||||||||||||
| Total interest bearing liabilities | 611,403 | 1,227 | 0.80 | % | 481,881 | 893 | 0.74 | % | |||||||||||||||||
| Non-interest bearing liabilities: | |||||||||||||||||||||||||
| Demand deposits | 126,783 | 91,454 | |||||||||||||||||||||||
| Other liabilities | 4,843 | 3,934 | |||||||||||||||||||||||
| Total non-interest bearing liabilities | 131,626 | 95,388 | |||||||||||||||||||||||
| Stockholders' equity | 58,145 | 52,670 | |||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 801,174 | $ | 629,939 | |||||||||||||||||||||
| Net Interest Income and Margin (5) | 6,453 | 3.34 | % | 5,166 | 3.43 | % | |||||||||||||||||||
| Tax-equivalent basis adjustment | (105 | ) | (116 | ) | |||||||||||||||||||||
| Net Interest Income | $ | 6,348 | $ | 5,050 | |||||||||||||||||||||
| (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 | |||||||||||||||||||||||||
| COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES | |||||||||||||||||||||||||
| (Dollars In Thousands) | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||||||
| Balance | Interest | Rate (2) | Balance | Interest | Rate (2) | ||||||||||||||||||||
| Earning Assets: | |||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||
| Tax exempt (3) | $ | 30,402 | $ | 890 | 3.91 | % | $ | 33,050 | $ | 990 | 4.00 | % | |||||||||||||
| Taxable | 70,195 | 1,116 | 2.12 | % | 63,765 | 890 | 1.87 | % | |||||||||||||||||
| Total securities | 100,597 | 2,006 | 2.66 | % | 96,815 | 1,880 | 2.60 | % | |||||||||||||||||
| Total loans receivable (1) (4) | 607,044 | 19,575 | 4.31 | % | 478,151 | 15,837 | 4.43 | % | |||||||||||||||||
| Other interest-earning assets | 9,154 | 17 | 0.25 | % | 7,396 | 8 | 0.14 | % | |||||||||||||||||
| Total earning assets | 716,795 | 21,598 | 4.02 | % | 582,362 | 17,725 | 4.07 | % | |||||||||||||||||
| Non-interest earning assets | 40,063 | 37,958 | |||||||||||||||||||||||
| Allowance for loan losses | (5,894 | ) | (5,719 | ) | |||||||||||||||||||||
| Total Assets | $ | 750,964 | $ | 614,601 | |||||||||||||||||||||
| Sources of Funds: | |||||||||||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||||||||||
| NOW | $ | 142,911 | $ | 229 | 0.21 | % | $ | 128,686 | $ | 162 | 0.17 | % | |||||||||||||
| Money market | 34,902 | 105 | 0.40 | % | 16,332 | 23 | 0.19 | % | |||||||||||||||||
| Savings | 138,174 | 214 | 0.21 | % | 139,828 | 212 | 0.20 | % | |||||||||||||||||
| Time | 157,235 | 1,282 | 1.09 | % | 117,025 | 905 | 1.03 | % | |||||||||||||||||
| Total interest bearing deposits | 473,222 | 1,830 | 0.52 | % | 401,871 | 1,302 | 0.43 | % | |||||||||||||||||
| Borrowed funds | 89,803 | 1,393 | 2.07 | % | 61,179 | 1,150 | 2.51 | % | |||||||||||||||||
| Junior subordinated debentures | 12,887 | 266 | 2.75 | % | 12,887 | 162 | 1.68 | % | |||||||||||||||||
| Total interest bearing liabilities | 575,912 | 3,489 | 0.81 | % | 475,937 | 2,614 | 0.73 | % | |||||||||||||||||
| Non-interest bearing liabilities: | |||||||||||||||||||||||||
| Demand deposits | 113,504 | 82,391 | |||||||||||||||||||||||
| Other liabilities | 4,890 | 3,926 | |||||||||||||||||||||||
| Total non-interest bearing liabilities | 118,394 | 86,317 | |||||||||||||||||||||||
| Stockholders' equity | 56,658 | 52,347 | |||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 750,964 | $ | 614,601 | |||||||||||||||||||||
| Net Interest Income and Margin (5) | 18,109 | 3.37 | % | 15,111 | 3.47 | % | |||||||||||||||||||
| Tax-equivalent basis adjustment | (298 | ) | (330 | ) | |||||||||||||||||||||
| Net Interest Income | $ | 17,811 | $ | 14,781 | |||||||||||||||||||||
| (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 | ||||||||||||||||||
| Segment Reporting | ||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | |||||||||||||||||
| Banking and | Banking and | |||||||||||||||||
| Financial | Insurance | Financial | Insurance | |||||||||||||||
| Services | Services | Total | Services | Services | Total | |||||||||||||
| Net interest income from external sources | $ | 6,348 | $ | - | $ | 6,348 | $ | 5,050 | $ | - | $ | 5,050 | ||||||
| Other income from external sources | 707 | 1,067 | 1,774 | 694 | 961 | 1,655 | ||||||||||||
| Depreciation and amortization | 282 | 8 | 290 | 245 | 4 | 249 | ||||||||||||
| Income before income taxes | 1,848 | 165 | 2,013 | 1,168 | 173 | 1,341 | ||||||||||||
| Income tax expense (1) | 630 | 66 | 696 | 321 | 69 | 390 | ||||||||||||
| Total assets | 803,032 | 5,955 | 808,987 | 639,563 | 4,456 | 644,019 | ||||||||||||
| Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||||||||||||
| Banking and | Banking and | |||||||||||||||||
| Financial | Insurance | Financial | Insurance | |||||||||||||||
| Services | Services | Total | Services | Services | Total | |||||||||||||
| Net interest income from external sources | $ | 17,811 | $ | - | $ | 17,811 | $ | 14,781 | $ | - | $ | 14,781 | ||||||
| Other income from external sources | 2,274 | 3,850 | 6,124 | 2,195 | 2,862 | 5,057 | ||||||||||||
| Depreciation and amortization | 815 | 21 | 836 | 731 | 15 | 746 | ||||||||||||
| Income before income taxes | 4,918 | 1,104 | 6,022 | 3,376 | 601 | 3,977 | ||||||||||||
| Income tax expense (1) | 1,580 | 442 | 2,022 | 950 | 240 | 1,190 | ||||||||||||
| Total assets | 803,032 | 5,955 | 808,987 | 639,563 | 4,456 | 644,019 | ||||||||||||
| (1) Calculated at statutory tax rate of 40% | ||||||||||||||||||