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Sussex Bancorp Reports Strong Loan and Deposit Growth Driving EPS Results for the Second Quarter 2017

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ROCKAWAY, N.J., July 27, 2017 (GLOBE NEWSWIRE) -- Sussex Bancorp (the "Company") (NASDAQ:SBBX), the holding company for Sussex Bank (the "Bank"), today announced a 8.6% increase in net income to $1.2 million, or $0.25 per basic and diluted common share, for the quarter ended June 30, 2017, as compared to $1.1 million, or $0.24 per basic and diluted share, for the same period last year. During the three months and six months ended June 30, 2017, net income and earnings per share were impacted by costs related to the pending acquisition of Community Bank of Bergen County, NJ ("Community") and expenses incurred in connection with to a S-3 registration statement ("S-3 registration") filed in the current quarter with the Securities and Exchange Commission.  Diluted earnings per share, excluding expenses net of tax related to the pending acquisition of Community, expenses related to the S-3 registration net of tax, and the weighted average number of shares issued in connection with an offering of the Company's common stock (the "capital raise") completed in the current quarter, increased 40.0%, or $0.10, to $0.34 for the quarter ended June 30, 2017.  Also, the Company announced a 19.8% increase in net income per diluted common share to $0.67 for the six months ended June 30, 2017 as compared to $0.58 for the same period last year.  Diluted earnings per share, excluding expenses net of tax related to the pending acquisition of Community, expenses related to the S-3 registration net of tax and weighted average number of shares issued in the capital raise completed in the current quarter, increased 30.9%, or $0.18, to $0.76 for the six months ended June 30, 2017.  The improvement for the second quarter of 2017 as compared to the same period last year was mostly driven by an 18.5% increase in net interest income as a result of strong growth in average loans and deposits, which increased $131.9 million, or 21.7%, and $101.5 million, or 21.2%, respectively.  The aforementioned increases in net interest income were partly offset by higher interest expenses resulting mostly from the private placement of $15 million of subordinated notes completed in the fourth quarter of 2016 and growth in interest bearing deposits.  Additionally, operating expenses increased due to costs to support the Company's growth.

"The outstanding organic growth we have demonstrated across all of our principal business lines continues and as such, we produced another quarter of strong financial performance for Sussex Bancorp.  On a year to date basis, our commercial loans and total deposits grew at an annualized rate of 23.2% and 15.0%, respectively. Our insurance company also increased its pretax earnings 37.7% when compared to the first six months of last year. As a result, our year to date ROA and ROE, when adjusted for merger and capital raise related costs, was 0.82% and 11.25%, respectively," said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bank.

Mr. Labozzetta also added, "I am very pleased with the overwhelming confidence and support from our shareholders, which resulted in a successful common stock offering of $30.0 million in gross proceeds. This additional capital will be used to support the continued growth of our business."

Declaration of Quarterly Dividend
On July 25th, The Company's Board of Directors declared a quarterly cash dividend of $0.06 per share, which is payable on August 24, 2017 to common shareholders of record as of the close of business on August 10, 2017.

Financial Performance
Net Income. For the quarter ended June 30, 2017, the Company reported net income of $1.2 million, or $0.25 per basic and diluted share, as compared to net income of $1.1 million, or $0.24 per basic and diluted share, for the same period last year.  The increase in net income for the quarter ended June 30, 2017 was driven by a $1.1 million, or 18.5%, increase in net interest income resulting from strong loan and deposit growth of 20.6% and 19.4%, respectively, partially offset by a $465 thousand increase in interest expense mostly related to the $15.0 million in a private placement of subordinated notes completed in the fourth quarter of 2016 and an increase in interest expense related to growth in interest bearing deposits. The aforementioned was partly offset by an increase in non-interest expenses of $928 thousand mostly due to costs to support the Company's growth, expenses related to the pending acquisition of Community and the S-3 registration.  Excluding expenses related to the pending acquisition of Community net of tax and expenses related to the S-3 registration net of tax, net income increased $485 thousand, or 43.7% for the quarter ended June 30, 2017. 

The Company's income before income taxes, including Tri-State Insurance Agency, increased $147 thousand, or 8.9%, to $1.8 million for the quarter ended June 30, 2017 as compared to $1.7 million for the same period last year.  The Company's income before income taxes, excluding Tri-State Insurance Agency, increased $71 thousand, or 4.6%.

For the six months ended June 30, 2017, the Company reported net income of $3.2 million, or $0.67 per diluted share, or a 19.8% increase, as compared to net income of $2.7 million, or $0.58 per diluted share, for the same period last year. The increase in net income for the six months ended June 30, 2017 was largely due to an increase in net interest income of $2.2 million, which was partially offset by an increase in non-interest expenses of $1.3 million. The increase in non-interest expenses was largely due to an $806 thousand increase in salaries and employee benefits and expenses related to the pending acquisition of Community of $481 thousand. Excluding expenses net of tax related to the pending acquisition of Community and expenses related to the S-3 registration net of tax, net income increased $922 thousand, or 34.4%, for the six months ended June 30, 2017.

Income before income taxes increased $640 thousand, or 16.0%, to $4.6 million for the six months ended June 30, 2017 as compared to $4.0 million for the same period last year. The Company's income before income taxes, excluding Tri-State Insurance Agency, increased $579 thousand, or 18.9%.

Net Interest Income.  Net interest income on a fully tax equivalent basis increased $1.1 million, or 19.4%, to $7.1 million for the second quarter of 2017, as compared to $5.9 million for the same period in 2016.  The increase in net interest income was largely due to a $143.6 million, or 20.1%, increase in average interest earning assets, principally loans receivable, which increased $131.9 million, or 21.7%. The improvement in net interest income was partly offset by a decline in the net interest margin of 2 basis points to 3.29% for the second quarter of 2017, as compared to the same period in 2016.  The net interest margin decrease was mostly attributed to higher interest expense related to the private placement of $15.0 million of subordinated notes completed in the fourth quarter of 2016 and an increase in the interest rate paid on money market deposits.  

Net interest income on a fully tax equivalent basis increased $2.3 million, or 19.8%, to $14.0 million for the first six months of 2017 as compared to $11.7 million for the same period in 2016. Included in the increase in net interest income was $252 thousand in prepayment penalties on $18.9 million of commercial loans.   

Provision for Loan Losses. Provision for loan losses decreased $5 thousand to $380 thousand for the second quarter of 2017, as compared to $385 thousand for the same period in 2016.

Provision for loan losses increased $191 thousand, or 32.0%, to $787 thousand for the first six months of 2017, as compared to $596 thousand for the same period in 2016.

Non-interest Income. Non-interest income decreased $8 thousand, or 0.4%, to $1.8 million for the second quarter of 2017, as compared to the same period last year.  The decrease was principally due to a reduction in gain on sales of securities of approximately $135 thousand to a net loss of $30 thousand for the second quarter 2017.  The aforementioned was partly offset by growth of $104 thousand in insurance commissions and fees relating to Tri-State Insurance Agency.

The Company's non-interest income decreased $55 thousand, or 1.3%, to $4.3 million for the first six months of 2017 as compared to the same period last year.  The decrease in non-interest income was mostly due to a decrease on realized gains on sales of securities of $195 thousand. The aforementioned was partly offset by growth of $130 thousand in insurance commissions and fees relating to Tri-State Insurance Agency.

Non-interest Expense. The Company's non-interest expenses increased $928 thousand, or 16.6%, to $6.5 million for the second quarter of 2017, as compared to the same period last year. The increase for the second quarter of 2017, as compared to the same period in 2016, was largely due to increases in salaries and employee benefits of $601 thousand and expenses of $481 thousand related to the pending acquisition of Community and S-3 registration costs in other expenses of $75 thousand.    

The Company's non-interest expenses increased $1.3 million, or 11.6%, to $12.5 million for the first six months of 2017 as compared to the same period last year.  The increase for the first six months of 2017, as compared to the same period in 2016, was largely due to increases in salaries and employee benefits of $806 thousand and  expenses of $481 thousand related to the pending acquisition of Community and S-3 registration.

The increase in salaries and employee benefits for the second quarter and first six months of 2017 as compared to the same periods in 2016 was largely due to an increase in personnel to support our growth.   

Financial Condition
At June 30, 2017, the Company's total assets were $928.8 million, an increase of $80.1 million, or 9.4%, as compared to total assets of $848.7 million at December 31, 2016.  The increase in total assets was largely driven by growth in loans receivable of $77.0 million, or 11.1%. 

Total loans receivable, net of unearned income, increased $77.0 million, or 11.1%, to $772.3 million at June 30, 2017, as compared to $695.3 million at December 31, 2016.  During the six months ended June 30, 2017, the Company had $102.6 million in commercial loan production, which was partly offset by $18.9 million in commercial loan payoffs.

The Company's total deposits increased $49.6 million, or 7.5%, to $710.5 million at June 30, 2017, from $660.9 million at December 31, 2016.  The growth in deposits was primarily due to an increase in interest bearing deposits of $35.6 million, or 6.7%, at June 30, 2017, as compared to December 31, 2016. Included in the aforementioned deposit total is $85.6 million in deposit balances with a cost of 0.63% attributed to our branch in Oradell, New Jersey, which opened in the beginning of March 2016. 

At June 30, 2017, the Company's total stockholders' equity was $92.3 million, an increase of $32.2 million when compared to December 31, 2016.  The increase was largely due to the capital raise of $28.0 million and net income for the six months ended June 30, 2017.  The Company completed the capital raise on June 21, 2017 which was the primary driver in the book value increase of 20.5% from $12.67 to $15.27.  At June 30, 2017, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 12.64%, 14.59%, 15.51% and 14.59%, respectively, all in excess of the ratios required to be deemed "well-capitalized."

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 increased to 1.15% at June 30, 2017 from 1.10% at December 31, 2016.  NPAs increased $1.3 million, or 13.8%, to $10.6 million at June 30, 2017, as compared to $9.3 million at December 31, 2016.  Loans 90 days past due and still accruing totaled $2.2 million at June 30, 2017 as compared to $468 thousand at December 31, 2016.  The increase in 90 days past due and still accruing is mostly due to one lending relationship of $1.2 million which the company is working on to resolve. Non-accrual loans decreased $210 thousand, or 3.6%, to $5.6 million at June 30, 2017, as compared to $5.8 million at December 31, 2016.  Loans past due 30 to 89 days totaled $521 thousand at June 30, 2017, representing a decrease of $1.3 million, or 71.7%, as compared to $1.8 million at December 31, 2016. The top five non-accrual loan relationships total $3.4 million, which equates to 59.6% of total non-accrual loans and 31.5% of total NPAs at June 30, 2017.  The remaining non-accrual loans at June 30, 2017 have an average loan balance of $95 thousand. 

The Company continues to actively market its foreclosed real estate properties, which decreased $521 thousand, with one property sold for $615 thousand and $49 thousand in write-downs, which was partly offset by the addition of one new property at $133 thousand, to $1.8 million at June 30, 2017, as compared to $2.4 million at December 31, 2016.  At June 30, 2017, the Company's foreclosed real estate properties had an average carrying value of approximately $264 thousand per property.

The allowance for loan losses increased by $469 thousand, or 7.0%, to $7.2 million, or 0.93% of total loans, at June 30, 2017, compared to $6.7 million, or 0.96% of total loans, at December 31, 2016. The Company recorded $787 thousand in provision for loan losses for the six months ended June 30, 2017 as compared to $596 thousand for the six months ended June 30, 2016.  Additionally, the Company recorded net charge-offs of $318 thousand for the six months ended June 30, 2017, as compared to $199 thousand in net charge-offs for the six months ended June 30, 2016. The allowance for loan losses as a percentage of non-accrual loans increased to 127.4% at June 30, 2017 from 114.8% at December 31, 2016.

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.  In November 2016, SBBX earned the honor of being named one of the 50 Fastest Growing Companies in New Jersey by NJBIZ Magazine and was the highest ranked bank on the list.  Anthony Labozzetta, President and Chief Executive Officer of SBBX, was named American Banker's Community Banker of the Year in 2016 and in February 2017, was recognized by Forbes magazine as one of America's Business Leaders in Banking. 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, the ability of its borrowers to comply with repayment terms, failure to complete the proposed acquisition of Community, the imposition of adverse regulatory conditions in connection with regulatory approval of the proposed acquisition of Community, disruption to the parties' businesses as a result of the announcement and pendency of the acquisition of Community, the inability to realize expected cost savings or to implement integration plans and other adverse consequences associated with the acquisition of Community.  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, 2016 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)
                                   
                  6/30/2017 VS.
    6/30/2017   12/31/2016   6/30/2016   6/30/2016   12/31/2016
 BALANCE SHEET HIGHLIGHTS - Period End Balances                             
Total securities   $ 106,721     $ 100,229     $ 100,457       6.2   %     6.5   %
Total loans     772,279       695,257       640,187       20.6   %     11.1   %
Allowance for loan losses     (7,165 )     (6,696 )     (5,988 )     19.7   %     7.0   %
Total assets     928,827       848,728       789,812       17.6   %     9.4   %
Total deposits     710,487       660,921       594,824       19.4   %     7.5   %
Total borrowings and junior subordinated debt     121,993       123,645       131,762       (7.4 ) %     (1.3 ) %
Total shareholders' equity     92,267       60,072       56,886       62.2   %     53.6   %
                                   
 FINANCIAL DATA - QUARTER ENDED:                                   
Net interest income (tax equivalent) (a)   $ 7,056     $ 6,704     $ 5,911       19.4   %     5.3   %
Provision for loan losses     380       237       385       (1.3 ) %     60.3   %
Total other income     1,818       1,705       1,826       (0.4 ) %     6.6   %
Total other expenses     6,526       5,726       5,598       16.6   %     14.0   %
Income before provision for income taxes (tax equivalent)     1,968       2,446       1,754       12.2   %     (19.5 ) %
Provision for income taxes     603       806       551       9.4   %     (25.2 ) %
Taxable equivalent adjustment (a)     161       117       94       71.3   %     37.6   %
Net income   $ 1,204     $ 1,523     $ 1,109       8.6   %     (20.9 ) %
                                   
Net income per common share - Basic   $ 0.25     $ 0.33     $ 0.24       4.2   %     (24.2 ) %
Net income per common share - Diluted   $ 0.25     $ 0.32     $ 0.24       4.2   %     (21.9 ) %
                                   
Return on average assets     0.54   % 0.74   % 0.59   % (9.4 ) %     (27.0 ) %
Return on average equity     7.23   % 10.14   % 7.85   % (7.9 ) %     (28.7 ) %
Efficiency ratio (b)     74.90   % 69.05   % 73.24   % 2.3   %     8.5   %
Net interest margin (tax equivalent)     3.29   % 3.35   % 3.31   % (0.6 ) %     (1.8 ) %
Avg. interest earning assets/Avg. interest bearing liabilities     1.25       1.25       1.25       0.1   %     (0.1 ) %
                                   
 FINANCIAL DATA - YEAR TO DATE:                                   
Net interest income (tax equivalent) (a)   $ 13,962           $ 11,656       19.8   %        
Provision for loan losses     787             596       32.0   %        
Total other income     4,295             4,350       (1.3 ) %        
Total other expenses     12,503             11,208       11.6   %        
Income before provision for income taxes (tax equivalent)     4,967             4,202       18.2   %        
Provision for income taxes     1,434             1,326       8.1   %        
Taxable equivalent adjustment (a)     318             193       64.8   %        
Net income   $ 3,215           $ 2,683       19.8   %        
                                   
Net income per common share - Basic   $ 0.68           $ 0.59       15.3   %        
Net income per common share - Diluted   $ 0.67           $ 0.58       15.5   %        
                                   
Return on average assets     0.73   %       0.74   % (1.0 ) %        
Return on average equity     10.03   %       9.60   % 4.5   %        
Efficiency ratio (b)     69.70   %       70.88   % (1.7 ) %        
Net interest margin (tax equivalent)     3.34   %       3.39   % (1.5 ) %        
Avg. interest earning assets/Avg. interest bearing liabilities     1.24             1.24       0.2   %        
                                   
 SHARE INFORMATION:                                   
Book value per common share   $ 15.27     $ 12.67     $ 12.15       25.7   %     20.5   %
Tangible book value per common share     14.81       12.08       11.55       28.2   %     22.6   %
Outstanding shares- period ending     6,041,002       4,741,068       4,680,697       29.1   %     27.4   %
Average diluted shares outstanding (year to date)     4,794,669       4,651,108       4,610,176       4.0   %     3.1   %
                                   
 CAPITAL RATIOS:                                   
Total equity to total assets     9.93   % 7.08   % 7.20   % 37.9   %     40.3   %
Leverage ratio (c)     12.64   % 10.41   % 8.75   % 44.5   %     21.4   %
Tier 1 risk-based capital ratio (c)     14.59   % 12.87   % 10.50   % 39.0   %     13.4   %
Total risk-based capital ratio (c)     15.51   % 13.86   % 11.46   % 35.3   %     11.9   %
Common equity Tier 1 capital ratio (c)     14.59   % 12.87   % 10.50   % 39.0   %     13.4   %
                                   
 ASSET QUALITY:                                   
Non-accrual loans   $ 5,623     $ 5,833     $ 4,650       20.9   %     (3.6 ) %
Loans 90 days past due and still accruing     2,229       468       -       -   %     376.3   %
Troubled debt restructured loans ("TDRs") (d)     943       679       1,258       (25.0 ) %     38.9   %
Foreclosed real estate     1,846       2,367       3,002       (38.5 ) %     (22.0 ) %
Non-performing assets ("NPAs")   $ 10,641     $ 9,347     $ 8,910       19.4   %     13.8   %
                                   
Foreclosed real estate, criticized and classified assets   $ 20,144     $ 20,450     $ 19,417       3.7   %     (1.5 ) %
Loans past due 30 to 89 days   $ 521     $ 1,840     $ 4,968       (89.5 ) %     (71.7 ) %
Charge-offs (Recoveries) , net (quarterly)   $ 12     $ (128 )   $ 209       (94.3 ) %     (109.4 ) %
Charge-offs (Recoveries) , net as a % of average loans (annualized)     0.01   % (0.08 ) % 0.14   % (95.3 ) %     (108.6 ) %
Non-accrual loans to total loans     0.73   % 0.84   % 0.73   % 0.2   %     (13.2 ) %
NPAs to total assets     1.15   % 1.10   % 1.13   % 1.6   %     4.0   %
NPAs excluding TDR loans (d) to total assets     1.04   % 1.02   % 0.97   % 7.8   %     2.2   %
Non-accrual loans to total assets     0.61   % 0.69   % 0.59   % 2.8   %     (11.9 ) %
Allowance for loan losses as a % of non-accrual loans     127.42   % 114.80   % 128.77   % (1.0 ) %     11.0   %
Allowance for loan losses to total loans     0.93   % 0.96   % 0.94   % (0.8 ) %     (3.7 ) %
                                   
(a) Full taxable equivalent basis, using a 34% 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 June 30, 2017     December 31, 2016
       
Cash and due from banks $ 2,762     $ 2,847
Interest-bearing deposits with other banks   4,888       11,791
Cash and cash equivalents   7,650       14,638
         
Interest bearing time deposits with other banks   100       100
Securities available for sale, at fair value   98,067       88,611
Securities held to maturity   8,654       11,618
Federal Home Loan Bank Stock, at cost   5,386       5,106
         
Loans receivable, net of unearned income   772,279       695,257
Less:  allowance for loan losses   7,165       6,696
Net loans receivable   765,114       688,561
         
Foreclosed real estate   1,846       2,367
Premises and equipment, net   8,304       8,728
Accrued interest receivable   2,270       2,058
Goodwill   2,820       2,820
Bank-owned life insurance   21,766       16,532
Other assets   6,850       7,589
         
Total Assets $ 928,827     $ 848,728
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Liabilities:        
Deposits:        
Non-interest bearing $ 146,380     $ 132,434
Interest bearing   564,107       528,487
Total Deposits   710,487       660,921
         
Borrowings   94,150       95,805
Accrued interest payable and other liabilities           4,080       4,090
Subordinated debentures   27,843       27,840
         
Total Liabilities   836,560       788,656
         
Total Stockholders' Equity   92,267       60,072
         
Total Liabilities and Stockholders' Equity $ 928,827     $ 848,728
         

 

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
  Three Months Ended June 30,   Six Months Ended June 30,
  2017
  2016
  2017
  2016
INTEREST INCOME               
               
Loans receivable, including fees $ 7,876     $ 6,459     $ 15,474     $ 12,604  
Securities:              
Taxable   344       344       685       720  
Tax-exempt   316       190       629       391  
Interest bearing deposits   6       6       22       10  
  Total Interest Income   8,542       6,999       16,810       13,725  
               
INTEREST EXPENSE              
Deposits   852       636       1,569       1,211  
Borrowings   479       448       960       885  
Junior subordinated debentures   316       98       637       166  
  Total Interest Expense   1,647       1,182       3,166       2,262  
               
  Net Interest Income   6,895       5,817       13,644       11,463  
PROVISION FOR LOAN LOSSES   380       385       787       596  
  Net Interest Income after Provision for Loan Losses   6,515       5,432       12,857       10,867  
               
OTHER INCOME              
Service fees on deposit accounts   285       256       538       481  
ATM and debit card fees   200       200       380       387  
Bank owned life insurance   128       75       234       151  
Insurance commissions and fees   1,143       1,039       2,890       2,760  
Investment brokerage fees   -       50       3       77  
(Loss) gain on securities transactions   (30 )     105       77       272  
(Loss) on disposal of fixed assets   -       (6 )     -       (19 )
Other   92       107       173       241  
  Total Other Income   1,818       1,826       4,295       4,350  
               
OTHER EXPENSES              
Salaries and employee benefits   3,677       3,076       7,235       6,429  
Occupancy, net   456       512       956       936  
Data processing   521       548       1,078       1,097  
Furniture and equipment   234       283       474       516  
Advertising and promotion   89       86       195       191  
Professional fees   198       177       475       351  
Director fees   89       160       196       219  
FDIC assessment   93       121       144       241  
Insurance   66       73       132       146  
Stationary and supplies   44       50       76       102  
Merger-related expenses   481       -       481       -  
Loan collection costs   28       53       52       85  
Expenses and write-downs related to foreclosed real estate   32       144       77       219  
Other   518       315       932       676  
  Total Other Expenses   6,526       5,598       12,503       11,208  
               
  Income before Income Taxes   1,807       1,660       4,649       4,009  
 INCOME TAX EXPENSE    603       551       1,434       1,326  
  Net Income  $ 1,204     $ 1,109     $ 3,215     $ 2,683  
               
OTHER COMPREHENSIVE INCOME (LOSS):              
Unrealized gains on available for sale securities arising during the period $ 1,145     $ 1,576     $ 1,821     $ 2,561  
Fair value adjustments on derivatives   (455 )     (1,149 )     (415 )     (1,549 )
Reclassification adjustment for net loss (gain) on securities transactions included in net income   30       (105 )     (77 )     (272 )
Income tax related to items of other comprehensive income (loss)   (288 )     (129 )     (532 )     (296 )
Other comprehensive income, net of income taxes   432       193       797       444  
Comprehensive income $ 1,636     $ 1,302     $ 4,012     $ 3,127  
               
EARNINGS PER SHARE              
               
Basic $ 0.25     $ 0.24     $ 0.68     $ 0.59  
Diluted $ 0.25     $ 0.24     $ 0.67     $ 0.58  

 

SUSSEX BANCORP  
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES  
(Dollars In Thousands)  
(Unaudited)  
                           
    Three Months Ended June 30,  
    2017 
  2016 
 
      Average       Average      Average       Average   
     Balance    Interest   Rate (2)    Balance    Interest   Rate (2)  
Earning Assets:                          
Securities:                          
Tax exempt (3)   $ 45,892     $ 477     4.17 %   $ 29,106     $ 284     3.91 %  
Taxable     66,467       344     2.08 %     69,204       344     1.99 %  
Total securities     112,359       821     2.93 %     98,310       628     2.56 %  
Total loans receivable (1) (4)     739,837       7,876     4.27 %     607,983       6,459     4.26 %  
Other interest-earning assets     7,110       6     0.34 %     9,375       6     0.26 %  
Total earning assets     859,306       8,703     4.06 %     715,668       7,093     3.98 %  
                           
Non-interest earning assets     45,352               39,713            
Allowance for loan losses     (6,956 )             (5,881 )          
Total Assets   $ 897,702             $ 749,500            
                           
Sources of Funds:                          
Interest bearing deposits:                          
NOW   $ 182,345     $ 130     0.29 %   $ 143,840     $ 80     0.22 %  
Money market     101,079       226     0.90 %     36,842       38     0.41 %  
Savings     138,403       72     0.21 %     138,546       72     0.21 %  
Time     157,283       424     1.08 %     158,408       446     1.13 %  
Total interest bearing deposits     579,110       852     0.59 %     477,636       636     0.53 %  
Borrowed funds     79,260       479     2.42 %     81,712       448     2.20 %  
Subordinated debentures     27,842       316     4.55 %     12,887       98     3.05 %  
Total interest bearing liabilities     686,212       1,647     0.96 %     572,235       1,182     0.83 %  
                           
Non-interest bearing liabilities:                          
Demand deposits     140,493               115,319            
Other liabilities     4,364               5,448            
Total non-interest bearing liabilities     144,857               120,767            
Stockholders' equity     66,633               56,498            
Total Liabilities and Stockholders' Equity   $ 897,702             $ 749,500            
                           
Net Interest Income and Margin (5)         7,056     3.29 %         5,911     3.31 %  
Tax-equivalent basis adjustment         (161 )             (94 )      
Net Interest Income       $ 6,895             $ 5,817        
                           
(1) Includes loan fee income                          
(2) Average rates on securities are calculated on amortized costs                      
(3) Full taxable equivalent basis, using a 34% 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)  
                           
    Six Months Ended June 30,  
    2017 
  2016
 
      Average       Average      Average       Average   
     Balance    Interest   Rate (2)    Balance    Interest   Rate (2)  
Earning Assets:                          
Securities:                          
Tax exempt (3)   $ 46,663     $ 947     4.09 %   $ 29,671     $ 584     3.96 %  
Taxable     64,628       685     2.14 %     69,537       720     2.08 %  
Total securities     111,291       1,632     2.96 %     99,208       1,304     2.64 %  
Total loans receivable (1) (4)     720,954       15,474     4.33 %     583,931       12,604     4.34 %  
Other interest-earning assets     10,009       22     0.44 %     9,006       10     0.22 %  
Total earning assets     842,254       17,128     4.10 %     692,145       13,918     4.04 %  
                           
Non-interest earning assets     43,218               39,208            
Allowance for loan losses     (6,840 )             (5,770 )          
Total Assets   $ 878,632             $ 725,583            
                           
Sources of Funds:                          
Interest bearing deposits:                          
NOW   $ 179,741     $ 249     0.28 %   $ 141,936     $ 151     0.21 %  
Money market     87,582       350     0.81 %     33,396       66     0.40 %  
Savings     138,074       143     0.21 %     138,537       142     0.21 %  
Time     161,951       827     1.03 %     152,376       852     1.12 %  
Total interest bearing deposits     567,348       1,569     0.56 %     466,245       1,211     0.52 %  
Borrowed funds     82,571       960     2.34 %     78,839       885     2.26 %  
Subordinated debentures     27,841       637     4.61 %     12,887       166     2.59 %  
Total interest bearing liabilities     677,760       3,166     0.94 %     557,971       2,262     0.82 %  
                           
Non-interest bearing liabilities:                          
Demand deposits     132,785               106,792            
Other liabilities     3,978               4,914            
Total non-interest bearing liabilities     136,763               111,706            
Stockholders' equity     64,109               55,906            
Total Liabilities and Stockholders' Equity   $ 878,632             $ 725,583            
                           
Net Interest Income and Margin (5)         13,962     3.34 %         11,656     3.39 %  
Tax-equivalent basis adjustment         (318 )             (193 )      
Net Interest Income       $ 13,644             $ 11,463        
                           
(1) Includes loan fee income                          
(2) Average rates on securities are calculated on amortized costs                      
(3) Full taxable equivalent basis, using a 34% 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 June 30, 2017   Three Months Ended June 30, 2016
  Banking and               Banking and            
  Financial   Insurance         Financial   Insurance      
  Services   Services   Total   Services   Services   Total
Net interest income from external sources $ 6,895   $ -   $ 6,895   $ 5,817   $ -   $ 5,817
Other income from external sources   675     1,143     1,818     781     1,045     1,826
Depreciation and amortization   260     7     267     281     7     288
Income before income taxes   1,627     180     1,807     1,556     104     1,660
Income tax expense (1)   531     72     603     509     42     551
Total assets   922,510     6,317     928,827     783,239     6,573     789,812
                                   
                                   
                                   
  Six Months Ended June 30, 2017   Six Months Ended June 30, 2016
  Banking and               Banking and            
  Financial   Insurance         Financial   Insurance      
  Services   Services   Total   Services   Services   Total
Net interest income from external sources $ 13,644   $ -   $ 13,644   $ 11,463   $ -   $ 11,463
Other income from external sources   1,405     2,890     4,295     1,567     2,783     4,350
Depreciation and amortization   527     13     540     533     13     546
Income before income taxes   3,649     1,000     4,649     3,070     939     4,009
Income tax expense (1)   1,034     400     1,434     950     376     1,326
Total assets   922,510     6,317     928,827     783,239     6,573     789,812
                                   
(1) Calculated at statutory tax rate of 40% for the insurance services segment                        

 

SUSSEX BANCORP
Non-GAAP Reporting
(Dollars In Thousands)
(Unaudited)
           
           
  Three Months Ended June 30,
  2017
  2016
Net income (GAAP) $ 1,204     $ 1,109  
Merger related expenses net of tax (1)   345       -  
S-3 Registration filing expenses net of tax (1)   45       -  
Net income, as adjusted $ 1,594     $ 1,109  
           
Average diluted shares outstanding (GAAP)   4,863,348       4,617,041  
Average diluted shares from capital raise (2)   122,283       -  
Average diluted shares outstanding, as adjusted   4,741,065       4,617,041  
           
Diluted EPS, as adjusted $ 0.34     $ 0.24  
Return on average assets, as adjusted   0.71 %     0.59 %
Return on average equity, as adjusted   9.57 %     7.85 %
           
(1) Merger related expense net of tax expense of $136 thousand; S-3 Registration filing net of  tax
expense of $30 thousand.
(2) Calculation is based on 1,249,999 common stock shares issued and outstanding as part of the
capital raise completed on June 21, 2017 divided by the number of days in the period.
           
           
  Six Months Ended June 30, 
  2017
  2016
Net income (GAAP) $ 3,215     $ 2,683  
Merger related expenses net of tax (1)   345       -  
S-3 Registration filing expenses net of tax (1)   45       -  
Net income, as adjusted $ 3,605     $ 2,683  
           
Average diluted shares outstanding (GAAP)   4,794,669       4,610,176  
Average diluted shares from capital raise (2)   61,813       -  
Average diluted shares outstanding, as adjusted   4,732,856       4,610,176  
           
Diluted EPS, as adjusted $ 0.76     $ 0.58  
Return on average assets, as adjusted   0.82 %     0.74 %
Return on average equity, as adjusted   11.25 %     9.60 %
           
(1) Merger related expenses net of tax expenses of $136 thousand; S-3 Registration filing net of  tax
expenses of $30 thousand.
(2) Calculation is based on 1,249,999 common stock shares issued and outstanding as part of the
capital raise completed on June 21, 2017 divided by the number of days in the period.

 

Contacts: 
Anthony Labozzetta, President/CEO
Steven Fusco, SEVP/CFO
844-256-7328

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