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Sussex Bancorp Reports Strong Growth of Approximately 40% in Operating Results for the Fourth Quarter and Full Year 2017

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ROCKAWAY, N.J., Jan. 30, 2018 (GLOBE NEWSWIRE) -- Sussex Bancorp (the "Company") (NASDAQ:SBBX), the holding company for Sussex Bank (the "Bank"), today reported net income of $513 thousand, or $0.09 per basic and diluted share, for the quarter ended December 31, 2017, as compared to $1.5 million, or $0.33 per basic share and $0.32 per diluted share, for the same period last year.   For the year ended December 31, 2017, the Company reported net income of $5.7 million, or $1.05 per diluted share as compared to net income of $5.5 million, or $1.19 per diluted share, for the same period last year.  The decrease in net income for both reported periods was mainly attributable to the Company's adjustment to deferred tax assets resulting from the recognition of the newly enacted Tax Cuts and Jobs Act ("Tax Act") and merger-related costs associated with the merger of Community Bank of Bergen County ("Community Bank"), NJ with and into the Bank.  Earnings per share for both periods were also impacted by 1,249,999 additional common shares issued in the second quarter of 2017 in connection with an approximately $28.2 million capital raise.

The Company's net income, adjusted for merger-related expenses and the impact from the Tax Act on income tax expenses, increased $608 thousand, or 39.9%, to $2.1 million, or $0.35 per basic and diluted share, for the quarter ended December 31, 2017, as compared to the same period last year. 

For the year ended December 31, 2017, the Company's net income, adjusted for merger-related expenses and the impact from the Tax Act on income tax expenses, increased $2.2 million, or 39.4%, to $7.7 million, or $1.42 per basic and diluted common share, for the year ended December 31, 2017, as compared to last year.

In December 2017, the Company recognized a decrease in deferred tax assets as a result of the Tax Act and the change in federal income tax rate from 34% to the newly enacted 21%, which resulted in additional income tax expense of $942 thousand. Also, the Company realized $705 thousand and $1.2 million in merger-related expenses for the three months ended December 31, 2017 and for the year ended December 31, 2017, respectively.

"I am very excited to report another strong year of financial performance for Sussex Bancorp as our business lines continue to drive outstanding results.  For 2017, each of our major business units grew in excess of 15% with commercial loans leading the way, growing at 23%.  The business line growth in conjunction with continued improvement in efficiency has driven strong growth in operating results of approximately 40% for the fourth quarter and fiscal year of 2017," said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bank.

Mr. Labozzetta also stated, "We are very excited at the tremendous opportunities ahead of us. In January, we completed our merger and began our partnership with Community Bank.  Also, the new Tax Act will provide us a financial lift for both the short and long run. The Tax Act provides an opportunity to prudently accelerate our strategic plan initiatives through the hiring of additional staff to grow our businesses, invest in technology, and expand risk management and infrastructure to support our growth.  We were optimistic and excited about the future of our Company prior to the signing of the Tax Act and now even more so."

Financial Performance
Net Income. For the quarter ended December 31, 2017, the Company reported net income of $513 thousand, or $0.09 per basic and diluted share, as compared to net income of $1.5 million, or $0.33 per basic share and $0.32 per diluted share, for the same period last year.  The decrease in net income for the quarter ended December 31, 2017 was driven by a $1.2 million, or 153.0%, increase in income tax provision mostly due to the newly enacted Tax Act and an increase in non-interest expenses of $1.1 million largely due to merger-related expenses of $705 thousand. The aforementioned decrease in net income was partially offset by a $1.3 million, or 19.5%, increase in net interest income resulting from strong average loan and average interest bearing deposit growth of 18.4% and 19.5%, respectively, which is partially offset by a $491 thousand increase in overall interest expense partly related to the $15.0 million  private placement of subordinated notes completed in the fourth quarter of 2016 and an increase in interest expense related to growth and higher costs for interest bearing deposits.

The Company's net income, adjusted for merger and impact on income tax expenses from the Tax Act, increased $608 thousand, or 39.9%, to $2.1 million, or $0.35 per basic and diluted share, for the quarter ended December 31, 2017, as compared to the same period last year.

For the year ended December 31, 2017, the Company reported net income of $5.7 million, or $1.05 per diluted share, or a 3.0% increase, as compared to net income of $5.5 million, or $1.19 per diluted share, for the same period last year. The increase in net income for the twelve months ended December 31, 2017 was largely due to an increase in net interest income of $4.7 million, which was partially offset by an increase in non-interest expenses of $3.0 million and income tax expenses from the Tax Act of $942 thousand. The increase in non-interest expenses was largely due to an $1.7 million increase in salaries and employee benefits and merger-related expenses of $1.2 million. Excluding merger-related expenses, net income increased $1.2 million, or 21.5%, for the twelve months ended December 31, 2017.

The Company's net income, adjusted for merger-related expenses and income tax expenses from the Tax Act, increased $2.2 million, or 39.4%, to $7.7 million, or $1.42 per basic and diluted share, for the year ended December 31, 2017, as compared to last year.

Net Interest Income.  Net interest income on a fully tax equivalent basis increased $1.3 million, or 19.9%, to $8.0 million for the fourth quarter of 2017, as compared to $6.7 million for the same period in 2016.  The increase in net interest income was largely due to a $128.1 million, or 16.1%, increase in average interest earning assets, principally loans receivable, which increased $125.1 million, or 18.4%. The net interest margin increased by 11 basis points to 3.46% for the fourth quarter of 2017, as compared to the same period in 2016.  The net interest margin increase was partially attributed to $178 thousand in prepayment penalties, an increase of $135 thousand, or 319.5%, as compared to the same period in 2016.  

Net interest income on a fully tax equivalent basis increased $4.9 million, or 19.8%, to $29.7 million for the year ended December 31, 2017 as compared to $24.8 million for the same period in 2016. Included in the increase in net interest income was $635 thousand in prepayment penalties on $54.9 million of commercial loans, an increase of $544 thousand, or 601.2%, as compared to the same period in 2016.  The net interest margin increased by 2 basis points to 3.39% for the year ended December 31, 2017, as compared to the same period in 2016.

Provision for Loan Losses. Provision for loan losses increased $222 thousand to $459 thousand for the fourth quarter of 2017, as compared to $237 thousand for the same period in 2016.

Provision for loan losses increased $295 thousand, or 22.9%, to $1.6 million for the year ended December 31, 2017, as compared to the same period in 2016.

Non-interest Income. Non-interest income increased $256 thousand, or 15.0%, to $2.0 million for the fourth quarter of 2017, as compared to the same period last year.  The increase was principally due to growth of $227 thousand in insurance commissions and fees relating to Tri-State Insurance Agency, $62 thousand in service fees on deposit accounts and $61 thousand in bank owned life insurance.  The aforementioned was partly offset by a reduction in gain on sales of securities of approximately $143 thousand. 

The Company's non-interest income increased $456 thousand, or 5.8%, to $8.3 million for the year ended December 31, 2017 as compared to the same period last year.  The increase was principally due to growth of $530 thousand in insurance commissions and fees relating to Tri-State Insurance Agency and an increase of $214 thousand in bank owned life insurance, due to an increase in investments in bank owned life insurance.  The aforementioned were partly offset by a reduction in gain on sales of securities of approximately $453 thousand.

Non-interest Expense. The Company's non-interest expenses increased $1.1 million, or 19.1%, to $6.8 million for the fourth quarter of 2017, as compared to the same period last year. The increase for the fourth quarter of 2017, as compared to the same period in 2016, was largely due to expenses of $705 thousand related to the acquisition of Community Bank and increases in salaries and employee benefits of $377 thousand and in professional fees of $177 thousand.   The aforementioned were partly offset by reductions in  expenses and write-downs related to foreclosed real estate of $156 thousand.    

The Company's non-interest expenses increased $3.0 million, or 13.4%, to $25.6 million for the year ended December 31, 2017 as compared to the same period last year.  The increase for the year ended December 31, 2017, as compared to the same period in 2016, was largely due to increases in salaries and employee benefits of $1.7 million, merger-related expenses of $1.2 million, professional fees of $385 thousand, and other expenses of $270 thousand and was partly offset by decreases of $245 thousand in FDIC assessment fees and $175 in expenses and write-downs related to foreclosed real estate.

The increase in salaries and employee benefits for the fourth quarter and twelve months ended December 31, 2017 as compared to the same periods in 2016 was largely due to an increase in personnel to support the Company's growth.  

Income Tax Expense. The Company's income tax expenses increased $1.2 million, or 153.0% to $2.0 million for the fourth quarter of 2017, as compared to the same period last year. The Company's income tax expenses increased $1.7 million, or 58.4%, to $4.5 million for the year ended December 31, 2017 as compared to the same period last year.

The increase in income tax expense for the quarter and year ended December 31, 2017, was directly impacted by the recognition of the newly enacted Tax Act.

Financial Condition
At December 31, 2017, the Company's total assets were $979.4 million, an increase of $130.7 million, or 15.4%, 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 $125.4 million, or 18.0%. 

Total loans receivable, net of unearned income, increased $125.4 million, or 18.0%, to $820.7 million at December 31, 2017, as compared to $695.3 million at December 31, 2016.  During the twelve months ended December 31, 2017, the Company had $165.3 million in commercial loan production, which was partly offset by $54.9 million in commercial loan payoffs.

The Company's total deposits increased $101.6 million, or 15.4%, to $762.5 million at December 31, 2017, from $660.9 million at December 31, 2016.  The growth in deposits was primarily due to an increase in interest bearing deposits of $87.8 million, or 16.6%, at December 31, 2017, as compared to December 31, 2016. Included in the aforementioned deposit total is $89.9 million with a cost of 0.69% attributed to our branch in Oradell, New Jersey, which opened in the beginning of March 2016, an increase of $29.9 million or 49.9% from December 31, 2016.  Additionally, the Company's wholesale deposits increased $46.0 million, or 54.4%, to $130.6 million at December 31, 2017 from $84.6 at December 31, 2016. 

At December 31, 2017, the Company's total stockholders' equity was $94.2 million, an increase of $34.1 million when compared to December 31, 2016.  The increase was largely due to the capital raise of  approximately $28.2 million and net income for the twelve months ended December 31, 2017.  The Company completed the capital raise on June 21, 2017 which was the primary driver in the book value increase of 23.1% from $12.67 to $15.59.  At December 31, 2017, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 11.87%, 14.28%, 15.19% and 14.28%, 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 decreased to 0.94% at December 31, 2017 from 1.10% at December 31, 2016.  NPAs decreased $120 thousand, or 1.3%, to $9.2 million at December 31, 2017, as compared to $9.3 million at December 31, 2016.  There were no loans 90 days past due and still accruing at December 31, 2017 as compared to $468 thousand at December 31, 2016.  Non-accrual loans increased $187 thousand, or 3.2%, to $6.0 million at December 31, 2017, as compared to $5.8 million at December 31, 2016.  Loans past due 30 to 89 days totaled $6.5 million at December 31, 2017, representing an increase of $4.7 million, or 253.0%, as compared to $1.8 million at December 31, 2016.

The Company continues to actively market its foreclosed real estate properties, which decreased $92 thousand to $2.3 million at December 31, 2017 as compared to $2.4 million at December 31, 2016.  At December 31, 2017, the Company's foreclosed real estate properties had an average carrying value of approximately $253 thousand per property.

The allowance for loan losses increased by $639 thousand, or 9.5%, to $7.3 million, or 0.89% of total loans, at December 31, 2017, compared to $6.7 million, or 0.96% of total loans, at December 31, 2016. The Company recorded $1.6 million in provision for loan losses for the twelve months ended December 31, 2017 as compared to $1.3 million for the twelve months ended December 31, 2016.  Additionally, the Company recorded net charge-offs of $947 thousand for the twelve months ended December 31, 2017, as compared to $185 thousand in net charge-offs for the twelve months ended December 31, 2016. The allowance for loan losses as a percentage of non-accrual loans increased to 121.8% at December 31, 2017 from 114.8% at December 31, 2016.

About Sussex Bancorp
Sussex Bancorp (NASDAQ:SBBX) is the holding company for Sussex Bank which is headquartered in Sussex County, New Jersey and operates regionally with fourteen branch locations throughout Bergen, Sussex and Warren counties in New Jersey and in Astoria, New York. In addition to its branch locations, Sussex Bancorp offers a loan production office in Oradell, New Jersey and a full-service insurance agency, the Tri-State Insurance Agency, Inc., with locations in Augusta and Oradell, New Jersey.

In 2017, Sussex Bancorp was recognized as one of the top 29 banks and thrifts nationwide and one of three from New Jersey that comprise the Sandler O'Neill Sm-All Stars Class of 2017. Sussex Bancorp is one of the 50 Fastest Growing Companies in New Jersey as ranked by NJBIZ Magazine. Sussex Bancorp President and Chief Executive Officer, Anthony Labozzetta, was named one of America's Business Leaders in Banking by Forbes magazine and American Banker's Community Banker of the Year in 2016.

For more details on Sussex Bank, please visit: 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, the inability to realize expected cost savings or to implement integration plans and other adverse consequences associated with the acquisition of Community Bank of Bergen County, NJ ("Community Bank"), the inability to retain Community's customers, the risk that the businesses of Community and the Bank may not be combined successfully or may take longer than expected, and the diversion of management's time on issues relating to integration 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.

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

 
SUSSEX BANCORP
SUMMARY FINANCIAL HIGHLIGHTS
(In Thousands, Except Percentages and Per Share Data)
(Unaudited)
                                   
                  12/31/2017 VS.
    12/31/2017   9/30/2017   12/31/2016   12/31/2016   9/30/2017
 BALANCE SHEET HIGHLIGHTS - Period End Balances                             
 Total securities    $ 104,034     $ 109,053     $ 100,229         3.8   %       (4.6 ) %
 Total loans      820,700       795,124       695,257         18.0   %       3.2   %
 Allowance for loan losses        (7,335 )       (7,502 )       (6,696 )       9.5   %       (2.2 ) %
 Total assets      979,383       956,802       848,728         15.4   %       2.4   %
 Total deposits      762,491       741,928       660,921         15.4   %       2.8   %
 Total borrowings and junior subordinated debt        118,198         116,556         123,645         (4.4 ) %       1.4   %
 Total shareholders' equity        94,193         93,944         60,072         56.8   %       0.3   %
                                   
 FINANCIAL DATA - QUARTER ENDED:                                   
 Net interest income (tax equivalent) (a)    $ 8,038     $ 7,732     $ 6,704         19.9   %       4.0   %
 Provision for loan losses      459       340       237         93.7   %       35.0   %
 Total other income      1,961       2,029       1,705         15.0   %       (3.4 ) %
 Total other expenses      6,820       6,294       5,726         19.1   %       8.4   %
 Income before provision for income taxes (tax equivalent)        2,720         3,127         2,446         11.2   %       (13.0 ) %
 Provision for income taxes      2,039       1,006       806         153.0   %       102.7   %
 Taxable equivalent adjustment (a)      168       158       117         43.6   %       6.3   %
 Net income    $ 513     $ 1,963     $ 1,523         (66.3 ) %       (73.9 ) %
                                   
 Net income per common share - Basic    $ 0.09     $ 0.33     $ 0.33         (72.7 ) %       (72.7 ) %
 Net income per common share - Diluted    $ 0.09     $ 0.33     $ 0.32         (71.9 ) %       (72.7 ) %
                                   
 Return on average assets        0.21   %   0.84   %   0.74   %   (71.0 ) %       (74.6 ) %
 Return on average equity        2.16   %   8.40   %   10.14   %   (78.7 ) %       (74.3 ) %
 Efficiency ratio (b)        69.37   %   65.54   %   69.05   %   0.5   %       5.8   %
 Net interest margin (tax equivalent)        3.46   %   3.42   %   3.35   %   3.3   %       1.2   %
 Avg. interest earning assets/Avg. interest bearing liabilities        1.29         1.29         1.25         2.9   %       (0.1 ) %
                                   
 FINANCIAL DATA - YEAR TO DATE:                                   
 Net interest income (tax equivalent) (a)    $ 29,732           $ 24,813         19.8   %        
 Provision for loan losses      1,586             1,291         22.9   %        
 Total other income        8,285               7,829         5.8   %        
 Total other expenses      25,617             22,585         13.4   %        
 Income before provision for income taxes (tax equivalent)        10,814               8,766         23.4   %        
 Provision for income taxes        4,479               2,828         58.4   %        
 Taxable equivalent adjustment (a)        644               415         55.2   %        
 Net income    $   5,691           $   5,523         3.0   %        
                                   
 Net income per common share - Basic    $ 1.06           $ 1.20         (11.7 ) %        
 Net income per common share - Diluted    $ 1.05           $ 1.19         (11.8 ) %        
                                   
 Return on average assets        0.62   %         0.72   %   (13.2 ) %        
 Return on average equity        7.17   %         9.60   %   (25.3 ) %        
 Efficiency ratio (b)        68.54   %         70.08   %   (2.2 ) %        
 Net interest margin (tax equivalent)        3.39   %         3.37   %   0.6   %        
 Avg. interest earning assets/Avg. interest bearing liabilities        1.27   %         1.25   %   1.6   %        
                                   
 SHARE INFORMATION:                                   
 Book value per common share    $   15.59     $   15.55     $   12.67         23.1   %       0.3   %
 Tangible book value per common share        15.13         15.09         12.08         25.3   %       0.3   %
Outstanding shares- period ending     6,040,564       6,040,180       4,741,068         27.4   %       0.0   %
Average diluted shares outstanding (year to date)     5,404,381       5,200,467       4,651,108         16.2   %       3.9   %
                                   
 CAPITAL RATIOS:                                   
 Total equity to total assets        9.62   %   9.82   %   7.08   %   35.9   %       (2.0 ) %
 Leverage ratio (c)      11.87   % 12.14   % 10.41   %   14.0   %       (2.2 ) %
 Tier 1 risk-based capital ratio (c)      14.28   %   14.82   %   12.87   %     11.0   %       (3.6 ) %
 Total risk-based capital ratio (c)      15.19   % 15.80   % 13.86   %   9.6   %       (3.9 ) %
 Common equity Tier 1 capital ratio (c)      14.28   % 14.82   %   12.87   %   11.0   %       (3.6 ) %
                                   
 ASSET QUALITY:                                   
 Non-accrual loans    $ 6,020     $ 6,604     $ 5,833         3.2   %       (8.8 ) %
 Loans 90 days past due and still accruing        -          -          468         -    %     #DIV/0! %
 Troubled debt restructured loans ("TDRs") (d)        932         939         679         37.3   %       (0.7 ) %
 Foreclosed real estate        2,275         2,275         2,367         (3.9 ) %       -    %
 Non-performing assets ("NPAs")    $ 9,227     $ 9,818     $ 9,347         (1.3 ) %       (6.0 ) %
                                   
 Foreclosed real estate, criticized and classified assets    $ 18,992     $ 20,285     $ 20,450         (7.1 ) %       (6.4 ) %
 Loans past due 30 to 89 days    $ 6,495     $ 1,628     $ 1,840         253.0   %       299.0   %
 Charge-offs (Recoveries) , net (quarterly)    $   626     $   3     $   (128 )       (589.1 ) %      20,766.7   %
 Charge-offs (Recoveries) , net as a % of average loans (annualized)        0.31   %   0.00   %   (0.08 ) %   (513.1 ) %      20,083.3   %
 Non-accrual loans to total loans        0.73   %   0.83   %   0.84   %   (12.6 ) %       (11.7 ) %
 NPAs to total assets        0.94   %   1.03   %   1.10   %   (14.5 ) %       (8.2 ) %
 NPAs excluding TDR loans (d) to total assets        0.85   %   0.93   %   1.02   %   (17.1 ) %       (8.7 ) %
 Non-accrual loans to total assets        0.61   %   0.69   %   0.69   %   (10.6 ) %       (10.9 ) %
 Allowance for loan losses as a % of non-accrual loans        121.84   %   113.60   %   114.80   %   6.1   %       7.3   %
 Allowance for loan losses to total loans        0.89   %   0.94   %   0.96   %   (7.2 ) %       (5.3 ) %
                                   
 (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 December 31, 2017     December 31, 2016
       
Cash and due from banks $   3,270     $   2,847
Interest-bearing deposits with other banks     8,376         11,791
Cash and cash equivalents     11,646         14,638
         
Interest bearing time deposits with other banks     100         100
Securities available for sale, at fair value     98,730         88,611
Securities held to maturity     5,304         11,618
Federal Home Loan Bank Stock, at cost     4,925         5,106
         
Loans receivable, net of unearned income     820,700         695,257
Less:  allowance for loan losses     7,335         6,696
Net loans receivable     813,365         688,561
         
Foreclosed real estate     2,275         2,367
Premises and equipment, net     8,389         8,728
Accrued interest receivable     2,472         2,058
Goodwill     2,820         2,820
Bank-owned life insurance     22,054         16,532
Other assets     7,303         7,589
         
Total Assets $   979,383     $   848,728
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Liabilities:        
Deposits:        
Non-interest bearing $   146,167     $   132,434
Interest bearing     616,324         528,487
Total Deposits     762,491         660,921
         
Borrowings     90,350         95,805
Accrued interest payable and other liabilities     4,501         4,090
Subordinated debentures     27,848         27,840
         
Total Liabilities     885,190         788,656
         
Total Stockholders' Equity     94,193         60,072
         
Total Liabilities and Stockholders' Equity $   979,383     $   848,728
         

 

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
INTEREST INCOME               
               
Loans receivable, including fees $   8,923     $   7,287     $   32,953     $   26,862  
Securities:              
Taxable     373         327         1,437         1,443  
Tax-exempt     331         240         1,274         832  
Interest bearing deposits     7         6         35         23  
  Total Interest Income     9,634         7,860         35,699         29,160  
               
INTEREST EXPENSE              
Deposits     1,052         619         3,584         2,449  
Borrowings     391         529         1,749         1,922  
Junior subordinated debentures     321         125         1,278         391  
  Total Interest Expense     1,764         1,273         6,611         4,762  
               
  Net Interest Income     7,870         6,587         29,088         24,398  
PROVISION FOR LOAN LOSSES     459         237         1,586         1,291  
  Net Interest Income after Provision for Loan Losses     7,411         6,350         27,502         23,107  
               
OTHER INCOME              
Service fees on deposit accounts     311         249         1,123         975  
ATM and debit card fees     199         190         777         767  
Bank owned life insurance     144         83         522         308  
Insurance commissions and fees     1,173         946         5,326         4,796  
Investment brokerage fees     12         8         24         75  
(Loss) gain on securities transactions     (60 )       83         (9 )       444  
Gain (loss) on disposal of fixed assets     7         -         7         (19 )
Other     175         146         515         483  
  Total Other Income     1,961         1,705         8,285         7,829  
               
OTHER EXPENSES              
Salaries and employee benefits     3,783         3,406         14,773         13,078  
Occupancy, net     462         460         1,880         1,859  
Data processing     530         482         2,173         2,108  
Furniture and equipment     233         229         938         993  
Advertising and promotion     49         57         308         311  
Professional fees     395         218         1,173         788  
Director fees     109         72         399         450  
FDIC assessment     70         129         263         508  
Insurance     77         67         279         280  
Stationary and supplies     30         42         148         191  
Merger-related expenses     705         -         1,187         -  
Loan collection costs     47         31         122         140  
Expenses and write-downs related to foreclosed real estate     (15 )       141         283         458  
Other     345         392         1,691         1,421  
  Total Other Expenses     6,820         5,726         25,617         22,585  
               
  Income before Income Taxes     2,552         2,329         10,170         8,351  
 INCOME TAX EXPENSE      2,039         806         4,479         2,828  
  Net Income  $   513     $   1,523     $   5,691     $   5,523  
               
OTHER COMPREHENSIVE INCOME (LOSS):              
Unrealized (loss) gains on available for sale securities arising during the period $   (128 )   $   (2,936 )   $   1,682     $   (950 )
Fair value adjustments on derivatives     282         3,006         (196 )       1,647  
Reclassification adjustment for net loss (gain) on securities transactions included in net income     60         (75 )       9         (436 )
Income tax related to items of other comprehensive income (loss)      (86 )       2         (599 )       (104 )
Other comprehensive income, net of income taxes     128         (3 )       896         157  
Comprehensive income $   641     $   1,520     $   6,587     $   5,680  
               
EARNINGS PER SHARE              
               
Basic $   0.09     $   0.33     $   1.06     $   1.20  
Diluted $   0.09     $   0.32     $   1.05     $   1.19  

 

   
SUSSEX BANCORP  
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES  
(Dollars In Thousands)  
(Unaudited)  
                           
    Three Months Ended December 31,  
    2017       2016      
      Average       Average      Average       Average   
     Balance    Interest   Rate (2)    Balance    Interest   Rate (2)  
Earning Assets:                          
Securities:                          
Tax exempt (3)   $   47,223     $   499     4.19 %   $   38,186     $   357     3.71 %  
Taxable       63,055         373     2.35 %       66,336         327     1.96 %  
Total securities       110,278         872     3.14 %       104,522         684     2.60 %  
Total loans receivable (1) (4)       805,179         8,923     4.40 %       680,064         7,287     4.25 %  
Other interest-earning assets       7,527         7     0.37 %       10,292         6     0.23 %  
Total earning assets       922,984         9,802     4.21 %     794,878         7,977     3.98 %  
                           
Non-interest earning assets       48,143                 40,240            
Allowance for loan losses       (7,528 )               (6,551 )          
Total Assets   $   963,599             $   828,567            
                           
Sources of Funds:                          
Interest bearing deposits:                          
NOW   $   192,595     $   185     0.38 %   $   153,845     $   84     0.22 %  
Money market       99,115         250     1.00 %       43,430         43     0.39 %  
Savings       134,803         70     0.21 %       136,274         72     0.21 %  
Time       186,896         547     1.16 %       179,629         420     0.93 %  
Total interest bearing deposits       613,409         1,052     0.68 %     513,178         619     0.48 %  
Borrowed funds     74,255       391     2.09 %     106,395         529     1.97 %  
Subordinated debentures     27,847       321     4.57 %     14,354         125     3.45 %  
Total interest bearing liabilities       715,511         1,764     0.98 %     633,927         1,273     0.80 %  
                           
Non-interest bearing liabilities:                          
Demand deposits       148,420                 131,098            
Other liabilities       4,515                 3,460            
Total non-interest bearing liabilities       152,935                 134,558            
Stockholders' equity       95,153                 60,082            
Total Liabilities and Stockholders' Equity   $   963,599             $   828,567            
                           
Net Interest Income and Margin (5)           8,038     3.46 %           6,704     3.35 %  
Tax-equivalent basis adjustment            (168 )               (117 )      
Net Interest Income        $   7,870             $   6,587        
                           
(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)  
                           
    Year Ended December 31,  
    2017       2016      
      Average       Average      Average       Average   
     Balance    Interest   Rate (2)    Balance    Interest   Rate (2)  
Earning Assets:                          
Securities:                          
Tax exempt (3)   $   46,449     $   1,918     4.13 %   $   32,359     $   1,247     3.85 %  
Taxable       64,636         1,437     2.22 %       69,225         1,443     2.08 %  
Total securities       111,085         3,355     3.02 %       101,584         2,690     2.65 %  
Total loans receivable (1) (4)       756,766         32,953     4.35 %       625,399         26,862     4.30 %  
Other interest-earning assets       8,611         35     0.41 %       9,440         23     0.24 %  
Total earning assets     876,462         36,343     4.15 %     736,423         29,575     4.02 %  
                           
Non-interest earning assets       45,398                 40,106            
Allowance for loan losses       (7,113 )               (6,059 )          
Total Assets   $   914,747             $   770,470            
                           
Sources of Funds:                          
Interest bearing deposits:                          
NOW   $   183,457     $   584     0.32 %   $   145,659     $   313     0.21 %  
Money market       93,505         843     0.90 %       37,046         148     0.40 %  
Savings       137,120         285     0.21 %       137,696         286     0.21 %  
Time       171,163         1,872     1.09 %       162,864         1,702     1.05 %  
Total interest bearing deposits     585,245         3,584     0.61 %     483,265         2,449     0.51 %  
Borrowed funds     78,551         1,749     2.23 %     93,974         1,922     2.05 %  
Subordinated debentures     27,844         1,278     4.59 %     13,256         391     2.95 %  
Total interest bearing liabilities     691,640         6,611     0.96 %     590,495         4,762     0.81 %  
                           
Non-interest bearing liabilities:                          
Demand deposits       139,611                 117,927            
Other liabilities       4,167                 4,530            
Total non-interest bearing liabilities       143,778                 122,457            
Stockholders' equity       79,329                 57,518            
Total Liabilities and Stockholders' Equity   $   914,747             $   770,470            
                           
Net Interest Income and Margin (5)           29,732     3.39 %           24,813     3.37 %  
Tax-equivalent basis adjustment            (644 )               (415 )      
Net Interest Income        $   29,088             $   24,398        
                           
(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 December 31, 2017   Three Months Ended December 31, 2016
  Banking and               Banking and            
  Financial   Insurance         Financial   Insurance      
  Services   Services   Total   Services   Services   Total
Net interest income from external sources $   7,870   $   -   $   7,870   $   6,587   $   -   $   6,587
Other income from external sources     723       1,238       1,961       759       946       1,705
Depreciation and amortization     257       5       262       274       5       279
Income before income taxes     2,333       219       2,552       2,234       95       2,329
Income tax expense (1)     1,952       87       2,039       768       38       806
Total assets     973,729       5,654       979,383       843,703       5,025       848,728
                                   
                                   
                                   
  Year Ended December 31, 2017   Year Ended December 31, 2016
  Banking and               Banking and            
  Financial   Insurance         Financial   Insurance      
  Services   Services   Total   Services   Services   Total
Net interest income from external sources $   29,088   $   -   $   29,088   $   24,398   $   -   $   24,398
Other income from external sources     2,864       5,421       8,285       3,033       4,796       7,829
Depreciation and amortization     1,037       24       1,061       1,089       26       1,115
Income before income taxes     8,757       1,413       10,170       7,152       1,199       8,351
Income tax expense (1)     3,914       565       4,479       2,348       480       2,828
Total assets     973,729       5,654       979,383       843,703       5,025       848,728
                                   
(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 December 31,
  2017   2016
Net income (GAAP) $   513     $   1,523  
Merger related expenses net of tax (1)     676         -  
Tax Cut and Jobs Act adjusted (2)     942         -  
Net income, as adjusted $   2,131     $   1,523  
           
Average diluted shares outstanding (GAAP)     6,011,574         4,684,308  
           
Diluted EPS, as adjusted $   0.35     $   0.33  
Return on average assets, as adjusted   0.88 %     0.74 %
Return on average equity, as adjusted   8.96 %     10.14 %
           
(1) Merger related expense net of tax expense of $29 thousand.
(2) Represents acceleration of $942 thousand of deferred tax assets into expense due to recent enactment of the Tax Cut and Jobs Act
           
           
  Year Ended December 31, 
  2017   2016
Net income (GAAP) $   5,691     $   5,523  
Merger related expenses net of tax (1)     1,021         -  
S-3 Registration filing expenses net of tax (1)     45         -  
Tax Cut and Jobs Act adjusted (2)     942         -  
Net income, as adjusted $   7,699     $   5,523  
           
Average diluted shares outstanding (GAAP)     5,404,381         4,633,473  
           
Diluted EPS, as adjusted $   1.42     $   1.19  
Return on average assets, as adjusted   0.84 %     0.72 %
Return on average equity, as adjusted   9.71 %     9.60 %
           
(1) Merger related expenses net of tax expenses of $166 thousand; S-3 registration filing net of tax expenses of $30 thousand.
(2) Represents acceleration of $942 thousand of deferred tax assets into expense due to recent enactment of the Tax Cut and Jobs Act

 

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