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Sussex Bancorp Reports a 67% Increase in Net Income Driven by Loan and Deposit Growth for the Fourth Quarter 2016 and Declares a Quarterly Cash Dividend

/EIN News/ -- ROCKAWAY, N.J., Jan. 26, 2017 (GLOBE NEWSWIRE) -- Sussex Bancorp (the “Company”) (Nasdaq:SBBX), the holding company for Sussex Bank (the “Bank”), today announced a 66.8% increase in net income to $1.5 million, or $0.33 per basic and $0.32 per diluted common share, for the quarter ended December 31, 2016, as compared to $913 thousand, or $0.20 per basic and diluted share, for the same period last year. The improvement for the fourth quarter of 2016 as compared to the same period last year was mostly driven by a 24.4% increase in net interest income as a result of strong growth in average loans and deposits, which increased $159.0 million, or 30.5%, and $94.0 million, or 22.4%, respectively.  The aforementioned increase in net interest income was partly offset by higher non-interest expenses of $528 thousand, provision for loan losses of $107 thousand due to loan growth and an increase in income tax expense. 

For the year ended December 31, 2016, the Company reported a 49.3% increase in net income to $5.5 million, or $1.20 per basic and $1.19 per diluted share, as compared to $3.7 million or $0.81 per basic and diluted share for the same period last year. The improvement for 2016 was driven by a $4.3 million, or 21.5%, increase in net interest income as a result of strong growth in average loans and interest-bearing deposits, which increased $136.4 million, or 27.9%, and $77.0 million, or 19.0%, respectively, and Tri State Insurance Agency’s (“Tri-State”) increase in contribution to net income before income taxes of $529 thousand, or 79.0%, as compared to the same period in 2015

“Viewed from a number of measures, I am excited to report that we had outstanding financial performance for the fourth quarter.  We are reaching key milestones on our journey to build a better bank,” stated Anthony Labozzetta, President and Chief Executive Officer of Sussex Bank.  “In 2016, each of our major business units grew in excess of 25%, which when paired with improved efficiency led to substantial improvement in net income for the fourth quarter and fiscal 2016,” added Mr. Labozzetta.

Mr. Labozzetta also stated, “How we attain our results is vital to us.  So it is rewarding to see our Teams’ focus on the customer and deepening relationships result in such strong organic growth.”

Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share, which is payable on February 23, 2017 to common shareholders of record as of the close of business on February 9, 2017.

Financial Performance
Net Income. For the quarter ended December 31, 2016, the Company reported net income of $1.5 million, or $0.33 per basic and $0.32 per diluted share, as compared to net income of $913 thousand, or $0.20 per basic and diluted share, for the same period last year.  The increase in net income for the quarter ended December 31, 2016 was driven by a $1.3 million, or 24.4%, increase in net interest income resulting from strong loan and deposit growth.  The aforementioned was partly offset by an increase in non-interest expenses of $528 thousand mostly due to costs attributed to support the Company’s growth, higher provision for loan losses of $107 thousand due to loan growth and an increase in income taxes due to earnings growth and a higher effective tax rate. 

Income before income taxes increased $966 thousand, or 70.9%, to $2.3 million for the quarter ended December 31, 2016 as compared to $1.4 million for the same period last year.  The Company’s income before income taxes, excluding Tri-State, increased $937 thousand, or 72.4%, to $2.2 million for the three months ended December 31, 2016 as compared to $1.3 million for the same period last year.  Tri-State’s contribution to the Company’s income before income taxes for the quarter ended December 31, 2016 increased $26 thousand, or 37.7%, to $95 thousand as compared to the same period last year. 

For the year ended December 31, 2016, the Company reported a 49.3% increase in net income to $5.5 million, or $1.20 per basic and $1.19 per diluted share as compared to net income of $3.7 million, or $0.81 per basic and diluted share, for the same period last year.  The increase in net income for the year ended December 31, 2016 was largely due to increases in net interest income of $4.3 million, or 21.5%, and non-interest income of $1.4 million, or 21.3%, which were partially offset by an increase in non-interest expenses of $2.0 million, or 9.9%, and a $655 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 the outsourcing of core processing systems.

Income before income taxes increased $3.0 million, or 56.4%, to $8.4 million for the year ended December 31, 2016 as compared to $5.3 million for the same period last year. Tri-State’s contribution to the Company’s income before income taxes for the year ended December 31, 2016 increased $529 thousand, or 79.0%, to $1.2 million as compared to $670 thousand for the same period last year.  The growth was driven by Tri-State’s commissions and fees due in particular to an increase in direct bill commissions of $498 thousand, or 18.8%, and contingency fee income of $418 thousand, or 124.1%.  The aforementioned was partly offset by an increase in non-interest expense of $591 thousand, or 19.4%.  The Company’s income before income taxes, excluding Tri-State, increased $2.5 million, or 53.1%, to $7.1 million for the year ended December 31, 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 23.8%, to $6.7 million for the fourth quarter of 2016, as compared to $5.4 million for the same period in 2015.  The increase in net interest income was largely due to a $161.7 million, or 25.5%, increase in average interest earning assets, principally loans receivable, which increased $159.0 million, or 30.5%.  The improvement in net interest income was partly offset by a decline in the net interest margin of 4 basis points to 3.35% for the fourth quarter of 2016, as compared to the same period in 2015.  The decline in the net interest margin was mostly attributed to a 6 basis point decrease in the average rate earned on loans, mostly due to loan growth and loan repricing in a low rate environment.  Also included in the net interest margin decrease was a 4 basis point increase in the average rate on interest bearing deposits, which was primarily due to increased competition in the Bank’s existing markets and entering of new markets.

Net interest income on a fully tax equivalent basis increased $4.3 million, or 20.9%, to $24.8 million for the year ended December 31, 2016 as compared to $20.5 million for the same period in 2015.  The increase in net interest income was largely due to a $141.3 million, or 23.7%, increase in average interest earning assets, principally loans, which increased $136.4 million, or 27.9%.  The Company’s net interest margin was 3.37% and 3.45% for the year ended December 31, 2016 and 2015, respectively. The decline in net interest margin was due to loan growth and loan repricing in a low rate environment along with an increase in the average rate on interest bearing deposits, which was primarily due to increased competition in the Bank’s existing markets and entering of new markets.

Provision for Loan Losses. Provision for loan losses increased $107 thousand to $237 thousand for the fourth quarter of 2016, as compared to the same period in 2015.

Provision for loan losses increased $655 thousand, or 103.0%, to $1.3 million for the year ended December 31, 2016, as compared to $636 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 $309 thousand, or 22.1%, to $1.7 million for the fourth quarter of 2016, as compared to the same period last year.  The increase was primarily due to higher insurance commissions and fees, which increased $106 thousand, and a reduction in the loss on disposal of fixed assets of $138 thousand, or 100.0%.

The Company reported an increase in non-interest income of $1.4 million, or 21.3%, to $7.8 million for the year ended December 31, 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 and gains on sale of securities of $1.1 million and $173 thousand, respectively.  The growth in Tri-State’s commissions and fees was largely due to an increase in direct bill commissions of $498 thousand, or 18.8%, and contingency fee income of $418 thousand, or 124.1%.

Non-interest Expense. The Company’s non-interest expenses increased $528 thousand, or 10.2%, to $5.7 million for the fourth quarter of 2016, as compared to the same period last year. The increase for the fourth quarter of 2016, as compared to the same period in 2015, was largely due to increases in salaries and employee benefits of $388 thousand, expenses and writes-downs related to foreclosed real estate of $82 thousand, data processing of $80 thousand, and FDIC assessment of $51 thousand.  The aforementioned increases were partly offset by declines in director fees and other expenses of $54 thousand and $50 thousand, respectively. 

The Company’s non-interest expenses increased $2.0 million, or 9.9%, to $22.6 million for the year ended December 31, 2016 as compared to the same period last year.  The increase for the year ended December 31, 2016, as compared to the same period in 2015, was largely due to increases in salaries and employee benefits of $1.6 million, data processing of $455 thousand and professional fees of $134 thousand.  The aforementioned increases were partly offset by declines in other expenses and director fees of $177 thousand and $94 thousand, respectively.

The increase in salaries and employee benefits for the fourth quarter and twelve months ended December 31, 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.  The decrease in director fees was a result of the Company placing a majority of the directors’ deferred compensation plan into a rabbi trust.  The rabbi trust deferred compensation arrangement minimizes the variability of the director fees expense previously associated with mark to market adjustments of the Company’s stock price.

Financial Condition
At December 31, 2016, the Company’s total assets were $847.1 million, an increase of $162.6 million, or 23.8%, 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 $151.8 million, or 27.9%. 

Total loans receivable, net of unearned income, increased $151.8 million, or 27.9%, to $695.3 million at December 31, 2016, as compared to $543.4 million at December 31, 2015.  During the twelve months ended December 31, 2016, the Company had $190.1 million in commercial loan production, which was partly offset by $14.1 million in commercial loan payoffs.

The Company’s total deposits increased $143.1 million, or 27.6%, to $660.9 million at December 31, 2016, from $517.9 million at December 31, 2015.  The growth in deposits was due to increases in both interest bearing deposits of $97.8 million, or 22.7%, and non-interest bearing deposits of $45.2 million, or 51.9%, at December 31, 2016, as compared to December 31, 2015. Included in the aforementioned deposit total is $60.0 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 $71.6 million in deposit balances with a cost of 0.39% attributed to our branch in Astoria, New York, which opened in Mid-March of 2015.

During the quarter ended December 31, 2016, the Company completed a private placement of $15 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “Notes”) to an institutional investor. The subordinated notes have a maturity date of December 22, 2026 and bear interest at the rate of 5.75% per annum, payable quarterly, for the first five years of the term, and then at a variable rate that will reset quarterly to a level equal to the then current 3-month LIBOR plus 350 basis points over the remainder of the term.

At December 31, 2016, the Company’s total stockholders’ equity was $60.1 million, an increase of $6.1 million when compared to December 31, 2015.  The increase was largely due to net income for the twelve months ended December 31, 2016.  At December 31, 2016, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 10.41%, 12.87%, 13.86% and 12.87%, respectively, all in excess of the ratios required to be deemed “well-capitalized.” During the quarter ended December 31, 2016, the Company contributed proceeds from the Notes to the Bank’s Tier 1 capital.

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 1.10% at December 31, 2016 from 1.49% at December 31, 2015.  NPAs decreased $872 thousand, or 8.5%, to $9.3 million at December 31, 2016, as compared to $10.2 million at December 31, 2015.  Non-accrual loans increased $521 thousand, or 9.8%, to $5.8 million at December 31, 2016, as compared to $5.3 million at December 31, 2015. Loans past due 30 to 89 days totaled $1.8 million at December, 31 2016, representing decreases of $5.7 million, or 75.7%, as compared to $7.6 million at September 30, 2016 and $983 thousand, or 34.8%, as compared to $3.4 million at December 31, 2015. The top five non-accrual loan relationships total $3.4 million, which equates to 59.1% of total non-accrual loans and 36.9% of total NPAs at December 31, 2016.  The remaining non-accrual loans at December 31, 2016 have an average loan balance of $108 thousand. 

The Company continues to actively market its foreclosed real estate properties, which decreased $987 thousand to $2.4 million at December 31, 2016, as compared to $3.4 million at December 31, 2015.  At December 31, 2016, the Company’s foreclosed real estate properties had an average carrying value of approximately $338 thousand per property.

The allowance for loan losses increased by $1.1 million, or 19.8%, to $6.7 million, or 0.96% of total loans, at December 31, 2016, compared to $5.6 million, or 1.03% of total loans, at December 31, 2015. The Company recorded $1.3 million in provision for loan losses for the year ended December 31, 2016.  Additionally, the Company recorded net charge-offs of $185 thousand for the year ended December 31, 2016, as compared to $687 thousand in net charge-offs for the year ended December 31, 2015. For the quarter ended December 31, 2016, the Company recorded $128 thousand in net recoveries, as compared to net charge offs of $115 thousand for the quarter ended September 30, 2016. The allowance for loan losses as a percentage of non-accrual loans increased to 114.8% at December 31, 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)
                                     
                        12/31/2016 VS.
    12/31/2016       9/30/2016       12/31/2015     12/31/2015   9/30/2016
BALANCE SHEET HIGHLIGHTS - Period End Balances                                   
Total securities   $ 100,229       $ 98,258       $ 100,610       (0.4 ) %   2.0   %
Total loans     695,257         663,258         543,423       27.9   %   4.8   %
Allowance for loan losses     (6,696 )       (6,331 )       (5,590 )     19.8   %   5.8   %
Total assets     847,081         808,987         684,503       23.8   %   4.7   %
Total deposits     660,921         624,921         517,856       27.6   %   5.8   %
Total borrowings and junior subordinated debt     123,645         120,387         108,537       13.9   %   2.7   %
Total shareholders' equity     60,072         58,633         53,941       11.4   %   2.5   %
                                     
FINANCIAL DATA - QUARTER ENDED:                                     
Net interest income (tax equivalent) (a)   $ 6,704       $ 6,453       $ 5,414       23.8   %   3.9   %
Provision for loan losses     237         458         130       82.3   %   (48.3 ) %
Total other income     1,705         1,774         1,396       22.1   %   (3.9 ) %
Total other expenses     5,726         5,651         5,198       10.2   %   1.3   %
Income before provision for income taxes (tax equivalent)     2,446         2,118         1,482       65.0   %   15.5   %
Provision for income taxes     806         696         450       79.1   %   15.8   %
Taxable equivalent adjustment (a)     117         105         119       (1.7 ) %   11.4   %
Net income   $ 1,523       $ 1,317       $ 913       66.8   %   15.6   %
                                     
Net income per common share - Basic   $ 0.33       $ 0.28       $ 0.20       65.0   %   17.9   %
Net income per common share - Diluted   $ 0.32       $ 0.28       $ 0.20       60.0   %   14.3   %
                                     
Return on average assets     0.74   %     0.66   %     0.55   %   33.9   %   11.8   %
Return on average equity     10.14   %     9.06   %     6.79   %   49.4   %   11.9   %
Efficiency ratio (b)     69.05   %     69.58   %     77.69   %   (11.1 ) %   (0.8 ) %
Net interest margin (tax equivalent)     3.35   %     3.34   %     3.39   %   (1.2 ) %   0.3   %
Avg. interest earning assets/Avg. interest bearing liabilities     1.25         1.25         1.24       1.2   %   0.1   %
                                     
FINANCIAL DATA - YEAR TO DATE:                                     
Net interest income (tax equivalent) (a)   $ 24,813               $ 20,525       20.9   %      
Provision for loan losses     1,291                 636       103.0   %      
Total other income     7,829                 6,453       21.3   %      
Total other expenses     22,585                 20,553       9.9   %      
Income before provision for income taxes (tax equivalent)     8,766                 5,789       51.4   %      
Provision for income taxes     2,828                 1,640       72.4   %      
Taxable equivalent adjustment (a)     415                 449       (7.6 ) %      
Net income   $ 5,523               $ 3,700       49.3   %      
                                     
Net income per common share - Basic   $ 1.20               $ 0.81       48.1   %      
Net income per common share - Diluted   $ 1.19               $ 0.81       46.9   %      
                                     
Return on average assets     0.72   %             0.59   % 21.5   %      
Return on average equity     9.60   %             7.02   % 36.8   %      
Efficiency ratio (b)     70.08   %             77.47   % (9.5 ) %      
Net interest margin (tax equivalent)     3.37   %             3.45   % (2.3 ) %      
Avg. interest earning assets/Avg. interest bearing liabilities     1.25                 1.23       1.6   %      
                                     
SHARE INFORMATION:                                     
Book value per common share   $ 12.67       $ 12.37       $ 11.61       9.1   %   2.5   %
Tangible book value per common share     12.08         11.77         11.00       9.8   %   2.6   %
Outstanding shares- period ending     4,741,068         4,741,720         4,646,238       2.0   %   (0.0 ) %
Average diluted shares outstanding (year to date)     4,651,108         4,633,473         4,591,822       1.3   %   0.4   %
                                     
CAPITAL RATIOS:                                       
Total equity to total assets     7.09   %     7.25   %     7.88   %   (10.0 ) %   (2.2 ) %
Leverage ratio (c)     10.41   %     8.98   %     9.45   %   10.2   %   15.9   %
Tier 1 risk-based capital ratio (c)     12.87   %     11.02   %     11.74   %   9.6   %   16.8   %
Total risk-based capital ratio (c)     13.86   %     11.99   %     12.79   %   8.4   %   15.6   %
Common equity Tier 1 capital ratio (c)     12.87   %     11.02   %     11.74   %   9.6   %   16.8   %
                                     
ASSET QUALITY:                                     
Non-accrual loans   $ 5,833       $ 4,583       $ 5,312       9.8   %   27.3   %
Loans 90 days past due and still accruing     468         386         -       -   %   21.2   %
Troubled debt restructured loans ("TDRs") (d)     679         1,142         1,553       (56.3 ) %   (40.5 ) %
Foreclosed real estate     2,367         3,005         3,354       (29.4 ) %   (21.2 ) %
Non-performing assets ("NPAs")   $ 9,347       $ 9,116       $ 10,219       (8.5 ) %   2.5   %
                                     
Foreclosed real estate, criticized and classified assets   $ 20,450       $ 19,777       $ 20,778       (1.6 ) %   3.4   %
Loans past due 30 to 89 days   $ 1,840       $ 7,580       $ 2,823       (34.8 ) %   (75.7 ) %
(Recoveries) Charge-offs, net (quarterly)   $ (128 )     $ 115       $ 181       (170.7 ) %   (211.3 ) %
(Recoveries) Charge-offs, net as a % of average loans (annualized)     (0.08 ) %     0.07   %     0.14   %   (154.2 ) %   (206.8 ) %
Non-accrual loans to total loans     0.84   %     0.69   %     0.98   %   (14.2 ) %   21.4   %
NPAs to total assets     1.10   %     1.13   %     1.49   %   (26.1 ) %   (2.1 ) %
NPAs excluding TDR loans (d) to total assets     1.02   %     0.99   %     1.27   %   (19.2 ) %   3.8   %
Non-accrual loans to total assets     0.69   %     0.57   %     0.78   %   (11.3 ) %   21.6   %
Allowance for loan losses as a % of non-accrual loans     114.80   %     138.14   %     105.23   %   9.1   %   (16.9 ) %
Allowance for loan losses to total loans     0.96   %     0.95   %     1.03   %   (6.4 ) %   0.9   %
                                     
(a) Full taxable equivalent basis, using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance  
(b) 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, 2016     December 31, 2015
       
Cash and due from banks $ 2,847     $   2,914  
Interest-bearing deposits with other banks   11,791         3,206  
Cash and cash equivalents   14,638         6,120  
         
Interest bearing time deposits with other banks   100         100  
Securities available for sale, at fair value   88,611         93,776  
Securities held to maturity   11,618         6,834  
Federal Home Loan Bank Stock, at cost   5,106         5,165  
         
Loans receivable, net of unearned income   695,257         543,423  
Less:  allowance for loan losses   6,696         5,590  
Net loans receivable   688,561         537,833  
         
Foreclosed real estate   2,367         3,354  
Premises and equipment, net   8,728         8,879  
Accrued interest receivable   2,058         1,764  
Goodwill   2,820         2,820  
Bank-owned life insurance   16,532         12,524  
Other assets   5,942         5,334  
         
Total Assets $ 847,081     $   684,503  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Liabilities:        
Deposits:        
Non-interest bearing $ 132,434     $   87,209  
Interest bearing   528,487         430,647  
Total Deposits   660,921         517,856  
         
Borrowings   95,805         95,650  
Accrued interest payable and other liabilities   2,443         4,169  
Subordinated debentures   27,840         12,887  
         
Total Liabilities   787,009         630,562  
         
Total Stockholders' Equity   60,072         53,941  
         
Total Liabilities and Stockholders' Equity $ 847,081     $   684,503  
         

 

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,
    2016       2015       2016       2015  
INTEREST INCOME               
Loans receivable, including fees $ 7,287     $ 5,660     $ 26,862     $ 21,497  
Securities:              
Taxable   327       349       1,443       1,239  
Tax-exempt   240       239       832       899  
Interest bearing deposits   6       1       23       9  
Total Interest Income   7,860       6,249       29,160       23,644  
               
INTEREST EXPENSE              
Deposits   619       470       2,449       1,772  
Borrowings   529       426       1,922       1,576  
Junior subordinated debentures   125       58       391       220  
Total Interest Expense   1,273       954       4,762       3,568  
               
Net Interest Income   6,587       5,295       24,398       20,076  
PROVISION FOR LOAN LOSSES   237       130       1,291       636  
Net Interest Income after Provision for Loan Losses   6,350       5,165       23,107       19,440  
               
OTHER INCOME              
Service fees on deposit accounts   249       250       975       906  
ATM and debit card fees   190       203       767       776  
Bank owned life insurance   82       78       307       313  
Insurance commissions and fees   946       840       4,796       3,686  
Investment brokerage fees   8       27       75       130  
Gain on securities transactions   83       4       444       271  
(Loss) on disposal of fixed assets   -       (138 )     (19 )     (130 )
Other   147       132       484       501  
Total Other Income   1,705       1,396       7,829       6,453  
               
OTHER EXPENSES              
Salaries and employee benefits   3,406       3,018       13,078       11,506  
Occupancy, net   460       421       1,859       1,751  
Data processing   482       402       2,108       1,653  
Furniture and equipment   229       220       993       865  
Advertising and promotion   57       101       311       326  
Professional fees   218       174       788       654  
Director fees   72       126       450       544  
FDIC assessment   129       78       508       446  
Insurance   67       82       280       271  
Stationary and supplies   42       43       191       197  
Loan collection costs   31       32       140       207  
Expenses and write-downs related to foreclosed real estate   141       59       458       535  
Other   392       442       1,421       1,598  
Total Other Expenses   5,726       5,198       22,585       20,553  
               
Income before Income Taxes   2,329       1,363       8,351       5,340  
INCOME TAX EXPENSE    806       450       2,828       1,640  
Net Income  $ 1,523     $ 913     $ 5,523     $ 3,700  
               
OTHER COMPREHENSIVE INCOME (LOSS):              
Unrealized (losses) gains on available for sale securities arising during the period $ (2,928 )   $ (40 )   $ (942 )   $ 134  
Fair value adjustments on derivatives   3,006       -       1,647       -  
Reclassification adjustment for net gain on securities transactions included in net income   (83 )     (4 )     (444 )     (271 )
Income tax related to items of other comprehensive income (loss)   2       17       (104 )     54  
Other comprehensive income (loss), net of income taxes   (3 )     (27 )     157       (83 )
Comprehensive income $ 1,520     $ 886     $ 5,680     $ 3,617  
               
EARNINGS PER SHARE              
Basic $ 0.33     $ 0.20     $ 1.20     $ 0.81  
Diluted $ 0.32     $ 0.20     $ 1.19     $ 0.81  

 

SUSSEX BANCORP  
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES  
(Dollars In Thousands)  
(Unaudited)  
                           
    Three Months Ended December 31,  
    2016
  2015
 
      Average       Average      Average       Average   
     Balance    Interest   Rate (2)    Balance    Interest   Rate (2)  
Earning Assets:                          
Securities:                          
Tax exempt (3)   $ 38,186     $ 357     3.71 %   $ 35,581     $ 358     3.99 %  
Taxable     66,336       327     1.96 %     70,262       349     1.97 %  
Total securities     104,522       684     2.60 %     105,843       707     2.65 %  
Total loans receivable (1) (4)     680,064       7,287     4.25 %     521,047       5,660     4.31 %  
Other interest-earning assets     10,292       6     0.23 %     6,259       1     0.06 %  
Total earning assets     794,878       7,977     3.98 %     633,149       6,368     3.99 %  
                           
Non-interest earning assets     40,240               37,462            
Allowance for loan losses     (6,551 )             (5,636 )          
Total Assets   $ 828,567             $ 664,975            
                           
Sources of Funds:                          
Interest bearing deposits:                          
NOW   $ 153,845     $ 84     0.22 %   $ 136,156     $ 65     0.19 %  
Money market     43,430       43     0.39 %     20,121       12     0.24 %  
Savings     136,274       72     0.21 %     137,017       70     0.20 %  
Time     179,629       420     0.93 %     125,877       323     1.02 %  
Total interest bearing deposits     513,178       619     0.48 %     419,171       470     0.44 %  
Borrowed funds     106,395       529     1.97 %     78,720       426     2.15 %  
Subordinated debentures     14,354       125     3.45 %     12,887       58     1.79 %  
Total interest bearing liabilities     633,927       1,273     0.80 %     510,778       954     0.74 %  
                           
Non-interest bearing liabilities:                          
Demand deposits     131,098               96,772            
Other liabilities     3,460               3,618            
Total non-interest bearing liabilities     134,558               100,390            
Stockholders' equity     60,082               53,807            
Total Liabilities and Stockholders' Equity   $ 828,567             $ 664,975            
                           
Net Interest Income and Margin (5)         6,704     3.35 %         5,414     3.39 %  
Tax-equivalent basis adjustment         (117 )             (119 )      
Net Interest Income       $ 6,587             $ 5,295        
                           
(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)  
                           
    Year Ended December 31,  
    2016
  2015 
 
      Average       Average      Average       Average   
     Balance    Interest   Rate (2)    Balance    Interest   Rate (2)  
Earning Assets:                          
Securities:                          
Tax exempt (3)   $ 32,359     $ 1,247     3.85 %   $ 33,688     $ 1,348     4.00 %  
Taxable     69,225       1,443     2.08 %     65,402       1,239     1.89 %  
Total securities     101,584       2,690     2.65 %     99,090       2,587     2.61 %  
Total loans receivable (1) (4)     625,399       26,862     4.30 %     488,963       21,497     4.40 %  
Other interest-earning assets     9,440       23     0.24 %     7,109       9     0.13 %  
Total earning assets     736,423       29,575     4.02 %     595,162       24,093     4.05 %  
                           
Non-interest earning assets     40,106               37,834            
Allowance for loan losses     (6,059 )             (5,698 )          
Total Assets   $ 770,470             $ 627,298            
                           
Sources of Funds:                          
Interest bearing deposits:                          
NOW   $ 145,659     $ 313     0.21 %   $ 130,569     $ 227     0.17 %  
Money market     37,046       148     0.40 %     17,287       35     0.20 %  
Savings     137,696       286     0.21 %     139,120       282     0.20 %  
Time     162,864       1,702     1.05 %     119,256       1,228     1.03 %  
Total interest bearing deposits     483,265       2,449     0.51 %     406,232       1,772     0.44 %  
Borrowed funds     93,974       1,922     2.05 %     65,600       1,576     2.40 %  
Subordinated debentures     13,256       391     2.95 %     12,887       220     1.71 %  
Total interest bearing liabilities     590,495       4,762     0.81 %     484,719       3,568     0.74 %  
                           
Non-interest bearing liabilities:                          
Demand deposits     117,927               86,016            
Other liabilities     4,530               3,848            
Total non-interest bearing liabilities     122,457               89,864            
Stockholders' equity     57,518               52,715            
Total Liabilities and Stockholders' Equity   $ 770,470             $ 627,298            
                           
Net Interest Income and Margin (5)         24,813     3.37 %         20,525     3.45 %  
Tax-equivalent basis adjustment         (415 )             (449 )      
Net Interest Income       $ 24,398             $ 20,076        
                           
(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 December 31, 2016   Three Months Ended December 31, 2015
  Banking and               Banking and            
  Financial   Insurance         Financial   Insurance      
  Services   Services   Total   Services   Services   Total
Net interest income from external sources $ 6,587   $ -   $ 6,587   $ 5,295   $ -   $ 5,295
Other income from external sources   759     946     1,705     546     850     1,396
Depreciation and amortization   274     5     279     247     5     252
Income before income taxes   2,234     95     2,329     1,294     69     1,363
Income tax expense (1)   768     38     806     422     28     450
Total assets   842,056     5,025     847,081     679,598     4,905     684,503
                                   
                                   
                                   
  Year Ended December 31, 2016   Year Ended December 31, 2015
  Banking and               Banking and            
  Financial   Insurance         Financial   Insurance      
  Services   Services   Total   Services   Services   Total
Net interest income from external sources $ 24,398   $ -   $ 24,398   $ 20,076   $ -   $ 20,076
Other income from external sources   3,033     4,796     7,829     2,741     3,712     6,453
Depreciation and amortization   1,090     26     1,116     978     20     998
Income before income taxes   7,152     1,199     8,351     4,670     670     5,340
Income tax expense (1)   2,348     480     2,828     1,372     268     1,640
Total assets   842,056     5,025     847,081     679,598     4,905     684,503
                                   
(1) Calculated at statutory tax rate of 40%                                  
Contacts:
Anthony Labozzetta, President/CEO
Steven Fusco, SEVP/CFO
844-256-7328

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