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Sussex Bancorp Announces Improved Third Quarter and Nine Month Earnings

(October 22, 2009)

FRANKLIN, N.J., Oct. 22, 2009 (GLOBE NEWSWIRE) -- Sussex Bancorp (Nasdaq:SBBX) today announced improved financial results for the third quarter and nine months ended September 30, 2009.

For the quarter ended September 30, 2009, the Company earned $897 thousand compared to a net loss of $3.0 million for the quarter ended September 30, 2008. For the nine months ended September 30, 2009, the Company earned $1.7 million compared to a net loss of $2.0 million reported for the same period last year. Basic and diluted earnings per share for the three and nine months ended September 30, 2009, were $0.28 and $0.54, respectively, compared to basic and diluted loss per share of ($0.92) and ($0.62) for the comparable periods of 2008. The improvement in the Company's performance in 2009 reflects higher net interest income, partially offset by higher provisions for loan losses, and the impact of other than temporary impairment ("OTTI") charges in 2008 attributable to Fannie Mae and Freddie Mac preferred stock. The Company had no comparable OTTI charge in 2009.

The Company's net interest income increased to $4.2 million for the quarter ended September 30, 2009 from $3.1 million for the third quarter of 2008. The Company's interest income was unchanged at $5.9 million during each period, while the Company's interest expense decreased to $1.7 million for the three months ended September 30, 2009 from $2.7 million for the third quarter of 2008.

For the nine months ended September 30, 2009, the Company's net interest income increased to $11.0 million from the $9.0 million earned for the same period last year. For the nine months ended September 30, 2009, the Company's interest income increased to $17.5 million from $17.0 million in the nine months ended September 30, 2008. As the Company's average earning assets increased by $48.8 million, its yield on earning assets decreased by 47 basis points. The Company's interest expense decreased to $6.5 million for the nine months ended September 30, 2009 from $8.0 million for the nine month period ended September 30, 2008. The Company's average interest bearing liabilities increased by $56.1 million in the first nine months of 2009 compared to the prior year, and the Company's cost of interest bearing liabilities decreased by 97 basis points.


For the nine months ended September 30, 2009, the Company's net interest margin increased by 30 basis points, to 3.51% from 3.21 % in the prior year period. For the third quarter of 2009, the Company's net interest margin increased to 4.04% from 3.18% in the third quarter of 2008.

The loan loss provision for the third quarter was $520 thousand compared to $279 thousand for the same period last year. For the nine month period the provision was $1.6 million, compared to $569 thousand for the same period last year. At September 30, 2009, non-performing assets totaled $23.8 million compared to $15.1 million at September 30, 2008 and $15.0 million at December 31, 2008.

At September 30, 2009 the Company had total assets of $452.5 million, compared to total assets of $439.1 million at September 30, 2008. The Company's total loans increased $18.1 million to $330.4 million at September 30, 2009 from $312.3 million at September 30, 2008.

The Company reported non-interest income for the three and nine month periods ending September 30, 2009 of $1.3 million and $4.1 million, respectively, compared to a loss of $2.3 million and non-interest income of $632 thousand for the three and nine month periods ending September 30, 2008, respectively. The reduced non-interest income for the three and nine month periods in 2008 reflects the OTTI charge discussed above, which is recognized in non-interest income.

Salaries and employee benefits increased by $228 thousand to $2.1 million for the quarter ended September 30, 2009 from the $1.8 million in the same period last year and declined by $73 thousand in the nine months ended September 30, 2009 compared to the prior year period. The increase in the quarterly period is related to expenses accrued in relation to severance owed to a former executive officer of the Company and the Bank.

Sussex Bancorp is the holding company for Sussex Bank, which operates through its eight New Jersey offices and two Orange County offices and for the Tri-State Insurance Agency, Inc., a full service insurance agency located in Sussex County, New Jersey.

SUSSEX BANCORP CONSOLIDATED BALANCE SHEETS (Dollars In Thousands) (Unaudited) ASSETS September 30, September 30, December 31, ------ 2009 2008 2008 ----------------------------------------- Cash and due from banks $13,240 $10,537 $7,602 Federal funds sold 2,038 15,470 13,310 ------------- ------------- ------------- Cash and cash equivalents 15,278 26,007 20,912 Interest bearing time deposits with other banks 100 100 100 Trading securities 3,974 13,519 13,290 Securities available for sale 80,040 64,487 62,272 Federal Home Loan Bank Stock, at cost 2,046 2,111 1,975 Loans receivable, net of unearned income 330,404 312,330 320,880 Less: allowance for loan losses 5,064 5,080 5,813 ------------- ------------- ------------- Net loans receivable 325,340 307,250 315,067 Foreclosed real estate 4,380 3,931 3,864 Premises and equipment, net 7,165 8,697 8,526 Accrued interest receivable 2,120 2,058 2,115 Goodwill 2,820 2,820 2,820 Other assets 9,271 8,099 9,654 ------------- ------------- ------------- Total Assets $452,534 $439,079 $440,595 ============= ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY --------------------- Liabilities: Deposits: Non-interest bearing $39,037 $40,430 $34,784 Interest bearing 330,100 316,231 325,297 ------------- ------------- ------------- Total Deposits 369,137 356,661 360,081 Borrowings 33,104 36,160 33,146 Accrued interest payable and other liabilities 2,717 2,572 2,571 Junior subordinated debentures 12,887 12,887 12,887 ------------- ------------- ------------- Total Liabilities 417,845 408,280 408,685 Total Stockholders' Equity 34,689 30,799 31,910 ------------- ------------- ------------- Total Liabilities and Stockholders' Equity $452,534 $439,079 $440,595 ============= ============= ============= SUSSEX BANCORP CONSOLIDATED STATEMENTS OF INCOME (Dollars In Thousands) (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ----------------- ----------------- 2009 2008 2009 2008 -------- -------- -------- -------- INTEREST INCOME Loans receivable, including fees $4,923 $4,887 $14,520 $14,335 Securities: Taxable 651 631 2,032 1,698 Tax-exempt 308 248 897 710 Federal funds sold 5 111 26 223 Interest bearing deposits 1 1 15 2 -------- -------- -------- -------- Total Interest Income 5,888 5,878 17,490 16,968 -------- -------- -------- -------- INTEREST EXPENSE Deposits 1,264 2,219 5,166 6,417 Borrowings 359 377 1,067 1,132 Junior subordinated debentures 64 135 251 459 -------- -------- -------- -------- Total Interest Expense 1,687 2,731 6,484 8,008 -------- -------- -------- -------- Net Interest Income 4,201 3,147 11,006 8,960 PROVISION FOR LOAN LOSSES 520 279 1,583 569 -------- -------- -------- -------- Net Interest Income after Provision for Loan Losses 3,681 2,868 9,423 8,391 -------- -------- -------- -------- OTHER INCOME Service fees on deposit accounts 380 409 1,095 1,111 ATM and debit card fees 126 123 354 348 Insurance commissions and fees 548 576 1,757 1,972 Investment brokerage fees 30 22 111 117 Holding gains on trading securities 2 (8) 21 13 Gain on sale of securities, available for sale 55 -- 55 152 Gain on sale of fixed assets -- -- 203 -- Loss on sale of foreclosed real estate (34) -- (35) -- Impairment write-down on equity securities -- (3,526) -- (3,526) Other 173 129 509 445 -------- -------- -------- -------- Total Other Income 1,280 (2,275) 4,070 632 -------- -------- -------- -------- OTHER EXPENSES Salaries and employee benefits 2,070 1,842 5,624 5,697 Occupancy, net 320 315 981 977 Furniture, equipment and data processing 314 372 991 1,119 Stationary and supplies 37 50 127 141 Professional fees 216 140 585 337 Advertising and promotion 49 92 145 379 Insurance 54 42 140 127 FDIC assessment 172 95 687 280 Postage and freight 33 34 110 118 Amortization of intangible assets 4 14 14 43 Write-down on foreclosed real estate -- -- 456 -- Expenses related to foreclosed real estate 77 75 353 132 Other 367 368 1,050 1,129 -------- -------- -------- -------- Total Other Expenses 3,713 3,439 11,263 10,479 -------- -------- -------- -------- Income (loss) before Income Taxes 1,248 (2,846) 2,230 (1,456) PROVISION FOR INCOME TAXES 351 181 485 575 -------- -------- -------- -------- Net Income (Loss) $897 ($3,027) $1,745 ($2,031) ======== ======== ======== ======== SUSSEX BANCORP COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES (Dollars In Thousands) (Unaudited) Nine Months Ended September 30, 2009 2008 -------------------------- -------------------------- Average Interest Average Average Interest Average Earning Assets: Balance (1) Rate(2) Balance (1) Rate(2) ----------------------------------------------------- Securities: Tax exempt (3) $28,812 $1,347 6.25% $22,906 $1,061 6.19% Taxable 61,628 2,032 4.41% 45,576 1,698 4.98% ----------------------------------------------------- Total securities 90,440 3,379 4.99% 68,482 2,759 5.38% Total loans receivable (4) 324,797 14,519 5.98% 304,859 14,335 6.28% Other interest- earning assets 21,226 41 0.25% 14,350 225 2.10% ----------------------------------------------------- Total earning assets 436,463 $17,939 5.50% 387,691 $17,319 5.97% Non-interest earning assets 36,269 30,837 Allowance for loan losses (6,059) (5,188) --------- --------- Total Assets $466,673 $413,340 ========= ========= Sources of Funds: Interest bearing deposits: NOW $57,108 $432 1.01% $58,277 $604 1.38% Money market 15,129 144 1.27% 26,346 451 2.29% Savings 171,163 2,264 1.77% 73,098 1,376 2.51% Time 103,722 2,325 3.00% 130,380 3,986 4.08% ----------------------------------------------------- Total interest bearing deposits 347,122 5,166 1.99% 288,101 6,417 2.98% Borrowed funds 33,123 1,067 4.25% 35,998 1,132 4.13% Junior subordinated debentures 12,887 251 2.57% 12,887 459 4.68% ----------------------------------------------------- Total interest bearing liabilities 393,132 $6,484 2.21% 336,986 $8,008 3.17% Non-interest bearing liabilities: Demand deposits 38,512 39,721 Other liabilities 2,159 2,207 --------- --------- Total non- interest bearing liabilities 40,671 41,928 Stockholders' equity 32,870 34,426 --------- --------- Total Liabilities and Stockholders' Equity $466,673 $413,340 ========= ========= Net Interest Income and ---------------- ---------------- Margin (5) $11,455 3.51% $9,311 3.21% ================ ================ (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

CONTACT: Sussex Bancorp Donald L. Kovach, President/CEO 973-827-2914


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