Sussex Bancorp Announces Second Quarter and Six Months Earnings

• Press Release
• Source: Sussex Bancorp
• On 6:00 pm EDT, Wednesday August 12, 2009

FRANKLIN, N.J., Aug. 12, 2009 (GLOBE NEWSWIRE) -- Sussex Bancorp (Nasdaq:SBBX - News) today announced its financial results for the quarter and the six months ending June 30, 2009.

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{"s" : "sbbx","k" : "c10,l10,p20,t10","o" : "","j" : ""}

For the quarter ended June 30, 2009, the Company earned net income of $595 thousand, or $0.18 cents per basic and diluted share, an increase over net income of $359 thousand, or $0.11 per basic and diluted share reported for the second quarter of 2008. For the six months ended June 30, 2009, the Company earned net income of $848 thousand, or $0.26 per basic and diluted share, a decline from the $996 thousand, or $0.30 per basic and diluted share earned for the same period last year.

The Company's net interest income increased to $3.7 million for the quarter ended June 30, 2009 from $2.9 million for the second quarter of 2008. The Company's total interest income increased to $5.9 million for the quarter ended June 30, 2009 from $5.5 million for the second quarter of 2008. The increase is primarily attributable to an increase in securities income coupled with a reduction in interest expense. For the six months ended June 30, 2009, the Company's net interest income increased to $6.8 million from the $5.8 million earned for the same period last year. For the six months ended June 30, 2009, the Company's total interest income increased to $11.6 million from $11.1 million for the period ended June 30, 2008. The Company's interest expense decreased to $4.8 million from $5.3 million for the six months ended June 30, 2008. As a result of these changes, the Company's net interest margin increased to 3.45% and 3.25% for the three and six months ended June 30, 2009, respectively, from 3.15% and 3.22% for the three and six months ended June 30, 2008, respectively.

The Company reported non-interest income of $1.5 million and $2.8 million for the current three and six month periods ended June 30, 2009, respectively, compared to non-interest income of $1.2 million and $2.9 million for the three and six month periods ending June 30, 2008.

The Company's other expenses increased in the three and six month periods of 2009 compared to the prior year periods. For the three month period ending June 30, 2009 other expenses increased by $435 thousand, or 12.2%, while other expenses increased by $510 thousand, or 7.2%, for the six months ended June 30, 2009 compared to the prior year periods. Professional fees increased by $98 thousand for the quarter and $172 thousand for the six months ended. The increases are attributable to expenses related to the workout of non-performing loans. FDIC insurance expense increased by $275 thousand for the quarter and by $330 thousand for the six months ended. The quarterly and six month periods include the impact of an industry-wide special assessment levied by the FDIC to recapitalize the Deposit Insurance Fund. The Company recognized $215 thousand in expense due to this assessment. Also included in the increase in other expense was a write-down on foreclosed real-estate of $456 thousand.

At June 30, 2009 the Company had total assets of $464.7 million, compared to total assets of $432.5 million at June 30, 2008. The Company's total deposits increased to $383.1 million at June 30, 2009 from $346.3 million at June 30, 2008

The Company's provision for loan losses increased to $424 thousand for the quarter ended June 30, 2009 from $117 thousand for the same period last year. The provision for the six months ended June 30, 2009 increased to $1.1 million from $290 thousand for the same period last year. The increase reflects added reserves necessary to adequately provide for potential collateral shortfalls caused by the decline in current real estate values relative to the non-performing assets, combined with increases deemed necessary by management due to continued general economic weakness and its potential impact on our borrowers.

At June 30, 2009, net investment in non-performing assets increased by $7.3 million to $22.3 million from $15.0 million at year end 2008. The Company's non-accrual loans increased $2.8 million to $12.5 million at June 30, 2009 from $9.7 million at December 31, 2008 and loans past due over 90 days and still accruing totaled $1.8 million at June 30, 2009. There were no loans past due over 90 days and still accruing at December 31, 2008. Restructured loans which were not on non-accrual at June 30, 2009 increased $1.9 million to $3.2 million from $1.3 million at December 31, 2008. In addition, foreclosed real estate increased by a net of $762 thousand to $4.6 million as of June 30, 2009 from $3.9 million at year-end 2008.

Sussex Bancorp is the holding company for Sussex Bank, which operates through its main office in Franklin, New Jersey and branch offices in Andover, Augusta, Newton, Montague, Sparta, Vernon and Wantage, New Jersey, Port Jervis and Warwick, New York and for the Tri-State Insurance Agency, Inc., a full service insurance agency located in Sussex County, New Jersey.

                      CONSOLIDATED BALANCE SHEETS
                        (Dollars In Thousands)
                              (Unaudited)


                                          June 30,  June 30,  Dec. 31,
 ASSETS                                     2009      2008      2008
                                          --------  --------  --------
 Cash and due from banks                  $ 11,932  $ 11,409  $  7,602
 Federal funds sold and interest
  bearing deposits                           5,237    30,735    13,310
                                          --------  --------  --------
    Cash and cash equivalents               17,169    42,144    20,912

 Interest bearing time deposits
  with other banks                           1,096       100       100
 Trading securities                          7,910    14,104    13,290
 Securities available for sale              86,758    48,539    62,272
 Federal Home Loan Bank Stock,
  at cost                                    2,047     2,111     1,975

 Loans receivable, net of
  unearned income                          329,181   305,366   320,880
    Less:  allowance for loan losses         6,709     4,831     5,813
                                          --------  --------  --------
         Net loans receivable              322,472   300,535   315,067

 Foreclosed real estate                      4,627     3,437     3,864
 Premises and equipment, net                 7,302     8,868     8,526
 Accrued interest receivable                 2,064     1,862     2,115
 Goodwill                                    2,820     2,820     2,820
 Other assets                               10,393     7,943     9,654
                                          --------  --------  --------

 Total Assets                             $464,658  $432,463  $440,595
                                          ========  ========  ========

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Liabilities:
    Deposits:
       Non-interest bearing               $ 40,868  $ 43,750  $ 34,784
       Interest bearing                    342,278   302,546   325,297
                                          --------  --------  --------
    Total Deposits                         383,146   346,296   360,081

 Borrowings                                 33,119    36,173    33,146
 Accrued interest payable and
  other liabilities                          2,756     2,547     2,571
 Junior subordinated debentures             12,887    12,887    12,887
                                          --------  --------  --------

 Total Liabilities                         431,908   397,903   408,685

 Total Stockholders' Equity                 32,750    34,560    31,910
                                          --------  --------  --------

 Total Liabilities and
  Stockholders' Equity                    $464,658  $432,463  $440,595
                                          ========  ========  ========

                            SUSSEX BANCORP
                   CONSOLIDATED STATEMENTS OF INCOME
                        (Dollars In Thousands)
                              (Unaudited)

                                       Three Months      Six Months
                                          Ended            Ended
                                         June 30,         June 30,
                                      --------------  ----------------
                                       2009    2008     2009     2008
                                      ------  ------  -------  -------
 INTEREST INCOME
  Loans receivable, including fees    $4,789  $4,637  $ 9,597  $ 9,448
  Securities:
    Taxable                              754     543    1,381    1,067
    Tax-exempt                           316     226      589      462
  Federal funds sold                       9      88       21      112
  Interest bearing deposits                7      --       14        1
                                      ------  ------  -------  -------
      Total Interest Income            5,875   5,494   11,602   11,090
                                      ------  ------  -------  -------

 INTEREST EXPENSE
  Deposits                             1,733   2,068    3,902    4,198
  Borrowings                             356     373      708      755
  Junior subordinated debentures          83     131      187      324
                                      ------  ------  -------  -------
      Total Interest Expense           2,172   2,572    4,797    5,277
                                      ------  ------  -------  -------

      Net Interest Income              3,703   2,922    6,805    5,813
 PROVISION FOR LOAN LOSSES               424     117    1,063      290
                                      ------  ------  -------  -------
      Net Interest Income after
       Provision for Loan Losses       3,279   2,805    5,742    5,523
                                      ------  ------  -------  -------

 OTHER INCOME
  Service fees on deposit accounts       348     351      715      702
  ATM and debit card fees                121     120      228      225
  Insurance commissions and fees         595     653    1,209    1,396
  Investment brokerage fees               34      48       81       95
  Unrealized holding gains (losses)
   on trading securities                 (16)   (196)      19       21
  Gain on sale of securities,
   available for sale                     --      68       --      152
  Gain on sale of fixed assets           203      --      203       --
  Loss on sale of foreclosed
   real estate                            --      --       (1)      --
  Other                                  168     184      336      316
                                      ------  ------  -------  -------
      Total Other Income               1,453   1,228    2,790    2,907
                                      ------  ------  -------  -------

 OTHER EXPENSES
  Salaries and employee benefits       1,771   1,976    3,554    3,855
  Occupancy, net                         309     304      661      662
  Furniture, equipment and data
   processing                            337     374      677      747
  Stationary and supplies                 45      48       90       91
  Professional fees                      186      88      369      197
  Advertising and promotion               37     161       96      287
  Insurance                               45      47       86       85
  FDIC assessment                        365      90      515      185
  Postage and freight                     35      46       77       84
  Amortization of intangible assets        5      14       10       29
  Write-down on foreclosed real
   estate                                456      --      456       --
  Expenses related to foreclosed
   real estate                            93      35      276       57
  Other                                  318     384      683      761
                                      ------  ------  -------  -------
     Total Other Expenses              4,002   3,567    7,550    7,040
                                      ------  ------  -------  -------
     Income before Income Taxes          730     466      982    1,390
 PROVISION FOR INCOME TAXES              135     107      134      394
                                      ------  ------  -------  -------
     Net Income                       $  595  $  359  $   848  $   996
                                      ======  ======  =======  =======

                            SUSSEX BANCORP
        COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
                        (Dollars In Thousands)
                              (Unaudited)


                                 Six Months Ended June 30,
                             2009                       2008
                    ------------------------- -------------------------
                                      Average                   Average
                     Average Interest  Rate   Average  Interest  Rate
Earning Assets:      Balance    (1)    (2)    Balance    (1)     (2)
                    -------- -------- ------- -------- -------- -------
 Securities:
   Tax exempt (3)   $ 28,593  $   883   6.22% $ 22,287 $   690    6.23%
   Taxable            61,881    1,381   4.50%   41,339   1,067    5.19%
                    -------- -------- ------- -------- -------- -------
 Total securities     90,473    2,264   5.05%   63,626   1,757    5.55%
 Total loans
  receivable (4)     323,857    9,597   5.98%  303,192   9,448    6.27%
 Other interest-
 earning assets       26,523       35   0.26%   10,153     113    2.24%
                    -------- -------- ------- -------- -------- -------
 Total earning
  assets             440,853  $11,895   5.44%  376,971 $11,318    6.04%

 Non-interest
  earning assets      35,899                    30,054
 Allowance for
  loan losses         (6,290)                   (5,305)
                    --------                  --------
 Total Assets       $470,462                  $401,720
                    ========                  ========

 Sources of Funds:
 Interest bearing
  deposits:
   NOW              $ 57,718  $   300   1.05% $ 58,426 $   429    1.48%
   Money market       14,805       96   1.30%   29,588     354    2.41%
   Savings           169,788    1,742   2.07%   53,995     551    2.05%
   Time              110,060    1,764   3.23%  134,773   2,864    4.27%
                    -------- -------- ------- -------- -------- -------
 Total interest
  bearing deposits   352,371    3,902   2.23%  276,782   4,198    3.05%
   Borrowed funds     33,130      708   4.25%   35,914     755    4.16%
   Junior
    subordinated
    debentures        12,887      187   2.89%   12,887     324    4.97%
                    -------- -------- ------- -------- -------- -------
 Total interest
  bearing
  liabilities        398,388  $ 4,797   2.43%  325,583 $ 5,277    3.26%

 Non-interest
  bearing
  liabilities:
   Demand deposits    37,690                    39,286
   Other
    liabilities        1,872                     2,069
                    --------                  --------
 Total non-
  interest
  bearing
  liabilities         39,562                    41,355
 Stockholders'
  equity              32,512                    34,782
                    --------                  --------
 Total
  Liabilities
  and
  Stockholders'
  Equity            $470,462                  $401,720
                    ========                  ========

 Net Interest
  Income and
  Margin (5)                  $  7,098   3.25%           $ 6,041    3.22%
                              ======== =======           ======== =======

 (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
Donald L. Kovach, President/CEO
973-827-2914
399 Route 23
Franklin, NJ  07416