ROCKAWAY, N.J., July 27, 2017 (GLOBE NEWSWIRE) -- Sussex Bancorp (the “Company”) (Nasdaq:SBBX), the holding company for Sussex Bank (the “Bank”), today announced a 8.6% increase in net income to $1.2 million, or $0.25 per basic and diluted common share, for the quarter ended June 30, 2017, as compared to $1.1 million, or $0.24 per basic and diluted share, for the same period last year. During the three months and six months ended June 30, 2017, net income and earnings per share were impacted by costs related to the pending acquisition of Community Bank of Bergen County, NJ (“Community”) and expenses incurred in connection with to a S-3 registration statement (“S-3 registration”) filed in the current quarter with the Securities and Exchange Commission. Diluted earnings per share, excluding expenses net of tax related to the pending acquisition of Community, expenses related to the S-3 registration net of tax, and the weighted average number of shares issued in connection with an offering of the Company’s common stock (the “capital raise”) completed in the current quarter, increased 40.0%, or $0.10, to $0.34 for the quarter ended June 30, 2017. Also, the Company announced a 19.8% increase in net income per diluted common share to $0.67 for the six months ended June 30, 2017 as compared to $0.58 for the same period last year. Diluted earnings per share, excluding expenses net of tax related to the pending acquisition of Community, expenses related to the S-3 registration net of tax and weighted average number of shares issued in the capital raise completed in the current quarter, increased 30.9%, or $0.18, to $0.76 for the six months ended June 30, 2017. The improvement for the second quarter of 2017 as compared to the same period last year was mostly driven by an 18.5% increase in net interest income as a result of strong growth in average loans and deposits, which increased $131.9 million, or 21.7%, and $101.5 million, or 21.2%, respectively. The aforementioned increases in net interest income were partly offset by higher interest expenses resulting mostly from the private placement of $15 million of subordinated notes completed in the fourth quarter of 2016 and growth in interest bearing deposits. Additionally, operating expenses increased due to costs to support the Company’s growth.
“The outstanding organic growth we have demonstrated across all of our principal business lines continues and as such, we produced another quarter of strong financial performance for Sussex Bancorp. On a year to date basis, our commercial loans and total deposits grew at an annualized rate of 23.2% and 15.0%, respectively. Our insurance company also increased its pretax earnings 37.7% when compared to the first six months of last year. As a result, our year to date ROA and ROE, when adjusted for merger and capital raise related costs, was 0.82% and 11.25%, respectively,” said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bank.
Mr. Labozzetta also added, “I am very pleased with the overwhelming confidence and support from our shareholders, which resulted in a successful common stock offering of $30.0 million in gross proceeds. This additional capital will be used to support the continued growth of our business."
Declaration of Quarterly Dividend
On July 25th, The Company’s Board of Directors declared a quarterly cash dividend of $0.06 per share, which is payable on August 24, 2017 to common shareholders of record as of the close of business on August 10, 2017.
Financial Performance
Net Income. For the quarter ended June 30, 2017, the Company reported net income of $1.2 million, or $0.25 per basic and diluted share, as compared to net income of $1.1 million, or $0.24 per basic and diluted share, for the same period last year. The increase in net income for the quarter ended June 30, 2017 was driven by a $1.1 million, or 18.5%, increase in net interest income resulting from strong loan and deposit growth of 20.6% and 19.4%, respectively, partially offset by a $465 thousand increase in interest expense mostly related to the $15.0 million in a private placement of subordinated notes completed in the fourth quarter of 2016 and an increase in interest expense related to growth in interest bearing deposits. The aforementioned was partly offset by an increase in non-interest expenses of $928 thousand mostly due to costs to support the Company’s growth, expenses related to the pending acquisition of Community and the S-3 registration. Excluding expenses related to the pending acquisition of Community net of tax and expenses related to the S-3 registration net of tax, net income increased $485 thousand, or 43.7% for the quarter ended June 30, 2017.
The Company’s income before income taxes, including Tri-State Insurance Agency, increased $147 thousand, or 8.9%, to $1.8 million for the quarter ended June 30, 2017 as compared to $1.7 million for the same period last year. The Company’s income before income taxes, excluding Tri-State Insurance Agency, increased $71 thousand, or 4.6%.
For the six months ended June 30, 2017, the Company reported net income of $3.2 million, or $0.67 per diluted share, or a 19.8% increase, as compared to net income of $2.7 million, or $0.58 per diluted share, for the same period last year. The increase in net income for the six months ended June 30, 2017 was largely due to an increase in net interest income of $2.2 million, which was partially offset by an increase in non-interest expenses of $1.3 million. The increase in non-interest expenses was largely due to an $806 thousand increase in salaries and employee benefits and expenses related to the pending acquisition of Community of $481 thousand. Excluding expenses net of tax related to the pending acquisition of Community and expenses related to the S-3 registration net of tax, net income increased $922 thousand, or 34.4%, for the six months ended June 30, 2017.
Income before income taxes increased $640 thousand, or 16.0%, to $4.6 million for the six months ended June 30, 2017 as compared to $4.0 million for the same period last year. The Company’s income before income taxes, excluding Tri-State Insurance Agency, increased $579 thousand, or 18.9%.
Net Interest Income. Net interest income on a fully tax equivalent basis increased $1.1 million, or 19.4%, to $7.1 million for the second quarter of 2017, as compared to $5.9 million for the same period in 2016. The increase in net interest income was largely due to a $143.6 million, or 20.1%, increase in average interest earning assets, principally loans receivable, which increased $131.9 million, or 21.7%. The improvement in net interest income was partly offset by a decline in the net interest margin of 2 basis points to 3.29% for the second quarter of 2017, as compared to the same period in 2016. The net interest margin decrease was mostly attributed to higher interest expense related to the private placement of $15.0 million of subordinated notes completed in the fourth quarter of 2016 and an increase in the interest rate paid on money market deposits.
Net interest income on a fully tax equivalent basis increased $2.3 million, or 19.8%, to $14.0 million for the first six months of 2017 as compared to $11.7 million for the same period in 2016. Included in the increase in net interest income was $252 thousand in prepayment penalties on $18.9 million of commercial loans.
Provision for Loan Losses. Provision for loan losses decreased $5 thousand to $380 thousand for the second quarter of 2017, as compared to $385 thousand for the same period in 2016.
Provision for loan losses increased $191 thousand, or 32.0%, to $787 thousand for the first six months of 2017, as compared to $596 thousand for the same period in 2016.
Non-interest Income. Non-interest income decreased $8 thousand, or 0.4%, to $1.8 million for the second quarter of 2017, as compared to the same period last year. The decrease was principally due to a reduction in gain on sales of securities of approximately $135 thousand to a net loss of $30 thousand for the second quarter 2017. The aforementioned was partly offset by growth of $104 thousand in insurance commissions and fees relating to Tri-State Insurance Agency.
The Company’s non-interest income decreased $55 thousand, or 1.3%, to $4.3 million for the first six months of 2017 as compared to the same period last year. The decrease in non-interest income was mostly due to a decrease on realized gains on sales of securities of $195 thousand. The aforementioned was partly offset by growth of $130 thousand in insurance commissions and fees relating to Tri-State Insurance Agency.
Non-interest Expense. The Company’s non-interest expenses increased $928 thousand, or 16.6%, to $6.5 million for the second quarter of 2017, as compared to the same period last year. The increase for the second quarter of 2017, as compared to the same period in 2016, was largely due to increases in salaries and employee benefits of $601 thousand and expenses of $481 thousand related to the pending acquisition of Community and S-3 registration costs in other expenses of $75 thousand.
The Company’s non-interest expenses increased $1.3 million, or 11.6%, to $12.5 million for the first six months of 2017 as compared to the same period last year. The increase for the first six months of 2017, as compared to the same period in 2016, was largely due to increases in salaries and employee benefits of $806 thousand and expenses of $481 thousand related to the pending acquisition of Community and S-3 registration.
The increase in salaries and employee benefits for the second quarter and first six months of 2017 as compared to the same periods in 2016 was largely due to an increase in personnel to support our growth.
Financial Condition
At June 30, 2017, the Company’s total assets were $928.8 million, an increase of $80.1 million, or 9.4%, as compared to total assets of $848.7 million at December 31, 2016. The increase in total assets was largely driven by growth in loans receivable of $77.0 million, or 11.1%.
Total loans receivable, net of unearned income, increased $77.0 million, or 11.1%, to $772.3 million at June 30, 2017, as compared to $695.3 million at December 31, 2016. During the six months ended June 30, 2017, the Company had $102.6 million in commercial loan production, which was partly offset by $18.9 million in commercial loan payoffs.
The Company’s total deposits increased $49.6 million, or 7.5%, to $710.5 million at June 30, 2017, from $660.9 million at December 31, 2016. The growth in deposits was primarily due to an increase in interest bearing deposits of $35.6 million, or 6.7%, at June 30, 2017, as compared to December 31, 2016. Included in the aforementioned deposit total is $85.6 million in deposit balances with a cost of 0.63% attributed to our branch in Oradell, New Jersey, which opened in the beginning of March 2016.
At June 30, 2017, the Company’s total stockholders’ equity was $92.3 million, an increase of $32.2 million when compared to December 31, 2016. The increase was largely due to the capital raise of $28.0 million and net income for the six months ended June 30, 2017. The Company completed the capital raise on June 21, 2017 which was the primary driver in the book value increase of 20.5% from $12.67 to $15.27. At June 30, 2017, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 12.64%, 14.59%, 15.51% and 14.59%, respectively, all in excess of the ratios required to be deemed “well-capitalized.”
Asset and Credit Quality
The ratio of NPAs, which include non-accrual loans, loans 90 days past due and still accruing, troubled debt restructured loans currently performing in accordance with renegotiated terms and foreclosed real estate, to total assets increased to 1.15% at June 30, 2017 from 1.10% at December 31, 2016. NPAs increased $1.3 million, or 13.8%, to $10.6 million at June 30, 2017, as compared to $9.3 million at December 31, 2016. Loans 90 days past due and still accruing totaled $2.2 million at June 30, 2017 as compared to $468 thousand at December 31, 2016. The increase in 90 days past due and still accruing is mostly due to one lending relationship of $1.2 million which the company is working on to resolve. Non-accrual loans decreased $210 thousand, or 3.6%, to $5.6 million at June 30, 2017, as compared to $5.8 million at December 31, 2016. Loans past due 30 to 89 days totaled $521 thousand at June 30, 2017, representing a decrease of $1.3 million, or 71.7%, as compared to $1.8 million at December 31, 2016. The top five non-accrual loan relationships total $3.4 million, which equates to 59.6% of total non-accrual loans and 31.5% of total NPAs at June 30, 2017. The remaining non-accrual loans at June 30, 2017 have an average loan balance of $95 thousand.
The Company continues to actively market its foreclosed real estate properties, which decreased $521 thousand, with one property sold for $615 thousand and $49 thousand in write-downs, which was partly offset by the addition of one new property at $133 thousand, to $1.8 million at June 30, 2017, as compared to $2.4 million at December 31, 2016. At June 30, 2017, the Company’s foreclosed real estate properties had an average carrying value of approximately $264 thousand per property.
The allowance for loan losses increased by $469 thousand, or 7.0%, to $7.2 million, or 0.93% of total loans, at June 30, 2017, compared to $6.7 million, or 0.96% of total loans, at December 31, 2016. The Company recorded $787 thousand in provision for loan losses for the six months ended June 30, 2017 as compared to $596 thousand for the six months ended June 30, 2016. Additionally, the Company recorded net charge-offs of $318 thousand for the six months ended June 30, 2017, as compared to $199 thousand in net charge-offs for the six months ended June 30, 2016. The allowance for loan losses as a percentage of non-accrual loans increased to 127.4% at June 30, 2017 from 114.8% at December 31, 2016.
About Sussex Bancorp
Sussex Bancorp is the holding company for Sussex Bank, which operates through its regional offices and corporate centers in Wantage and Rockaway, New Jersey, its eleven branch offices located in Andover, Augusta, Franklin, Hackettstown, Newton, Montague, Sparta, Vernon, Oradell and Wantage, New Jersey, and Astoria, New York, and a loan production office in Oradell, New Jersey, and for the Tri-State Insurance Agency, Inc., a full service insurance agency with locations in Augusta and Oradell, New Jersey. In November 2016, SBBX earned the honor of being named one of the 50 Fastest Growing Companies in New Jersey by NJBIZ Magazine and was the highest ranked bank on the list. Anthony Labozzetta, President and Chief Executive Officer of SBBX, was named American Banker’s Community Banker of the Year in 2016 and in February 2017, was recognized by Forbes magazine as one of America’s Business Leaders in Banking. For additional information, please visit the Company’s website at www.sussexbank.com.
Forward-Looking Statements
This press release contains statements that are forward looking and are made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as "expect," "estimate," “assume,” "believe," "anticipate," "will," "forecast," "plan," "project" or similar words. Such statements are based on the Company’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, changes to interest rates, the ability to control costs and expenses, general economic conditions, the success of the Company’s efforts to diversify its revenue base by developing additional sources of non-interest income while continuing to manage its existing fee-based business, risks associated with the quality of the Company’s assets, the ability of its borrowers to comply with repayment terms, failure to complete the proposed acquisition of Community, the imposition of adverse regulatory conditions in connection with regulatory approval of the proposed acquisition of Community, disruption to the parties’ businesses as a result of the announcement and pendency of the acquisition of Community, the inability to realize expected cost savings or to implement integration plans and other adverse consequences associated with the acquisition of Community. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in subsequent filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the results of any revisions to those forward looking statements that may be made to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.
| SUSSEX BANCORP | ||||||||||||||||||||||
| SUMMARY FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||
| (In Thousands, Except Percentages and Per Share Data) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| 6/30/2017 VS. | ||||||||||||||||||||||
| 6/30/2017 | 12/31/2016 | 6/30/2016 | 6/30/2016 | 12/31/2016 | ||||||||||||||||||
| BALANCE SHEET HIGHLIGHTS - Period End Balances | ||||||||||||||||||||||
| Total securities | $ | 106,721 | $ | 100,229 | $ | 100,457 | 6.2 | % | 6.5 | % | ||||||||||||
| Total loans | 772,279 | 695,257 | 640,187 | 20.6 | % | 11.1 | % | |||||||||||||||
| Allowance for loan losses | (7,165 | ) | (6,696 | ) | (5,988 | ) | 19.7 | % | 7.0 | % | ||||||||||||
| Total assets | 928,827 | 848,728 | 789,812 | 17.6 | % | 9.4 | % | |||||||||||||||
| Total deposits | 710,487 | 660,921 | 594,824 | 19.4 | % | 7.5 | % | |||||||||||||||
| Total borrowings and junior subordinated debt | 121,993 | 123,645 | 131,762 | (7.4 | ) | % | (1.3 | ) | % | |||||||||||||
| Total shareholders' equity | 92,267 | 60,072 | 56,886 | 62.2 | % | 53.6 | % | |||||||||||||||
| FINANCIAL DATA - QUARTER ENDED: | ||||||||||||||||||||||
| Net interest income (tax equivalent) (a) | $ | 7,056 | $ | 6,704 | $ | 5,911 | 19.4 | % | 5.3 | % | ||||||||||||
| Provision for loan losses | 380 | 237 | 385 | (1.3 | ) | % | 60.3 | % | ||||||||||||||
| Total other income | 1,818 | 1,705 | 1,826 | (0.4 | ) | % | 6.6 | % | ||||||||||||||
| Total other expenses | 6,526 | 5,726 | 5,598 | 16.6 | % | 14.0 | % | |||||||||||||||
| Income before provision for income taxes (tax equivalent) | 1,968 | 2,446 | 1,754 | 12.2 | % | (19.5 | ) | % | ||||||||||||||
| Provision for income taxes | 603 | 806 | 551 | 9.4 | % | (25.2 | ) | % | ||||||||||||||
| Taxable equivalent adjustment (a) | 161 | 117 | 94 | 71.3 | % | 37.6 | % | |||||||||||||||
| Net income | $ | 1,204 | $ | 1,523 | $ | 1,109 | 8.6 | % | (20.9 | ) | % | |||||||||||
| Net income per common share - Basic | $ | 0.25 | $ | 0.33 | $ | 0.24 | 4.2 | % | (24.2 | ) | % | |||||||||||
| Net income per common share - Diluted | $ | 0.25 | $ | 0.32 | $ | 0.24 | 4.2 | % | (21.9 | ) | % | |||||||||||
| Return on average assets | 0.54 | % | 0.74 | % | 0.59 | % | (9.4 | ) | % | (27.0 | ) | % | ||||||||||
| Return on average equity | 7.23 | % | 10.14 | % | 7.85 | % | (7.9 | ) | % | (28.7 | ) | % | ||||||||||
| Efficiency ratio (b) | 74.90 | % | 69.05 | % | 73.24 | % | 2.3 | % | 8.5 | % | ||||||||||||
| Net interest margin (tax equivalent) | 3.29 | % | 3.35 | % | 3.31 | % | (0.6 | ) | % | (1.8 | ) | % | ||||||||||
| Avg. interest earning assets/Avg. interest bearing liabilities | 1.25 | 1.25 | 1.25 | 0.1 | % | (0.1 | ) | % | ||||||||||||||
| FINANCIAL DATA - YEAR TO DATE: | ||||||||||||||||||||||
| Net interest income (tax equivalent) (a) | $ | 13,962 | $ | 11,656 | 19.8 | % | ||||||||||||||||
| Provision for loan losses | 787 | 596 | 32.0 | % | ||||||||||||||||||
| Total other income | 4,295 | 4,350 | (1.3 | ) | % | |||||||||||||||||
| Total other expenses | 12,503 | 11,208 | 11.6 | % | ||||||||||||||||||
| Income before provision for income taxes (tax equivalent) | 4,967 | 4,202 | 18.2 | % | ||||||||||||||||||
| Provision for income taxes | 1,434 | 1,326 | 8.1 | % | ||||||||||||||||||
| Taxable equivalent adjustment (a) | 318 | 193 | 64.8 | % | ||||||||||||||||||
| Net income | $ | 3,215 | $ | 2,683 | 19.8 | % | ||||||||||||||||
| Net income per common share - Basic | $ | 0.68 | $ | 0.59 | 15.3 | % | ||||||||||||||||
| Net income per common share - Diluted | $ | 0.67 | $ | 0.58 | 15.5 | % | ||||||||||||||||
| Return on average assets | 0.73 | % | 0.74 | % | (1.0 | ) | % | |||||||||||||||
| Return on average equity | 10.03 | % | 9.60 | % | 4.5 | % | ||||||||||||||||
| Efficiency ratio (b) | 69.70 | % | 70.88 | % | (1.7 | ) | % | |||||||||||||||
| Net interest margin (tax equivalent) | 3.34 | % | 3.39 | % | (1.5 | ) | % | |||||||||||||||
| Avg. interest earning assets/Avg. interest bearing liabilities | 1.24 | 1.24 | 0.2 | % | ||||||||||||||||||
| SHARE INFORMATION: | ||||||||||||||||||||||
| Book value per common share | $ | 15.27 | $ | 12.67 | $ | 12.15 | 25.7 | % | 20.5 | % | ||||||||||||
| Tangible book value per common share | 14.81 | 12.08 | 11.55 | 28.2 | % | 22.6 | % | |||||||||||||||
| Outstanding shares- period ending | 6,041,002 | 4,741,068 | 4,680,697 | 29.1 | % | 27.4 | % | |||||||||||||||
| Average diluted shares outstanding (year to date) | 4,794,669 | 4,651,108 | 4,610,176 | 4.0 | % | 3.1 | % | |||||||||||||||
| CAPITAL RATIOS: | ||||||||||||||||||||||
| Total equity to total assets | 9.93 | % | 7.08 | % | 7.20 | % | 37.9 | % | 40.3 | % | ||||||||||||
| Leverage ratio (c) | 12.64 | % | 10.41 | % | 8.75 | % | 44.5 | % | 21.4 | % | ||||||||||||
| Tier 1 risk-based capital ratio (c) | 14.59 | % | 12.87 | % | 10.50 | % | 39.0 | % | 13.4 | % | ||||||||||||
| Total risk-based capital ratio (c) | 15.51 | % | 13.86 | % | 11.46 | % | 35.3 | % | 11.9 | % | ||||||||||||
| Common equity Tier 1 capital ratio (c) | 14.59 | % | 12.87 | % | 10.50 | % | 39.0 | % | 13.4 | % | ||||||||||||
| ASSET QUALITY: | ||||||||||||||||||||||
| Non-accrual loans | $ | 5,623 | $ | 5,833 | $ | 4,650 | 20.9 | % | (3.6 | ) | % | |||||||||||
| Loans 90 days past due and still accruing | 2,229 | 468 | - | - | % | 376.3 | % | |||||||||||||||
| Troubled debt restructured loans ("TDRs") (d) | 943 | 679 | 1,258 | (25.0 | ) | % | 38.9 | % | ||||||||||||||
| Foreclosed real estate | 1,846 | 2,367 | 3,002 | (38.5 | ) | % | (22.0 | ) | % | |||||||||||||
| Non-performing assets ("NPAs") | $ | 10,641 | $ | 9,347 | $ | 8,910 | 19.4 | % | 13.8 | % | ||||||||||||
| Foreclosed real estate, criticized and classified assets | $ | 20,144 | $ | 20,450 | $ | 19,417 | 3.7 | % | (1.5 | ) | % | |||||||||||
| Loans past due 30 to 89 days | $ | 521 | $ | 1,840 | $ | 4,968 | (89.5 | ) | % | (71.7 | ) | % | ||||||||||
| Charge-offs (Recoveries) , net (quarterly) | $ | 12 | $ | (128 | ) | $ | 209 | (94.3 | ) | % | (109.4 | ) | % | |||||||||
| Charge-offs (Recoveries) , net as a % of average loans (annualized) | 0.01 | % | (0.08 | ) | % | 0.14 | % | (95.3 | ) | % | (108.6 | ) | % | |||||||||
| Non-accrual loans to total loans | 0.73 | % | 0.84 | % | 0.73 | % | 0.2 | % | (13.2 | ) | % | |||||||||||
| NPAs to total assets | 1.15 | % | 1.10 | % | 1.13 | % | 1.6 | % | 4.0 | % | ||||||||||||
| NPAs excluding TDR loans (d) to total assets | 1.04 | % | 1.02 | % | 0.97 | % | 7.8 | % | 2.2 | % | ||||||||||||
| Non-accrual loans to total assets | 0.61 | % | 0.69 | % | 0.59 | % | 2.8 | % | (11.9 | ) | % | |||||||||||
| Allowance for loan losses as a % of non-accrual loans | 127.42 | % | 114.80 | % | 128.77 | % | (1.0 | ) | % | 11.0 | % | |||||||||||
| Allowance for loan losses to total loans | 0.93 | % | 0.96 | % | 0.94 | % | (0.8 | ) | % | (3.7 | ) | % | ||||||||||
| (a) Full taxable equivalent basis, using a 34% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance | ||||||||||||||||||||||
| (b) Efficiency ratio calculated non-interest expense divided by net interest income plus non-interest income | ||||||||||||||||||||||
| (c) Sussex Bank capital ratios | ||||||||||||||||||||||
| (d) Troubled debt restructured loans currently performing in accordance with renegotiated terms | ||||||||||||||||||||||
| SUSSEX BANCORP | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (Dollars In Thousands) | ||||||
| ASSETS | June 30, 2017 | December 31, 2016 | ||||
| Cash and due from banks | $ | 2,762 | $ | 2,847 | ||
| Interest-bearing deposits with other banks | 4,888 | 11,791 | ||||
| Cash and cash equivalents | 7,650 | 14,638 | ||||
| Interest bearing time deposits with other banks | 100 | 100 | ||||
| Securities available for sale, at fair value | 98,067 | 88,611 | ||||
| Securities held to maturity | 8,654 | 11,618 | ||||
| Federal Home Loan Bank Stock, at cost | 5,386 | 5,106 | ||||
| Loans receivable, net of unearned income | 772,279 | 695,257 | ||||
| Less: allowance for loan losses | 7,165 | 6,696 | ||||
| Net loans receivable | 765,114 | 688,561 | ||||
| Foreclosed real estate | 1,846 | 2,367 | ||||
| Premises and equipment, net | 8,304 | 8,728 | ||||
| Accrued interest receivable | 2,270 | 2,058 | ||||
| Goodwill | 2,820 | 2,820 | ||||
| Bank-owned life insurance | 21,766 | 16,532 | ||||
| Other assets | 6,850 | 7,589 | ||||
| Total Assets | $ | 928,827 | $ | 848,728 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Liabilities: | ||||||
| Deposits: | ||||||
| Non-interest bearing | $ | 146,380 | $ | 132,434 | ||
| Interest bearing | 564,107 | 528,487 | ||||
| Total Deposits | 710,487 | 660,921 | ||||
| Borrowings | 94,150 | 95,805 | ||||
| Accrued interest payable and other liabilities | 4,080 | 4,090 | ||||
| Subordinated debentures | 27,843 | 27,840 | ||||
| Total Liabilities | 836,560 | 788,656 | ||||
| Total Stockholders' Equity | 92,267 | 60,072 | ||||
| Total Liabilities and Stockholders' Equity | $ | 928,827 | $ | 848,728 | ||
| SUSSEX BANCORP | |||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||||||||||||||
| (Dollars In Thousands Except Per Share Data) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| INTEREST INCOME | |||||||||||||||
| Loans receivable, including fees | $ | 7,876 | $ | 6,459 | $ | 15,474 | $ | 12,604 | |||||||
| Securities: | |||||||||||||||
| Taxable | 344 | 344 | 685 | 720 | |||||||||||
| Tax-exempt | 316 | 190 | 629 | 391 | |||||||||||
| Interest bearing deposits | 6 | 6 | 22 | 10 | |||||||||||
| Total Interest Income | 8,542 | 6,999 | 16,810 | 13,725 | |||||||||||
| INTEREST EXPENSE | |||||||||||||||
| Deposits | 852 | 636 | 1,569 | 1,211 | |||||||||||
| Borrowings | 479 | 448 | 960 | 885 | |||||||||||
| Junior subordinated debentures | 316 | 98 | 637 | 166 | |||||||||||
| Total Interest Expense | 1,647 | 1,182 | 3,166 | 2,262 | |||||||||||
| Net Interest Income | 6,895 | 5,817 | 13,644 | 11,463 | |||||||||||
| PROVISION FOR LOAN LOSSES | 380 | 385 | 787 | 596 | |||||||||||
| Net Interest Income after Provision for Loan Losses | 6,515 | 5,432 | 12,857 | 10,867 | |||||||||||
| OTHER INCOME | |||||||||||||||
| Service fees on deposit accounts | 285 | 256 | 538 | 481 | |||||||||||
| ATM and debit card fees | 200 | 200 | 380 | 387 | |||||||||||
| Bank owned life insurance | 128 | 75 | 234 | 151 | |||||||||||
| Insurance commissions and fees | 1,143 | 1,039 | 2,890 | 2,760 | |||||||||||
| Investment brokerage fees | - | 50 | 3 | 77 | |||||||||||
| (Loss) gain on securities transactions | (30 | ) | 105 | 77 | 272 | ||||||||||
| (Loss) on disposal of fixed assets | - | (6 | ) | - | (19 | ) | |||||||||
| Other | 92 | 107 | 173 | 241 | |||||||||||
| Total Other Income | 1,818 | 1,826 | 4,295 | 4,350 | |||||||||||
| OTHER EXPENSES | |||||||||||||||
| Salaries and employee benefits | 3,677 | 3,076 | 7,235 | 6,429 | |||||||||||
| Occupancy, net | 456 | 512 | 956 | 936 | |||||||||||
| Data processing | 521 | 548 | 1,078 | 1,097 | |||||||||||
| Furniture and equipment | 234 | 283 | 474 | 516 | |||||||||||
| Advertising and promotion | 89 | 86 | 195 | 191 | |||||||||||
| Professional fees | 198 | 177 | 475 | 351 | |||||||||||
| Director fees | 89 | 160 | 196 | 219 | |||||||||||
| FDIC assessment | 93 | 121 | 144 | 241 | |||||||||||
| Insurance | 66 | 73 | 132 | 146 | |||||||||||
| Stationary and supplies | 44 | 50 | 76 | 102 | |||||||||||
| Merger-related expenses | 481 | - | 481 | - | |||||||||||
| Loan collection costs | 28 | 53 | 52 | 85 | |||||||||||
| Expenses and write-downs related to foreclosed real estate | 32 | 144 | 77 | 219 | |||||||||||
| Other | 518 | 315 | 932 | 676 | |||||||||||
| Total Other Expenses | 6,526 | 5,598 | 12,503 | 11,208 | |||||||||||
| Income before Income Taxes | 1,807 | 1,660 | 4,649 | 4,009 | |||||||||||
| INCOME TAX EXPENSE | 603 | 551 | 1,434 | 1,326 | |||||||||||
| Net Income | $ | 1,204 | $ | 1,109 | $ | 3,215 | $ | 2,683 | |||||||
| OTHER COMPREHENSIVE INCOME (LOSS): | |||||||||||||||
| Unrealized gains on available for sale securities arising during the period | $ | 1,145 | $ | 1,576 | $ | 1,821 | $ | 2,561 | |||||||
| Fair value adjustments on derivatives | (455 | ) | (1,149 | ) | (415 | ) | (1,549 | ) | |||||||
| Reclassification adjustment for net loss (gain) on securities transactions included in net income | 30 | (105 | ) | (77 | ) | (272 | ) | ||||||||
| Income tax related to items of other comprehensive income (loss) | (288 | ) | (129 | ) | (532 | ) | (296 | ) | |||||||
| Other comprehensive income, net of income taxes | 432 | 193 | 797 | 444 | |||||||||||
| Comprehensive income | $ | 1,636 | $ | 1,302 | $ | 4,012 | $ | 3,127 | |||||||
| EARNINGS PER SHARE | |||||||||||||||
| Basic | $ | 0.25 | $ | 0.24 | $ | 0.68 | $ | 0.59 | |||||||
| Diluted | $ | 0.25 | $ | 0.24 | $ | 0.67 | $ | 0.58 | |||||||
| SUSSEX BANCORP | |||||||||||||||||||||||
| COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES | |||||||||||||||||||||||
| (Dollars In Thousands) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2017 | 2016 | ||||||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||||
| Balance | Interest | Rate (2) | Balance | Interest | Rate (2) | ||||||||||||||||||
| Earning Assets: | |||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||
| Tax exempt (3) | $ | 45,892 | $ | 477 | 4.17 | % | $ | 29,106 | $ | 284 | 3.91 | % | |||||||||||
| Taxable | 66,467 | 344 | 2.08 | % | 69,204 | 344 | 1.99 | % | |||||||||||||||
| Total securities | 112,359 | 821 | 2.93 | % | 98,310 | 628 | 2.56 | % | |||||||||||||||
| Total loans receivable (1) (4) | 739,837 | 7,876 | 4.27 | % | 607,983 | 6,459 | 4.26 | % | |||||||||||||||
| Other interest-earning assets | 7,110 | 6 | 0.34 | % | 9,375 | 6 | 0.26 | % | |||||||||||||||
| Total earning assets | 859,306 | 8,703 | 4.06 | % | 715,668 | 7,093 | 3.98 | % | |||||||||||||||
| Non-interest earning assets | 45,352 | 39,713 | |||||||||||||||||||||
| Allowance for loan losses | (6,956 | ) | (5,881 | ) | |||||||||||||||||||
| Total Assets | $ | 897,702 | $ | 749,500 | |||||||||||||||||||
| Sources of Funds: | |||||||||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||||||||
| NOW | $ | 182,345 | $ | 130 | 0.29 | % | $ | 143,840 | $ | 80 | 0.22 | % | |||||||||||
| Money market | 101,079 | 226 | 0.90 | % | 36,842 | 38 | 0.41 | % | |||||||||||||||
| Savings | 138,403 | 72 | 0.21 | % | 138,546 | 72 | 0.21 | % | |||||||||||||||
| Time | 157,283 | 424 | 1.08 | % | 158,408 | 446 | 1.13 | % | |||||||||||||||
| Total interest bearing deposits | 579,110 | 852 | 0.59 | % | 477,636 | 636 | 0.53 | % | |||||||||||||||
| Borrowed funds | 79,260 | 479 | 2.42 | % | 81,712 | 448 | 2.20 | % | |||||||||||||||
| Subordinated debentures | 27,842 | 316 | 4.55 | % | 12,887 | 98 | 3.05 | % | |||||||||||||||
| Total interest bearing liabilities | 686,212 | 1,647 | 0.96 | % | 572,235 | 1,182 | 0.83 | % | |||||||||||||||
| Non-interest bearing liabilities: | |||||||||||||||||||||||
| Demand deposits | 140,493 | 115,319 | |||||||||||||||||||||
| Other liabilities | 4,364 | 5,448 | |||||||||||||||||||||
| Total non-interest bearing liabilities | 144,857 | 120,767 | |||||||||||||||||||||
| Stockholders' equity | 66,633 | 56,498 | |||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 897,702 | $ | 749,500 | |||||||||||||||||||
| Net Interest Income and Margin (5) | 7,056 | 3.29 | % | 5,911 | 3.31 | % | |||||||||||||||||
| Tax-equivalent basis adjustment | (161 | ) | (94 | ) | |||||||||||||||||||
| Net Interest Income | $ | 6,895 | $ | 5,817 | |||||||||||||||||||
| (1) Includes loan fee income | |||||||||||||||||||||||
| (2) Average rates on securities are calculated on amortized costs | |||||||||||||||||||||||
| (3) Full taxable equivalent basis, using a 34% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance | |||||||||||||||||||||||
| (4) Loans outstanding include non-accrual loans | |||||||||||||||||||||||
| (5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets | |||||||||||||||||||||||
| SUSSEX BANCORP | |||||||||||||||||||||||
| COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES | |||||||||||||||||||||||
| (Dollars In Thousands) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2017 | 2016 | ||||||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||||
| Balance | Interest | Rate (2) | Balance | Interest | Rate (2) | ||||||||||||||||||
| Earning Assets: | |||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||
| Tax exempt (3) | $ | 46,663 | $ | 947 | 4.09 | % | $ | 29,671 | $ | 584 | 3.96 | % | |||||||||||
| Taxable | 64,628 | 685 | 2.14 | % | 69,537 | 720 | 2.08 | % | |||||||||||||||
| Total securities | 111,291 | 1,632 | 2.96 | % | 99,208 | 1,304 | 2.64 | % | |||||||||||||||
| Total loans receivable (1) (4) | 720,954 | 15,474 | 4.33 | % | 583,931 | 12,604 | 4.34 | % | |||||||||||||||
| Other interest-earning assets | 10,009 | 22 | 0.44 | % | 9,006 | 10 | 0.22 | % | |||||||||||||||
| Total earning assets | 842,254 | 17,128 | 4.10 | % | 692,145 | 13,918 | 4.04 | % | |||||||||||||||
| Non-interest earning assets | 43,218 | 39,208 | |||||||||||||||||||||
| Allowance for loan losses | (6,840 | ) | (5,770 | ) | |||||||||||||||||||
| Total Assets | $ | 878,632 | $ | 725,583 | |||||||||||||||||||
| Sources of Funds: | |||||||||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||||||||
| NOW | $ | 179,741 | $ | 249 | 0.28 | % | $ | 141,936 | $ | 151 | 0.21 | % | |||||||||||
| Money market | 87,582 | 350 | 0.81 | % | 33,396 | 66 | 0.40 | % | |||||||||||||||
| Savings | 138,074 | 143 | 0.21 | % | 138,537 | 142 | 0.21 | % | |||||||||||||||
| Time | 161,951 | 827 | 1.03 | % | 152,376 | 852 | 1.12 | % | |||||||||||||||
| Total interest bearing deposits | 567,348 | 1,569 | 0.56 | % | 466,245 | 1,211 | 0.52 | % | |||||||||||||||
| Borrowed funds | 82,571 | 960 | 2.34 | % | 78,839 | 885 | 2.26 | % | |||||||||||||||
| Subordinated debentures | 27,841 | 637 | 4.61 | % | 12,887 | 166 | 2.59 | % | |||||||||||||||
| Total interest bearing liabilities | 677,760 | 3,166 | 0.94 | % | 557,971 | 2,262 | 0.82 | % | |||||||||||||||
| Non-interest bearing liabilities: | |||||||||||||||||||||||
| Demand deposits | 132,785 | 106,792 | |||||||||||||||||||||
| Other liabilities | 3,978 | 4,914 | |||||||||||||||||||||
| Total non-interest bearing liabilities | 136,763 | 111,706 | |||||||||||||||||||||
| Stockholders' equity | 64,109 | 55,906 | |||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 878,632 | $ | 725,583 | |||||||||||||||||||
| Net Interest Income and Margin (5) | 13,962 | 3.34 | % | 11,656 | 3.39 | % | |||||||||||||||||
| Tax-equivalent basis adjustment | (318 | ) | (193 | ) | |||||||||||||||||||
| Net Interest Income | $ | 13,644 | $ | 11,463 | |||||||||||||||||||
| (1) Includes loan fee income | |||||||||||||||||||||||
| (2) Average rates on securities are calculated on amortized costs | |||||||||||||||||||||||
| (3) Full taxable equivalent basis, using a 34% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance | |||||||||||||||||||||||
| (4) Loans outstanding include non-accrual loans | |||||||||||||||||||||||
| (5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets | |||||||||||||||||||||||
| SUSSEX BANCORP | |||||||||||||||||
| Segment Reporting | |||||||||||||||||
| (Dollars In Thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | ||||||||||||||||
| Banking and | Banking and | ||||||||||||||||
| Financial | Insurance | Financial | Insurance | ||||||||||||||
| Services | Services | Total | Services | Services | Total | ||||||||||||
| Net interest income from external sources | $ | 6,895 | $ | - | $ | 6,895 | $ | 5,817 | $ | - | $ | 5,817 | |||||
| Other income from external sources | 675 | 1,143 | 1,818 | 781 | 1,045 | 1,826 | |||||||||||
| Depreciation and amortization | 260 | 7 | 267 | 281 | 7 | 288 | |||||||||||
| Income before income taxes | 1,627 | 180 | 1,807 | 1,556 | 104 | 1,660 | |||||||||||
| Income tax expense (1) | 531 | 72 | 603 | 509 | 42 | 551 | |||||||||||
| Total assets | 922,510 | 6,317 | 928,827 | 783,239 | 6,573 | 789,812 | |||||||||||
| Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||||||||||||||||
| Banking and | Banking and | ||||||||||||||||
| Financial | Insurance | Financial | Insurance | ||||||||||||||
| Services | Services | Total | Services | Services | Total | ||||||||||||
| Net interest income from external sources | $ | 13,644 | $ | - | $ | 13,644 | $ | 11,463 | $ | - | $ | 11,463 | |||||
| Other income from external sources | 1,405 | 2,890 | 4,295 | 1,567 | 2,783 | 4,350 | |||||||||||
| Depreciation and amortization | 527 | 13 | 540 | 533 | 13 | 546 | |||||||||||
| Income before income taxes | 3,649 | 1,000 | 4,649 | 3,070 | 939 | 4,009 | |||||||||||
| Income tax expense (1) | 1,034 | 400 | 1,434 | 950 | 376 | 1,326 | |||||||||||
| Total assets | 922,510 | 6,317 | 928,827 | 783,239 | 6,573 | 789,812 | |||||||||||
| (1) Calculated at statutory tax rate of 40% for the insurance services segment | |||||||||||||||||
| SUSSEX BANCORP | |||||||
| Non-GAAP Reporting | |||||||
| (Dollars In Thousands) | |||||||
| (Unaudited) | |||||||
| Three Months Ended June 30, | |||||||
| 2017 | 2016 | ||||||
| Net income (GAAP) | $ | 1,204 | $ | 1,109 | |||
| Merger related expenses net of tax (1) | 345 | - | |||||
| S-3 Registration filing expenses net of tax (1) | 45 | - | |||||
| Net income, as adjusted | $ | 1,594 | $ | 1,109 | |||
| Average diluted shares outstanding (GAAP) | 4,863,348 | 4,617,041 | |||||
| Average diluted shares from capital raise (2) | 122,283 | - | |||||
| Average diluted shares outstanding, as adjusted | 4,741,065 | 4,617,041 | |||||
| Diluted EPS, as adjusted | $ | 0.34 | $ | 0.24 | |||
| Return on average assets, as adjusted | 0.71 | % | 0.59 | % | |||
| Return on average equity, as adjusted | 9.57 | % | 7.85 | % | |||
| (1) Merger related expense net of tax expense of $136 thousand; S-3 Registration filing net of tax expense of $30 thousand. | |||||||
| (2) Calculation is based on 1,249,999 common stock shares issued and outstanding as part of the capital raise completed on June 21, 2017 divided by the number of days in the period. | |||||||
| Six Months Ended June 30, | |||||||
| 2017 | 2016 | ||||||
| Net income (GAAP) | $ | 3,215 | $ | 2,683 | |||
| Merger related expenses net of tax (1) | 345 | - | |||||
| S-3 Registration filing expenses net of tax (1) | 45 | - | |||||
| Net income, as adjusted | $ | 3,605 | $ | 2,683 | |||
| Average diluted shares outstanding (GAAP) | 4,794,669 | 4,610,176 | |||||
| Average diluted shares from capital raise (2) | 61,813 | - | |||||
| Average diluted shares outstanding, as adjusted | 4,732,856 | 4,610,176 | |||||
| Diluted EPS, as adjusted | $ | 0.76 | $ | 0.58 | |||
| Return on average assets, as adjusted | 0.82 | % | 0.74 | % | |||
| Return on average equity, as adjusted | 11.25 | % | 9.60 | % | |||
| (1) Merger related expenses net of tax expenses of $136 thousand; S-3 Registration filing net of tax expenses of $30 thousand. | |||||||
| (2) Calculation is based on 1,249,999 common stock shares issued and outstanding as part of the capital raise completed on June 21, 2017 divided by the number of days in the period. | |||||||