-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N1ZYy3w+aqp0eLusKHl8jleiA4uXZWUpIpH1BWNm04X7g1lVme+qWYtUxtJEfDPE Hqe6x6cvEfZ9fjJWamyecg== 0000914317-97-000527.txt : 19971111 0000914317-97-000527.hdr.sgml : 19971111 ACCESSION NUMBER: 0000914317-97-000527 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUSSEX BANCORP CENTRAL INDEX KEY: 0001028954 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 223475473 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-29030 FILM NUMBER: 97711205 BUSINESS ADDRESS: STREET 1: 399 RTE 23 STREET 2: 9 CITY: FRANKLIN STATE: NJ ZIP: 07416 BUSINESS PHONE: 2018272917 MAIL ADDRESS: STREET 1: 399 RTE 23 CITY: FRANKLIN STATE: NJ ZIP: 07416 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------------- FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ____________ Commission file number 0-29030 SUSSEX BANCORP (Exact name of registrant as specified in its charter) New Jersey 22-3475473 - -------------------------------------------------------------------------------- (State of other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 399 Route 23, Franklin, New Jersey 07416 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (Issuer's telephone number, including area code) (973) 827-2914 ------------------------------------------------------------------- N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] As of October 31, 1997 there were 695,988 shares of common stock, no par value, outstanding. SUSSEX BANCORP FORM 10-QSB INDEX Part I - Financial Information Item I. Financial Statements and Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial condition and Results of Operations Part II - Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS
SUSSEX BANCORP CONSOLIDATED BALANCE SHEETS (in Thousands, Except Share Data) (Unaudited) ASSETS Sept. 30, 1997 December 31, 1996 Cash and Due from Banks ................... $ 4,321 $ 4,605 Federal Funds Sold ........................ 7,650 4,250 Securities: Available for Sale, at Market Value ..... 24,142 22,154 Held to maturity ........................ 1,594 1,122 --------- --------- Total Securities .................... 25,736 23,276 Loans (Net of Unearned Income) ............ 68,804 65,464 Less: Allowance for Possible Loan Losses ...................... 725 542 Net Loans ................ 68,079 64,922 Premises and Equipment, Net ............... 2,298 2,242 Other Real Estate ......................... -0- 396 Intangible Assets, Primarily Core Deposit Premiums ................... 808 870 Other Assets ..................... 1,129 1,215 --------- --------- Total Assets ..................... $ 110,021 $ 101,776 ========= =========
SUSSEX BANCORP CONSOLIDATED BALANCE SHEETS (in Thousands, Except Share Data) (Unaudited) (continued) ASSETS Sept. 30, 1997 December 31, 1996 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits: Demand ................................. $ 16,828 $ 13,807 Savings .......................... 30,104 26,502 Time ............................. 53,933 52,580 --------- --------- Total Deposits ................... 100,865 92,889 Other Liabilities ......................... 790 1,005 --------- --------- Total Liabilities ..... $ 101,655 $ 93,894 Stockholders' Equity: Common Stock, No Par Value Authorized 5,000,000 Shares, Issued and outstanding 695,988 in 1997 and 672,460 in 1996, respectively .... 5,358 5,246 Retained Earnings ......................... 3,001 2,729 Net Unrealized Gain on Securities Available for Sale, net of income taxes .............. 7 (93) --------- --------- Total Stockholders' Equity ................ 8,366 7,882 Total Liabilities and Stockholders' Equity ............. $ 110,021 $ 101,776 ========= =========
See Notes to Consolidated Financial Statements
SUSSEX BANCORP CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share Data) (Unaudited) Three Months Ended Nine Months Ended Sept. 30 Sept. 30 ------------------------ ------------------------ 1997 1996 1997 1996 -------- -------- -------- -------- INTEREST INCOME Interest and Fees on Loans .......... $ 1,409 $ 1,262 $ 4,114 $ 3,652 Interest on Securities: Taxable ............................. 376 361 1,070 1,140 Exempt from Federal Income Tax ...... 10 6 27 31 Interest on Federal Funds Sold .......... 97 26 246 159 -------- -------- -------- -------- Total Interest Income . $ 1,892 $ 1,655 $ 5,457 $ 4,982 INTEREST EXPENSE Interest on Deposits: Interest on Savings Deposits ........ 180 161 518 501 Interest on Time Deposits ........... 597 493 1,744 1,489 -------- -------- -------- -------- Total Interest Expense ......... $ 777 $ 654 $ 2,262 $ 1,990 Net Interest Income ................. $ 1,115 $ 1,001 $ 3,195 $ 2,992 Provision for Possible Loan Losses ....................... 45 45 195 85 -------- -------- -------- -------- Net Interest Income After Provision for Possible Loan Losses $ 1,070 $ 951 $ 3,000 $ 2,907 NON-INTEREST INCOME Trust Income ........................ 0 0 5 8 Service charges on Deposit Accounts .............. 121 130 376 385 Other Income ........................ 46 27 156 112 -------- -------- -------- -------- Total Non-interest Income ...... 167 157 537 505
SUSSEX BANCORP CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share Data) (Unaudited) (continued) Three Months Ended Nine Months Ended Sept. 30 Sept. 30 ------------------------ ------------------------ 1997 1996 1997 1996 -------- -------- -------- -------- NON-INTEREST EXPENSE Salaries and Employee Benefits ...... 487 440 1,409 1,284 Occupancy Expense, Net .............. 81 84 262 269 Furniture and Equipment Expense ..... 92 75 288 246 Data Processing Expense ............. 21 16 53 42 Amortization of Intangibles ......... 21 21 63 63 Other Expenses ...................... 269 251 761 799 -------- -------- -------- -------- Total Non-Interest Expense ..... 971 887 2,836 2,703 Income Before Provision for Income Taxes 266 226 701 709 Provision for Income Taxes .............. 93 87 244 269 -------- -------- -------- -------- Net Income ..................... $ 173 $ 139 $ 457 $ 440 ======== ======== ======== ======== Net Income Per Common Share ......... $ 0.25 $ 0.21 $ .66 $ .67 ======== ======== ======== ======== Weighted Average Shares Outstanding ..... 695,067 659,821 695,067 659,821
See Notes to Consolidated Financial Statements
SUSSEX BANCORP CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (In Thousands, Except Share Data) (Unaudited) Unrealized Gain (Loss) on Total Common Retained Securities Stockholders Stock Earnings Available for Sale Equity ----------- ----------- ----------- ----------- Balance December 31, 1996 ..... $ 5,003,000 $ 2,971,000 $ (93,000) $ 7,881,000 Net Income for the Period ..... 457,000 475,000 Cash Dividend ($.27 per share) (187,000) (187,000) Stock Dividend 2% ............. 237,000 (240,000) Treasury Stock ................ (2,000) (2,000) Shares issued through dividend reinvestment plan .. 97,000 97,000 Stock Option Exercised ........ 23,000 23,000 Change in unrealized gain on securities available for sale 100,000 100,000 ----------- ----------- ----------- ----------- Balance Sept. 30, 1997 ........ $ 5,358,000 $ 3,001,000 $ 7,000 $ 8,369,000
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended Sept. 1997 1996 -------- -------- Cash Flows from Operating Activities: Net Income ................................ 457 440 Adjustments to reconcile net income to net cash provided by Operating Activities: Depreciation and Amortization of Premises and Equipment ............................. 213 5 Amortization of Intangible Assets .................. 62 Premium amortization (discount accretion) of securities, net ........................ 43 25 Loss on Sale of Investment Securities .............. 0 (9) Provision for Possible Loan Loses .................. 195 85 Gain/Loss on Sale of Other Real Estate ............. 24 (14) Accretion of Loan origination and commitment fees, net ...................... 16 (26) Deferred Federal income tax benefit (increase) ................................ 71 59 Decrease (Increase) in Accrued Interest Receivable ................................ (195) (106) Decrease (Increase) in Other Assets ................ 305 (132) Decrease (Increase) in Accrued Interest and Other Liabilities ..................... (193) (261) -------- -------- Net Cash Provided by Operating Activities .......... $ 998 $ 256 Cash Flow from Investing Activities: Securities Available for Sale: Proceeds from Maturities and Pay downs .... 674 4,437 Proceeds from Sales/Calls Prior to Maturity -- 5,061 Purchases ................................. (2,658) (10,526) Securities Held to maturity: Proceeds from Maturities .................. 682 1,671 Purchases ................................. (1,125) (1,220)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended Sept. 1997 1996 -------- -------- Net Increase in Loans Outstanding ......... (3,493) (10,878) Capital Expenditures ...................... (270) (100) Net Increase in Other Real Estate ......... 410 -0- -------- -------- Net Cash Provided by (used in) Investing Activities .................... $ (5,780) $(11,555) Cash Flows from Financing Activities: Net (Decrease) Increase Total Deposits .... 7,874 4,118 Payment of dividends ........................... (186) (154) -------- -------- Net Cash (used in) Provided by Financing Activities ................... $ 7,688 $ 3,964 Net increase (Decrease) in Cash and Cash Equivalents ........................ 2,906 (7,335) Cash and Cash Equivalents, Beginning of Period ..................... 8,964 14,202 Cash and Cash Equivalents, End of Period .......................... $ 11,870 $ 6,867 ======== ========
See Notes to Consolidated Financial Statements SUSSEX BANCORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation Sussex Bancorp ("the Company"), a one-bank holding company was incorporated in January, 1996 to serve as a holding company for the Sussex County State Bank ("the Bank"). The Company acquired the Bank and became its holding company on November 20, 1996. The Bank is the only active subsidiary at September 30, 1997. The Bank operates seven banking offices all located in Sussex County. The Company is subject to the supervision and regulation of the Board of Governors of the Federal Reserve System (the "FRB"). The Bank's deposits are insured by the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance corporation ("FDIC") up to applicable limits. The operations of the Company and the Bank are subject to the supervision and regulation of the FRB, FDIC and the New Jersey Department of Banking and Insurance (the "Department"). The consolidated financial statements included herein have been prepared without audit in accordance with the rules and regulations of the Securities and Exchange Commission and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for interim periods. All adjustments made were of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto that are included in the Company's Annual Report on Form 10-KSB for the fiscal period ended December 31, 1996. 2. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks and federal funds sold. Generally, federal funds are sold for a one day period. 3. Securities The amortized cost and approximate market value of securities are summarized as follows (in thousands):
September 30, 1997 December 31, 1996 ---------------------- ----------------------- Amortized Market Amortized Market Cash Value Cash Value ------- ------- ------- ------- Securities Available For Sale - U. S. Treasury Securities .... $ 8,042 $ 8,035 $ 8,068 $ 8,022 U. S. Government Mortgage Backed Securities ... 16,088 16,106 14,239 14,132 ------- ------- ------- ------- Total Securities Available for Sale $24,130 $24,141 $22,307 $22,154 Securities Held to Maturity - Obligations of State and Political Subdivisions . 971 975 652 646 Other Debt Securities ... 623 623 470 470 ------- ------- ------- ------- Total Securities Held to Maturity ... $ 1,594 $ 1,598 $ 1,122 $ 1,116 ------- ------- ------- ------- Total Securities ................. $25,724 $25,739 $23,429 $23,270 ======= ======= ======= =======
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Nine Months Ended September 30, 1997 and September 30, 1996. OVERVIEW The Company realized net income of $173,000 for the third quarter of 1997, a increase of $34,000, or 24.5%, over net income reported for the same period of 1996. Earnings per share were $.25 for the third quarter, an increase of $.04 or a 19% increase over earnings reported for the same period in 1996. The increase in net income for the third quarter of 1997 resulted from a number of factors including an increase in net-interest income coupled with an increase in non-interest income, which relates to a gain on sale of REO property, partially offset by increases in interest expense and non-interest expense. For the nine months ended September 30, 1997, net-income was $457,000, an increase of 3.9% from the $440,000 reported for the same period last year, reflecting increases in interest income and non-interest income partially offset by increases in interest expense and the provision for loan losses. Per share earnings were $.66 and $.67, respectively, reflecting an increase in the average number of shares outstanding during the 1997 period through the Company's dividend reinvestment plan. RESULTS OF OPERATIONS Interest Income. Total interest income increased $237 thousand, or 14.3%, to $1.9 million for the quarter ended September 30, 1997 from $1.7 million for the same period in 1996. This was attributable to an increase in interest and fees on loans of $147 thousand, an increase in interest on Federal Funds sold of $71 thousand, and an increase in interest on securities of $19 thousand. The increase in interest income is primarily attributable to the $11,810,000 increase in average interest-earning assets. The yield on average interest-earning assets on a fully taxable equivalent basis increased 5 basis points from 7.43% for the third quarter of 1996 to 7.48% for the third quarter of 1997, reflecting both the Company's purchase of higher yielding investment securities and reduced market rates of interest on deposits partially offset by management's decision to offer lower priced consumer loan products in an effort to generate additional consumer loans and reestablish the Company's presence in its market areas. For the nine months ended September 30, 1997, interest income increased $475 thousand, or 9.5%, to $5.5 million from the $5.0 million reported for the same period in 1996. This growth in interest income is the result of a $8.7 million, or 10%, increase in the average balance of interest-earning assets over the comparable period last year, partially offset by a decrease in the average yield on total interest-earning assets to 7.48% during the nine months ended September 30, 1997, compared to 7.53% during the same period in 1996. The decline in average yield reflects reinvestment of mortgage principal repayments and amortization and consumer loan repayments, primarily on home equity loans, at lower rates of interest. The increased interest yields for the three month period as compared to the nine-month period is attributable to the purchase of higher yielding investment securities during the third quarter and the repricing of existing adjustable rate investment securities to higher market rates of interest. Interest Expense. The Company's interest expense for the third quarter of 1997 increased $123 thousand, or 18.8%, to $777 thousand from $654 thousand for the same period last year. For the nine months ended September 30, 1997 interest expense increased $272 thousand, or 13.7%, to $2,262,000 from $1,990,000 for the same period last year. The average balance of interest bearing deposits increased $10.6 million, or 12%, over the same period last year. The largest component of the increase, interest on time deposits, increased $104 thousand. The Company's average cost of funds increased to 3.72% for the third quarter from 3.50% for the third quarter in 1996, reflecting a change in the composition of the Company's deposit portfolio as time deposits increased by $6.8 million for the nine months ended September 30, 1997, compared to the nine months ended September 30, 1996. This growth in time deposits is primarily the result of the Company's marketing during the 1997 period a certificate of deposit product and an IRA certificate of deposit product which were not being offered by the Company's competitors. Despite the higher rate paid on time deposits, management believes these new products will provide a stable, cost efficient source of funds to fund expansion of the Company's loan and securities portfolios. The average cost of the interest-bearing deposits increased to 3.72% for the first nine months of 1997, from the 3.60% during the same period last year. Table 1 following presents a summary of the Company's interest-earning assets and their average yields, and interest-bearing liabilities and their average costs and shareholders' equity for the nine months ended September 30, 1997 and 1996. The average balance of loans includes non-accrual loans, and associated yields include loan fees which are considered adjustments to yields.
Comparative Average Balance Sheets Nine Months Ended September 30, 1997 1996 --------------------------------------- -------------------------------------- Average Average Interest Rates Rates Average Income/ Earned/ Average Income Earned/ Balance Expense Paid Balance Expense Paid ------- ------- ---- ------- ------- ---- (Dollars in Thousands) Assets Interest Earning assets: Taxable loans (net of unearned income) .................. $ 66,847 $ 4,114 8.11% $ 57,306 $ 3,652 8.39% Tax exempt securities ....... 841 27 6.01% 1,028 31 5.53% Taxable investment securities 22,748 1,070 6.80% 26,008 1,140 6.14% Federal Funds sold .......... 6,020 246 5.45% 3,364 159 5.41% Total earning assets ........ 96,456 5,457 7.48% 87,706 4,982 7.53% Non-interest earning assets . 8,144 8,486 Allowance for possible loan losses ............... (646) (481) Total Assets ................ $ 103,954 $ 95,711 Comparative Average Balance Sheets Nine Months Ended September 30, 1997 1996 --------------------------------------- -------------------------------------- Average Average Interest Rates Rates Average Income/ Earned/ Average Income Earned/ Balance Expense Paid Balance Expense Paid ------- ------- ---- ------- ------- ---- (Dollars in Thousands) Liabilities and Shareholders' Equity Interest bearing liabilities: NOW deposits ......................... $ 12,346 $ 176 1.89% $ 11,786 164 1.85% Savings deposits ..................... 27,574 518 2.49% 26,986 502 2.49% Money market deposits ................ 3,541 59 2.21% 3,929 65 2.21% Time deposits ........................... 37,315 1,509 5.40% 31,268 1,259 5.22% Subordinated debt .................... 0 0 Total interest bearing liabilities ............... 80,776 2,262 3.72% 73,969 1,990 3.60%
Comparative Average Balance Sheets Nine Months Ended September 30, (continued) 1997 1996 --------------------------------------- -------------------------------------- Average Average Interest Rates Rates Average Income/ Earned/ Average Income Earned/ Balance Expense Paid Balance Expense Paid ------- ------- ---- ------- ------- ---- (Dollars in Thousands) Non-interest bearing liabilities: Demand Deposits ..................... $ 14,515 $ 12,935 Other liabilities ................... 781 1,142 Total non-interest bearing liabilities ......................... 15,296 14,127 Shareholders' equity ................ 7,882 7,615 Total liabilities and shareholders' equity ................ $103,954 $ 95,711 Net interest differential ........... $ 3,195 $ 2,992 Net yield on interest-earning assets ............................ 4.37% 4.49%
Net-Interest Income. The net effect of the changes in interest income and interest expense for the third quarter of 1997 was an increase of $114 thousand, or 11.4%, in net interest income as compared to the third quarter of 1996. The net interest spread, on a fully taxable equivalent basis, declined 6 basis points from the same period last year. Net interest income for the nine months ended September 30, 1997, increased by $203 thousand, or 6.8%, over the same period last year. The net interest spread over the nine month period decreased 12 basis points. Provision for Loan Losses. For the three months ended September 30, 1997, the provision for possible loan losses was equal to the provision for the same period last year, $45 thousand. The provision for possible loan losses was $195 thousand for the nine months ended September 30, 1997, as compared to $85 thousand for the same period last year. The amount of the loan loss provision was determined by management after review of, among other things, the Company's loan portfolio, the risks inherent in the Company's lending activities and the economy in the Company's market area. Upon this review, it was determined during the first half of 1997 that the provision should be increased in light of the growth experienced in the Company's loan portfolio as well as management's strategy of seeking additional commercial lending opportunities. Non-Interest Income. For the third quarter of 1997, total non-interest income increased $10 thousand, or 6.4%, over the comparable period of 1996 due primarily to a gain of $6 thousand on the sale of an OREO property. For the nine months ended September 30, 1997, non-interest income increased $32 thousand from the same period in 1996, due primarily to an increase from a gain on the sale of other real estate. Non-Interest Expense. For the quarter ended September 30, 1997, non-interest expense increased $84 thousand from the same period last year. Salaries and employee benefits increased $47 thousand, or 10.7%, as salaries increased $28 thousand and employee benefits increased $19 thousand, reflecting normal salary and benefit increases. Furniture and equipment expense increased $17 thousand, or 22.7%, as a result of an increase in depreciation expense of $9 thousand and an increase in maintenance and repair costs of $7 thousand. This is primarily attributable to the addition of an ATM at Sussex County Community College, an upgrade to the ATM at the Company`s Andover branch, the addition of a voice response unit and upgrade's to the Company's data processing systems. Other expenses increased by $18 thousand, or 7.2%, as a result of an increase of $9 thousand in Audit & Examination costs, and an increase in legal expense of $20 thousand related to the formation of the holding company offset by decreases in FDIC insurance premiums in 1997 and a reduction in New Jersey Corporate Business Taxes resulting from lower levels of taxable income. For the nine months ended September 30, 1997, non-interest expense increased $133 thousand, or 4.9%, from the same period last year. Salaries and employee benefits increased $125 thousand, or 9.7%; salaries and wages increased $88 thousand and employee benefits increased $37 thousand. Furniture and equipment expense increased $42 thousand, or 17.1%, as a result of additions to the Company's ATM network and upgrades in the Company's data processing systems. Other expenses decreased $38 thousand. This includes a reduction in FDIC assessments and in Corporate Business Taxes. Income Taxes. Income tax expense decreased $25 thousand to $244 thousand for the nine months ended September 30, 1997 as compared to $269 thousand for the same period in 1996. The decrease in income taxes resulted from lower levels of taxable income during the first nine months of 1997. FINANCIAL CONDITION September 30, 1997 as compared to December 31, 1996 Total assets at September 30, 1997 increased $8.2 million, or 8.1%, to $110 million from $101.8 million at December 31, 1996. Increases in total assets included increases of $3.4 million in Federal Funds sold, $2.5 million in total securities and $3.3 million in total loans. This was offset by a decrease of $772 thousand in cash and due from banks, premises and equipment, other real estate, intangible assets and all other assets. Total loans at September 30, 1997 increased $3.3 million, or 5.1% from year-end 1996 to $68.8 million. Commercial and industrial loans increased $710 thousand from December 31, 1996 and residential and commercial real estate increased by $1.8 million from December 31, 1996 to $63 million at September 30, 1997. The following schedule presents the components of loans, by type, for each of the periods presented.
September 30, December 31, 1996 1997 -------------------- -------------------- Amount Percent Amount Percent ------ ------- ------ ------- (Dollars in Thousands) Commercial and industrial ...... $ 2,527 3.67% $ 1,817 2.75% Real Estate: Non-residential properties 10,691 15.55% 9,603 14.75% Residential properties .... 52,209 75.88% 51,572 78.75% Construction ................... 652 .95% 381 0.60% Lease financing ................ 182 .26% 0 0 Consumer ....................... 2,543 3.69% 2,091 ------- ------ ------- ------ 3.15% Total Loans .................... $68,804 100.00% $65,464 100.00% ======= ====== ======= ======
As September 30, 1997, Federal Funds sold increased by $3.4 million to $7.7 million from $4.3 million at December 31, 1996. The increases in Federal Funds sold reflected the Company's deposit portfolio increasing faster than loan demand and management's strategy to keep these excess funds liquid to insure sufficient funds to fund future loan demand. Subsequent to September 30, 1997, these excess funds have been invested in investment securities available for sale to increase the Company's yields. At September 30, 1997, total deposits increased to $100.9 million, an increase of $8 million, or 8.6%, over total deposits at December 31, 1996. The increases in the Company's total deposit portfolio include an increase of $1.4 million in time deposits, $3.6 million in savings deposits and $3 million in demand deposits. The increase in time deposits reflects the results of certain time deposit promotion rates offered in the second half of 1996 and the first half of 1997 on new products offered by the Company, such as an IRA Certificate of Deposit. Increases in savings deposits and demand deposits reflect the offering of a new savings product, a statement savings account, and the Company's emphasis of commercial relationships, which increased demand deposits. The following schedule presents the components of deposits, for each period presented.
September 30, 1997 December 31, 1996 -------------------- --------------------- Amount % Amount % Balance Deposits: NOW deposits ............... $ 12,475 12.35% $ 12,058 13.00% Savings deposits ........... 30,104 29.85% 26,502 28.50% Money market deposits ...... 3,324 3.30% 3,693 4.00% Time deposits .............. 38,134 37.82% 36,829 39.65% Demand deposits ............ 16,828 16.68% 13,807 14.85% ------ -------- ------ Total interest-bearing liabilities ................. $100,865 100.00% $ 92,889 100.00% ======== ====== ======== ======
ASSET QUALITY At September 30, 1997, non-performing loans of $232 thousand decreased by $703 thousand, as compared to December 31, 1996. Of the decrease in non-performing loans, $481 thousand was in real estate loans which were restored to performing status. The balance of the decrease was in commercial loans. Management continues to work diligently to reduce the Company's non-performing loans. The following table provides information regarding risk elements in the loan portfolio:
September 30 December 31 1997 1996 ---- ---- Non-accrual loans ............................ $ 232 $ 935 Non-accrual loans to total loans ............................... 0.34% 1.40% Non-performing assets to total assets ........................... 0.21% 0.91% Allowance for possible loan losses as a percentage of non-performing loans ....................... 312.5% 56.00%
ALLOWANCE FOR POSSIBLE LOAN LOSSES The allowance for possible loan losses is maintained at a level considered adequate to provide for potential loan losses. The level of the allowance is based on management's evaluation of potential losses in the portfolio, after consideration of risk characteristics of the loans and prevailing and anticipated economic conditions. The allowance is increased by provisions charged to expense and reduced by charge-offs, net of recoveries. At September 30, 1997, the allowance for possible loan losses was $725 thousand, up 33.8% from the $542 thousand at year-end 1996. Net charge-offs for the first half of 1997 were $13 thousand. LIQUIDITY MANAGEMENT At September 30, 1997, the amount of liquid assets remain at a level management deems adequate to ensure that contractual liabilities, depositors' withdrawal requirements, and other operational and customer credit needs can be satisfied. At September 30, 1997, liquid investments totaled $12 million, and all mature within 30 days. CAPITAL RESOURCES Total stockholders' equity increased $487 thousand to $8,369,000 at September 30, 1997 from the $7,882,000 at December 31, 1996. The increase was due primarily to net income of $457 thousand for the first nine months of 1997 and an increase in the net unrealized gains on securities available for sale, net of tax. The increase was offset by a cash dividend of $187 thousand. At September 30, 1997, each of the Company and the Bank exceeded the regulatory capital requirements applicable to it. The table below presents the capital ratios at September 30, 1997 for both the Company and the Bank as well as the minimum regulatory requirements.
Amount Ratio Amount Minimum Ratio ------ ----- ------ ------------- The Company Leverage $7,544,000 7.26% $3,358,000 - 5,146,000 3-5% Capital Tier 1 - $7,544,000 12.36% 2,040,000 4% Risk Based Total $8,269,000 13.55% 4,081,000 8% Risk-Based The Bank Leverage $7,544,000 7.26% 3,358,000 - 5,146,000 3-5% Capital Tier 1 $7,544,000 12.36% 2,040,000 4% Risk-Based Total $8,269,000 13.55% 4,081,000 8% Risk-Based
Part II Other Information Item 1 Legal Proceedings The Company and the Bank are periodically involved in various legal proceedings as a normal incident to their businesses. In the opinion of management, no material loss is expected from any such pending lawsuit. Item 2 Changes in Securities Not applicable Item 3 Defaults Upon Senior Securities Not applicable Item 4 Submission of Matters to a Vote of Security Holders Not applicable Item 5 Other Information Not applicable Item 6 Exhibits and Report on form 8-K (a) Exhibits Number Description ------ ----------- 27 Financial Data Schedule (b) Reports on Form 8-K None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SUSSEX BANCORP Date: November 10, 1997 By: /s/ Candace A. Leatham ----------------------- CANDACE A. LEATHAM Senior Vice President and Chief Financial Officer EX-27 2
9 9-MOS 9-MOS DEC-31-1997 DEC-31-1996 SEP-30-1997 DEC-31-1996 4,321 4,605 0 0 7,650 4,250 0 0 24,142 22,154 1,594 1,122 0 0 68,804 64,922 725 542 110,021 101,776 100,865 92,889 0 0 0 0 0 0 0 0 0 0 5,358 5,003 3,008 2,972 110,021 101,776 4,114 4,958 1,343 1,752 0 0 5,457 6,710 2,262 2,728 2,262 2,728 3,195 3,982 195 130 0 (9) 2,836 3,707 709 844 709 844 0 0 0 0 457 522 0.66 0.78 0.66 0.78 0 0 232 935 0 0 172 172 0 0 542 476 13 66 0 2 725 542 725 542 0 0 0 0
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