8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 20, 2006

SUSSEX BANCORP

(Exact name of registrant as specified in its charter)

New Jersey	0-29030	22-3475473
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

200 Munsonhurst Road
Franklin, New Jersey	07416
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (973) 827-2914

Item 2.02. Results of Operations and Financial Condition.

The information in this section, including the information contained in the press release included as Exhibit 99.1 hereto, is being furnished pursuant to this Item 2.02 and shall not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. In addition, this information shall not be deemed to be incorporated by reference into any of the Registrant’s filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such filing.

On July 20, 2006, the Registrant issued a press release announcing its financial results for the quarter ended June 30, 2006. A copy of the July 20, 2006 press release is included as Exhibit 99.1 hereto.

Item 8.01. Other Events.

On July 20, 2006, the Registrant issued a press release announcing that its Board of Directors declared a cash dividend of $0.07 per share, payable on August 28, 2006 to shareholders of record as of August 4, 2006. A copy of the July 20, 2006 press release is included as Exhibit 99.1 hereto.

The information in this section, including the information contained in the press release included as Exhibit 99.1 hereto, is being furnished pursuant to this Item 8.01 and shall not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. In addition, this information shall not be deemed to be incorporated by reference into any of the Registrant’s filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

Exhibit Number	Description
99.1	Press Release dated July 20, 2006 regarding financial results for the quarter ended June 30, 2006 and announcing the declaration of a $0.07 per share cash dividend to be paid to shareholders of record as of August 4, 2006.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Sussex Bancorp, has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SUSSEX BANCORP
	(Registrant)
Dated: July 20, 2006	By:	/s/ Candace A. Leatham
		CANDACE A. LEATHAM
		Executive Vice President and
		Chief Financial Officer

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EXHIBIT INDEX

CURRENT REPORT ON FORM 8-K

Exhibit No.	Description	Page No.
99.1	Press release announcing the Registrant's results for the quarterly period ending June 30, 2006 and the Registrant’s declaration of a $0.07 per share cash dividend to shareholders of record as of August 4, 2006.	5 - 8

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EX-99.1

EXHIBIT 99.1

Sussex Bancorp	Candace Leatham
399 Route 23	Executive Vice President
Franklin, NJ 07416	& Treasurer
	973-827-2914
FOR IMMEDIATE RELEASE

SUSSEX BANCORP ANNOUNCES SECOND QUARTER 2006 EARNINGS

---

DECLARES QUARTERLY CASH DIVIDEND OF $0.07 PER SHARE

FRANKLIN, NEW JERSEY - July 20, 2006- Sussex Bancorp ( AMEX: “SBB”) today announced its financial results for the second quarter ending June 30, 2006.

For the quarter ended June 30, 2006, the Company earned net income of $652,000 compared to net income of $666,000 reported for the second quarter of 2005. For the six months ended June 30, 2006, the Company earned net income of $1,248,000, an increase of $62,000, or 5.2%, from the $1,186,000 earned for the same period last year. Basic earnings per share for the three and six months ended June 30, 2006 were $0.21 and $0.40 respectively, compared to $0.21 and $0.38 for the respective comparable periods of 2005. Diluted earnings per share were $0.20 and $0.39 respectively for the three and six months ended June 30, 2006, compared to $0.21 and $0.37 in the respective comparable periods of 2005. While the Company’s net interest income and other income both increased in the three and six month periods ended June 30, 2006 compared to the prior year, the Company incurred increases in its other expenses related to its acquisition of a new office in Port Jervis, New York on March 24 and additional consulting fees and other expenses associated with preparing for compliance with Sarbanes-Oxley section 404.

The Company’s net interest income increased to $3,051,000 for the quarter ended June 30, 2006 from $2,742,000 for the second quarter of 2005. The Company’s interest income increased to $4,876,000 for the quarter ended June 30, 2006 from $3,684,000 for the second quarter of 2005. The Company’s interest expense increased to $1,825,000 for the three months ended June 30, 2006 from $942,000 for the second quarter of 2005. For the six months ended June 30, 2006, the Company’s net interest income increased to $5,966,000 from the $5,378,000 earned for the same period last year. For the six months ended June 30, 2006, the Company’s interest income increased to $9,457,000 from $7,107,000 for the period ended June 30, 2005. The Company’s total deposits increased to $277.3 million at June 30, 2006 from $236.3 million at June 30, 2005. At June 30, 2006 the Company had total assets of $331.3 million, compared to total assets of $290.4 million at June 30, 2005.

The loan loss provision for the second quarter was $229,000 compared to $206,000 for the same period last year. The Company’s total loans increased $57.8 million to $244.1 million at June 30, 2006 from $186.3 million at June 30, 2005.

The Company also experienced increases in non-interest income in both the current quarter and year to date periods compared to 2005. The Company reported non-interest income of $1,369,000 and $2,660,000 for the current three and six month periods, respectively, compared to non-interest income of $1,324,000 and $2,425,000 for the three and six month periods ending June 30, 2005. For the three and six month periods ending June 30, 2006, $348,000 and $668,000, respectively, of the non-interest income represented service charges on deposit accounts. Insurance commissions for the three and six month periods ended June 30, 2006 were $688,000 and $1,421,000, respectively.

The Company’s other expenses increased in the three and six month periods of 2006 compared to the prior year periods. For the three month period ending June 30, other expenses increased by $307 thousand, or 10.5%, while other expenses increased by $533 thousand, or 9.2%, for the six months ended June 30, 2006 compared to the prior year periods. On March 24^th the bank purchased a branch of NBT Bank in Port Jervis, New York. The increases in other expenses related to increases in salaries and employee benefits, occupancy expenses from the

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addition of Port Jervis branch and professional fees increased in relations to cost attributable to Sarbanes Oxley 404.

Sussex Bancorp also announced that it’s Board of Directors declared a cash dividend of $0.07 per share, payable on August 28, 2006 to shareholders of record as of August 4, 2006.

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, New York 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)
ASSETS	June 30, 2006		June 30, 2005		December 31, 2005
	(unaudited)		(unaudited)
Cash and due from banks	$	10,442	$	14,186	$	11,395
Federal funds sold		2,670		2,195		13,385
Cash and cash equivalents		13,112		16,381		24,780
Interest bearing time deposits with other banks		100		500		500
Securities available for sale		57,814		72,652		61,180
Federal Home Loan Bank Stock, at cost		964		700		1,025
Loans receivable, net of unearned income		244,061		186,278		211,335
Less: allowance for loan losses		3,040		2,158		2,615
Net loans receivable		241,021		184,120		208,720
Premises and equipment, net		6,909		5,830		6,619
Accrued interest receivable		1,497		1,567		1,778
Other assets		9,842		8,696		8,580
Total Assets	$	331,259	$	290,446	$	313,182
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	34,234	$	36,719	$	39,148
Interest bearing		243,063		199,613		217,699
Total Deposits		277,297		236,332		256,847
Borrowings		13,276		14,000		16,300
Accrued interest payable and other liabilities		2,077		2,365		1,956
Junior subordinated debentures		5,155		5,155		5,155
Total Liabilities		297,805		257,852		280,258
Total Stockholders' Equity		33,454		32,594		32,924
Total Liabilities and Stockholders' Equity	$	331,259	$	290,446	$	313,182

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SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands)
(Unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
	2006		2005		2006		2005
INTEREST INCOME
Loans receivable, including fees	$	4,217	$	2,869	$	8,030	$	5,489
Securities:
Taxable		349		433		702		880
Tax-exempt		259		299		520		592
Federal funds sold		46		79		195		119
Interest bearing deposits		5		4		10		27
Total Interest Income		4,876		3,684		9,457		7,107
INTEREST EXPENSE
Deposits		1,548		695		2,920		1,273
Borrowings		168		161		359		292
Junior subordinated debentures		109		86		212		164
Total Interest Expense		1,825		942		3,491		1,729
Net Interest Income		3,051		2,742		5,966		5,378
PROVISION FOR LOAN LOSSES		229		206		445		341
Net Interest Income after Provision for Loan Losses		2,822		2,536		5,521		5,037
OTHER INCOME
Service fees on deposit accounts		348		315		668		551
ATM and debit card fees		97		86		179		169
Insurance commissions and fees		688		622		1,421		1,217
Investment brokerage fees		88		66		140		130
Other		148		235		252		358
Total Other Income		1,369		1,324		2,660		2,425
OTHER EXPENSES
Salaries and employee benefits		1,756		1,609		3,395		3,203
Occupancy, net		259		233		530		488
Furniture, equipment and data processing		297		271		575		522
Stationary and supplies		45		40		96		88
Professional fees		167		134		345		249
Advertising and promotion		145		150		330		266
Insurance		46		46		104		88
Postage and freight		60		45		112		90
Amortization of intangible assets		40		63		73		127
Other		414		331		798		704
Total Other Expenses		3,229		2,922		6,358		5,825
Income before Income Taxes		962		938		1,823		1,637
PROVISION FOR INCOME TAXES		310		272		575		451
Net Income	$	652	$	666	$	1,248	$	1,186

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SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
Six Months Ended June 30, 2006 and 2005
(Dollars In Thousands)
(dollars in thousands)	2006							2005
	Average					Average		Average					Average
Earning Assets:	Balance			Interest (1)		Rate (2)		Balance			Interest (1)		Rate (2)
Securities:
Tax exempt (3)	$	24,171		$	708		5.91%	$	27,749		$	845		6.14%
Taxable		35,752			702		3.96%		47,954			880		3.70%
Total securities		59,923			1,410		4.74%		75,703			1,725		4.60%
Total loans receivable (4)		227,472			8,030		7.12%		169,676			5,489		6.52%
Other interest-earning assets		9,083			205		4.55%		11,098			146		2.64%
Total earning assets		296,478		$	9,645		6.56%		256,477		$	7,360		5.79%
Non-interest earning assets		25,213							23,813
Allowance for loan losses		(2,804	)						(2,051	)
Total Assets	$	318,887						$	278,239
Sources of Funds:
Interest bearing deposits:
NOW	$	52,470		$	500		1.92%	$	42,573		$	124		0.59%
Money market		27,873			511		3.70%		21,143			199		1.90%
Savings		49,171			206		0.84%		65,214			226		0.70%
Time		91,556			1,703		3.75%		62,039			724		2.35%
Total interest bearing deposits		221,070			2,920		2.66%		190,969			1,273		1.34%
Borrowed funds		14,786			359		4.83%		12,484			292		4.65%
Junior subordinated debentures		5,155			213		8.20%		5,155			164		6.32%
Total interest bearing liabilities		241,011		$	3,491		2.92%		208,608		$	1,729		1.67%
Non-interest bearing liabilities:
Demand deposits		42,561							36,295
Other liabilities		1,965							1,451
Total non-interest bearing liabilities		44,526							37,746
Stockholders' equity		33,351							31,885
Total Liabilities and Stockholders' Equity	$	318,887						$	278,239
Net Interest Income and Margin (5)				$	6,154		4.19%				$	5,631		4.43%
(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

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