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) April 19, 2007

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 April 19, 2007, the Registrant issued a press release announcing its financial results for the year ended March 31, 2007.  A copy of the April 19, 2007 press release is included as Exhibit 99.1 hereto.

Item 8.01.  Other Events.

On April 19, 2007, the Registrant issued a press release announcing that its Board of Directors declared a cash dividend of $0.07 per share, payable on May 25, 2007 to shareholders of record as of May 6, 2007.  A copy of the April 19, 2007 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.

(d) Exhibits.

Exhibit Number	Description
99.1	Press Release dated April 19, 2007 regarding financial results for the year ended March 31, 2007 and announcing the declaration of a $0.07 per share cash dividend to be paid to shareholders of record as of May 6, 2007.

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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: April 19, 2007	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 year ending March 31, 2007 and the Registrant’s declaration of a $0.07 per share cash dividend to shareholders of record as of May 6, 2007.	5 - 9

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EX-99.1

EXHIBIT 99.1

Sussex Bancorp	Contact: Candace Leatham
399 Route 23		Executive Vice President
Franklin, NJ  07416		/Treasurer
		(973) 827-2914

SUSSEX BANCORP ANNOUNCES INCREASED FIRST QUARTER 2007 EARNINGS;

SECURITIES PORTFOLIO RESTRUCTURING

---

FRANKLIN, NEW JERSEY– April 19, 2007– Sussex Bancorp (NASDAQ: “SBBX”) today     announced its financial results for the first quarter ended March 31, 2007.  Highlights included:

· A 21.5% increase in net income;

· A 21.1% increase in earnings per share;

· A 17.8% increase in net loans year over year;

· The early adoption of SFAS 159 and a restructuring of the Company’s investment securities portfolio to enhance the yield on the portfolio.

For the quarter ended March 31, 2007, the Company earned net income of $724,000, an increase of approximately 21.5 percent over net income of $596,000 for the first quarter of 2006.   Basic and diluted earnings per share for the first quarter of 2007 were $0.23, a $0.04 increase over the $0.19 basic and diluted earnings per share that were reported for the first quarter of 2006.

The Company’s net interest income decreased $66 thousand, or 2.3%, to $2.8 million for the quarter ended March 31, 2007 from $2.9 million for the first quarter of 2006. The Company’s interest income increased $811 thousand to $5.4 million for the three months ended March 31, 2007 from $4.6 million for the first quarter of 2006. However, the Company’s interest expense increased $877 thousand to $2.5 million for the first quarter of 2007 from $1.7 million for the first quarter of 2006.   The increase in interest expense reflects both an increase in the average balance of interest bearing deposits and an increase in the average rate paid on interest bearing deposits, reflecting the continued competitive market for deposits in the Company’s trade area.

The Company’s non-interest income increased to $1.6 million for the quarter ended March 31, 2007 from $1.3 million for the first quarter of 2006, offsetting the decline in net interest income.  The increase in non-interest income is attributable to increased insurance commissions and brokerage fees on the sale of non-deposit products.

The Company’s total deposits increased to $294.0 million at March 31, 2007 from $272.4 million at March 31, 2006. The Company’s total loans increased $41.1 million to $270.7 million at March 31, 2007 from $229.6 million at March 31, 2006.   At March 31, 2007 the Company had total assets of $357.3 million, compared to total assets of $326.4 million at March 31, 2006.   The loan loss provision for the first quarter of 2007 was $108 thousand compared to $216 thousand for the same period last year.

The Company also announced that effective January 1, 2007 it elected to early adopt Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”, including an amendment of FASB Statement No. 115 and No. 157 Fair Value Measurements.  SFAS No. 159, which was issued in February 2007, generally permits the measurement of selected eligible financial instruments at fair value at specified election dates.  Upon adoption, the Company identified approximately $14.3 million in securities with lower yields from the available for sale portfolio.  Prior to the adoption of SFAS No. 159, the Company intended to hold these securities until a market price recovery or possibly to maturity.  The initial fair value measurement of these items resulted in an approximately $262,000 cumulative-effect adjustment, net of tax, recorded as a reduction in retained earnings as of January 1, 2007. Under SFAS No. 159, this adjustment will not be recognized in current earnings. This charge to retained earnings has no overall impact on total shareholders’ equity because the fair value adjustment had previously been included as an element of shareholders’ equity in the accumulated other comprehensive loss account.  The Company recorded an unrealized fair market value trading gain of $46 thousand in the first quarter of 2007 upon adoption of SFAS 159.  The Company anticipates selling these securities during the second quarter of 2007. The Company also anticipates using the proceeds to purchase securities

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with an average yield of 5.20%, which should increase the Company’s interest income from its investment portfolio by $182 thousand per year starting in the second quarter of 2007.

Sussex Bancorp also announced that its Board of Directors declared a cash dividend of $0.07 per share, payable on May 25, 2007 to shareholders of record as of May 6, 2007.

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.

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SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
ASSETS	March 31, 2007		March 31, 2006		December 31, 2006
	(Unaudited)		(Unaudited)
Cash and due from banks	$	7,783	$	10,742	$	10,170
Federal funds sold		2,665		11,780		11,995
Cash and cash equivalents		10,448		22,522		22,165
Interest bearing time deposits with other banks		100		500		100
Trading assets		13,476		-		-
Securities available for sale		44,945		58,354		54,635
Federal Home Loan Bank Stock, at cost		1,277		890		1,188
Loans receivable, net of unearned income		270,740		229,614		262,276
Less:  allowance for loan losses		3,428		2,824		3,340
Net loans receivable		267,312		226,790		258,936
Premises and equipment, net		8,172		6,688		7,794
Accrued interest receivable		1,685		1,439		1,910
Goodwill		2,820		2,820		2,820
Other assets		7,017		6,384		6,749
Total Assets	$	357,252	$	326,387	$	356,297
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	37,215	$	51,978	$	40,083
Interest bearing		256,696		220,456		255,687
Total Deposits		293,911		272,434		295,770
Borrowings		20,239		13,288		18,251
Accrued interest payable and other liabilities		2,708		2,156		2,529
Junior subordinated debentures		5,155		5,155		5,155
Total Liabilities		322,013		293,033		321,705
Total Stockholders' Equity		35,239		33,354		34,592
Total Liabilities and Stockholders' Equity	$	357,252	$	326,387	$	356,297

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SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
	Three Months Ended March 31,
	2007		2006
INTEREST INCOME
Loans receivable, including fees	$	4,653	$	3,813
Securities:
Taxable		396		353
Tax-exempt		250		261
Federal funds sold		92		149
Interest bearing deposits		1		5
Total Interest Income		5,392		4,581
INTEREST EXPENSE
Deposits		2,208		1,372
Borrowings		222		191
Junior subordinated debentures		113		103
Total Interest Expense		2,543		1,666
Net Interest Income		2,849		2,915
PROVISION FOR LOAN LOSSES		108		216
Net Interest Income after Provision for Loan Losses		2,741		2,699
OTHER INCOME
Service fees on deposit accounts		319		320
ATM fees		87		82
Insurance commissions and fees		854		733
Investment brokerage fees		157		52
Other		169		104
Total Other Income		1,586		1,291
OTHER EXPENSES
Salaries and employee benefits		1,782		1,639
Occupancy, net		313		271
Furniture, equipment and data processing		338		278
Stationary and supplies		46		51
Professional fees		139		178
Advertising and promotion		104		185
Insurance		46		58
Postage and freight		40		52
Amortization of intangible assets		37		33
Other		395		384
Total Other Expenses		3,240		3,129
Income before Income Taxes		1,087		861
PROVISION FOR INCOME TAXES		363		265
Net Income	$	724	$	596

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SUSSEX BANCORP COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Unaudited)
	Three Months Ended March 31,
(Dollars in thousands)	2007								2006
	Average					Average			Average					Average
Interest earning assets:	Balance			Interest (1)		Rate (2)			Balance			Interest (1)		Rate (2)
Securities:
Tax exempt  (3)	$	23,640		$	328		5.63	%	$	24,178		$	356		5.96	%
Taxable		34,149			396		4.70	%		36,546			353		3.92	%
Total securities		57,789			724		5.08	%		60,724			709		4.73	%
Total loans receivable (4)		266,252			4,653		7.09	%		219,172			3,813		7.06	%
Other interest-earning assets		6,819			93		5.53	%		14,220			154		4.41	%
Total interest earning assets		330,860		$	5,470		6.70	%		294,116		$	4,676		6.45	%
Non-interest earning assets		27,298								24,768
Allowance for loan losses		(3,385	)							(2,707	)
Total Assets	$	354,773							$	316,177
Interest bearing liabilities:
Interest bearing deposits:
NOW	$	57,140		$	314		2.23	%	$	48,402		$	201		1.68	%
Money market		35,400			343		3.92	%		27,663			241		3.54	%
Savings		39,884			90		0.91	%		50,798			103		0.82	%
Time		124,130			1,462		4.78	%		92,147			827		3.64	%
Total interest bearing deposits		256,554			2,208		3.49	%		219,010			1,372		2.54	%
Borrowed funds		18,777			222		4.72	%		16,192			191		4.72	%
Junior subordinated debentures		5,155			113		8.74	%		5,155			103		7.97	%
Total interest bearing liabilities		280,486		$	2,543		3.68	%		240,357		$	1,666		2.81	%
Non-interest bearing liabilities:
Demand deposits		37,294								40,491
Other liabilities		2,159								2,084
Total non-interest bearing liabilities		39,453								42,575
Stockholders' equity		34,834								33,245
Total Liabilities and Stockholders' Equity	$	354,773							$	316,177
Net Interest Income and Margin (5)				$	2,927		3.59	%				$	3,010		4.15	%
(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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