EX-99.1 CHARTER 3 ex99-1.htm EXHIBIT 99.1 ex99-1.htm
Sussex Bancorp
200 Munsonhurst Road, Rt. 517
Franklin, NJ 07416
973-827-2914


FOR IMMEDIATE RELEASE
SUSSEX BANCORP ANNOUNCES THIRD QUARTER AND NINE MONTHS EARNINGS
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DECLARES QUARTERLY 6.5% STOCK DIVIDEND

FRANKLIN, NEW JERSEY – October 16, 2008– Sussex Bancorp (NASDAQ: “SBBX”) today announced its financial results for the third quarter and nine months ended September 30, 2008

As previously announced in an 8-K filing on September 8, 2008, Sussex Bancorp held Fannie Mae and Freddie Mac perpetual preferred stock at September 30, 2008 with a cost basis of approximately $3.8 million.  These securities are subject to an other than temporary impairment (“OTTI”) charge.  On September 7, 2008, the Federal Housing Finance Agency placed both Fannie Mae and Freddie Mac under conservatorship.  Although this action did not eliminate the equity in Fannie Mae and Freddie Mac represented by the perpetual preferred stock, it has negatively impacted the value of the perpetual preferred stock.   The estimated fair value of these securities at September 30, 2008 was $300 thousand.  The OTTI charge that was taken amounted to $3.5 million.

As a result of the OTTI charge, for the quarter ended September 30, 2008, the Company had a net loss of $3.0 million compared to net income of $533 thousand reported for the third quarter of 2007.  For the nine months ended September 30, 2008, the Company had a net loss of $2.0 million compared to net income of $1.6 million reported for the same period last year. Basic and diluted loss per share for the three and nine months ended September 30, 2008, were ($0.92) and ($0.62), respectively, compared to basic and diluted earnings per share of $0.16 and $0.46 for the respective comparable periods of 2007. All per share numbers have been adjusted to reflect the stock dividend discussed below.

While the reported results for the three and nine month periods reflect the effects of the OTTI charge, they do not reflect the change in tax treatment enacted as part of the Emergency Economic Stabilization Act of 2008 (the “Act”), which was adopted on October 3, 2008. Under the Act, the Company is permitted to deduct the loss as an ordinary loss for tax purposes, thereby offsetting a portion of the Company’s ordinary income. However, since the Act was not enacted until the fourth quarter, the Company can not recognize this tax benefit as part of its third quarter results. The tax benefit will be recognized in the fourth quarter, and it is expected to amount to approximately $1.3 million or $0.40 per share, based on the average shares outstanding for the quarter ended September 30, 2008 and adjusted for the stock dividend discussed below.

Mr. Donald Kovach, the Company’s Chairman and CEO, stated: “Although the Company can not be immune from the turbulence effecting our financial markets and financial institutions, our core business remains strong, and we remain a well capitalized institution, exceeding all regulatory capital requirements. We have money to lend, and remain committed to serving the banking needs of our local communities.”

 The Company’s net interest income increased to $3.1 million for the quarter ended September 30, 2008 from $2.9 million for the third quarter of 2007.  The Company’s interest income was unchanged at $5.9 million for the quarter ended September 30, 2008 compared to same for the third quarter of 2007. The Company’s interest expense decreased to $2.7 million for the three months ended September 30, 2008 from $3.0 million for the third quarter of 2007.  For the nine months ended September 30, 2008, the Company’s net interest income increased to $9.0 million from the $8.7 million earned for the same period last year.  For the nine months ended September 30, 2008, the Company’s interest income was $17.0 million as compared to $16.9 million for the nine months ended September 30, 2007.  As the Company’s average earning assets increased by $41.5 million, its yield on earning assets decreased by 66 basis points.  The Company’s interest expense decreased to $8.0 million for the nine months ended September 30, 2008 from $8.3 million for the nine month period ended September 30, 2007. The Company’s average interest bearing liabilities increased by $40.7 million in the first nine months of 2008 compared to the prior year, and the Company’s cost of interest bearing liabilities decreased by 56 basis points.
 
 
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The loan loss provision for the third quarter was $279 thousand compared to $324 thousand for the same period last year.  For the nine month period the provision was $569 thousand, compared to $868 thousand for the same period last year.

At September 30, 2008, non-performing assets totaled $14.8 million compared to $7.3 million at September 30, 2007 and $12.9 million at December 31, 2007.

At September 30, 2008 the Company had total assets of $439.1 million, compared to total assets of $391.9 million at September 30, 2007.  The Company’s total loans increased $18.4 million to $312.3 million at September 30, 2008 from $293.9 million at September 30, 2007.

The Company reported non-interest income for the three and nine month periods ending September 30, 2008 of ($2.3) million and $632 thousand compared to $1.5 million and $4.3 million for the three and nine month periods ending September 30, 2007. The reduction in non-interest income for the three and nine month periods reflects the OTTI charge discussed above, which is recognized in non-interest income.

Sussex Bancorp also announced that its Board of Director’s declared a 6.5% stock dividend on October 15, 2008 payable November 12, 2008 to shareholders of record as of October 29, 2008.

Sussex Bancorp is the holding company for Sussex Bank, which operates through its eight New Jersey offices and two Orange County offices 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)
(Unaudited)
           
ASSETS
September 30, 2008
  
September 30, 2007
  
December 31, 2007
           
Cash and due from banks
$10,537
  
$10,056
  
$7,985
Federal funds sold
15,470
  
11,255
  
3,790
   Cash and cash equivalents
26,007
  
21,311
  
11,775
           
Interest bearing time deposits with other banks
100
  
100
  
100
Trading securities
13,519
  
11,865
  
14,259
Securities available for sale
64,487
  
46,248
  
48,397
Federal Home Loan Bank Stock, at cost
2,111
  
1,358
  
2,032
           
Loans receivable, net of unearned income
312,330
  
293,906
  
300,646
   Less:  allowance for loan losses
5,080
  
4,098
  
5,140
        Net loans receivable
307,250
  
289,808
  
295,506
           
Foreclosed real estate
3,931
  
-
  
-
Premises and equipment, net
8,697
  
8,897
  
9,112
Accrued interest receivable
2,058
  
2,046
  
2,035
Goodwill
2,820
  
2,820
  
2,820
Other assets
8,099
  
7,481
  
7,496
           
Total Assets
$439,079
  
$391,934
  
$393,532
           
LIABILITIES AND STOCKHOLDERS' EQUITY
          
           
Liabilities:
          
   Deposits:
          
      Non-interest bearing
$40,430
  
$38,315
  
$36,625
      Interest bearing
316,231
  
282,116
  
271,913
   Total Deposits
356,661
  
320,431
  
308,538
           
Borrowings
36,160
  
20,213
  
35,200
Accrued interest payable and other liabilities
2,572
  
3,158
  
2,467
Junior subordinated debentures
12,887
  
12,887
  
12,887
           
Total Liabilities
408,280
  
356,689
  
359,092
           
Total Stockholders' Equity
30,799
  
35,245
  
34,440
           
Total Liabilities and Stockholders' Equity
$439,079
  
$391,934
  
$393,532


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SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands)
(Unaudited)
               
 
Three Months Ended September 30,
  
Nine Months Ended September 30,
 
2008
  
2007
  
2008
  
2007
INTEREST INCOME
              
   Loans receivable, including fees
$4,887
  
$5,038
  
$14,335
  
$14,572
   Securities:
              
      Taxable
631
  
439
  
1,698
  
1,239
      Tax-exempt
248
  
255
  
710
  
762
   Federal funds sold
111
  
193
  
223
  
354
   Interest bearing deposits
1
  
1
  
2
  
4
         Total Interest Income
             5,878
  
5,926
  
16,968
  
16,931
               
INTEREST EXPENSE
              
   Deposits
2,219
  
2,548
  
6,417
  
7,111
   Borrowings
377
  
241
  
1,132
  
706
   Junior subordinated debentures
135
  
226
  
459
  
460
        Total Interest Expense
             2,731
  
3,015
  
8,008
  
8,277
               
        Net Interest Income
             3,147
  
2,911
  
8,960
  
8,654
PROVISION FOR LOAN LOSSES
279
  
324
  
569
  
868
        Net Interest Income after Provision for Loan Losses
             2,868
  
2,587
  
8,391
  
7,786
               
OTHER INCOME
              
   Service fees on deposit accounts
409
  
362
  
1,111
  
1,016
   ATM and debit card fees
123
  
109
  
348
  
300
   Insurance commissions and fees
576
  
618
  
1,972
  
2,136
   Investment brokerage fees
22
  
26
  
117
  
239
   Holding gains on trading securities
(8)
  
194
  
13
  
192
   Gain (loss) on sale of securities, available for sale
-
  
10
  
152
  
10
   Impairment writedowns on equity securities
(3,526)
  
-
  
(3,526)
  
-
   Other
129
  
149
  
445
  
396
      Total Other Income
            (2,275)
  
1,468
  
632
  
4,289
               
OTHER EXPENSES
              
   Salaries and employee benefits
1,842
  
1,792
  
5,697
  
5,403
   Occupancy, net
315
  
319
  
977
  
932
   Furniture, equipment and data processing
372
  
372
  
1,119
  
1,066
   Stationary and supplies
50
  
46
  
141
  
138
   Professional fees
140
  
120
  
337
  
424
   Advertising and promotion
92
  
174
  
379
  
415
   Insurance
42
  
41
  
127
  
135
   FDIC assessment
95
  
9
  
280
  
26
   Postage and freight
34
  
36
  
118
  
124
   Amortization of intangible assets
14
  
15
  
43
  
78
   Other
443
  
360
  
1,261
  
1,119
      Total Other Expenses
             3,439
  
3,284
  
10,479
  
9,860
               
       Income (loss) before Income Taxes
(2,846)
  
771
  
(1,456)
  
2,215
PROVISION FOR INCOME TAXES
181
  
238
  
575
  
664
      Net Income (Loss)
(3,027)
  
$533
  
($2,031)
  
$1,551



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SUSSEX BANCORP
  
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
  
(Dollars In Thousands)
  
(Unaudited)
  
   
 
Nine Months Ended September 30,
  
 
2008
  
2007
  
 
  Average
  
Average
  
  Average
  
Average
  
Earning Assets:
 Balance
 Interest (1)
Rate (2)
  
 Balance
 Interest (1)
Rate (2)
  
Securities:
                
      Tax exempt  (3)
$22,906
$1,061
6.19%
  
$24,083
$992
5.51%
  
      Taxable
45,576
1,698
4.98%
  
34,773
1,239
4.76%
  
Total securities
68,482
2,759
5.38%
  
58,856
2,231
5.07%
  
Total loans receivable (4)
304,859
14,335
6.28%
  
278,102
14,572
7.01%
  
Other interest-earning assets
14,350
225
2.10%
  
9,283
358
5.16%
  
Total earning assets
387,691
$17,319
5.97%
  
346,241
$17,161
6.63%
  
                 
Non-interest earning assets
30,837
      
28,420
      
Allowance for loan losses
(5,188)
      
(3,626)
      
Total Assets
$413,340
      
$371,035
      
                 
Sources of Funds:
                
Interest bearing deposits:
                
      NOW
$58,277
$604
1.38%
  
$59,130
$971
2.20%
  
      Money market
26,346
451
2.29%
  
38,379
1,097
3.82%
  
      Savings
73,098
1,376
2.51%
  
38,860
264
0.91%
  
      Time
130,380
3,986
4.08%
  
132,081
4,779
4.84%
  
Total interest bearing deposits
288,101
6,417
2.98%
  
268,450
7,111
3.54%
  
      Borrowed funds
35,998
1,132
4.13%
  
19,785
706
4.70%
  
      Junior subordinated debentures
12,887
459
4.68%
  
8,052
460
7.54%
  
Total interest bearing liabilities
336,986
$8,008
3.17%
  
296,287
$8,277
3.74%
  
                 
Non-interest bearing liabilities:
                
      Demand deposits
39,721
      
37,454
      
      Other liabilities
2,207
      
2,252
      
Total non-interest bearing liabilities
41,928
      
39,706
      
Stockholders' equity
34,426
      
35,042
      
Total Liabilities and Stockholders' Equity
$413,340
      
$371,035
      
                 
Net Interest Income and Margin (5)
  
$9,311
3.21%
    
$8,884
3.43%
  

(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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