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): October 22, 2009

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 October 22, 2009, the Registrant issued a press release announcing its operating results for the three months and nine months ended September 30, 2009.  A copy of the October 22, 2009 press release is included as Exhibit 99.1 hereto.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.  The following is filed as an Exhibit to this Current Report on Form 8-K:

99.1 Press Release dated October 22, 2009

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: October 23, 2009	By:	/s/    Candace A. Leatham
		CANDACE A. LEATHAM
		Executive Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

Sussex Bancorp

200 Munsonhurst Road, Rt. 517

Franklin, NJ 07416

973-827-2914

FOR IMMEDIATE RELEASE

SUSSEX BANCORP ANNOUNCES IMPROVED THIRD QUARTER AND NINE MONTH EARNINGS

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FRANKLIN, NEW JERSEY – October 22, 2009– Sussex Bancorp (NASDAQ: “SBBX”) today announced improved financial results for the third quarter and nine months ended September 30, 2009.

For the quarter ended September 30, 2009, the Company earned $897 thousand compared to a net loss of $3.0 million for the quarter ended September 30, 2008.   For the nine months ended September 30, 2009, the Company earned $1.7 million compared to a net loss of $2.0 million reported for the same period last year. Basic and diluted earnings per share for the three and nine months ended September 30, 2009, were $0.28 and $0.54, respectively, compared to basic and diluted loss per share of ($0.92) and ($0.62) for the comparable periods of 2008.  The improvement in the Company’s performance in 2009 reflects higher net interest income, partially offset by higher provisions for loan losses, and the impact of other than temporary impairment (“OTTI”) charges in 2008 attributable to Fannie Mae and Freddie Mac preferred stock.  The Company had no comparable OTTI charge in 2009.

 The Company’s net interest income increased to $4.2 million for the quarter ended September 30, 2009 from $3.1 million for the third quarter of 2008.  The Company’s interest income was unchanged at $5.9 million during each period, while the Company’s interest expense decreased to $1.7 million for the three months ended September 30, 2009 from $2.7 million for the third quarter of 2008.

For the nine months ended September 30, 2009, the Company’s net interest income increased to $11.0 million from the $9.0 million earned for the same period last year.  For the nine months ended September 30, 2009, the Company’s interest income increased to $17.5 million from $17.0 million in the nine months ended September 30, 2008.  As the Company’s average earning assets increased by $48.8 million, its yield on earning assets decreased by 47 basis points.  The Company’s interest expense decreased to $6.5 million for the nine months ended September 30, 2009 from $8.0 million for the nine month period ended September 30, 2008. The Company’s average interest bearing liabilities increased by $56.1 million in the first nine months of 2009 compared to the prior year, and the Company’s cost of interest bearing liabilities decreased by 97 basis points.

For the nine months ended September 30, 2009, the Company’s net interest margin increased by 30 basis points, to 3.51% from 3.21 % in the prior year period.  For the third quarter of 2009, the Company’s net interest margin increased to 4.04% from 3.18% in the third quarter of 2008.

The loan loss provision for the third quarter was $520 thousand compared to $279 thousand for the same period last year.  For the nine month period the provision was $1.6 million, compared to $569 thousand for the same period last year.  At September 30, 2009, non-performing assets totaled $23.8 million compared to $15.1 million at September 30, 2008 and $15.0 million at December 31, 2008.

At September 30, 2009 the Company had total assets of $452.5 million, compared to total assets of $439.1 million at September 30, 2008.  The Company’s total loans increased $18.1 million to $330.4 million at September 30, 2009 from $312.3 million at September 30, 2008.

The Company reported non-interest income for the three and nine month periods ending September 30, 2009 of $1.3 million and $4.1 million, respectively, compared  to a loss of $2.3 million and non-interest income of $632 thousand for the three and nine month periods ending September 30, 2008, respectively.  The reduced non-interest income for the three and nine month periods in 2008 reflects the OTTI charge discussed above, which is recognized in non-interest income.

Salaries and employee benefits increased by $228 thousand to $2.1 million for the quarter ended September 30, 2009 from the $1.8 million in the same period last year and declined by $73 thousand in the nine months ended September 30, 2009 compared to the prior year period.  The increase in the quarterly period is related to expenses accrued in relation to severance owed to a former executive officer of the Company and the Bank.

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.

SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
(Unaudited)
ASSETS	September 30, 2009		September 30, 2008		December 31, 2008
Cash and due from banks	$	13,240	$	10,537	$	7,602
Federal funds sold		2,038		15,470		13,310
Cash and cash equivalents		15,278		26,007		20,912
Interest bearing time deposits with other banks		100		100		100
Trading securities		3,974		13,519		13,290
Securities available for sale		80,040		64,487		62,272
Federal Home Loan Bank Stock, at cost		2,046		2,111		1,975
Loans receivable, net of unearned income		330,404		312,330		320,880
Less:  allowance for loan losses		5,064		5,080		5,813
Net loans receivable		325,340		307,250		315,067
Foreclosed real estate		4,380		3,931		3,864
Premises and equipment, net		7,165		8,697		8,526
Accrued interest receivable		2,120		2,058		2,115
Goodwill		2,820		2,820		2,820
Other assets		9,271		8,099		9,654
Total Assets	$	452,534	$	439,079	$	440,595
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	39,037	$	40,430	$	34,784
Interest bearing		330,100		316,231		325,297
Total Deposits		369,137		356,661		360,081
Borrowings		33,104		36,160		33,146
Accrued interest payable and other liabilities		2,717		2,572		2,571
Junior subordinated debentures		12,887		12,887		12,887
Total Liabilities		417,845		408,280		408,685
Total Stockholders' Equity		34,689		30,799		31,910
Total Liabilities and Stockholders' Equity	$	452,534	$	439,079	$	440,595

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands)
(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
INTEREST INCOME
Loans receivable, including fees	$	4,923		$	4,887		$	14,520		$	14,335
Securities:
Taxable		651			631			2,032			1,698
Tax-exempt		308			248			897			710
Federal funds sold		5			111			26			223
Interest bearing deposits		1			1			15			2
Total Interest Income		5,888			5,878			17,490			16,968
INTEREST EXPENSE
Deposits		1,264			2,219			5,166			6,417
Borrowings		359			377			1,067			1,132
Junior subordinated debentures		64			135			251			459
Total Interest Expense		1,687			2,731			6,484			8,008
Net Interest Income		4,201			3,147			11,006			8,960
PROVISION FOR LOAN LOSSES		520			279			1,583			569
Net Interest Income after Provision for Loan Losses		3,681			2,868			9,423			8,391
OTHER INCOME
Service fees on deposit accounts		380			409			1,095			1,111
ATM and debit card fees		126			123			354			348
Insurance commissions and fees		548			576			1,757			1,972
Investment brokerage fees		30			22			111			117
Holding gains on trading securities		2			(8	)		21			13
Gain on sale of securities, available for sale		55			-			55			152
Gain on sale of fixed assets		-			-			203			-
Loss on sale of foreclosed real estate		(34	)		-			(35	)		-
Impairment write-down on equity securities		-			(3,526	)		-			(3,526	)
Other		173			129			509			445
Total Other Income		1,280			(2,275	)		4,070			632
OTHER EXPENSES
Salaries and employee benefits		2,070			1,842			5,624			5,697
Occupancy, net		320			315			981			977
Furniture, equipment and data processing		314			372			991			1,119
Stationary and supplies		37			50			127			141
Professional fees		216			140			585			337
Advertising and promotion		49			92			145			379
Insurance		54			42			140			127
FDIC assessment		172			95			687			280
Postage and freight		33			34			110			118
Amortization of intangible assets		4			14			14			43
Write-down on foreclosed real estate		-			-			456			-
Expenses related to foreclosed real estate		77			75			353			132
Other		367			368			1,050			1,129
Total Other Expenses		3,713			3,439			11,263			10,479
Income (loss) before Income Taxes		1,248			(2,846	)		2,230			(1,456	)
PROVISION FOR INCOME TAXES		351			181			485			575
Net Income (Loss)	$	897		$	(3,027	)	$	1,745		$	(2,031	)

SUSSEX BANCORP

COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES

(Dollars In Thousands)

(Unaudited)

	Nine Months Ended September 30,
	2009								2008
	Average					Average			Average					Average
Earning Assets:	Balance			Interest (1)		Rate (2)			Balance			Interest (1)		Rate (2)
Securities:
Tax exempt  (3)	$	28,812		$	1,347		6.25	%	$	22,906		$	1,061		6.19	%
Taxable		61,628			2,032		4.41	%		45,576			1,698		4.98	%
Total securities		90,440			3,379		4.99	%		68,482			2,759		5.38	%
Total loans receivable (4)		324,797			14,519		5.98	%		304,859			14,335		6.28	%
Other interest-earning assets		21,226			41		0.25	%		14,350			225		2.10	%
Total earning assets		436,463		$	17,939		5.50	%		387,691		$	17,319		5.97	%
Non-interest earning assets		36,269								30,837
Allowance for loan losses		(6,059	)							(5,188	)
Total Assets	$	466,673							$	413,340
Sources of Funds:
Interest bearing deposits:
NOW	$	57,108		$	432		1.01	%	$	58,277		$	604		1.38	%
Money market		15,129			144		1.27	%		26,346			451		2.29	%
Savings		171,163			2,264		1.77	%		73,098			1,376		2.51	%
Time		103,722			2,325		3.00	%		130,380			3,986		4.08	%
Total interest bearing deposits		347,122			5,166		1.99	%		288,101			6,417		2.98	%
Borrowed funds		33,123			1,067		4.25	%		35,998			1,132		4.13	%
Junior subordinated debentures		12,887			251		2.57	%		12,887			459		4.68	%
Total interest bearing liabilities		393,132		$	6,484		2.21	%		336,986		$	8,008		3.17	%
Non-interest bearing liabilities:
Demand deposits		38,512								39,721
Other liabilities		2,159								2,207
Total non-interest bearing liabilities		40,671								41,928
Stockholders' equity		32,870								34,426
Total Liabilities and Stockholders' Equity	$	466,673							$	413,340
Net Interest Income and Margin (5)				$	11,455		3.51	%				$	9,311		3.21	%

(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