-----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, R1aRW4Iv0muEZp2srMiAO33IAMQQXcyhjdoFHnZzcAWoJB0fHGChIyRGhj2eMyao zJ0Rz47oQA/dnE0wWr8RAw== 0000914317-98-000527.txt : 19980817 0000914317-98-000527.hdr.sgml : 19980817 ACCESSION NUMBER: 0000914317-98-000527 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: AMEX 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: 001-12569 FILM NUMBER: 98689343 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 June 30, 1998 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 August 3, 1998 there were 706,375 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 June 30, 1998 December 31, 1997 - ------ ------------- ----------------- Cash and Due from Banks ...................... $ 4,029 $ 5,793 Federal Funds Sold ........................... 16,525 7,875 Securities: Available for Sale, at Market Value ........ 28,433 26,600 Held to maturity ........................... 2,750 2,706 --------- --------- Total Securities ....................... 31,183 29,306 Loans (Net of Unearned Income) ............... 68,409 68,035 Less: Allowance for Possible Loan Losses ........................ 727 685 --------- --------- Net Loans .................. 67,682 67,350 Premises and Equipment, Net .................. 2,369 2,287 Other Real Estate ............................ -0- -0- Intangible Assets, Primarily ................. 745 787 Core Deposit Premiums Other Assets ...................... 1,318 859 --------- --------- Total Assets ........................ $ 123,851 $ 114,257 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits: Demand .................................... 19,232 13,807 Savings ................................... 47,894 47,884 Time ...................................... 47,133 38,971 --------- --------- Total Deposits ...................... 114,259 104,882 Other Liabilities ............................ 757 789 --------- --------- Total Liabilities ................... 115,016 105,671
PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS
SUSSEX BANCORP CONSOLIDATED BALANCE SHEETS (in Thousands, Except Share Data) (Unaudited) (continued) June 30, 1998 December 31, 1997 ------------- ----------------- Stockholders' Equity: Common Stock, No Par Value Authorized 5,000,000 Shares, Issued and outstanding 706,375 in 1998 and 693,563 in 1997, respectively ............. 5,543 5,412 Retained Earnings ............................ 3,320 3,162 Treasury Stock ............................... (2) (2) Net Unrealized Gain on Securities Available for Sale, net of income taxes ....................... (26) (14) --------- --------- Total Stockholders' Equity ................... 8,835 8,586 Total Liabilities and Stockholders' Equity ...................... $ 123,851 $ 114,257 ========= =========
See Notes to Consolidated Financial Statements
SUSSEX BANCORP CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share Data) (Unaudited) Three Months Ended Six Months Ended June 30 June 30 --------------------- --------------------- 1998 1997 1998 1997 -------- -------- -------- -------- INTEREST INCOME Interest and Fees on Loans ................... $ 1,382 $ 1,361 $ 2,766 $ 2,705 Interest on Securities: Taxable ..................................... 402 349 806 694 Exempt from Federal Income Tax .............. 21 8 40 17 Interest on Federal Funds Sold .............. 244 92 388 149 -------- -------- -------- -------- Total Interest Income .................. 2,049 1,810 $ 4,000 $ 3,565 INTEREST EXPENSE Interest on Deposits: Interest on Savings Deposits ............. 278 174 544 338 Interest on Time Deposits ................ 654 580 1,219 1,147 -------- -------- -------- -------- Total Interest Expense ................. 932 754 1,763 1,485 Net Interest Income ....................... 1,117 1,056 2,237 2,080 -------- -------- -------- -------- Provision for Possible Loan Losses ........................... 21 75 42 150 -------- -------- -------- -------- Net Interest Income After Provision for Possible Loan Losses ..... 1,096 981 2,195 1,930 NON-INTEREST INCOME Trust Income .............................. 4 5 4 5 Service charges on Deposit Accounts ...... 122 129 246 255 Other Income ............................. 79 71 138 110 -------- -------- -------- -------- Total Non-interest Income .............. 205 205 388 370
SUSSEX BANCORP CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share Data) (Unaudited) (continued) Three Months Ended Six Months Ended June 30 June 30 --------------------- --------------------- 1998 1997 1998 1997 -------- -------- -------- -------- NON-INTEREST EXPENSE Salaries and Employee Benefits ............ 539 458 1,050 922 Occupancy Expense, Net .................... 88 87 180 181 Furniture and Equipment Expens ............ 110 106 205 196 Data Processing Expense ................... 19 16 37 32 Amortization of Intangibles ............... 20 21 41 42 Other Expenses ............................ 289 250 551 504 -------- -------- -------- -------- Total Non-Interest Expense ............. 1,065 938 2,064 1,877 Income Before Provision for Income Taxes ........ 236 248 519 423 Provision for Income Taxes ...................... 77 88 178 152 -------- -------- -------- -------- Net Income ............................. $ 159 $ 160 $ 341 $ 271 ======== ======== ======== ======== Net Income Per Common Share .................. $ 0.23 $ 0.23 $ .49 $ .40 ======== ======== ======== ======== Weighted Average Shares Outstanding ............. 697,163 686,867 701,819 680,959
See Notes to Consolidated Financial Statements
SUSSEX BANCORP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands) (Unaudited) Six Months Ended: June 30, 1998 1997 ----- ---- Net Income ............................................. $ 341 $ 271 Other comprehensive income, Net of tax Unrealized loss on available-for-sale Securities ... (26) (14) ----- ----- Comprehensive income ................................... $ 315 $ 257 ===== =====
SUSSEX BANCORP CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (In Thousands, Except Share Data) (Unaudited) Unrealized Gain (Loss) on Total Common Retained Treasury Securities Stockholders Stock Earnings Stock Available for Sale Equity ----- -------- ----- ------------------ ------ Balance December 31, 1997 $5,412 $3,162 $(2) $ 14 $8,586 ------ ------ --- ----- ------ Net Income for the Period 341 341 Cash Dividend ($.26 per share) (183) (183) Shares issued through dividend reinvestment plan 94 94 Stock Option Exercised 37 37 Change in unrealized gain on securities available for sale (40) ------ ------ --- ----- ------ Balance June 30, 1998 $5,543 $3,320 $(2) $ (26) $8,835
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 1998 1997 -------- -------- Cash Flows from Operating Activities: Net Income ..................................... $ 341 $ 271 Adjustments to reconcile net income to net cash provided by Operating Activities: Depreciation and Amortization of Premises and Equipment .................................. 167 142 Amortization of Intangible Assets .................. 42 41 Premium amortization (discount accretion) of securities, net ............................. (40) 25 Provision for Possible Loan Loses .................. 42 150 Accretion of Loan origination and commitment fees, net ........................... (69) 11 Deferred Federal income tax benefit (increase) ..................................... 200 90 Decrease (Increase) in Accrued Interest Receivable ..................................... (149) (149) Decrease (Increase) in Other Assets ................ (310) 157 Decrease (Increase) in Accrued Interest and Other Liabilities .......................... (32) (239) -------- -------- Net Cash Provided by Operating Activities ... $ 192 $ 499 Cash Flow from Investing Activities: Securities Available for Sale: Proceeds from Maturities and Paydowns ....... 2,667 349 Proceeds from Sales/Calls Prior to Maturity . 5,650 -- Purchases ................................... (10,216) (506) Securities Held to maturity: Proceeds from Maturities .................... 489 618 Purchases ................................... (536) (1,039) Net Increase in Loans Outstanding .............. (306) (2,539) Capital Expenditures ........................... (249) (172) Net Increase in Other Real Estate .............. 0 154 -------- -------- Net Cash Provided by (used in) Investing Activities ...................... $ (2,501) $ (3,135) Cash Flows from Financing Activities: Net (Decrease) Increase Total Deposits ...... 9,377 5,764 Payment of dividends ........................... (183) (110) -------- --------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued) Six Months Ended June 1998 1997 -------- -------- Net Cash (used in) Provided by Financing Activities ................... $ 9,194 $ 5,654 Net increase (Decrease) in Cash and Cash Equivalents ........................ 6,885 3,018 Cash and Cash Equivalents, Beginning of Period ..................... 13,668 8,964 Cash and Cash Equivalents, End of Period .......................... $ 20,553 $ 11,982 ======== ========
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 June 30, 1998. 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, 1997. 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): June 30, 1998 December 31, 1997 ------------------- ------------------- Amortized Market Amortized Market Cost Value Cost Value ---- ----- ---- ----- Securities Available For Sale - U. S. Treasury Securities .. $ 6,539 $ 6,549 $ 8,049 $ 8,049 U. S. Government Mortgage Backed Securities . 21,939 21,883 18,529 18,551 ------- ------- ------- ------- Total Securities Available for Sale ...... $28,478 $28,432 $26,578 $26,600 Securities Held to Maturity - Obligations of State and Political Subdivisions ..... $ 2,058 $ 2,061 $ 2,082 $ 2,089 Other Debt Securities ... 693 693 624 624 ------- ------- ------- ------- Total .................... $ 2,751 $ 2,754 $ 2,706 $ 2,713 Total Securities ............... $31,229 $31,186 $29,284 $29,313 ======= ======= ======= ======= 4. Recently Issued Accounting Pronouncements The Company adopted Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("Statement 130") effective March 31, 1998. Statement 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Under Statement 130, comprehensive income is divided into net income and other comprehensive income. Other comprehensive income includes items previously recorded directly in equity, such as unrealized gains or losses on securities available-for-sale. Statement 130 became effective for interim and annual periods beginning after December 15, 1997. Comparative financial statements provided for earlier periods are reclassified to reflect application of the provisions of the statement. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three and Six Months Ended June 30, 1998 and June 30, 1997. OVERVIEW The Company realized net income of $159 thousand for the second quarter of 1998, a decrease of $1 thousand from the $160 thousand reported for the same period in 1997. Basic earnings per share were $.23, the same as per share income for the prior year period, and diluted earnings per share were $ .22 for both the three month periods ended June 30, 1998 and 1997 respectively. For the six months ended June 30, 1998, net-income was $341 thousand, an increase of $70 thousand, or 25.8% from the $271 thousand reported for the same period in 1997. Basic earnings per share were $ .49 and $ .40 for the six months ended June 30, 1998 and 1997, respectively, and diluted earnings per share were $ .48 and $ .39, respectively. Six month earnings for 1998 represent an increase over prior year earnings of 22.5%. RESULTS OF OPERATIONS Interest Income. Total interest income increased $239 thousand, or 13.2%, to $2.0 million for the quarter ended June 30, 1998 from $1.8 million for the same period in 1997. This was attributable to an increase in interest and fees on loans of $21 thousand, an increase in interest on Federal Funds sold of $152 thousand, and an increase in interest and dividends on securities of $66 thousand. The increase in interest income is primarily attributable to the $24.4 million increase in average interest earnings assets. The yield on average interest-earnings on a fully taxable equivalent basis decreased 17 basis points from 7.41% for the second quarter of 1997 to 7.24% for the second quarter of 1998. The decline in average yield reflects reinvestment of mortgage principal repayments and prepayments and amortization and cash flows from called and maturing investment securities being reinvested at lower current market rates of interest. The increase in interest earning assets reflects the Company's continued efforts to increase market share in its Sussex County, New Jersey trade area. For the six months ended June 30, 1998, interest income increased $435 thousand, or 12.2%, from the $3.6 million reported for the same period in 1997. This growth in interest income is the result of a $22.1 million, or 23.1%, increase in the average balance of interest-earning assets over the comparable period of last year, partially offset by a decrease in the average yield on total interest-earning assets to 7.30% during the six months ended June 30, 1998, compared to 7.45% during the same period in 1997. The decline in average yield reflects investment on securities at lower rates of interest. The reduced interest rates for the six month periods reflect the same factors as were present in the three month period. Interest Expense. The Company's interest expense for the second quarter of 1998 increased $178 thousand, or 23.6%, to $932 thousand from $754 thousand for the same period last year. For the six months ended June 30, 1998 interest expense increased $277 thousand, or 18.7%, to 1.8 million from $1.5 million for the same period last year. The average balance of interest bearing deposits increased $11.8 million, or 14.5%, from the same period of 1997, with growth in time deposits the largest component of this increase. Interest on time deposits increased $278 thousand for the six months ended June 30, 1998 over the comparable period of 1997. The Company's average cost of funds increased to 3.28% for the second quarter from 3.15% for the second quarter in 1997, reflecting a change in the composition of the Company's deposit portfolio as average time deposits for the six months ended June 30, 1998 increased by $15.9 million compared to the six months ended June 30, 1997. This growth is primarily the result of an increase in the Company's public funds on deposit, representing time deposits over $100,000. The average cost of the interest-bearing deposits increased to 3.75% during the current period, from the 3.71% 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 six months ended June 30, 1998 and 1997. The average balance of loans includes non-accrual loans, and associated yields include loan fees which are considered adjustment to yields.
Comparative Average Balance Sheets Six Months Ended June 30, ---------------------------------------------------------------------------------------- 1998 1997 ----------------------------------------- -------------------------------------- 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) .......................... $ 68,491 2,766 8.16% $ 66,853 $ 2,705 8.07% Tax exempt securities ............ 2,058 40 5.85% 793 17 6.11% Taxable investment securities ... 28,467 838 6.14% 22,499 694 6.16% Interest bearing deposits ........ 100 3 4.65% 0 0 0.00% Federal Funds sold ............... 18,681 388 5.86% 5,595 149 5.41% Total earning assets ............. 117,797 4,025 7.30% 95,740 3,565 7.45% Non-interest earning assets ...... 8,390 8,383 Allowance for possible loan losses .................... (721) (619) Total Assets ............... $ 125,634 $ 103,511 Liabilities and Shareholders' Equity Interest bearing liabilities: NOW deposits ....................... $ 13,283 $ 126 1.94% $ 12,516 $ 117 1.90% Savings deposits ................... 30,097 366 2.64% 27,292 338 2.50% Money market deposits .............. 3,986 52 2.25% 3,598 40 2.24% Time deposits ......................... 49,236 1,218 5.39% 37,304 990 5.38% Total interest bearing liabilities ............. 96,602 1,762 3.75% 80,710 1,485 3.71% Non-interest bearing liabilities: Demand Deposits ................... $ 19,836 $ 14,096 Other liabilities ................. 771 799 Total non-interest bearing liabilities ....................... 20,607 14,895 Shareholders' equity .............. 8,425 7,906 Total liabilities and shareholders' equity........................... 125,634 103,511 ========== ========= New interest differential ......... $ 2,263 $ 2,080 Net yield on interest-earning assets ......................... 4.11% 4.32%
Net-Interest Income. The net effect of the changes in interest income and interest expense for the second quarter of 1998 was an increase of $61 thousand, or 5.8%, in net interest income as compared to the second quarter of 1997. The net interest spread, on a fully taxable equivalent basis, declined 32 basis points from the same period last year. Net interest income for the six months ended June 30, 1998, increased by $157 thousand, or 7.5%, over the same period last year. The net interest spread decreased 22 basis points. Provision for Loan Losses. For the three months ended June 30, 1998, the provision for possible loan losses was $21 thousand compared to the $75 thousand for the same period last year. The provision for possible loan losses was $42 thousand for the six months ended June 30,. 1998, as compared to $150 thousand for the same period last year. The decrease in the provision for loan losses reflects management's judgement concerning the risks inherent in the Company's existing loan portfolio and the size of the allowance necessary to absorb the risks. In setting the provision, management considers the amount and type of lending being undertaken by the Company and economic conditions in the Company's trade area, among other factors. Management reviews the adequacy of its allowance on an ongoing basis and will provide for additional provision in future periods as may be necessary. Non-Interest Income. For the second quarter of 1998, total non-interest income equaled the comparable period of 1997. For the six months ended June 30, 1998, non-interest income increased $18 thousand from the same period in 1997, due primarily to fees generated by the sale of non-deposit products such as annuities and mutual funds. Non-Interest Expense. For the quarter ended June 30, 1998, non-interest expense increased $127 thousand from the same period of 1997. Salaries and employee benefits increased $81 thousand, or 17.7%, as salaries increased $61 thousand and employee benefits increased $20 thousand, reflecting the addition of staff, normal salary increases and benefit increases from the increased cost to provide standard benefits. Furniture and equipment expense increased $4 thousand, or 3.8%, as a result of an increase in depreciation expense. Other expenses increased by $39 thousand, or 15.6%, as a result of increases in the costs to operate the Company's ATM network, increases in legal and professional fees and increase in filing fees attributable to listing on the American Stock Exchange. For the six months ended June 30, 1998, non-interest expense increased $187 thousand, or 10.0%, from the same period last year. Salaries and employee benefits increased $128 thousand, or 13.9%; salaries increased $101 thousand and employee benefits increased $27 thousand. Furniture and equipment expense increased $9 thousand, or 4.4%, which reflects an increase in depreciation expense of $26 thousand as a result of upgrades to the Company's in-house computer system, offset by a decrease in maintenance and repairs of $17 thousand. Other expenses increased $47 thousand. This includes an increase in legal and professional fees of $24 thousand, or 6.8%, and an increase in ATM fees of $10 thousand, or 4.9%. Income Taxes. Income taxes expense increased $26 thousand to $178 thousand for the six months ended June 30, 1998 as compared to $152 thousand for the same period in 1997. The increase in income taxes resulted from higher levels of taxable income in 1998. FINANCIAL CONDITION June 30, 1998 compared to December 31, 1997 Total assets increased to $123.9 million, an increase of $9.6 million, or 8.4%, from total assets of $114.3 million at December 31, 1997. Increases in total assets included increases of $8.7 million in Federal Funds sold, $1.9 million in total securities, $374 thousand in total loans and $541 thousand in premises and equipment and other assets. This was offset by a decrease of $1.8 million in cash and due from banks and intangible assets Total loans at June 30, 1998 increased $541 thousand to $68.4 million from year-end 1997. Within the portfolio, commercial and industrial loans increased $516 thousand to $3 million, and residential and commercial real estate loans declined $856 thousand from year-end 1997, reflecting increased prepayments. The following schedule presents the components of loans, net of unearned income, by type, for each periods presented.
June 30 December 31 1998 1997 ---------------------- ---------------------- Amount Percent Amount Percent ------- ------ ------- ------ (Dollars in Thousands) Commercial and industrial ............... $ 3,060 4.43% $ 2,499 3.67% Real Estate non residential properties 10,915 15.65% 10,665 15.67% Residential properties ............. 50,123 73.70% 51,229 75.30% Construction ........................... 1,393 2.00% 877 1.30% Lease financing ......................... 158 0.22% 0 0 Consumer ............................... 2,760 4.00% 2,765 4.06% ------- ------ ------- ------ Total Loans ............................ $68,409 100.00% $68,035 100.00% ======= ====== ======= ======
At June 10, 1998, federal funds sold increased by $8.7 million over December 31, 1997. The increase is attributable both to the short term investment of public deposits received by the Bank and cash from prepayments and repayments in the investment portfolio exceeding new loan demand. Subsequent to June 30, 1998, the Company reinvested this excess cash in new investment securities. Total average deposits increased $16.2 million, or 16.5%. Time deposits over $100,000 increased by $5.4 million, savings deposits increased by $2.4 million, NOW deposits increased by $817 thousand and demand deposits by $3.3 million. The increase in Time Deposits over $100,000 reflects the Bank's increase in public deposits as the Bank has sought to develop additional loan and deposit relationships through public entities. Management continues to monitor the shift in deposits through its Asset/Liability Committee. The following schedule presents the components of deposits, for each period presented.
June 30, 1998 December 31, 1997 -------------------------- ------------------------ Average Balance % Average Balance % Deposits: NOW deposits ......................... $ 13,410 11.74% $12,593 12.85% Savings deposits ..................... 30,58 26.77% 28,109 28.67% Money market deposits ................ 3,901 3.40% 3,580 3.65% Time deposits ........................ 47,133 41.25% 37,874 38.63% Demand deposits ...................... 19,232 16.84% 15,886 16.20% --------- ------ ------- ------ Total interest-bearing liabilities . $ 114,259 100.00% $98,042 100.00% ========= ====== ======= ======
ASSET QUALITY At June 30, 1998, non-performing loans decreased $107 thousand as compared to December 31, 1997. The following table provides information on risk elements in the loan portfolio:
June 30 December 31 1998 1997 ---- ---- Non-accrual loans ................................ $ 623 $ 730 Non-accrual loans to total loans ................. 0.91% 1.07% Non-performing assets to total assets ............ 0.50% 0.64% Allowance for possible loan losses as a percentage of non-performing loans ...... 85.69% 93.80%
ALLOWANCE FOR POSSIBLE LOAN LOSSES The allowance for possible loan losses is maintained at a level considered adequate by management 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, among other factors. The allowance is increased by provisions charged to expense and reduced by charge-offs, net of recoveries. Although management strives to maintain an allowance it deems adequate, future economic changes, deterioration of borrowers' credit worthiness, and the impact of of examinations by regulatory agencies all could cause changes to the Company's allowance for possible loan losses. At June 30, 1998, the allowance for possible loan losses was $737 thousand, an increase of 6.13% from the $685 thousand at year-end 1997. There were no net- charge-offs for the first half of 1998. LIQUIDITY MANAGEMENT At June 30, 1998, the amount of liquid assets remain at a level management deemed adequate to ensure that contractual liabilities, depositors' withdrawal requirements, and other operational and customer credit needs could be satisfied. At June 30, 1998, liquid investments totaled $20 million, and all mature within 30 days. CAPITAL RESOURCES Total Stockholders' equity increased $249 thousand to $8.8 at June 30, 1998 from $8.6 at year end 1997. The increase was due primarily to net income of $341 thousand for the first six months of 1998. This increase was offset by a cash dividend of $183 thousand. At June 30, 1998, both the Company and the Bank exceeded each of the regulatory capital requirements applicable to it. The table below presents the capital ratios at June 30, 1998 for both the Company and the Bank as well as the minimum regulatory requirements.
Company Required Maximum Minimum Amount Ratio Amount Ratio ------ ----- ------ ----- THE COMPANY: Leverage Capital .......... $8,089 6.57% $3,419 3-5% Tier 1 - Risk Based ....... 8,089 12.74% 2,240 4% Total Risk-Based .......... 8,816 13.88% 4,482 8% THE BANK: Leverage Capital .......... 7,747 6.33% 3,411 3-5% Tier 1 Risk-Based ......... 7,747 12.35% 2,226 4% Total Risk-Based .......... 8,474 13.51% 4,431 8%
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, nor from all such lawsuits in the aggregate. Item 2 Changes in Securities Not applicable Item 3 Defaults Upon Served Securities Not applicable Item 4 Submission of Matters to a Vote of Security Holders On April 22, 1998, the Registrant held its annual meeting of shareholders to elect certain members of the Company's Board of Directors. Nominees for election to the Board of Directors received the following votes: Nominees: For Withhold Authority Broker Non-Vote --- ------------------ --------------- Irvin Ackerson 559,133 518 0 William E. Kulsar 559,160 491 0 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 thereunto duly authorized. SUSSEX BANCORP Date: By: /s/ Candace A. Leatham ------------------------- CANDACE A. LEATHAM Senior Vice President and Chief Financial Officer EX-27 2
9 6-MOS 6-MOS DEC-31-1998 DEC-31-1997 JUN-30-1998 JUN-30-1997 4,029 5,893 100 100 16,525 7,875 0 0 28,433 26,600 2,760 2,706 0 0 67,682 67,351 727 685 123,851 114,257 114,259 104,882 0 0 0 0 0 0 0 0 0 0 5,543 5,412 3,318 3,174 123,851 114,257 2,766 5,517 1,234 1,866 0 0 4,000 7,383 1,763 3,063 1,763 3,063 2,237 4,320 42 210 0 0 2,064 3,753 519 1,101 519 1,101 0 0 0 0 341 708 0.49 1.03 0.48 1.02 0 0 623 730 0 0 164 344 0 0 0 0 0 68 0 1 727 685 727 685 0 0 0 0
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