Sussex Bancorp Announces Fourth Quarter and Full Year Results for 2010

/ Source: GlobeNewswire

FRANKLIN, N.J., Jan. 31, 2011 (GLOBE NEWSWIRE) -- Sussex Bancorp (the "Company") (Nasdaq:SBBX), the holding company for Sussex Bank (the "Bank") today announced net income available to shareholders of $2.2 million, or $0.66 per diluted share, for the year ended December 31, 2010, which amounted to an 8.2% increase in net income over the same period in 2009. The Company attributed the increase in net income to a 9.4% increase in net interest income, which was largely due to a stronger net interest margin.

For the quarter ended December 31, 2010, the Company reported net income of $597 thousand, an increase of $331 thousand, or 124.7%, as compared to the same period in 2009. Basic and diluted earnings per share were $0.18 in the fourth quarter of 2010 compared to $0.08 for same period in 2009. The Company attributed the increase in net income to a $905 thousand decrease in provision for loan losses and a 9.3% increase in net interest income.

Mr. Anthony Labozzetta, Sussex's President and Chief Executive Officer, commented that "In what can be described as a transition year, I am pleased with the advancements that our Company has made in 2010. I am encouraged with the progress in identifying and resolving our non-performing assets, which have shown signs of stabilization. We have also made substantial enhancements to our credit and risk management culture and improved our operational effectiveness. Simultaneously, we have implemented a sales and performance culture to improve and build each of our lines of business, which will improve our core operating performance."

Mr. Labozzetta also stated that "despite the resources and effort used to enhance our culture and operations as well as the efforts and costs to work through our non-performing assets, the Company reported an 8.2% increase in earnings and a return on average assets of 0.46%." 

2010 Highlights

  • (tax equivalent basis) increased $1.4 million to $17.0 million in 2010.
  • (tax equivalent basis) was 3.81% for 2010, up from 3.60% in 2009. The improvement was due to a decline in funding costs for 2010.
  • decreased $124 thousand, or 3.6%, for 2010 as compared to the same period last year.
  • decreased $904 thousand, or 16.4%, to $4.6 million for 2010.  The decrease was driven by declines in gain on the sales of securities, fixed assets and foreclosed real estate in 2009, which were lower in total by $455 thousand for 2010 as compared to 2009. In addition, the Company recorded an other-than-temporary impairment charge on equity securities during the second quarter in 2010 of $171 thousand and insurance commissions were lower by $213 thousand for 2010 due in part to market softness.
  • increased $378 thousand to $15.0 million for 2010. The increase was largely attributed to higher employee related costs, resulting from increases in salary expense of 4.3% and a 14.7% increase in benefits costs.
  • Nonperforming assets as a percent of total assets was 5.57% and 5.70% at December 31, 2010 and 2009, respectively.
  • Nonperforming assets increased by $453 thousand, or 1.8%, to $26.4 million at December 31, 2010.
  • Net charge-offs for 2010 declined $1.3 million to $2.4 million for 2010.
  • The allowance for loan losses totaled $6.4 million at December 31, 2010, or 1.89% of total loans, as compared to $5.5 million, or 1.65% of total loans, at December 31, 2009.
  • of 0.46% for 2010 and 0.43% for 2009.
  • At December 31, 2010 the leverage, Tier I and Total Risk Based Capital ratios for Sussex Bank were 9.04%, 12.37% and 13.63%, respectively, all in excess of the ratios required to be deemed "well-capitalized".

Full Year 2010 Financial Results

Net Interest Income

Net interest income, on a fully taxable equivalent basis, increased $1.4 million, or 8.9%, to $17.0 million for the year ended December 31, 2010, as compared to $15.6 million for 2009. The increase in net interest income was driven by a 21 basis point improvement in the Company's net interest margin to 3.81% for the year ended December 31, 2010. The improvement in the net interest margin was largely due to a 67 basis point decrease in the average rate paid on interest bearing liabilities. In addition, total average earning assets increased by $12.8 million to $445.9 million from $433.1 million for the year ended December 31, 2009. The aforementioned improvement in net interest income was partially offset by a decline in the average rate earned on total earning assets, which decreased 40 basis points to 5.06% in 2010 from 5.46% for 2009.   

Provision for Loan Losses

Provision for loan losses decreased $124 thousand to $3.3 million for the year ended December 31, 2010, as compared to $3.4 million for the same period in 2009. The decline in the provision for loan losses was largely due to non-performing asset levels that were relatively flat for 2010 and a decline in net charge-offs, which decreased  $1.3 million to $2.4 million for 2010.

Non-interest Income

The Company reported non-interest income of $4.6 million for the year ended December 31, 2010 as compared to $5.5 million for the same period in 2009. The decline of $904 thousand was largely due to lower insurance commissions of $213 thousand, a decline in other income of $213 thousand partly attributed to a decrease of $72 thousand in mortgage banking fee income, and a non-cash other than temporary impairment charge of $171 thousand related to an equity portfolio fund during the second quarter of 2010. Also contributing to the decrease in non-interest income for 2010 were declines in gains on the sale of fixed assets, foreclosed assets and securities, which were lower by $203 thousand, $172 thousand, and $82 thousand, respectively, for 2010 as compared to 2009. The aforementioned decline was partly offset by an increase in bank owned life insurance income of $157 thousand for 2010 as compared to 2009. 

Non-interest Expense

The Company's non-interest expenses increased $378 thousand, or 2.6%, to $15.0 million for the year ended December 31, 2010. The growth for 2010 was largely due to an increase of $432 thousand in salaries and employee benefits and an increase in loan collection costs of $54 thousand, or 12.1%, as compared to 2009. The growth in salaries and employee benefits resulted from increases in salary expense of $272 thousand, or 4.3%, and higher benefits costs of $159 thousand, or 14.3%, for 2010 as compared to the prior year. The increase in benefit costs was due in part to higher medical insurance premiums and recruiting costs. The above mentioned increase was partly offset by a decline in write-downs on foreclosed real estate of $215 thousand. 

Fourth Quarter 2010 Financial Results

Net Interest Income

Net interest income, on a fully taxable equivalent basis, increased $379 thousand, or 9.2%, to $4.5 million for the quarter ended December 31, 2010, as compared to $4.1 million for same period in 2009. The increase in net interest income was largely due to growth of $29.9 million in total average earning assets to $453.0 million for the quarter ended December 31, 2010 from $423.1 million for the quarter ended December 31, 2009. In addition, the Company's net interest margin improved 8 basis points to 3.95% for the quarter ended December 31, 2010, which was largely due to a 45 basis point decrease in the average rate paid on interest bearing liabilities. This improvement in net interest income was partially offset by a decline in the average rate earned on total earning assets, which decreased 32 basis points to 5.02% for the fourth quarter of 2010 from 5.46% for the same period in 2009.

Provision for Loan Losses

Provision for loan losses decreased $905 thousand to $916 thousand for the quarter ended December 31, 2010, as compared to $1.8 million for the same period in 2009. The decrease was largely due to two non-performing loans that required an additional $1.0 million in allowance during the fourth quarter of 2009.

Non-interest Income

The Company reported non-interest income of $1.1 million for the quarter ended December 31, 2010, as compared to $1.4 million for the same period in 2009, which amounted to a $334 thousand decrease. The decrease in non-interest income was largely due to declines in gains on the sale of foreclosed assets and securities, which were lower by $224 thousand and $79 thousand, respectively, for the fourth quarter of 2010, as compared to the same period in 2009. In addition, insurance commissions declined $78 thousand for the fourth quarter of 2010, as compared to the same period in 2009. The aforementioned decline was partly offset by an increase in bank-owned life insurance income of $82 thousand for 2010, as compared to 2009. 

Non-interest Expense

The Company's non-interest expenses increased $423 thousand, or 12.5%, to $3.8 million for the quarter ended December 31, 2010. The growth for fourth quarter of 2010 versus the same period in 2009 was largely due to an increase of $191 thousand in salaries and employee benefits and an increase in loan collection costs of $85 thousand, or 77.3%, as compared to 2009.

Financial Condition Comparison for 2010 versus 2009

Balance Sheet

At December 31, 2010, the Company's total assets were $474.0 million, an increase of $19.2 million, or 4.2%, as compared to total assets of $454.8 million at December 31, 2009. The increase in assets was largely driven by growth in deposits. The Company's total deposits increased $13.9 million, or 3.7%, to $386.0 million at December 31, 2010 from $372.1 million at December 31, 2009. The growth in deposits was primarily in core deposits, (non-interest demand, NOW, savings and money market accounts), which increased $23.3 million, or 8.6%, at December 31, 2010, as compared to December 31, 2009. 

The growth in deposits was used to fund loan growth and excess funds were invested into securities and the purchase of additional bank owned life insurance in 2010. The Company's loan portfolio increased $5.2 million to $338.2 million at December 31, 2010 from $333.0 million at December 31, 2009. The Company's security portfolio increased $16.3 million, or 21.4%, to $92.6 million at December 31, 2010, as compared to $76.3 million at December 31, 2009. Bank-owned life insurance increased to $10.1 million at December 31, 2010 due to the Company's purchase of an additional $6.5 million during 2010.  

Capital

At December 31, 2010, the Company's total stockholders' equity was $36.7 million, an increase of $2.2 million, or 6.2%, as compared $34.5 million at December 31, 2009. 

Asset and Credit Quality

Non-performing assets, which include non-accrual loans, renegotiated loans and foreclosed real estate, increased by $453 thousand, or 1.8%, to $26.4 million at December 31, 2010, as compared to $25.9 million at December 31, 2009. On a linked quarter basis, non-performing assets decreased $638 thousand, or 2.4%, from $27.0 million at September 30, 2010. The ratio of non-performing assets to total assets for December 31, 2010 and December 31, 2009 were 5.57% and 5.70%, respectively. The allowance for loan losses was $6.4 million, or 1.89% of total loans, at December 31, 2010, as compared to $5.5 million, or 1.65% of total loans, at December 31, 2009.   

About Sussex Bancorp

Sussex Bancorp is the holding company for Sussex Bank, which operates through its main office in Franklin, New Jersey and through its nine branch offices located 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. For additional information, please visit the company's Web site at www.sussexbank.com.

Forward-Looking Statements

This press release contains statements that are forward-looking and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such statements may be identified by the use of words such as "expect," "estimate," "assume," "believe," "anticipate," "will," "forecast," "plan," "project," or similar words. Such statements are based on the Company's current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, changes to interest rates, the ability to control costs and expenses, general economic conditions, the success of the Company's efforts to diversify its revenue base by developing additional sources of non-interest income while continuing to manage its existing fee based business, risks associated with the quality of the Company's assets and the ability of its borrowers to comply with repayment terms.  Further information about these and other relevant risks and uncertainties may be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and in subsequent filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements that may be made to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.

CONTACT: Anthony Labozzetta, President/CEO Steven Fusco, SVP/CFO 973-827-2914