Sussex Bancorp Reports a 33.3% Increase in EPS to $0.28 for the Third Quarter

ROCKAWAY, N.J., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Sussex Bancorp (the “Company”) (Nasdaq:SBBX), the holding company for Sussex Bank (the “Bank”), today announced a 38.5% increase in net income to $1.3 million, or $0.28 per basic and diluted common share, for the quarter ended September 30, 2016 as compared to $951 thousand, or $0.21 per basic and diluted share, for the same period last year. Also, the Company announced a 43.5% increase in net income to $4.0 million, or $0.87 per basic and $0.86 per diluted share, for the nine months ended September 30, 2016 as compared to $2.8 million or $0.61 per basic and diluted share for the same period last year. The improvement for the third quarter of 2016 as compared to the same period last year was mostly driven by a 24.9% increase in net interest income on a fully tax equivalent basis as a result of strong growth in average loans and deposits, which increased $165.2 million, or 33.9%, and $115.9 million, or 23.3%, respectively. The aforementioned increase in net interest income was partly offset by higher provision for loan losses due to loan growth and an increase in income tax expense.

“I am pleased to report that we produced another quarter of strong financial performance for Sussex Bancorp. These results continue to be driven by our dedicated employees that helped our principal business lines achieve outstanding growth. This growth resulted in an impressive 24.9% increase in net interest income on a fully tax equivalent basis and helped improve our margin 3 basis points on a linked quarter basis,” said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bank. Mr. Labozzetta also stated, “We had exceptional growth in deposits, but even more noteworthy is the pace of growth in our noninterest bearing demand accounts, which grew 28% over last year and have a three year compounded annual growth rate 29%.”

Mr. Labozzetta also added, “It is wonderful that the efforts of our Team has led to Sussex Bank being recognized as one of the 50 Fastest Growing Companies in New Jersey by NJBIZ during the third quarter.”

Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share, which is payable on November 23, 2016 to common shareholders of record as of the close of business on November 9, 2016.

Financial Performance
Net Income. For the quarter ended September 30, 2016, the Company reported net income of $1.3 million, or $0.28 per basic and diluted share, as compared to net income of $951 thousand, or $0.21 per basic and diluted share, for the same period last year. The increase in net income for the quarter ended September 30, 2016 was driven by an $1.3 million, or 24.9%, increase in net interest income on a fully tax equivalent basis resulting from strong loan and deposit growth. The aforementioned was partly offset by an increase in provision for loan losses of $457 thousand due to loan growth and an increase in income taxes due to earnings growth and a higher effective tax rate. In addition, non-interest expenses increased 5.4% mostly due to costs attributed to support the Company’s growth.

Income before income taxes increased $672 thousand, or 51.1%, to $2.0 million for the quarter ended September 30, 2016 as compared to $1.3 million for the same period last year. The Company’s income before income taxes, excluding Tri-State Insurance Agency’s (“Tri-State”), increased $682 thousand, or 58.4%, to $1.8 million for the three months ended September 30, 2016 as compared to $1.2 million for the same period last year. Tri-State’s contribution to the Company’s income before income taxes for the quarter ended September 30, 2016 decreased $10 thousand, or 5.4%, to $164 thousand as compared to the same period last year.

For the nine months ended September 30, 2016, the Company reported a 43.5% increase in net income to $4.0 million, or $0.87 per basic and $0.86 per diluted share as compared to net income of $2.8 million, or $0.61 per basic and diluted share, for the same period last year. The increase in net income for the nine months ended September 30, 2016 was largely due to increases in net interest income on a fully tax equivalent basis of $3.0 million, or 19.8%, and non-interest income of $1.1 million, or 21.1%, which were partially offset by an increase in non-interest expenses of $1.5 million, or 9.8%, and a $548 thousand increase in provision for loan losses. The increase in non-interest expense was largely due to increases in salaries and employee benefits, mostly due to an increase in personnel to support our growth and higher incentive and commission costs related to the Bank’s and Tri-State’s performance, and data processing costs largely resulting from outsourcing of core processing systems.

Income before income taxes increased $2.0 million, or 51.4%, to $6.0 million for the nine months ended September 30, 2016 as compared to $4.0 million for the same period last year. Tri-State’s contribution to the Company’s income before income taxes for the nine months ended September 30, 2016 increased $502 thousand, or 83.4%, to $1.1 million as compared to $602 thousand for the same period last year. The growth was driven by an increase in Tri-State’s commissions and fees that was largely due to an increase in commissions of $496 thousand, or 25.6%, and contingency fee income of $418 thousand, or 124.7%. The aforementioned was partly offset by an increase in non-interest expense of $516 thousand, or 22.8%. The Company’s income before income taxes, excluding Tri-State, increased $1.5 million, or 45.7%, to $4.9 million for the nine months ended September 30, 2016 as compared to the same period last year.

Net Interest Income. Net interest income on a fully tax equivalent basis increased $1.3 million, or 24.9%, to $6.5 million for the third quarter of 2016, as compared to $5.2 million for the same period in 2015. The increase in net interest income was largely due to a $167.9 million, or 28.1%, increase in average interest earning assets, principally loans receivable, which increased $165.2 million, or 33.9%. The improvement in net interest income was partly offset by a decline in the net interest margin of 9 basis points to 3.34% for the third quarter of 2016, as compared to the same period in 2015. The decline in the net interest margin was mostly attributed to a 15 basis point decrease in the average rate earned on loans, which is mostly due to loan growth and loan repricing in a low rate environment. Also included in the net interest margin decrease is a 6 basis point increase in the average rate on interest bearing deposits, which was primarily due to an increase in wholesale funding.

Net interest income on a fully tax equivalent basis increased $3.0 million, or 19.8%, to $18.1 million for the first nine months of 2016 as compared to $15.1 million for the same period in 2015. The increase in net interest income was largely due to a $134.4 million, or 23.1%, increase in average interest earning assets, principally loans receivable and the securities portfolio, which increased $128.9 million, or 27.0% and $3.8 million, or 3.9%, respectively. The Company’s net interest margin was 3.37% and 3.47% for the first nine months of 2016 and 2015, respectively. The decline in net interest margin is due to loan growth and loan repricing in a low rate environment along with an increase in the average rate on interest bearing deposits, primarily due to an increase in wholesale funding.

Provision for Loan Losses. Provision for loan losses increased $457 thousand to $458 thousand for the third quarter of 2016, as compared to the same period in 2015.

Provision for loan losses increased $548 thousand, or 108.3%, to $1.1 million thousand for the first nine months of 2016, as compared to $506 thousand for the same period in 2015. The increases for both periods were mostly attributable to the Company’s loan growth.

Non-interest Income. Non-interest income increased $119 thousand, or 7.2%, to $1.8 million for the third quarter of 2016, as compared to the same period last year. The increase was primarily due to higher insurance commissions and fees, which increased $135 thousand, or 14.1%, for the third quarter of 2016 as compared to the same period in 2015.

The Company reported an increase in non-interest income of $1.1 million, or 21.1%, to $6.1 million for the first nine months of 2016 as compared to the same period last year. The increase in non-interest income was largely due to increases in insurance commissions and fees of $1.0 million. The growth in Tri-State’s commissions and fees was largely due to an increase in commissions of $496 thousand, or 25.6%, and contingency fee income of $418 thousand, or 124.7%.

Non-interest Expense. The Company’s non-interest expenses increased $288 thousand, or 5.4%, to $5.7 million for the third quarter of 2016, as compared to the same period last year. The increase for the third quarter of 2016, as compared to the same period in 2015, was largely due to an increase in salaries and employee benefits of $324 thousand. The aforementioned increases were partly offset by declines in expenses and write-downs related to foreclosed real estate and other expenses of $179 thousand and $127 thousand, respectively.

The Company’s non-interest expenses increased $1.5 million, or 9.8%, to $16.9 million for the first nine months of 2016 as compared to the same period last year. The increase for the first nine months of 2016, as compared to the same period in 2015, was largely due to increases in salaries and employee benefits of $1.2 million, data processing of $375 thousand and furniture and equipment of $119 thousand. The aforementioned increases were partly offset by declines in expenses and write-downs related to foreclosed real estate and other expenses of $159 thousand and $127 thousand, respectively.

The increase in salaries and employee benefits for the third quarter and first nine months of 2016 as compared to the same periods in 2015 was largely due to an increase in personnel to support our growth, including the opening of our Oradell, New Jersey branch in the first quarter of 2016, and higher incentive and commission costs related to the Bank’s and Tri-State’s performance. The aforementioned increases were partly offset by the elimination of our in-house data operations center during the fourth quarter of 2015 and the closing of our Port Jervis, New York branch during the second quarter of 2016. The increase in data processing was largely due to the costs associated with the outsourcing of core processing systems and higher costs related to the Company’s growth and introduction of new products and services during 2016.

Financial Condition
At September 30, 2016, the Company’s total assets were $809.0 million, an increase of $124.5 million, or 18.2%, as compared to total assets of $684.5 million at December 31, 2015. The increase in total assets was largely driven by growth in loans receivable of $119.8 million, or 22.1%.

Total loans receivable, net of unearned income, increased $119.8 million, or 22.1%, to $663.3 million at September 30, 2016, as compared to $543.4 million at December 31, 2015. During the nine months ended September 30, 2016, the Company had $163.5 million in commercial loan production, which was partly offset by $8.6 million in commercial loan payoffs.

The Company’s total deposits increased $107.1 million, or 20.7%, to $624.9 million at September 30, 2016, from $517.9 million at December 31, 2015. The growth in deposits was due to increases in both interest bearing deposits of $67.1 million, or 15.6%, and non-interest bearing deposits of $40.0 million, or 45.9%, at September 30, 2016, as compared to December 31, 2015. Additionally there was an increase in borrowings of $6.8 million, or 7.2%, to $102.5 million at September 30, 2016 from $95.7 million at December 31, 2015 due to substantial loan growth. Included in the aforementioned deposit total is $46.9 million in deposit balances with a cost of 0.59% attributed to our newest branch in Oradell, New Jersey, which opened in the beginning of March, 2016. Also, included is $69.0 million in deposit balances with a cost of 0.42% attributed to our branch in Astoria, New York, which opened in Mid-March of 2015.

At September 30, 2016, the Company’s total stockholders’ equity was $58.6 million, an increase of $4.7 million when compared to December 31, 2015. The increase was largely due to net income for the nine months ended September 30, 2016. At September 30, 2016, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 8.98%, 11.02%, 11.99% and 11.02%, respectively, all in excess of the ratios required to be deemed “well-capitalized.” During the quarter ended September 30, 2016 the Company entered into an unsecured revolving line of credit (“LOC”), in the amount of $5 million, with a floating rate of prime plus 50 basis points and a fee of 25 basis points. The LOC funds were contributed to the Bank’s capital in the third quarter of 2016.

Asset and Credit Quality
The ratio of NPAs, which include non-accrual loans, loans 90 days past due and still accruing, troubled debt restructured loans currently performing in accordance with renegotiated terms and foreclosed real estate, to total assets improved to 1.13% at September 30, 2016 from 1.49% at December 31, 2015. NPAs decreased $1.1 million, or 10.8%, to $9.1 million at September 30, 2016, as compared to $10.2 million at December 31, 2015. Non-accrual loans decreased $729 thousand, or 13.7%, to $4.6 million at September 30, 2016, as compared to $5.3 million at December 31, 2015. The top five non-accrual loan relationships total $3.0 million, which equates to 64.8% of total non-accrual loans and 32.6% of total NPAs at September 30, 2016. The remaining non-accrual loans at September 30, 2016 have an average loan balance of $85 thousand. Loans past due 30 to 89 days increased $4.8 million to approximately $7.6 million at September 30, 2016, as compared to $2.8 million at December 31, 2015. Included in the $4.8 million increase was $3.5 million in matured loans, of which $2.6 million were renewed in the fourth quarter of 2016.

The Company continues to actively market its foreclosed real estate properties, which decreased $349 thousand to $3.0 million at September 30, 2016, as compared to $3.4 million at December 31, 2015. At September 30, 2016, the Company’s foreclosed real estate properties had an average carrying value of approximately $300 thousand per property.

The allowance for loan losses increased by $741 thousand, or 13.3%, to $6.3 million, or 0.95% of total loans, at September 30, 2016, compared to $5.6 million, or 1.03% of total loans, at December 31, 2015. The Company recorded $1.1 million in provision for loan losses for the nine months ended September 30, 2016. Additionally, the Company recorded net charge-offs of $313 thousand for the nine months ended September 30, 2016, as compared to $506 thousand in net charge-offs for the nine months ended September 30, 2015. The allowance for loan losses as a percentage of non-accrual loans increased to 138.1% at September 30, 2016 from 105.2% at December 31, 2015.

About Sussex Bancorp
Sussex Bancorp is the holding company for Sussex Bank, which operates through its regional offices and corporate centers in Wantage and Rockaway, New Jersey, its eleven branch offices located in Andover, Augusta, Franklin, Hackettstown, Newton, Montague, Sparta, Vernon, Oradell and Wantage, New Jersey, and Astoria, New York, and a loan production office in Oradell, New Jersey, and for the Tri-State Insurance Agency, Inc., a full service insurance agency with locations in Augusta and Oradell, New Jersey. For additional information, please visit the Company’s website 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. 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, 2015 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.


SUSSEX BANCORP
SUMMARY FINANCIAL HIGHLIGHTS
(In Thousands, Except Percentages and Per Share Data)
(Unaudited)
9/30/2016 VS.
9/30/2016 12/31/2015 9/30/2015 9/30/2015 12/31/2015
BALANCE SHEET HIGHLIGHTS - Period End Balances
Total securities $ 98,258 $ 100,610 $ 100,559 (2.3)% (2.3)%
Total loans 663,258 543,423 501,203 32.3 % 22.1 %
Allowance for loan losses (6,331) (5,590) (5,641) 12.2 % 13.3 %
Total assets 808,987 684,503 644,019 25.6 % 18.2 %
Total deposits 624,921 517,856 502,509 24.4 % 20.7 %
Total borrowings and junior subordinated debt 120,387 108,537 84,187 43.0 % 10.9 %
Total shareholders' equity 58,633 53,941 53,146 10.3 % 8.7 %
FINANCIAL DATA - QUARTER ENDED:
Net interest income (tax equivalent) (a) $ 6,453 $ 5,414 $ 5,166 24.9 % 19.2 %
Provision for loan losses 458 130 1 45,700.0 % 252.3 %
Total other income 1,774 1,396 1,655 7.2 % 27.1 %
Total other expenses 5,651 5,198 5,363 5.4 % 8.7 %
Income before provision for income taxes (tax equivalent) 2,118 1,482 1,457 45.4 % 42.9 %
Provision for income taxes 696 450 390 78.5 % 54.7 %
Taxable equivalent adjustment (a) 105 119 116 (9.5)% (11.8)%
Net income $ 1,317 $ 913 $ 951 38.5 % 44.2 %
Net income per common share - Basic $ 0.28 $ 0.20 $ 0.21 33.3 % 40.0 %
Net income per common share - Diluted $ 0.28 $ 0.20 $ 0.21 33.3 % 40.0 %
Return on average assets 0.66 % 0.55 % 0.60 % 8.9 % 19.7 %
Return on average equity 9.06 % 6.79 % 7.22 % 25.4 % 33.5 %
Efficiency ratio (b) 69.58 % 77.69 % 79.99 % (13.0)% (10.4)%
Net interest margin (tax equivalent) 3.34 % 3.39 % 3.43 % (2.6)% (1.5)%
Avg. interest earning assets/Avg. interest bearing liabilities 1.25 1.24 1.24 1.0 % 1.0 %
FINANCIAL DATA - YEAR TO DATE:
Net interest income (tax equivalent) (a) $ 18,109 $ 15,111 19.8 %
Provision for loan losses 1,054 506 108.3 %
Total other income 6,124 5,057 21.1 %
Total other expenses 16,859 15,355 9.8 %
Income before provision for income taxes (tax equivalent) 6,320 4,307 46.7 %
Provision for income taxes 2,022 1,190 69.9 %
Taxable equivalent adjustment (a) 298 330 (9.7)%
Net income $ 4,000 $ 2,787 43.5 %
Net income per common share - Basic $ 0.87 $ 0.61 42.6 %
Net income per common share - Diluted $ 0.86 $ 0.61 41.0 %
Return on average assets 0.71 % 0.60 % 17.5 %
Return on average equity 9.41 % 7.10 % 32.6 %
Efficiency ratio (b) 70.44 % 77.40 % (9.0)%
Net interest margin (tax equivalent) 3.37 % 3.47 % (2.9)%
Avg. interest earning assets/Avg. interest bearing liabilities 1.24 1.22 1.7 %
SHARE INFORMATION:
Book value per common share $ 12.37 $ 11.61 $ 11.44 8.1 % 6.5 %
Tangible book value per common share 11.77 11.00 10.83 8.6 % 7.0 %
Outstanding shares- period ending 4,741,720 4,646,238 4,645,387 2.1 % 2.1 %
Average diluted shares outstanding (year to date) 4,633,473 4,591,822 4,591,700 0.9 % 0.9 %
CAPITAL RATIOS:
Total equity to total assets 7.25 % 7.88 % 8.25 % (12.2)% (8.0)%
Leverage ratio (c) 8.98 % 9.45 % 9.82 % (8.6)% (5.0)%
Tier 1 risk-based capital ratio (c) 11.02 % 11.74 % 12.39 % (11.1)% (6.1)%
Total risk-based capital ratio (c) 11.99 % 12.79 % 13.52 % (11.3)% (6.3)%
Common equity Tier 1 capital ratio (c) 11.02 % 11.74 % 12.39 % (11.1)% (6.1)%
ASSET QUALITY:
Non-accrual loans $ 4,583 $ 5,312 $ 5,682 (19.3)% (13.7)%
Loans 90 days past due and still accruing 386 - - - % - %
Troubled debt restructured loans ("TDRs") (d) 1,142 1,553 1,562 (26.9)% (26.5)%
Foreclosed real estate 3,005 3,354 3,335 (9.9)% (10.4)%
Non-performing assets ("NPAs") $ 9,116 $ 10,219 $ 10,579 (13.8)% (10.8)%
Foreclosed real estate, criticized and classified assets $ 19,777 $ 20,778 $ 20,167 (1.9)% (4.8)%
Loans past due 30 to 89 days $ 7,580 $ 2,823 $ 2,436 211.2 % 168.5 %
Charge-offs, net (quarterly) $ 115 $ 181 $ 112 2.7 % (36.5)%
Charge-offs, net as a % of average loans (annualized) 0.07 % 0.14 % 0.09 % (23.3)% (49.3)%
Non-accrual loans to total loans 0.69 % 0.98 % 1.13 % (39.0)% (29.3)%
NPAs to total assets 1.13 % 1.49 % 1.64 % (31.4)% (24.5)%
NPAs excluding TDR loans (d) to total assets 0.99 % 1.27 % 1.40 % (29.6)% (22.1)%
Non-accrual loans to total assets 0.57 % 0.78 % 0.88 % (35.8)% (27.0)%
Allowance for loan losses as a % of non-accrual loans 138.14 % 105.23 % 99.28 % 39.1 % 31.3 %
Allowance for loan losses to total loans 0.95 % 1.03 % 1.13 % (15.2)% (7.2)%
(a) Full taxable equivalent basis, using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance
(b) Efficiency ratio calculated non-interest expense divided by net interest income plus non-interest income
(c) Sussex Bank capital ratios
(d) Troubled debt restructured loans currently performing in accordance with renegotiated terms

SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
ASSETSSeptember 30, 2016 December 31, 2015
Cash and due from banks$4,355 $2,914
Interest-bearing deposits with other banks 8,055 3,206
Cash and cash equivalents 12,410 6,120
Interest bearing time deposits with other banks 100 100
Securities available for sale, at fair value 91,630 93,776
Securities held to maturity 6,628 6,834
Federal Home Loan Bank Stock, at cost 5,633 5,165
Loans receivable, net of unearned income 663,258 543,423
Less: allowance for loan losses 6,331 5,590
Net loans receivable 656,927 537,833
Foreclosed real estate 3,005 3,354
Premises and equipment, net 8,945 8,879
Accrued interest receivable 1,797 1,764
Goodwill 2,820 2,820
Bank-owned life insurance 12,749 12,524
Other assets 6,343 5,334
Total Assets$808,987 $684,503
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing$127,198 $87,209
Interest bearing 497,723 430,647
Total Deposits 624,921 517,856
Borrowings 107,500 95,650
Accrued interest payable and other liabilities 5,046 4,169
Junior subordinated debentures 12,887 12,887
Total Liabilities 750,354 630,562
Total Stockholders' Equity 58,633 53,941
Total Liabilities and Stockholders' Equity$808,987 $684,503

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
INTEREST INCOME
Loans receivable, including fees$6,971 $5,390 $19,575 $15,837
Securities:
Taxable 396 321 1,116 890
Tax-exempt 201 231 592 660
Interest bearing deposits 7 1 17 8
Total Interest Income 7,575 5,943 21,300 17,395
INTEREST EXPENSE
Deposits 619 448 1,830 1,302
Borrowings 508 390 1,393 1,150
Junior subordinated debentures 100 55 266 162
Total Interest Expense 1,227 893 3,489 2,614
Net Interest Income 6,348 5,050 17,811 14,781
PROVISION FOR LOAN LOSSES 458 1 1,054 506
Net Interest Income after Provision for Loan Losses 5,890 5,049 16,757 14,275
OTHER INCOME
Service fees on deposit accounts 245 230 726 656
ATM and debit card fees 190 198 577 573
Bank owned life insurance 74 78 225 235
Insurance commissions and fees 1,090 955 3,850 2,846
Investment brokerage fees (10) 40 67 103
Gain on securities transactions 89 11 361 267
(Loss) on disposal of fixed assets - - (19) 8
Other 96 143 337 369
Total Other Income 1,774 1,655 6,124 5,057
OTHER EXPENSES
Salaries and employee benefits 3,243 2,919 9,672 8,488
Occupancy, net 463 410 1,399 1,330
Data processing 529 468 1,626 1,251
Furniture and equipment 248 221 764 645
Advertising and promotion 63 65 254 225
Professional fees 219 161 570 480
Director fees 159 105 378 418
FDIC assessment 138 120 379 368
Insurance 67 69 213 189
Stationary and supplies 47 49 149 154
Loan collection costs 24 19 109 175
Expenses and write-downs related to foreclosed real estate 98 277 317 476
Other 353 480 1,029 1,156
Total Other Expenses 5,651 5,363 16,859 15,355
Income before Income Taxes 2,013 1,341 6,022 3,977
INCOME TAX EXPENSE 696 390 2,022 1,190
Net Income $1,317 $951 $4,000 $2,787
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains on available for sale securities arising during the period$(575) $1,024 $1,986 $174
Fair value adjustments on derivatives 190 - (1,359) -
Reclassification adjustment for net gain on securities transactions included in net income (89) (11) (361) (267)
Income tax related to items of other comprehensive income (loss) 190 (405) (106) 37
Other comprehensive income, net of income taxes (284) 608 160 (56)
Comprehensive income$1,033 $1,559 $4,160 $2,731
EARNINGS PER SHARE
Basic$0.28 $0.21 $0.87 $0.61
Diluted$0.28 $0.21 $0.86 $0.61

SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
Three Months Ended September 30,
2016
2015
Average Average Average Average
Balance Interest Rate (2) Balance Interest Rate (2)
Earning Assets:
Securities:
Tax exempt (3) $31,849 $306 3.81% $34,371 $347 4.01%
Taxable 71,496 396 2.20% 69,546 321 1.83%
Total securities 103,345 702 2.69% 103,917 668 2.55%
Total loans receivable (1) (4) 652,766 6,971 4.24% 487,545 5,390 4.39%
Other interest-earning assets 9,445 7 0.29% 6,236 1 0.06%
Total earning assets 765,556 7,680 3.98% 597,698 6,059 4.02%
Non-interest earning assets 41,759 37,918
Allowance for loan losses (6,141) (5,677)
Total Assets $801,174 $629,939
Sources of Funds:
Interest bearing deposits:
NOW $144,840 $78 0.21% $129,487 $57 0.17%
Money market 37,881 39 0.41% 18,504 10 0.21%
Savings 137,455 72 0.21% 138,020 70 0.20%
Time 166,847 430 1.02% 120,397 311 1.02%
Total interest bearing deposits 487,023 619 0.50% 406,408 448 0.44%
Borrowed funds 111,493 508 1.81% 62,586 390 2.47%
Junior subordinated debentures 12,887 100 3.07% 12,887 55 1.69%
Total interest bearing liabilities 611,403 1,227 0.80% 481,881 893 0.74%
Non-interest bearing liabilities:
Demand deposits 126,783 91,454
Other liabilities 4,843 3,934
Total non-interest bearing liabilities 131,626 95,388
Stockholders' equity 58,145 52,670
Total Liabilities and Stockholders' Equity $801,174 $629,939
Net Interest Income and Margin (5) 6,453 3.34% 5,166 3.43%
Tax-equivalent basis adjustment (105) (116)
Net Interest Income $6,348 $5,050
(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
SUSSEX BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
Nine Months Ended September 30,
2016
2015
Average Average Average Average
Balance Interest Rate (2) Balance Interest Rate (2)
Earning Assets:
Securities:
Tax exempt (3) $30,402 $890 3.91% $33,050 $990 4.00%
Taxable 70,195 1,116 2.12% 63,765 890 1.87%
Total securities 100,597 2,006 2.66% 96,815 1,880 2.60%
Total loans receivable (1) (4) 607,044 19,575 4.31% 478,151 15,837 4.43%
Other interest-earning assets 9,154 17 0.25% 7,396 8 0.14%
Total earning assets 716,795 21,598 4.02% 582,362 17,725 4.07%
Non-interest earning assets 40,063 37,958
Allowance for loan losses (5,894) (5,719)
Total Assets $750,964 $614,601
Sources of Funds:
Interest bearing deposits:
NOW $142,911 $229 0.21% $128,686 $162 0.17%
Money market 34,902 105 0.40% 16,332 23 0.19%
Savings 138,174 214 0.21% 139,828 212 0.20%
Time 157,235 1,282 1.09% 117,025 905 1.03%
Total interest bearing deposits 473,222 1,830 0.52% 401,871 1,302 0.43%
Borrowed funds 89,803 1,393 2.07% 61,179 1,150 2.51%
Junior subordinated debentures 12,887 266 2.75% 12,887 162 1.68%
Total interest bearing liabilities 575,912 3,489 0.81% 475,937 2,614 0.73%
Non-interest bearing liabilities:
Demand deposits 113,504 82,391
Other liabilities 4,890 3,926
Total non-interest bearing liabilities 118,394 86,317
Stockholders' equity 56,658 52,347
Total Liabilities and Stockholders' Equity $750,964 $614,601
Net Interest Income and Margin (5) 18,109 3.37% 15,111 3.47%
Tax-equivalent basis adjustment (298) (330)
Net Interest Income $17,811 $14,781
(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

SUSSEX BANCORP
Segment Reporting
(Dollars In Thousands)
(Unaudited)
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015
Banking and Banking and
Financial Insurance Financial Insurance
Services Services Total Services Services Total
Net interest income from external sources$6,348 $- $6,348 $5,050 $- $5,050
Other income from external sources 707 1,067 1,774 694 961 1,655
Depreciation and amortization 282 8 290 245 4 249
Income before income taxes 1,848 165 2,013 1,168 173 1,341
Income tax expense (1) 630 66 696 321 69 390
Total assets 803,032 5,955 808,987 639,563 4,456 644,019
Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015
Banking and Banking and
Financial Insurance Financial Insurance
Services Services Total Services Services Total
Net interest income from external sources$17,811 $- $17,811 $14,781 $- $14,781
Other income from external sources 2,274 3,850 6,124 2,195 2,862 5,057
Depreciation and amortization 815 21 836 731 15 746
Income before income taxes 4,918 1,104 6,022 3,376 601 3,977
Income tax expense (1) 1,580 442 2,022 950 240 1,190
Total assets 803,032 5,955 808,987 639,563 4,456 644,019
(1) Calculated at statutory tax rate of 40%

Contacts: Anthony Labozzetta, President/CEO Steven Fusco, SEVP/CFO 844-256-7328

Source:Sussex Bancorp