Sussex Bancorp Announces Second Quarter 2006 Earnings

Declares Quarterly Cash Dividend of $0.07 Per Share 


FRANKLIN, N.J., July 20  /PRNewswire-FirstCall/ -- Sussex Bancorp (AMEX:SBB) today announced its financial results for the second quarter ending June  30, 2006.

For the quarter ended June 30, 2006, the Company earned net income of $652,000 compared to net income of $666,000 reported for the second quarter of 2005. For the six months ended June 30, 2006, the Company earned net income of $1,248,000, an increase of $62,000, or 5.2%, from the $1,186,000 earned for the same period last year.  Basic earnings per share for the three and six months ended June 30, 2006 were $0.21 and $0.40 respectively, compared to $0.21 and $0.38 for the respective comparable periods of 2005.  Diluted earnings per share were $0.20 and $0.39 respectively for the three and six months ended June 30, 2006, compared to $0.21 and $0.37 in the respective comparable periods of 2005. While the Company's net interest income and other income both increased in the three and six month periods ended June 30, 2006 compared to the prior year, the Company incurred increases in its other expenses related to its acquisition of a new office in Port Jervis, New York on March 24 and additional consulting fees and other expenses associated with preparing for compliance with Sarbanes-Oxley section 404.

The Company's net interest income increased to $3,051,000 for the quarter ended June 30, 2006 from $2,742,000 for the second quarter of 2005.  The Company's interest income increased to $4,876,000 for the quarter ended June 30, 2006 from $3,684,000 for the second quarter of 2005.   The Company's interest expense increased to $1,825,000 for the three months ended June 30, 2006 from $942,000 for the second quarter of 2005.  For the six months ended June 30, 2006, the Company's net interest income increased to $5,966,000 from the $5,378,000 earned for the same period last year.  For the six months ended June 30, 2006, the Company's interest income increased to $9,457,000 from $7,107,000 for the period ended June 30, 2005.  The Company's total deposits increased to $277.3 million at June 30, 2006 from $236.3 million at June 30, 2005.  At June 30, 2006 the Company had total assets of $331.3 million, compared to total assets of $290.4 million at June 30, 2005.

The loan loss provision for the second quarter was $229,000 compared to $206,000 for the same period last year.  The Company's total loans increased $57.8 million to $244.1 million at June 30, 2006 from $186.3 million at June 30, 2005.

The Company also experienced increases in non-interest income in both the current quarter and year to date periods compared to 2005.  The Company reported non-interest income of $1,369,000 and $2,660,000 for the current three and six month periods, respectively, compared to non-interest income of $1,324,000 and $2,425,000 for the three and six month periods ending June 30, 2005.  For the three and six month periods ending June 30, 2006, $348,000 and $668,000, respectively, of the non-interest income represented service charges on deposit accounts. Insurance commissions for the three and six month periods ended June 30, 2006 were $688,000 and $1,421,000, respectively.

The Company's other expenses increased in the three and six month periods of 2006 compared to the prior year periods.  For the three month period ending June 30, other expenses increased by $307 thousand, or 10.5%, while other expenses increased by $533 thousand, or 9.2%, for the six months ended June 30, 2006 compared to the prior year periods. On March 24th the bank purchased a branch of NBT Bank in Port Jervis, New York.  The increases in other expenses related to increases in salaries and employee benefits, occupancy expenses from the addition of Port Jervis branch and professional fees increased in relations to cost attributable to Sarbanes Oxley 404.

Sussex Bancorp also announced that its Board of Directors declared a cash dividend of $0.07 per share, payable on August 28, 2006 to shareholders of record as of August 4, 2006.

Sussex Bancorp is the holding company for Sussex Bank, which operates through its main office in Franklin, New Jersey and branch offices in Andover, Augusta, Newton, Montague, Sparta, Vernon and Wantage, New Jersey, Port Jervis, New York 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)

                                      June 30,     June 30,     December 31,
  ASSETS                                2006         2005          2005
                                    (unaudited)  (unaudited)

  Cash and due from banks             $10,442      $14,186          $11,395
  Federal funds sold                    2,670        2,195           13,385
    Cash and cash equivalents          13,112       16,381           24,780

  Interest bearing time deposits
   with other banks                       100          500              500
  Securities available for sale        57,814       72,652           61,180
  Federal Home Loan Bank Stock,
   at cost                                964          700            1,025

  Loans receivable, net of
   unearned income                    244,061      186,278          211,335
    Less:  allowance for loan
     losses                             3,040        2,158            2,615
       Net loans receivable           241,021      184,120          208,720

  Premises and equipment, net           6,909        5,830            6,619
  Accrued interest receivable           1,497        1,567            1,778
  Other assets                          9,842        8,696            8,580

  Total Assets                       $331,259     $290,446         $313,182

  LIABILITIES AND STOCKHOLDERS'
   EQUITY

  Liabilities:
     Deposits:
      Non-interest bearing            $34,234      $36,719          $39,148
      Interest bearing                243,063      199,613          217,699
     Total Deposits                   277,297      236,332          256,847

  Borrowings                           13,276       14,000           16,300
  Accrued interest payable and
   other liabilities                    2,077        2,365            1,956
  Junior subordinated
   debentures                           5,155        5,155            5,155

  Total Liabilities                   297,805      257,852          280,258

  Total Stockholders' Equity           33,454       32,594           32,924

  Total Liabilities and
   Stockholders' Equity              $331,259     $290,446         $313,182



                              SUSSEX BANCORP
                    CONSOLIDATED STATEMENTS OF INCOME
                          (Dollars In Thousands)
                               (Unaudited)

                                   Three Months Ended     Six Months Ended
                                        June 30,               June 30,
                                    2006        2005       2006       2005
  INTEREST INCOME
   Loans receivable, including
    fees                          $4,217      $2,869     $8,030     $5,489
   Securities:
     Taxable                         349         433        702        880
     Tax-exempt                      259         299        520        592
   Federal funds sold                 46          79        195        119
   Interest bearing deposits           5           4         10         27
       Total Interest Income       4,876       3,684      9,457      7,107

  INTEREST EXPENSE
   Deposits                        1,548         695      2,920      1,273
   Borrowings                        168         161        359        292
   Junior subordinated
    debentures                       109          86        212        164
       Total Interest Expense      1,825         942      3,491      1,729

       Net Interest Income         3,051       2,742      5,966      5,378
  PROVISION FOR LOAN LOSSES          229         206        445        341
       Net Interest Income
        after Provision for
        Loan Losses                2,822       2,536      5,521      5,037

  OTHER INCOME
   Service fees on deposit
    accounts                         348         315        668        551
   ATM and debit card fees            97          86        179        169
   Insurance commissions and
    fees                             688         622      1,421      1,217
   Investment brokerage fees          88          66        140        130
   Other                             148         235        252        358
       Total Other Income          1,369       1,324      2,660      2,425

  OTHER EXPENSES
   Salaries and employee
    benefits                       1,756       1,609      3,395      3,203
   Occupancy, net                    259         233        530        488
   Furniture, equipment and
    data processing                  297         271        575        522
   Stationary and supplies            45          40         96         88
   Professional fees                 167         134        345        249
   Advertising and promotion         145         150        330        266
   Insurance                          46          46        104         88
   Postage and freight                60          45        112         90
   Amortization of intangible
    assets                            40          63         73        127
   Other                             414         331        798        704
       Total Other Expenses        3,229       2,922      6,358      5,825

       Income before Income
        Taxes                        962         938      1,823      1,637
  PROVISION FOR INCOME TAXES         310         272        575        451
       Net Income                   $652        $666     $1,248     $1,186


                              SUSSEX BANCORP
         COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
                 Six Months Ended June 30, 2006 and 2005
                          (Dollars In Thousands)

  (dollars in
   thousands)                    2006                        2005
                      Average  Interest Average    Average Interest Average
  Earning Assets:     Balance    (1)    Rate (2)   Balance   (1)    Rate (2)
  Securities:
    Tax exempt(3)     $24,171    $708    5.91 %    $27,749   $845    6.14 %
    Taxable            35,752     702    3.96 %     47,954    880    3.70 %
  Total securities     59,923   1,410    4.74 %     75,703  1,725    4.60 %
  Total loans
   receivable (4)     227,472   8,030    7.12 %    169,676  5,489    6.52 %
  Other interest-
   earning assets       9,083     205    4.55 %     11,098    146    2.64 %
  Total earning
   assets             296,478  $9,645    6.56 %    256,477 $7,360    5.79 %

  Non-interest
   earning assets      25,213                       23,813
  Allowance for loan
   losses              (2,804)                      (2,051)
  Total Assets       $318,887                     $278,239

  Sources of Funds:
  Interest bearing
   deposits:
    NOW               $52,470    $500    1.92 %    $42,573   $124    0.59 %
    Money market       27,873     511    3.70 %     21,143    199    1.90 %
    Savings            49,171     206    0.84 %     65,214    226    0.70 %
    Time               91,556   1,703    3.75 %     62,039    724    2.35 %
  Total interest
   bearing deposits   221,070   2,920    2.66 %    190,969  1,273    1.34 %
    Borrowed funds     14,786     359    4.83 %     12,484    292    4.65 %
    Junior
     subordinated
     debentures         5,155     213    8.20 %      5,155    164    6.32 %
  Total interest
   bearing
   liabilities        241,011  $3,491    2.92 %    208,608 $1,729    1.67 %

  Non-interest
   bearing
   liabilities:
    Demand deposits    42,561                       36,295
    Other
     liabilities        1,965                        1,451
  Total non-interest
   bearing
   liabilities         44,526                       37,746
  Stockholders'
   equity              33,351                       31,885
  Total Liabilities
   and Stockholders'
   Equity            $318,887                     $278,239

  Net Interest
   Income and
   Margin (5)                  $6,154    4.19 %            $5,631    4.43 %

  (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


DATASOURCE: Sussex Bancorp



CONTACT:  Candace Leatham, Executive Vice President & Treasurer,

[phone]



Web site:  http://www.sussexbank.com/ 

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