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 March 31, 2000
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
- --------------------------------------------------------------------------------
(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 May 1, 2000 there were 1,423,269 shares of common stock, no par value,
outstanding.
<PAGE>
SUSSEX BANCORP
FORM 10-QSB
INDEX
Part I - Financial Information Page(s)
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
3
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(in Thousands, Except Share Data)
(Unaudited)
ASSETS March 31, 2000 December 31, 1999
- ------ -------------- -----------------
<S> <C> <C>
Cash and Due from Banks $ 7,062 $ 5,623
Federal Funds Sold 4,000 4,000
Interest Bearing Deposits 168 130
Time Deposits in Other Banks 2,279 2,280
Securities:
Available for Sale, at Market Value 36,476 38,595
Held to maturity 6,456 7,929
--------- ---------
Total Securities 42,932 46,524
Loans held for sale 1,149 772
Loans (Net of Unearned Income) 87,138 84,834
Less: Allowance for Possible Loan Losses 886 837
--------- ---------
Net Loans 86,252 83,997
Premises and Equipment, Net 4,042 3,610
Federal Home Loan Bank Stock 693 693
Intangible Assets, Primarily Core Deposit Premiums 598 619
Other Assets 1,934 1,878
--------- ---------
Total Assets $ 151,109 $ 150,126
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 22,694 $ 24,357
Savings 68,031 68,187
Time 44,441 46,004
--------- ---------
Total Deposits 135,166 138,548
Fed Funds Purchased 6,170 1,990
Other Liabilities 617 499
--------- ---------
Total Liabilities 141,953 141,037
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Stockholders' Equity:
Common Stock, No Par Value
Authorized 5,000,000 Shares, issued and outstanding
1,423,269 in 2000 and 1,420,899 in 1999, 5,708 5,687
respectively
Retained Earnings 4,250 4,136
Treasury Stock (71) (71)
Net Unrealized (Loss) on Securities
Available for Sale, net of income taxes (731) (663)
--------- ---------
Total Stockholders' Equity 9,156 9,089
Total Liabilities and Stockholders' Equity $ 151,109 $ 150,126
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Share Data)
(Unaudited)
Three Months Ended
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 1,731 $ 1,406
Interest on Interest Earning Deposits 33 2
Interest on Securities:
Taxable 571 439
Exempt from Federal Income Tax 87 85
Interest on Federal Funds Sold 57 199
----------- -----------
Total Interest Income 2,479 2,131
INTEREST EXPENSE Interest on Deposits:
Interest on Savings Deposits 506 378
Interest on Time Deposits 550 669
----------- -----------
Total Interest Expense on Deposits 1,056 1,047
Interest Expense on Federal Funds Purchased 67 0
----------- -----------
Total Interest Expense 1,123 1,047
Net Interest Income 1,356 1,084
Provision for Possible Loan Losses 48 33
----------- -----------
Net Interest Income After Provision for Loan Losses 1,308 1,051
NON-INTEREST INCOME
Trust Income (2) 1
Service charges on Deposit Accounts 110 112
Other Income 82 183
----------- -----------
Total Non-Interest Income 190 296
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NON-INTEREST EXPENSE
Salaries and Employee Benefits 672 573
Occupancy Expense, Net 108 94
Furniture and Equipment Expense 132 120
Data Processing Expense 22 20
Amortization of Intangibles 21 21
Other Expenses 285 279
----------- -----------
Total Non-Interest Expense 1,240 1,107
Income Before Provision for Income Taxes 258 240
Provision for Income Taxes 58 48
----------- -----------
Net Income $ 200 $ 192
=========== ===========
Net Income Per Common Share-Basic and Diluted $ 0.14 $ 0.13
=========== ===========
Weighted Average Shares Outstanding-Basic 1,422,644 1,423,228
Weighted Average Shares Outstanding-Diluted 1,432,695 1,440,136
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
<TABLE>
<CAPTION>
SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
(Unaudited)
Three Months Ended March 31,
----------------------------
2000 1999
---- ----
<S> <C> <C>
Net Income $ 200 $ 192
Other comprehensive income,
Net of tax
Unrealized gain (loss) on available-for-sale
Securities (68) (126)
----- -----
Comprehensive income $ 132 $ 66
----- -----
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SUSSEX BANCORP
CONSOLIDATED STATEMENTS 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
----- -------- --------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1999 $5,687 $4,136 ($71) ($663) $9,089
Net Income for the Period 200 200
Cash Dividends (85) (85)
Shares issued through dividend
reinvestment plan 20 20
Change in unrealized gain on
securities, available for sale (68) (68)
---- ------ ---- ----- ------
Balance March 31, 2000 $5,707 $4,251 ($71) ($731) $9,156
====== ====== ==== ===== ======
</TABLE>
See Notes to Consolidated Financial Statements
7
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
Three
Months Ended
March 31,
2000 1999
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 200 $ 192
Adjustments to reconcile net income
to net cash provided by Operating
Activities:
Depreciation and Amortization of Premises and Equipment 108 98
Amortization of Intangible Assets 21 21
Premium amortization (discount accretion) of securities, 33 39
net
Provision for Possible Loan Loses 48 26
(Gain) on Sale of Securities, Available for Sale 0 (3)
Accretion (amortization) of Loan origination and (9) 8
commitment fees, net
Decrease (Increase) Loans Held for Sale (377) 239
Deferred Federal income tax benefit (increase) (1) (25)
Decrease (Increase) in Accrued Interest Receivable 10 (299)
Decrease (Increase) in Other Assets (20) (112)
(Decrease) Increase in Accrued Interest and Other Liabilities 118 77
-------- --------
Net Cash Provided by Operating Activities $ 131 $ 261
-------- --------
Cash Flow from Investing Activities:
Securities Available for Sale:
Proceeds from Maturities and Paydowns 1,984 1,522
Proceeds from Sales/Calls Prior to 0 507
Maturity
Purchases 0 (10,405)
Securities Held to maturity:
Proceeds from Maturities 2,113 0
Purchases (650) (3,478)
Net Increase in Loans Outstanding (2,294) (1,095)
Capital Expenditures (540) (71)
Net Increase (Decrease) in Other Real Estate 0 (7)
-------- --------
Net Cash Provided by (used in)
Investing Activities $ 613 ($13,027)
-------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Cash Flows from Financing Activities:
Net (Decrease) Increase Total Deposits (3,382) 2,129
Net Increase in Federal Funds Purchased 4,180 0
Exercise of stock options 0 10
Payment of dividends net of reinvestment (65) (28)
Purchase of Treasury Stock 0 (4)
-------- --------
Net Cash Provided by
Financing Activities $ 733 $ 2,107
-------- --------
Net increase (Decrease) in Cash and
Cash Equivalents $ 1,477 ($10,659)
Cash and Cash Equivalents,
Beginning of Period 9,753 30,660
-------- --------
Cash and Cash Equivalents,
End of Period $ 11,230 $ 20,001
======== ========
</TABLE>
8
<PAGE>
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 the holding company for the Sussex County State
Bank ("the Bank"). The Bank is the only active subsidiary of the Company at
March 31, 2000. The Bank operates eight 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,
1999.
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):
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
------------------------ ------------------------
Amortized Market Amortized Market
Cost Value Cost Value
------- ------- ------- -------
<S> <C> <C> <C> <C>
Available For Sale
US Treasury securities $ 5,561 $ 5,420 $ 5,567 $ 5,450
US Government Mortgage Backed
25,796 24,880 26,288 25,476
Debt Securities
5,488 5,404 6,996 6,907
Equity Securities
850 772 850 762
------- ------- ------- -------
Total $37,695 $36,476 $39,701 $38,595
======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Held to maturity
Obligations of State and
Political subdivisions $ 6,456 $ 6,258 $ 7,929 $ 7,737
------- ------- ------- -------
Total $ 6,456 $ 6,258 $ 7,929 $ 7,737
======= ======= ======= =======
Total Securities $44,151 $42,734 $47,630 $46,332
======= ======= ======= =======
</TABLE>
9
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months ended March 31, 2000 and March 31, 1999.
OVERVIEW
The Company realized net income of $200 thousand for the first quarter of 2000,
an increase of $8 thousand over the $192 thousand reported for the same period
in 1999. Basic earnings per share increased from $.13 at March 31, 1999 to $.14
for the first quarter of 2000. Diluted earnings per share also increased from
$.13 in the first quarter of 1999 to $.14 per share in the quarter ending March
31, 2000.
RESULTS OF OPERATIONS
Interest Income. Total interest income increased $348 thousand, or 16.3%, to
$2.5 million for the quarter ended March 31, 2000 from $2.1 million for the same
period in 1999. This increase was attributable to an increase in interest and
fees on loans of $325 thousand, an increase in interest on interest earning
deposits of $31 thousand, and an increase in interest and dividends on
securities of $134 thousand. Offsetting these increases was a $142 thousand
decline in interest income on Federal Funds Sold from the first quarter of 1999
to the first quarter of 2000. This net increase in interest income is
attributable to a $12.5 million increase in average interest earning assets,
primarily in the loan portfolio. The yield on average interest-earning assets on
a fully taxable equivalent basis increased 35 basis points from 6.79% for the
first quarter of 1999 to 7.14% for the first quarter of 2000, reflecting both
market changes in interest rates and the first results of the Company's emphasis
on originating commercial and industrial loans.
Interest Expense. The Company's interest expense for the first quarter of 2000
increased $76 thousand, or 7.3% to $1.1 million from $1.0 million for the same
period last year. The average balance of interest bearing deposits increased
$9.7 million, or 9.0%, from the same period last year. The largest component of
the increase was in savings deposits, which increased $8.7 million, or 23.3% in
the first quarter of 2000 compared to the same period in 1999. This increase was
primarily due to the promotion of a special higher yielding savings account for
senior citizens, our senior select account. The average balance of money market
deposits increased $3.5 million and the Company's average borrowed funds
increased $4.5 million from first quarter 1999 compared to the first quarter of
2000. Offsetting these increases was a $7.0 million decline in average time
deposits from March 31, 1999 compared to the same period in 2000, as the Company
elected not to compete for higher rate time deposit accounts. The Company's
average cost of funds decreased to 3.82% for the first quarter of 2000 from
3.89% for the first quarter in 1999. This decline in the average cost of funds
was the result of lowering interest rates paid on time deposits and a shift in
interest bearing deposit accounts from time deposits into lower yielding
transaction accounts.
The following table presents, on a tax equivalent basis, 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 three
months ended March 31, 2000 and 1999. The average balance of loans includes
non-accrual loans, and associated yields include loan fees, which are considered
adjustment to yields.
10
<PAGE>
<TABLE>
<CAPTION>
Comparative Average
Balance Sheets
Three Months Ended March 31,
2000 1999
--------------------------------- --------------------------------
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
------- ------- ---- ------- ------- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest Earning assets:
Taxable loans (net of unearned income) $86,948 $1,731 7.96% $70,811 $1,406 7.94%
Tax exempt securities (1) 8,915 119 5.34% 8,766 127 5.80%
Taxable investment securities 38,281 571 5.97% 31,628 439 5.55%
Other (2) 6,436 90 5.59% 16,872 201 4.77%
-------------------------------- --------------------------------
Total earning assets 140,580 2,511 7.14% 128,077 2,173 6.79%
Non-interest earning assets 9,734 7,793
Allowance for possible
loan losses (862) (694)
-------- --------
Total Assets $149,452 $136,564
======== ========
Liabilities and Shareholders' Equity
Interest bearing liabilities:
NOW deposits $14,347 $43 1.20% $14,418 $57 1.58%
Savings deposits 46,062 392 3.40% 37,351 294 3.15%
Money market deposits 7,445 71 3.81% 3,938 27 2.74%
Time deposits 45,085 550 4.88% 52,089 669 5.14%
Borrowed Funds 4,515 67 5.94% 0 0 0.00%
-------------------------------- --------------------------------
Total interest bearing liabilities 117,454 1,123 3.82% 107,796 1,047 3.89%
Non-interest bearing liabilities:
Demand Deposits 22,376 18,566
Other liabilities 581 948
--- ---
Total non-interest bearing liabilities 22,957 19,514
Shareholders' equity 9,041 9,254
Total liabilities and
shareholders' equity
-------- --------
$149,452 $136,564
======== ========
Net interest differential $1,388 $1,126
Net Interest Margin 3.32% 2.90%
Net yield on interest-earning
assets 3.95% 3.52%
</TABLE>
(1) Interest income includes tax-equivalent adjustments of $32 thousand and $42
thousand, respectively.
(2) Includes federal funds sold, interest-bearing deposits and time deposits in
other banks.
11
<PAGE>
Net-Interest Income. The net effect of the changes in interest income and
interest expense for the first quarter of 2000 was an increase in net interest
income of $262 thousand, or 23.3%, compared to the first quarter of 1999. The
net interest spread, on a fully taxable equivalent basis, increased 42 basis
points from the same period last year. This increase was largely attributable to
the increase in the average balance of higher yielding loans from lower yielding
federal funds sold.
Provision for Loan Losses. For the three months ended March 31, 2000, the
provision for possible loan losses was $48 thousand compared to the $33 thousand
provision for the same period last year. The increase in the provision for loan
losses over the three month period 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, as well as in the average balance of
the portfolio over both periods. Management reviews the adequacy of its
allowance on an ongoing basis and will provide for additional provision in
future periods, as management may deem necessary.
Non-Interest Income. For the first quarter of 2000, total non-interest income
decreased $106 thousand, or 35.8%, from the same period in 1999. Service charges
on deposit accounts decreased $2 thousand in the first quarter of 2000 compared
to the three months ended March 31, 1999. Other income decreased $101 thousand,
or 55.2%, in the first quarter of 2000 from the same period last year. This
decrease was mainly the result of reporting $135 thousand in fees generated by
the non-deposit investment products offered by our third party provider, IBFS,
and commission income from Sussex Bancorp Mortgage Company, our mortgage banking
subsidiary in the first quarter of 1999. In the current period $34 thousand in
fees were recorded for the same two areas, largely due to the decreased volume
of mortgage originations by our mortgage banking subsidiary.
Non-Interest Expense. For the quarter ended March 31, 2000, non-interest expense
increased $133 thousand from the same period last year. On February 7, 2000 the
Company opened its eighth branch and relocated its Trust and Investment Services
to Augusta, New Jersey. The branch expansion, combined with continued growth in
our existing locations, contributed to the increase in non-interest expense.
Salaries and employee benefits increased $99 thousand, or 17.3%, as salaries
increased $72 thousand reflecting the addition of staff and normal salary
increases and employee benefits increased $27 thousand, with a $24 thousand
increase in medical claim expenses. Furniture and equipment expense increased
$12 thousand, or 10.0%, as a result of an increase in depreciation expense.
Other expenses increased by $6 thousand, or 2.2%, from first quarter 1999 to
first quarter 2000 mainly due to the promotion of the new location.
Income Taxes. Income taxes expense increased $10 thousand to $58 thousand for
the three months ended March 31, 2000 as compared to $48 thousand for the same
period in 1999. The increase in income taxes resulted from a lower percentage of
tax-exempt income in 2000.
12
<PAGE>
FINANCIAL CONDITION
March 31, 2000 as compared to December 31, 1999
Total assets increased to $151.1 million at March 31, 2000, a $983 thousand
increase from total assets of $150.1 million at December 31, 1999. Increases in
total assets included increases of $2.3 million in total loans and $1.4 million
in cash and due from other banks. These increases were offset by a decrease of
$3.6 million in total securities, as the Company funded new loan originations
from maturing security investments.
Total loans at March 31, 2000 increased $2.3 million to $87.1 million from
year-end 1999. Commercial and industrial loans increased $1.3 million,
residential and commercial real estate loans increased $1.0 million and
construction loans increased $30 thousand from year-end 1999. These increases
were offset by a decrease of $20 thousand in consumer and other loans from
year-end 1999. During 2000, the Company intends to emphasize the origination of
commercial, industrial, and construction loans to increase the yield in its loan
portfolio and reduce its dependence on loans secured by 1-4 family properties.
The following schedule presents the components of loans, net of unearned income,
by type, for each period presented:
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
--------------------- ---------------------
Amount Percent Amount Percent
------ ------- ------ -------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Commercial and industrial $ 5,074 5.82% $ 3,811 4.49%
Real Estate non residential
properties 20,025 23.98% 19,759 23.29%
Residential properties 51,175 58.73% 50,411 59.42%
Construction 7,104 8.15% 7,074 8.34%
Consumer 2,192 2.52% 2,295 2.71%
Other Loans 1,567 1.80% 1,484 1.75%
------- ------ ------- ------
Total Loans $87,138 100.00% $84,834 100.00%
======= ====== ======= ======
</TABLE>
Federal funds sold remained constant at $4 million for March 31, 2000 and
December 31, 1999.
Total securities decreased $3.6 million, or 7.7%, from $46.5 million at year-end
1999 to $42.9 million on March 31, 2000. Securities, available for sale, at
market value, decreased $2.1 million, or 5.5%, from $38.6 million on December
31, 1999 to $36.5 million on March 31, 2000. The Company purchased no new
securities in the first three months of 2000, as deposit inflows were used to
fund new loan originations, and $2.0 million in available for sale securities
matured and were repaid. There were $113 thousand in recorded unrealized losses
in the available of sale portfolio during the first three months of 2000. Held
to maturity securities decreased to $6.5 million on March 31, 2000 from $7.9
million at year-end 1999. There were $650 thousand in held to maturity purchases
and $2.1 million in maturing securities in the held to maturity portfolio during
the first three months of 2000.
<PAGE>
Total average deposits increased $1.8 million, or 1.3% during the first quarter
of 2000 from $133.5 million at December 31, 1999 to $135.3 million on March 31,
2000. Savings deposits increased by $3.9 million, money market accounts
increased by $2.2 million, and demand deposits increased by $1.1 million. These
increases were offset by a decrease in time deposits by $5.3 million. As
discussed earlier, the increase in savings deposits is primarily attributable to
the Company's senior select product and the decrease in time deposits was due to
the maturing of higher yielding time deposits and the Company's decision not to
compete for the deposits on the basis of rate. 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.
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------------------
March 31, 2000 December 31, 1999
------------------------- ------------------------------
Average Balance % Average Balance %
<S> <C> <C> <C> <C>
Deposits:
NOW deposits $ 14,347 10.60% $14,561 10.90%
Savings deposits 46,062 34.04% 42,159 31.57%
Money market deposits 7,445 5.50% 5,196 3.89%
Time deposits 45,085 33.32% 50,387 37.73%
Demand deposits 22,376 16.54% 21,239 15.90%
-------- ------ -------- ------
Total interest-bearing liabilities $135,315 100.00% $133,542 100.00%
======== ====== ======== ======
</TABLE>
ASSET QUALITY
At March 31, 2000, non-performing loans decreased $1 thousand, as compared to
December 31, 1999, to $331 thousand. Management continues to work diligently to
reduce the Company's non-performing loans.
The following table provides information regarding risk elements in the loan
portfolio:
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
---- ----
<S> <C> <C>
Non-accrual loans $ 331 $ 332
Non-accrual loans to total loans 0.38% 0.39%
Non-performing loans to total assets 0.22% 0.22%
Allowance for possible loan losses as a
percentage of non-performing loans 267.67% 252.11%
</TABLE>
13
<PAGE>
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The allowance for possible loan losses is maintained at a level considered
adequate 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. 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
examinations by regulatory agencies all could cause changes to the Company's
allowance for possible loan losses.
At March 31, 2000, the allowance for possible loan losses was $886 thousand, up
5.9% from the $837 thousand at year-end 1999. The Company recognized $1 thousand
in net charge-offs for the first three months of 2000.
LIQUIDITY MANAGEMENT
At March 31, 2000, the amount of liquid assets remained 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 March 31, 2000, liquid investments totaled $11.2 million, and all mature
within 30 days.
CAPITAL RESOURCES
Total stockholders' equity increased $67 thousand to $9.2 million at March 31,
2000 from the $9.1 million at year end 1999. The increase was due to net income
of $200 thousand and shares issued through the dividend reinvestment plan of $20
thousand. These increases were offset by an increase in the net unrealized loss
on securities available for sale of $68 thousand and cash dividends of $85
thousand.
At March 31, 2000, each of the Company and the Bank exceeded each of the
regulatory capital requirements applicable to it. The table below presents the
capital ratios at March 31, 2000 for both the Company and the Bank as well as
the minimum regulatory requirements.
<TABLE>
<CAPTION>
Amount Ratio Amount Minimum Ratio
------ ----- ------ -------------
<S> <C> <C> <C> <C>
The Company
Leverage Capital $9,242 6.18% $4,487 3-5%
Tier 1 - Risk Based 9,242 10.43% 3,546 4%
Total Risk-Based 10,128 11.42% 7,092 8%
The Bank
Leverage Capital 8,846 5.92% 4,483 3-5%
Tier 1 Risk-Based 8,846 9.99% 3,543 4%
Total Risk-Based 9,732 10.99% 7,086 8%
</TABLE>
14
<PAGE>
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.
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
---------------------------------------------------
Not applicable
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
15
<PAGE>
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: May 11, 2000 By: /s/Candace A. Leatham
---------------------
CANDACE A. LEATHAM
Senior Vice President and
Chief Financial Officer
16
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<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,062
<INT-BEARING-DEPOSITS> 2,447
<FED-FUNDS-SOLD> 4,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 36,476
<INVESTMENTS-CARRYING> 6,456
<INVESTMENTS-MARKET> 0
<LOANS> 88,287
<ALLOWANCE> 886
<TOTAL-ASSETS> 151,109
<DEPOSITS> 135,166
<SHORT-TERM> 6,170
<LIABILITIES-OTHER> 617
<LONG-TERM> 0
0
0
<COMMON> 5,708
<OTHER-SE> 3,448
<TOTAL-LIABILITIES-AND-EQUITY> 151,109
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<INTEREST-TOTAL> 2,479
<INTEREST-DEPOSIT> 1,056
<INTEREST-EXPENSE> 1,123
<INTEREST-INCOME-NET> 1,356
<LOAN-LOSSES> 48
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,240
<INCOME-PRETAX> 258
<INCOME-PRE-EXTRAORDINARY> 200
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<CHANGES> 0
<NET-INCOME> 200
<EPS-BASIC> 0.14
<EPS-DILUTED> 0.14
<YIELD-ACTUAL> 3.95
<LOANS-NON> 331
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 837
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