T
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New Jersey
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22-3475473
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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200 Munsonhurst Road
Franklin, New Jersey 07416
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(Address of principal executive offices) (Zip Code)
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(973) 827-2914
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(Registrant’s telephone number, including area code)
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Title of each class
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Name of exchange on which registered
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Common Stock, no par value
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The NASDAQ Stock Market LLC
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
T
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(Do not check if a smaller reporting company
)
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FORWARD-LOOKING STATEMENTS
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3
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3
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ITEM 1.
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8
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ITEM 1A.
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12
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ITEM 1B.
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12
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ITEM 2.
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12
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ITEM 3.
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13
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ITEM 4.
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13
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14
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ITEM 5.
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14
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ITEM 6.
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15
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ITEM 7.
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16
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ITEM 7A.
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33
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ITEM 8.
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33
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ITEM 9.
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33
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ITEM 9A.
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33
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ITEM 9B.
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34
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35
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ITEM 10.
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35
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ITEM 11.
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35
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ITEM 12.
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35
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ITEM 13.
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35
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ITEM 14.
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35
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36
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ITEM 15.
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36
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§
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changes to interest rates, the ability to control costs and expenses;
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§
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our ability to integrate new technology into its operations;
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§
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general economic conditions;
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§
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the success of our efforts to diversify its revenue base by developing additional sources of non-interest income while continuing to manage its existing fee based business;
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§
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the impact on us of the changing statutory and regulatory requirements; and
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§
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the risks inherent in commencing operations in new markets.
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I
TEM 1.
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BUSINESS
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I
TEM 1A.
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RISK FACTORS
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I
TEM 1B.
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UNRESOLVED STAFF COMMENTS
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IT
EM 2.
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PROPERTIES
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LOCATION
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LEASED OR OWNED
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DATE OF
LEASE EXPIRATION
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399 Route 23
Franklin, New Jersey
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Owned
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N/A
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7 Church Street
Vernon, New Jersey
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Owned
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N/A
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266 Clove Road
Montague, New Jersey
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Leased
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March, 2012
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96 Route 206
Augusta, New Jersey
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Leased
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July, 2015
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378 Route 23
Wantage, New Jersey
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Owned
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N/A
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455 Route 23
Wantage, New Jersey
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Owned (1)
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N/A
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15 Trinity Street
Newton, New Jersey
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Owned
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N/A
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165 Route 206
Andover, New Jersey
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Owned
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N/A
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100 Route 206
Augusta, New Jersey
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Owned
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N/A
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33 Main Street
Sparta, New Jersey
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Owned
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N/A
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200 Munsonhurst Road
Franklin, New Jersey
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Leased
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December, 2013
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20-22 Fowler Street
Port Jervis, New York
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Leased
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June
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2016
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65-67 Main Street
Warwick, New York
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Leased
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December, 2011
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(1)
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We own the building housing our former Wantage branch. The land on which the building is located is leased pursuant to a ground lease which runs until December 31, 2020, and contains an option for us to extend the lease for an additional 25 year term.
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I
TEM 3.
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LEGAL PROCEEDINGS
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I
TEM 4.
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[REMOVED AND RESERVED]
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ITE
M 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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2010
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High
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Low
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Cash Dividends Declared
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|||||||||
Fourth Quarter ended December 31
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$ | 6.08 | $ | 4.90 | – | |||||||
Third Quarter ended September 30
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$ | 5.80 | $ | 4.38 | – | |||||||
Second Quarter ended June 30
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$ | 6.70 | $ | 5.15 | – | |||||||
First Quarter ended March 31
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$ | 5.70 | $ | 3.00 | – |
2009
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High
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Low
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Cash Dividends Declared
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|||||||||
Fourth Quarter ended December 31
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$ | 5.15 | $ | 3.24 | – | |||||||
Third Quarter ended September 30
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$ | 5.74 | $ | 3.00 | – | |||||||
Second Quarter ended June 30
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$ | 5.35 | $ | 3.50 | – | |||||||
First Quarter ended March 31
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$ | 5.87 | $ | 1.99 | $ | 0.03 |
Period
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Total Number of Shares Purchased
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Average Price Paid per Share ($)
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Total Number of Shares Purchased as Part of Publicly Announced Programs
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Maximum Number of Shares that May Yet Be Purchased Under the Program (1)
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||||||||||||
October 1 - 31, 2010
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- | - | - | 153,438 | ||||||||||||
November 1 - 30, 2010
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780 | 5.10 | - | 152,658 | ||||||||||||
December 1 - 31, 2010
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- | - | - | 152,658 | ||||||||||||
Total
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780 | 5.10 | - | 152,658 | ||||||||||||
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(1)
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In April of 1999, the Board of Directors initially approved a repurchase program (“Repurchase Program”), authorizing us to repurchase 50,000 shares of our outstanding shares of common stock. Subsequently, the Board of Directors increased the shares authorized under the Repurchase Program four times to a total of 400,000 shares. The Repurchase Program will continue until it is completed and has no expiration date. The repurchases may be made from time to time at the discretion of management.
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ITE
M 6.
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SELECTED FINANCIAL DATA
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(1)
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The weighted average number of shares outstanding was computed based on the average number of shares outstanding during each period as adjusted for subsequent stock dividends.
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(2)
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Cash dividends per common share are based on the actual number of common shares outstanding on the dates of record as adjusted for subsequent stock dividends.
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(3)
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Efficiency ratio is total other expenses divided by net interest income and total other income.
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(4)
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As the Company has consolidated assets of less than $500 million, it does not have a minimum consolidated requirement. The ratios presented are those of the Bank.
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(5)
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Non-performing loans includes non-accrual loans, loans past due 90 days and still accruing and restructured loans still accruing.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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·
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Net interest income
(tax equivalent basis) increased $1.4 million to $17.0 million in 2010.
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·
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Net interest margin
(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.
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·
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Provision for loan losses
decreased $124 thousand, or 3.6%, for 2010 as compared to the same period last year.
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·
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Non-interest income
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 2010, 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.
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·
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Non-interest expense
increased $378 thousand to $15.0 million for 2010. The increase was largely attributed to higher employee related costs resulting from an increase in salary expense of 4.3% and a 14.7% increase in benefits costs.
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·
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Credit quality shows signs of stabilizing:
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o
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Nonperforming assets as a percent of total assets was 5.58% and 6.01% at December 31, 2010 and 2009, respectively.
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o
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Nonperforming assets decreased by $890 thousand, or 3.3%, to $26.4 million at December 31, 2010.
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o
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Net charge-offs for 2010 declined $1.3 million to $2.4 million for 2010.
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o
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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.
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·
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Return on Average Assets
of 0.46% for 2010 and 0.43% for 2009.
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·
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Capital Adequacy:
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”.
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·
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Non-residential transactions when the transaction value exceeds $250,000.
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·
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Loan transactions in which real estate is used as the primary security for the loan, regardless of the type of loan (commercial, installment or mortgage), including:
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§
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New loans, loan modifications, loan extensions and renewals, provided that certain conditions are met.
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§
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The purchase, sale, exchange or investment in real property or an interest in real property where the “transaction value” of the real property interest exceeds $250,000.
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§
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The long-term lease of real estate, which is the economic equivalent of a purchase or sale where the “transaction value” of the real property interest exceeds $250,000.
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·
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Purchase of a loan or pool of loans, or participation therein, or of an interest in real property, providing that any individual loan or property interest exceeds $250,000, and further provided that a satisfactory appraisal of the property relating to that loan or interest has not been made available to the Bank by another party to the transaction.
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·
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New loans, loan modifications, loan extensions and renewals with real property interest value of $250,000 or less.
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·
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Purchase, sale, exchange, long-term lease or investment in real property where the “transaction value” of the real property interest does not exceed $250,000.
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·
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Renewal or extension of an existing loan in excess of $250,000 provided that certain conditions are met.
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·
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Purchase of a loan or pool of loans, or participation therein, or of an interest in real property where a satisfactory appraisal of the property relating to that loan or interest has been made available to the Bank by another federally insured depository institution that is subject to Title XI of Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA).
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December 31,
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||||||||||||
(Dollars in thousands)
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2010
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2009
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2008
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|||||||||
U.S. government agencies
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$ | 21,189 | $ | 15,002 | $ | 7,963 | ||||||
State and political subdivisions
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28,735 | 25,877 | 23,859 | |||||||||
Mortgage-backed securities:
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||||||||||||
US government-sponsored enterprises
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33,286 | 21,877 | 26,030 | |||||||||
Private mortgage-backed securities
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4,807 | 6,205 | 2,671 | |||||||||
Corporate debt securities
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- | 1,007 | - | |||||||||
Equity securities, financial services and other
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1,363 | 1,347 | 1,749 | |||||||||
Total available for sale
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$ | 89,380 | $ | 71,315 | $ | 62,272 |
(Dollars in thousands)
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2010
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2009
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2008
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|||||||||
U.S. government agencies
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$ | – | $ | – | $ | 5,744 | ||||||
Mortgage-backed securities
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– | 2,955 | 7,546 | |||||||||
Total trading securities
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$ | – | $ | 2,955 | $ | 13,290 |
(Dollars in thousands)
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2010
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2009
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2008
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|||||||||
State and political subdivisions
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$ | 1,000 | $ | – | $ | – | ||||||
Total held to maturity securities
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$ | 1,000 | $ | – | $ | – |
Due under 1 Year
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Due 1-5 Years
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Due 5-10 Years
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Due over 10 Years
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|||||||||||||||||||||||||||||
(Dollars in thousands)
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Amount
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Yield
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Amount
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Yield
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Amount
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Yield
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Amount
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Yield
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||||||||||||||||||||||||
Available for sale:
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||||||||||||||||||||||||||||||||
U.S. government agencies
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$ | 3,533 | 0.66 | % | $ | 15,055 | 0.70 | % | $ | - | - | $ | 2,570 | 2.84 | % | |||||||||||||||||
State and political subdivisions
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4,300 | 1.27 | % | - | - | 197 | 4.69 | % | 24,856 | 4.29 | % | |||||||||||||||||||||
Mortgage-backed securities:
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US government-sponsored enterprises
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331 | 2.17 | % | 544 | 1.25 | % | 5,348 | 0.77 | % | 26,337 | 2.84 | % | ||||||||||||||||||||
Private mortgage-backed securities
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- | - | - | - | 848 | 3.27 | % | 3,744 | 8.61 | % | ||||||||||||||||||||||
Equity securities, financial services and
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||||||||||||||||||||||||||||||||
other
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- | - | - | - | - | - | 1,638 | 3.07 | % | |||||||||||||||||||||||
Total available for sale
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$ | 8,164 | 1.04 | % | $ | 15,599 | 0.72 | % | $ | 6,393 | 1.22 | % | $ | 59,145 | 3.82 | % |
Due under 1 Year
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Due 1-5 Years
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Due 5-10 Years
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Due over 10 Years
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|||||||||||||||||||||||||||||
(Dollars in thousands)
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Amount
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Yield
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Amount
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Yield
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Amount
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Yield
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Amount
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Yield
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||||||||||||||||||||||||
Held to maturity:
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||||||||||||||||||||||||||||||||
State and political subdivisions
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$ | - | - | % | $ | - | - | % | $ | - | - | % | $ | 1,000 | 5.70 | % | ||||||||||||||||
Total held to maturity
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$ | - | - | % | $ | - | - | % | $ | - | - | % | $ | 1,000 | 5.70 | % |
December 31,
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||||||||||||||||||||
(Dollars in thousands)
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2010
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2009
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2008
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2007
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2006
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|||||||||||||||
Commercial and industrial
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$ | 15,045 | $ | 17,016 | $ | 22,346 | $ | 20,702 | $ | 18,298 | ||||||||||
Construction
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20,862 | 27,555 | 38,413 | 41,954 | 30,094 | |||||||||||||||
Commercial real estate
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204,407 | 193,091 | 174,218 | 165,848 | 151,318 | |||||||||||||||
Residential real estate
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96,659 | 93,558 | 84,412 | 70,597 | 60,960 | |||||||||||||||
Consumer and other loans
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1,395 | 1,919 | 1,621 | 1,664 | 1,785 | |||||||||||||||
Total gross loans
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$ | 338,368 | $ | 333,139 | $ | 321,010 | $ | 300,765 | $ | 262,455 |
December 31, 2010
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||||||||||||
Due Under
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Due 1-5
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Due Over
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||||||||||
(Dollars in thousands)
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One Year
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Years
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Five Years
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|||||||||
Commercial and industrial
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$ | 5,724 | $ | 5,161 | $ | 4,160 | ||||||
Construction
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16,353 | 3,860 | 649 | |||||||||
Commercial real estate
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16,101 | 16,844 | 171,461 | |||||||||
Residential real estate
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3,083 | 7,327 | 86,249 | |||||||||
Consumer and other
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241 | 680 | 474 | |||||||||
Total loans
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$ | 41,502 | $ | 33,872 | $ | 262,993 | ||||||
Interest rates:
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||||||||||||
Fixed or predetermined
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31,912 | 24,066 | 93,565 | |||||||||
Floating or adjustable
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9,590 | 9,806 | 169,428 | |||||||||
Total loans
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$ | 41,502 | $ | 33,872 | $ | 262,993 |
December 31,
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||||||||||||||||||||
(Dollars in thousands)
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2010
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2009
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2008
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2007
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2006
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Non-accrual loans:
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Commercial and industrial
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$ | 78 | $ | 240 | $ | 336 | $ | 449 | $ | - | ||||||||||
Construction
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6,430 | 4,307 | 5,042 | 10,210 | 465 | |||||||||||||||
Commercial real estate
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14,930 | 15,211 | 3,460 | 1,533 | - | |||||||||||||||
Residential real estate
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1,244 | 457 | 896 | 98 | 942 | |||||||||||||||
Consumer and other
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- | 1 | 11 | 11 | - | |||||||||||||||
Total nonaccrual loans
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22,682 | 20,216 | 9,745 | 12,301 | 1,407 | |||||||||||||||
Loans past due 90 days and still accruing
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49 | 1,392 | - | 69 | 746 | |||||||||||||||
Restructured loans and still accruing
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1,318 | 1,885 | 1,302 | 1,107 | 506 | |||||||||||||||
Total non-performing loans
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24,049 | 23,493 | 11,047 | 13,477 | 2,659 | |||||||||||||||
Impaired securities
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- | - | 93 | - | - | |||||||||||||||
Foreclosed real estate
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2,397 | 3,843 | 3,864 | - | - | |||||||||||||||
Total non-performing assets
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$ | 26,446 | $ | 27,336 | $ | 15,004 | $ | 13,477 | $ | 2,659 | ||||||||||
Non-accrual loans to total loans
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6.71 | % | 6.07 | % | 3.04 | % | 4.09 | % | 0.54 | % | ||||||||||
Non-performing assets to total assets
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5.58 | % | 6.01 | % | 3.41 | % | 3.42 | % | 0.75 | % | ||||||||||
Interest income received on nonaccrual
loans
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$ | 463 | $ | 488 | $ | 61 | $ | 50 | $ | 10 | ||||||||||
Interest income that would have been
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||||||||||||||||||||
recorded under the original terms of the
loans
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$ | 1,323 | $ | 1,153 | $ | 858 | $ | 653 | $ | 127 |
Year Ended December 31,
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(Dollars in thousands)
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2010
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2009
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2008
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2007
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2006
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|||||||||||||||
Balance at beginning of year
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$ | 5,496 | $ | 5,813 | $ | 5,140 | $ | 3,340 | $ | 2,615 | ||||||||||
Provision charged to operating expenses
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3,280 | 3,404 | 1,350 | 1,930 | 733 | |||||||||||||||
Recoveries of loans previously charged-off:
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||||||||||||||||||||
Commercial and industrial
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126 | 4 | 6 | 2 | - | |||||||||||||||
Construction
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- | - | - | - | - | |||||||||||||||
Commercial real estate
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2 | 60 | 3 | 6 | - | |||||||||||||||
Residential real estate
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- | 71 | - | - | - | |||||||||||||||
Consumer and other
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19 | 17 | 30 | 46 | 86 | |||||||||||||||
Total recoveries
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147 | 152 | 39 | 54 | 86 | |||||||||||||||
Loans charged-off:
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||||||||||||||||||||
Commercial and industrial
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241 | 1,345 | 34 | 70 | - | |||||||||||||||
Construction
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768 | 1,632 | - | - | - | |||||||||||||||
Commercial real estate
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1,462 | 588 | 504 | - | - | |||||||||||||||
Residential real estate
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- | 242 | 68 | 12 | - | |||||||||||||||
Consumer and other
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55 | 66 | 110 | 102 | 94 | |||||||||||||||
Total charge-offs
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2,526 | 3,873 | 716 | 184 | 94 | |||||||||||||||
Net charge-offs
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2,379 | 3,721 | 677 | 130 | 8 | |||||||||||||||
Balance at end of year
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$ | 6,397 | $ | 5,496 | $ | 5,813 | $ | 5,140 | $ | 3,340 | ||||||||||
Net charge-offs to average loans
outstanding
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0.72 | % | 1.14 | % | 0.22 | % | 0.05 | % | 0.00 | % | ||||||||||
Allowance for loan losses to year-end
loans
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1.89 | % | 1.65 | % | 1.81 | % | 1.71 | % | 1.27 | % |
Allowance for Loans Losses at December 31,
|
||||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Percentage Of Loans In Each Category To Total Loans
|
Amount
|
Percentage Of Loans In Each Category To Total Loans
|
Amount
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Percentage Of Loans In Each Category To Total Loans
|
||||||||||||||||||
Commercial and industrial
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$ | 447 | 4.45 | % | $ | 380 | 5.11 | % | $ | 526 | 6.96 | % | ||||||||||||
Construction
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1,214 | 6.16 | % | 1,398 | 8.27 | % | 2,270 | 11.97 | % | |||||||||||||||
Commercial real estate
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3,859 | 60.41 | % | 3,297 | 57.96 | % | 2,249 | 54.27 | % | |||||||||||||||
Residential real estate
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819 | 28.57 | % | 327 | 28.08 | % | 713 | 26.30 | % | |||||||||||||||
Consumer and other loans
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58 | 0.41 | % | 94 | 0.58 | % | 55 | 0.50 | % | |||||||||||||||
Total
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$ | 6,397 | 100.00 | % | $ | 5,496 | 100.00 | % | $ | 5,813 | 100.00 | % |
Allowance for Loans Losses at December 31,
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
(Dollars in thousands)
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Amount
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Percentage Of Loans In Each Category To Total Loans
|
Amount
|
Percentage Of Loans In Each Category To Total Loans
|
||||||||||||
Commercial and industrial
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$ | 438 | 6.88 | % | $ | 405 | 6.97 | % | ||||||||
Construction
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2,238 | 13.95 | % | 731 | 11.47 | % | ||||||||||
Commercial real estate
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2,129 | 55.15 | % | 1,943 | 57.65 | % | ||||||||||
Residential real estate
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263 | 23.47 | % | 195 | 23.23 | % | ||||||||||
Consumer and other loans
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72 | 0.55 | % | 66 | 0.68 | % | ||||||||||
Total
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$ | 5,140 | 100.00 | % | $ | 3,340 | 100.00 | % |
Year Ended December 31,
|
||||||||||||||||||||||||
2010 Average
|
2009 Average
|
2008 Average
|
||||||||||||||||||||||
(Dollars in thousands)
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Balance
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Rate
|
Balance
|
Rate
|
Balance
|
Rate
|
||||||||||||||||||
Demand, non-interest bearing
|
$ | 38,255 | $ | 38,154 | $ | 39,303 | ||||||||||||||||||
Now accounts
|
67,729 | 0.76 | % | 57,928 | 1.00 | % | 58,878 | 1.36 | % | |||||||||||||||
Money market accounts
|
13,189 | 0.71 | % | 14,709 | 1.21 | % | 23,769 | 2.22 | % | |||||||||||||||
Savings
|
174,208 | 0.98 | % | 169,541 | 1.63 | % | 85,707 | 2.74 | % | |||||||||||||||
Time
|
101,354 | 1.66 | % | 101,565 | 2.76 | % | 127,475 | 3.98 | % | |||||||||||||||
Total deposits
|
$ | 394,735 | $ | 381,897 | $ | 335,132 |
(Dollars in thousands)
|
2010
|
|||
3 months or less
|
$ | 4,125 | ||
3 to 6 months
|
6,453 | |||
6 to 12 months
|
11,742 | |||
Over 12 months
|
7,939 | |||
Total
|
$ | 30,259 |
Year Ended December 31,
|
||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Average daily amount of short-term borrowings outstanding during the period
|
$ | 137 | $ | 22 | $ | 185 | ||||||
Weighted average interest rate on average daily short-term borrowings
|
0.38 | % | 0.38 | % | 2.87 | % | ||||||
Maximum short-term borrowings outstanding at any month-end
|
$ | 10,000 | - | $ | 1,175 | |||||||
Short-term borrowings outstanding at period end
|
$ | 10,000 | - | - | ||||||||
Weighted average interest rate on short-term borrowings at period end
|
0.38 | % | - | - |
|
·
|
net interest income, or the difference between interest income earned on loans and investments and interest expense paid on deposits and borrowed funds;
|
|
·
|
provision for loan losses, or the amount added to the allowance for loan losses to provide reserves for inherent losses on loans;
|
|
·
|
non-interest income, which is made up primarily of certain loan and deposit fees, insurance commissions and gains and losses from sales of securities or other transactions;
|
|
·
|
non-interest expense, which consists primarily of salaries, employee benefits, credit collection and write-off costs and other operating expenses; and
|
|
·
|
income taxes.
|
Twelve Months Ended December 31,
|
||||||||||||||||||||||||
2010
|
2009
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Average Balance
|
Interest (1)
|
Average Rate (2)
|
Average Balance
|
Interest (1)
|
Average Rate (2)
|
||||||||||||||||||
Earning Assets:
|
|
|
|
|||||||||||||||||||||
Securities:
|
||||||||||||||||||||||||
Tax exempt (3)
|
$ | 28,871 | $ | 1,662 | 5.76 | % | $ | 28,102 | $ | 1,747 | 6.22 | % | ||||||||||||
Taxable
|
52,766 | 1,796 | 3.40 | % | 59,035 | 2,587 | 4.38 | % | ||||||||||||||||
Total securities
|
81,637 | 3,458 | 4.24 | % | 87,137 | 4,334 | 4.97 | % | ||||||||||||||||
Total loans receivable (4)
|
331,457 | 19,057 | 5.75 | % | 326,740 | 19,259 | 5.89 | % | ||||||||||||||||
Other interest-earning assets
|
32,793 | 65 | 0.20 | % | 19,208 | 45 | 0.23 | % | ||||||||||||||||
Total earning assets
|
445,887 | $ | 22,580 | 5.06 | % | 433,085 | $ | 23,638 | 5.46 | % | ||||||||||||||
Non-interest earning assets
|
37,945 | 36,355 | ||||||||||||||||||||||
Allowance for loan losses
|
(6,093 | ) | (5,824 | ) | ||||||||||||||||||||
Total Assets
|
$ | 477,739 | $ | 463,616 | ||||||||||||||||||||
Sources of Funds:
|
||||||||||||||||||||||||
Interest bearing deposits:
|
||||||||||||||||||||||||
NOW
|
$ | 67,729 | $ | 512 | 0.76 | % | $ | 57,928 | $ | 582 | 1.00 | % | ||||||||||||
Money market
|
13,189 | 93 | 0.71 | % | 14,709 | 177 | 1.21 | % | ||||||||||||||||
Savings
|
174,208 | 1,709 | 0.98 | % | 169,541 | 2,759 | 1.63 | % | ||||||||||||||||
Time
|
101,354 | 1,681 | 1.66 | % | 101,565 | 2,803 | 2.76 | % | ||||||||||||||||
Total interest bearing deposits
|
356,480 | 3,995 | 1.12 | % | 343,743 | 6,321 | 1.84 | % | ||||||||||||||||
Borrowed funds
|
32,593 | 1,393 | 4.27 | % | 33,139 | 1,426 | 4.30 | % | ||||||||||||||||
Junior subordinated debentures
|
12,887 | 225 | 1.75 | % | 12,887 | 306 | 2.38 | % | ||||||||||||||||
Total interest bearing liabilities
|
401,960 | $ | 5,613 | 1.40 | % | 389,769 | $ | 8,053 | 2.07 | % | ||||||||||||||
Non-interest bearing liabilities:
|
||||||||||||||||||||||||
Demand deposits
|
38,255 | 38,154 | ||||||||||||||||||||||
Other liabilities
|
1,525 | 2,303 | ||||||||||||||||||||||
Total non-interest bearing liabilities
|
39,780 | 40,457 | ||||||||||||||||||||||
Stockholders’ equity
|
35,999 | 33,390 | ||||||||||||||||||||||
Total Liabilities and Stockholders’ Equity
|
$ | 477,739 | $ | 463,616 | ||||||||||||||||||||
Net Interest Income and Margin (5)
|
$ | 16,967 | 3.81 | % | $ | 15,585 | 3.60 | % |
(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
|
December 31, 2010 v. 2009
|
December 31, 2009 v. 2008
|
|||||||||||||||||||||||
Increase (decrease)
Due to changes in:
|
Increase (decrease)
Due to changes in:
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Volume
|
Rate
|
Total
|
Volume
|
Rate
|
Total
|
||||||||||||||||||
Securities:
|
||||||||||||||||||||||||
Tax exempt
|
$ | 47 | $ | (132 | ) | $ | (85 | ) | $ | 272 | $ | 17 | $ | 289 | ||||||||||
Taxable
|
(255 | ) | (536 | ) | (791 | ) | 530 | (209 | ) | 321 | ||||||||||||||
Total securities (1)
|
(208 | ) | (668 | ) | (876 | ) | 802 | (192 | ) | 610 | ||||||||||||||
Total loans receivable (2)
|
275 | (477 | ) | (202 | ) | 1,142 | (1,033 | ) | 109 | |||||||||||||||
Other interest-earning assets
|
28 | (8 | ) | 20 | 61 | (277 | ) | (216 | ) | |||||||||||||||
Total net change in income on interest-earning assets
|
95 | (1,153 | ) | (1,058 | ) | 2,005 | (1,502 | ) | 503 | |||||||||||||||
Interest bearing deposits:
|
||||||||||||||||||||||||
NOW
|
89 | (159 | ) | (70 | ) | (13 | ) | (203 | ) | (216 | ) | |||||||||||||
Money Market
|
(17 | ) | (67 | ) | (84 | ) | (159 | ) | (191 | ) | (350 | ) | ||||||||||||
Savings
|
74 | (1,123 | ) | (1,049 | ) | 1,639 | (1,230 | ) | 409 | |||||||||||||||
Time
|
(6 | ) | (1,117 | ) | (1,123 | ) | (905 | ) | (1,363 | ) | (2,268 | ) | ||||||||||||
Total interest bearing deposits
|
140 | (2,466 | ) | (2,326 | ) | 562 | (2,987 | ) | (2,425 | ) | ||||||||||||||
Borrowed funds
|
(24 | ) | (9 | ) | (33 | ) | (121 | ) | 40 | (81 | ) | |||||||||||||
Junior subordinated debentures
|
- | (81 | ) | (81 | ) | - | (284 | ) | (284 | ) | ||||||||||||||
Total net change in expense on interest-bearing liabilities
|
116 | (2,556 | ) | (2,440 | ) | 441 | (3,231 | ) | (2,790 | ) | ||||||||||||||
Change in net interest income
|
$ | (21 | ) | $ | 1,403 | $ | 1,382 | $ | 1,564 | $ | 1,729 | $ | 3,293 |
(1)
|
Fully taxable equivalent basis, using 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance
|
(2)
|
Includes loan fee income
|
Net Portfolio Value(2)
|
Net Interest Income
|
|||||||||||||||||||||||
(Dollars in thousands)
Change in Interest Rates
|
Estimated
|
Estimated Increase
(Decrease)
|
Estimated
Net Interest
|
Estimated Increase
(Decrease)
|
||||||||||||||||||||
(basis points)(1)
|
NPV
|
Amount
|
Percent
|
Income(3)
|
Amount
|
Percent
|
||||||||||||||||||
December 31, 2010
|
||||||||||||||||||||||||
+200bp
|
$ | 36,765 | $ | (4,325 | ) | (10.5 | )% | $ | 16,556 | $ | (872 | ) | (5.0 | )% | ||||||||||
0bp
|
$ | 41,090 | — | — | $ | 17,428 | — | — | ||||||||||||||||
December 31, 2009
|
||||||||||||||||||||||||
+200
|
$ | 40,277 | $ | (3,475 | ) | (7.9 | )% | $ | 15,920 | $ | (789 | ) | (4.7 | )% | ||||||||||
0bp
|
$ | 43,752 | — | — | $ | 16,709 | — | — |
(1)
|
Assumes an instantaneous and parallel shift in interest rates at all maturities.
|
(2)
|
NPV, also referred to as economic value of equity, is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
|
(3)
|
Assumes a gradual change in interest rates over a one year period at all maturities.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
CONTROLS AND PROCEDURES
|
OTHER INFORMATION
|
DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
EXECUTIVE COMPENSATION
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a)(1)
|
Financial Statements
|
(a)(2)
|
Financial Statement Schedules
|
(a)(3)
|
Exhibits
|
SUSSEX BANCORP
|
|
/s/ Anthony Labozzetta
|
|
Anthony Labozzetta
|
|
President and Chief Executive Officer
|
|
Dated: March 16, 2011
|
Name
|
Title
|
Date
|
||
/s/ Anthony Labozzetta
|
President and Chief Executive Officer
|
March 16, 2011
|
||
Anthony Labozzetta
|
||||
/s/ Steven M. Fusco
|
Senior Vice President (Principal Financial
|
March 16, 2011
|
||
Steven M. Fusco
|
and Accounting Officer)
|
|||
/s/ Anthony S. Abbate
|
Director
|
March 16, 2011
|
||
Anthony S. Abbate
|
||||
/s/ Patrick Brady
|
Director
|
March 16, 2011
|
||
Patrick Brady
|
||||
/s/ Richard Branca
|
Director
|
March 16, 2011
|
||
Richard Branca
|
||||
/s/ Katherine H. Caristia
|
Director
|
March 16, 2011
|
||
Katherine H. Caristia
|
||||
/s/ Mark J. Hontz
|
Director
|
March 16, 2011
|
||
Mark J. Hontz
|
||||
/s/ Donald L. Kovach
|
Director
|
March 16, 2011
|
||
Donald L. Kovach
|
||||
/s/ Edward J. Leppert
|
Director
|
March 16, 2011
|
||
Edward J. Leppert
|
||||
/s/ Timothy Marvil
|
Director
|
March 16, 2011
|
||
Timothy Marvil
|
||||
/s/ Richard W. Scott
|
Director
|
March 16, 2011
|
||
Richard W. Scott |
Year Ended December 31,
|
||||||||
(Dollars In Thousands Except Per Share Data)
|
2010
|
2009
|
||||||
INTEREST INCOME
|
||||||||
Loans receivable, including fees
|
$ | 19,057 | $ | 19,259 | ||||
Securities:
|
||||||||
Taxable
|
1,796 | 2,587 | ||||||
Tax-exempt
|
1,110 | 1,164 | ||||||
Federal funds sold
|
22 | 30 | ||||||
Interest bearing deposits
|
43 | 15 | ||||||
Total Interest Income
|
22,028 | 23,055 | ||||||
INTEREST EXPENSE
|
||||||||
Deposits
|
3,995 | 6,321 | ||||||
Borrowings
|
1,393 | 1,426 | ||||||
Junior subordinated debentures
|
225 | 306 | ||||||
Total Interest Expense
|
5,613 | 8,053 | ||||||
Net Interest Income
|
16,415 | 15,002 | ||||||
PROVISION FOR LOAN LOSSES
|
3,280 | 3,404 | ||||||
Net Interest Income after Provision for Loan Losses
|
13,135 | 11,598 | ||||||
OTHER INCOME
|
||||||||
Service fees on deposit accounts
|
1,406 | 1,467 | ||||||
ATM and debit card fees
|
501 | 480 | ||||||
Bank-owned life insurance
|
313 | 156 | ||||||
Insurance commissions and fees
|
2,071 | 2,284 | ||||||
Investment brokerage fees
|
166 | 137 | ||||||
Realized holding gains on trading securities
|
7 | 5 | ||||||
Gain on sale of securities, available for sale
|
52 | 134 | ||||||
Gain on sale of premises and equipment
|
2 | 203 | ||||||
Gain on sale of foreclosed real estate
|
18 | 190 | ||||||
Impairment write-downs on equity securities
|
(171 | ) | - | |||||
Other
|
246 | 459 | ||||||
Total Other Income
|
4,611 | 5,515 | ||||||
OTHER EXPENSES
|
||||||||
Salaries and employee benefits
|
7,783 | 7,351 | ||||||
Occupancy, net
|
1,345 | 1,300 | ||||||
Furniture, equipment and data processing
|
1,234 | 1,286 | ||||||
Advertising and promotion
|
178 | 190 | ||||||
Professional fees
|
607 | 554 | ||||||
Director Fees
|
265 | 233 | ||||||
FDIC assessment
|
911 | 936 | ||||||
Insurance
|
222 | 194 | ||||||
Stationary and supplies
|
194 | 179 | ||||||
Loan collection costs
|
502 | 448 | ||||||
Write-down on foreclosed real estate
|
241 | 456 | ||||||
Expenses related to foreclosed real estate
|
270 | 240 | ||||||
Amortization of intangible assets
|
14 | 18 | ||||||
Other
|
1,262 | 1,265 | ||||||
Total Other Expenses
|
15,028 | 14,650 | ||||||
Income before Income Taxes
|
2,718 | 2,463 | ||||||
PROVISION FOR INCOME TAXES
|
542 | 452 | ||||||
Net Income
|
$ | 2,176 | $ | 2,011 | ||||
EARNINGS PER SHARE
|
||||||||
Basic
|
$ | 0.67 | $ | 0.62 | ||||
Diluted
|
$ | 0.66 | $ | 0.62 |
(Dollars In Thousands, Except Per Share Data)
|
Number of
Shares
Outstanding
|
Common
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (loss)
|
Treasury
Stock
|
Total
Stockholders'
Equity
|
||||||||||||||||||
Balance December 31, 2008
|
3,261,362 | $ | 27,783 | $ | 4,665 | $ | (538 | ) | $ | - | $ | 31,910 | ||||||||||||
Comprehensive gain:
|
||||||||||||||||||||||||
Net income
|
- | - | 2,011 | - | - | 2,011 | ||||||||||||||||||
Change in unrealized gains on securities available
|
||||||||||||||||||||||||
for sale, net of tax and reclassification adjustments
|
- | - | - | 683 | - | 683 | ||||||||||||||||||
Total Comprehensive Income
|
2,694 | |||||||||||||||||||||||
Treasury shares purchased
|
(7,500 | ) | - | - | - | (30 | ) | (30 | ) | |||||||||||||||
Treasury shares retired
|
(30 | ) | - | - | 30 | - | ||||||||||||||||||
Restricted stock granted
|
9,570 | - | - | - | - | - | ||||||||||||||||||
Restricted stock forfeited
|
(3,646 | ) | - | - | - | - | - | |||||||||||||||||
Compensation expense related to stock option and
|
||||||||||||||||||||||||
restricted stock grants
|
- | 52 | - | - | - | 52 | ||||||||||||||||||
Dividends on common stock ($.03 per share)
|
- | - | (99 | ) | - | - | (99 | ) | ||||||||||||||||
Balance December 31, 2009
|
3,259,786 | 27,805 | 6,577 | 145 | - | 34,527 | ||||||||||||||||||
Comprehensive gain:
|
||||||||||||||||||||||||
Net income
|
- | - | 2,176 | - | - | 2,176 | ||||||||||||||||||
Change in unrealized gains on securities available
|
||||||||||||||||||||||||
for sale, net of tax and reclassification adjustments
|
- | - | - | (98 | ) | - | (98 | ) | ||||||||||||||||
Total Comprehensive Income
|
2,078 | |||||||||||||||||||||||
Treasury shares purchased
|
(780 | ) | - | - | - | (4 | ) | (4 | ) | |||||||||||||||
Restricted stock granted
|
95,303 | - | - | - | - | - | ||||||||||||||||||
Restricted stock forfeited
|
(2,743 | ) | - | - | - | - | - | |||||||||||||||||
Compensation expense related to stock option and
|
||||||||||||||||||||||||
restricted stock grants
|
- | 65 | - | - | - | 65 | ||||||||||||||||||
Balance December 31, 2010
|
3,351,566 | $ | 27,870 | $ | 8,753 | $ | 47 | $ | (4 | ) | $ | 36,666 |
Years Ended December 31,
|
||||||||
2010
|
2009
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$ | 2,176 | $ | 2,011 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for loan losses
|
3,280 | 3,404 | ||||||
Provision for depreciation and amortization
|
736 | 773 | ||||||
Net change in trading securities
|
714 | 10,335 | ||||||
Impairment charge on equity securities
|
171 | - | ||||||
Net amortization of securities premiums and discounts
|
378 | 127 | ||||||
Net realized gain on sale of securities
|
(52 | ) | (134 | ) | ||||
Net gain on sale of premises and equipment
|
(2 | ) | (203 | ) | ||||
Net realized gain on sale of foreclosed real estate
|
(18 | ) | (190 | ) | ||||
Provision for foreclosed real estate
|
241 | 456 | ||||||
Deferred income taxes
|
(125 | ) | 976 | |||||
Earnings on investment in life insurance
|
(313 | ) | (156 | ) | ||||
Compensation expense for stock options and stock awards
|
65 | 52 | ||||||
Decrease (increase) in assets:
|
||||||||
Accrued interest receivable
|
27 | 172 | ||||||
Other assets
|
1,860 | (3,852 | ) | |||||
Increase (decrease) in accrued interest payable and other liabilities
|
242 | (309 | ) | |||||
Net Cash Provided by Operating Activities
|
9,380 | 13,462 | ||||||
Cash Flows from Investing Activities
|
||||||||
Securities available for sale:
|
||||||||
Purchases
|
(46,867 | ) | (45,067 | ) | ||||
Proceeds from sale of securities
|
1,081 | 17,456 | ||||||
Maturities, calls and principal repayments
|
29,303 | 19,713 | ||||||
Securities held to maturity:
|
||||||||
Purchases
|
(1,000 | ) | - | |||||
Net increase in loans
|
(8,980 | ) | (17,575 | ) | ||||
Purchases of interest bearing time deposits
|
(500 | ) | - | |||||
Proceeds from the sale of foreclosed real estate
|
2,549 | 1,552 | ||||||
Proceeds from the sale of bank premises and equipment
|
2 | 1,094 | ||||||
Purchases of bank premises and equipment
|
(406 | ) | (207 | ) | ||||
Purchases of bank-owned life insurance
|
(6,500 | ) | - | |||||
Increase in FHLB stock
|
(190 | ) | (70 | ) | ||||
Net Cash Used in Investing Activities
|
(31,508 | ) | (23,104 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Net increase in deposits
|
13,892 | 11,994 | ||||||
Proceeds from borrowings
|
10,000 | - | ||||||
Repayments of borrowings
|
(7,090 | ) | (56 | ) | ||||
Purchase of treasury stock
|
(4 | ) | (30 | ) | ||||
Dividends paid, net of reinvestments
|
- | (99 | ) | |||||
Net Cash Provided by Financing Activities
|
16,798 | 11,809 | ||||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
(5,330 | ) | 2,167 | |||||
Cash and Cash Equivalents - Beginning
|
23,079 | 20,912 | ||||||
Cash and Cash Equivalents - Ending
|
$ | 17,749 | $ | 23,079 | ||||
Supplementary Cash Flows Information
|
||||||||
Interest paid
|
$ | 5,705 | $ | 8,433 | ||||
Income taxes paid
|
$ | 784 | $ | 575 | ||||
Supplementary Schedule of Noncash Investing and Financing Activities
|
||||||||
Foreclosed real estate acquired in settlement of loans
|
$ | 1,326 | $ | 1,775 | ||||
Trading securities transferred to available for sale securities
|
$ | 2,241 | - |
NOTE 1
|
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Years
|
||||
Buildings and building improvements
|
20 – 40 | |||
Leasehold improvements
|
5 – 10 | |||
Furniture, fixtures and equipment
|
5 – 10 | |||
Computer equipment and software
|
3 – 5 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTE
|
2 – SEGMENT REPORTING
|
(Dollars in thousands)
|
Banking and
Financial Services
|
Insurance
Services
|
Total
|
|||||||||
Year Ended December 31, 2010:
|
||||||||||||
Net interest income from external sources
|
$ | 16,415 | $ | - | $ | 16,415 | ||||||
Other income from external sources
|
2,540 | 2,071 | 4,611 | |||||||||
Depreciation and amortization
|
724 | 12 | 736 | |||||||||
Income (loss) before income taxes
|
2,790 | (72 | ) | 2,718 | ||||||||
Income tax expense (benefit) (1)
|
571 | (29 | ) | 542 | ||||||||
Total assets
|
471,104 | 2,920 | 474,024 | |||||||||
Year Ended December 31, 2009:
|
||||||||||||
Net interest income from external sources
|
$ | 15,002 | $ | - | $ | 15,002 | ||||||
Other income from external sources
|
3,231 | 2,284 | 5,515 | |||||||||
Depreciation and amortization
|
762 | 11 | 773 | |||||||||
Income before income taxes
|
2,357 | 106 | 2,463 | |||||||||
Income tax expense (1)
|
410 | 42 | 452 | |||||||||
Total assets
|
451,834 | 3,007 | 454,841 |
(1)
|
Calculated at statutory tax rate of 40%
|
NOTE
|
3 – FAIR VALUE OF ASSETS AND LIABILITIES
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Dollars in thousands)
|
Fair
Value
Measurements
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level I)
|
Significant
Other
Observable
Inputs
(Level II)
|
Significant
Unobservable
Inputs
(Level III)
|
||||||||||||
December 31, 2010:
|
||||||||||||||||
U.S. Government agencies
|
$ | 21,189 | $ | - | $ | 21,189 | $ | - | ||||||||
State and political subdivisions
|
28,735 | - | 28,735 | - | ||||||||||||
Mortgage-backed securities
|
||||||||||||||||
US government-sponsored enterprises
|
33,286 | - | 33,286 | - | ||||||||||||
Private mortgage-backed securities
|
4,807 | - | 4,807 | - | ||||||||||||
Equity securities-financial services industry and other
|
1,363 | 1,213 | 150 | - | ||||||||||||
December 31, 2009:
|
||||||||||||||||
Trading securities
|
$ | 2,955 | $ | - | $ | 2,955 | $ | - | ||||||||
U.S. Government agencies
|
15,002 | - | 15,002 | - | ||||||||||||
State and political subdivisions
|
25,877 | - | 25,877 | - | ||||||||||||
Mortgage-backed securities
|
||||||||||||||||
US government-sponsored enterprises
|
21,877 | - | 21,877 | - | ||||||||||||
Private mortgage-backed securities
|
6,205 | - | 6,205 | - | ||||||||||||
Corporate debt securities
|
1,007 | - | 1,007 | - | ||||||||||||
Equity securities-financial services industry and other
|
1,347 | 1,091 | 256 | - |
(Dollars in thousands)
|
Fair
Value
Measurements
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level I)
|
Significant
Other
Observable
Inputs
(Level II)
|
Significant
Unobservable
Inputs
(Level III)
|
||||||||||||
December 31, 2010:
|
||||||||||||||||
Impaired loans
|
$ | 13,430 | $ | - | $ | - | $ | 13,430 | ||||||||
Foreclosed real estate
|
2,007 | - | - | 2,007 | ||||||||||||
December 31, 2009:
|
||||||||||||||||
Impaired loans
|
$ | 4,452 | $ | - | $ | - | $ | 4,452 | ||||||||
Foreclosed real estate
|
2,385 | - | - | 2,385 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
2010
|
2009
|
|||||||||||||||
(Dollars in thousands)
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
||||||||||||
Financial assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 17,749 | $ | 17,749 | $ | 23,079 | $ | 23,079 | ||||||||
Time deposits with other banks
|
600 | 600 | 100 | 100 | ||||||||||||
Trading securities
|
- | - | 2,955 | 2,955 | ||||||||||||
Securities available for sale
|
89,380 | 89,380 | 71,315 | 71,315 | ||||||||||||
Securities held to maturity
|
1,000 | 1,007 | - | - | ||||||||||||
Federal Home Loan Bank stock
|
2,235 | 2,235 | 2,045 | 2,045 | ||||||||||||
Loans receivable, net of allowance
|
331,837 | 334,762 | 327,463 | 330,441 | ||||||||||||
Accrued interest receivable
|
1,916 | 1,916 | 1,943 | 1,943 | ||||||||||||
Financial liabilities:
|
||||||||||||||||
Deposits
|
385,967 | 386,935 | 372,075 | 372,868 | ||||||||||||
Borrowings
|
36,000 | 38,168 | 33,090 | 34,963 | ||||||||||||
Junior subordinated debentures
|
12,887 | 8,647 | 12,887 | 9,090 | ||||||||||||
Accrued interest payable
|
269 | 269 | 361 | 361 | ||||||||||||
Off-balance financial instruments:
|
||||||||||||||||
Commitments to extend credit
|
- | - | - | - | ||||||||||||
Outstanding letters of credit
|
- | - | - | - |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTE
|
4 – SECURITIES
|
(Dollars in thousands)
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||||
December 31, 2010
|
||||||||||||||||
U.S. Government agencies
|
$ | 21,158 | $ | 78 | $ | (47 | ) | $ | 21,189 | |||||||
State and political subdivisions
|
29,353 | 97 | (715 | ) | 28,735 | |||||||||||
Mortgage-backed securities:
|
||||||||||||||||
US government-sponsored enterprises
|
32,560 | 747 | (21 | ) | 33,286 | |||||||||||
Private mortgage-backed securities
|
4,592 | 215 | - | 4,807 | ||||||||||||
Equity securities, financial services
|
||||||||||||||||
industry and other
|
1,638 | 9 | (284 | ) | 1,363 | |||||||||||
$ | 89,301 | $ | 1,146 | $ | (1,067 | ) | $ | 89,380 | ||||||||
December 31, 2009
|
||||||||||||||||
U.S. Government agencies
|
$ | 14,938 | $ | 85 | $ | (21 | ) | $ | 15,002 | |||||||
State and political subdivisions
|
25,987 | 221 | (331 | ) | 25,877 | |||||||||||
Mortgage-backed securities:
|
||||||||||||||||
US government-sponsored enterprises
|
21,083 | 795 | (1 | ) | 21,877 | |||||||||||
Private mortgage-backed securities
|
6,255 | 67 | (117 | ) | 6,205 | |||||||||||
Corporate debt securities
|
1,005 | 2 | - | 1,007 | ||||||||||||
Equity securities, financial services
|
||||||||||||||||
industry and other
|
1,806 | - | (459 | ) | 1,347 | |||||||||||
$ | 71,074 | $ | 1,170 | $ | (929 | ) | $ | 71,315 |
(Dollars in thousands)
|
Amortized Cost
|
Fair Value
|
||||||
Due in one year or less
|
$ | 7,833 | $ | 7,859 | ||||
Due after one year through five years
|
15,055 | 15,025 | ||||||
Due after five years through ten years
|
197 | 200 | ||||||
Due after ten years
|
27,426 | 26,840 | ||||||
Total bonds and obligations
|
50,511 | 49,924 | ||||||
Mortgage-backed securities:
|
||||||||
US government-sponsored enterprises
|
32,560 | 33,286 | ||||||
Private mortgage-backed securities
|
4,592 | 4,807 | ||||||
Equity securities, financial services industry and other
|
1,638 | 1,363 | ||||||
Total available for sale securities
|
$ | 89,301 | $ | 89,380 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Less Than Twelve Months
|
Twelve Months or More
|
Total
|
||||||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Gross
Unrealized
Losses
|
Fair Value
|
Gross
Unrealized
Losses
|
Fair Value
|
Gross
Unrealized
Losses
|
||||||||||||||||||
December 31, 2010
|
||||||||||||||||||||||||
U.S. Government agencies
|
$ | 6,962 | $ | (47 | ) | $ | - | $ | - | $ | 6,962 | $ | (47 | ) | ||||||||||
State and political subdivisions
|
18,006 | (578 | ) | 1,071 | (137 | ) | 19,077 | (715 | ) | |||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||||||||||
US government-sponsored enterprises
|
4,536 | (21 | ) | - | - | 4,536 | (21 | ) | ||||||||||||||||
Private mortgage-backed securities
|
- | - | - | - | - | - | ||||||||||||||||||
Equity securities, financial services
|
||||||||||||||||||||||||
industry and other
|
820 | (50 | ) | 445 | (234 | ) | 1,265 | (284 | ) | |||||||||||||||
Total Temporarily Impaired Securities
|
$ | 30,324 | $ | (696 | ) | $ | 1,516 | $ | (371 | ) | $ | 31,840 | $ | (1,067 | ) | |||||||||
December 31, 2009
|
||||||||||||||||||||||||
U.S. Government agencies
|
$ | 8,585 | $ | (21 | ) | $ | - | $ | - | $ | 8,585 | $ | (21 | ) | ||||||||||
State and political subdivisions
|
13,208 | (82 | ) | 2,467 | (249 | ) | 15,675 | (331 | ) | |||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||||||||||
US government-sponsored enterprises
|
22 | (1 | ) | - | - | 22 | (1 | ) | ||||||||||||||||
Private mortgage-backed securities
|
4,491 | (117 | ) | - | - | 4,491 | (117 | ) | ||||||||||||||||
Equity securities, financial services
|
||||||||||||||||||||||||
industry and other
|
124 | (66 | ) | 1,187 | (393 | ) | 1,311 | (459 | ) | |||||||||||||||
Total Temporarily Impaired Securities
|
$ | 26,430 | $ | (287 | ) | $ | 3,654 | $ | (642 | ) | $ | 30,084 | $ | (929 | ) |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(Dollars in thousands)
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Amortized
Cost
|
Fair
Value
|
||||||||||||
December 31, 2010
|
||||||||||||||||
State and political subdivisions
|
$ | 7 | $ | - | $ | 1,000 | $ | 1,007 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(Dollars in thousands)
|
Amortized Cost
|
Fair Value
|
||||||
Due in one year or less
|
$ | - | $ | - | ||||
Due after one year through five years
|
- | - | ||||||
Due after five years through ten years
|
- | - | ||||||
Due after ten years
|
1,000 | 1,007 | ||||||
Total bonds and obligations
|
$ | 1,000 | $ | 1,007 |
NOTE 5
|
– LOANS
|
(Dollars in thousands)
|
2010
|
2009
|
||||||
Commercial and industrial
|
$ | 15,045 | $ | 17,016 | ||||
Construction
|
20,862 | 27,555 | ||||||
Commercial real estate
|
204,407 | 193,091 | ||||||
Residential real estate
|
96,659 | 93,558 | ||||||
Consumer and other
|
1,395 | 1,919 | ||||||
338,368 | 333,139 | |||||||
Unearned net loan origination fees
|
(134 | ) | (180 | ) | ||||
Allowance for loan losses
|
(6,397 | ) | (5,496 | ) | ||||
Net Loans Receivable
|
$ | 331,837 | $ | 327,463 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 6
|
– ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY OF FINANCING RECEIVABLES
|
(Dollars in thousands)
|
2010
|
2009
|
||||||
Balance, at beginning of year
|
$ | 5,496 | $ | 5,813 | ||||
Provision for loan losses
|
3,280 | 3,404 | ||||||
Loans charged off
|
(2,526 | ) | (3,873 | ) | ||||
Recoveries
|
147 | 152 | ||||||
Balance, at end of year
|
$ | 6,397 | $ | 5,496 |
(Dollars in thousands)
|
30-59 Days
Past Due
|
60-89 days
Past Due
|
Greater Than
90 Days (a)
|
Total Past
Due
|
Current
|
Total Financing
Receivables
|
Recorded Investment
>90 Days
and
Accruing
|
|||||||||||||||||||||
December 31, 2010
|
||||||||||||||||||||||||||||
Commercial and industrial
|
$ | 182 | $ | 229 | $ | 98 | $ | 509 | $ | 14,536 | $ | 15,045 | $ | 20 | ||||||||||||||
Construction
|
- | - | 6,430 | 6,430 | 14,432 | 20,862 | - | |||||||||||||||||||||
Commercial real estate
|
2,316 | 3,946 | 14,959 | 21,221 | 183,186 | 204,407 | 29 | |||||||||||||||||||||
Residential real estate
|
3,029 | - | 1,244 | 4,273 | 92,386 | 96,659 | - | |||||||||||||||||||||
Consumer and other
|
3 | 16 | - | 19 | 1,376 | 1,395 | - | |||||||||||||||||||||
Total
|
$ | 5,530 | $ | 4,191 | $ | 22,731 | $ | 32,452 | $ | 305,916 | $ | 338,368 | $ | 49 | ||||||||||||||
December 31, 2009
|
||||||||||||||||||||||||||||
Commercial and industrial
|
$ | 111 | $ | - | $ | 247 | $ | 358 | $ | 16,658 | $ | 17,016 | $ | 7 | ||||||||||||||
Construction
|
1,821 | - | 4,307 | 6,128 | 21,427 | 27,555 | - | |||||||||||||||||||||
Commercial real estate
|
3,619 | 395 | 16,546 | 20,560 | 172,531 | 193,091 | 1,335 | |||||||||||||||||||||
Residential real estate
|
763 | 624 | 507 | 1,894 | 91,664 | 93,558 | 50 | |||||||||||||||||||||
Consumer and other
|
38 | - | 1 | 39 | 1,880 | 1,919 | - | |||||||||||||||||||||
Total
|
$ | 6,352 | $ | 1,019 | $ | 21,608 | $ | 28,979 | $ | 304,160 | $ | 333,139 | $ | 1,392 |
(a)
|
Includes loans greater than 90 days past due and still accruing
.
|
(Dollars in thousands)
|
2010
|
2009
|
||||||
Commercial and industrial
|
$ | 78 | $ | 240 | ||||
Construction
|
6,430 | 4,307 | ||||||
Commercial real estate
|
14,930 | 15,211 | ||||||
Residential real estate
|
1,244 | 457 | ||||||
Consumer and other
|
- | 1 | ||||||
Total
|
$ | 22,682 | $ | 20,216 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Commercial
and Industrial
|
Construction
|
Commercial
Real Estate
|
||||||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||||||||
Grade:
|
||||||||||||||||||||||||
Pass
|
$ | 14,268 | $ | 13,924 | $ | 10,669 | $ | 16,148 | $ | 162,147 | $ | 153,576 | ||||||||||||
Special mention
|
679 | 1,804 | 2,753 | 6,540 | 19,880 | 15,278 | ||||||||||||||||||
Substandard
|
75 | 1,261 | 7,440 | 4,739 | 21,920 | 23,597 | ||||||||||||||||||
Doubtful
|
23 | 27 | - | 128 | 460 | 640 | ||||||||||||||||||
Total
|
$ | 15,045 | $ | 17,016 | $ | 20,862 | $ | 27,555 | $ | 204,407 | $ | 193,091 |
Residential
Real Estate
|
Consumer
and Other
|
||||||||||||||||
2010
|
2009
|
2010
|
2009
|
||||||||||||||
Grade:
|
|||||||||||||||||
Pass
|
$ | 93,884 | $ | 91,948 |
Performing
|
$ | 1,382 | $ | 1,903 | ||||||||
Special mention
|
1,083 | 121 |
Nonperforming
|
13 | 16 | ||||||||||||
Substandard
|
1,681 | 1,476 |
Total
|
$ | 1,395 | $ | 1,919 | ||||||||||
Doubtful
|
11 | 13 | |||||||||||||||
Total
|
$ | 96,659 | $ | 93,558 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(Dollars in thousands)
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
December 31, 2010
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial and industrial
|
$ | - | $ | - | $ | - | $ | 188 | $ | - | ||||||||||
Construction
|
3,230 | 3,535 | - | 2,885 | 38 | |||||||||||||||
Commercial real estate
|
4,863 | 5,284 | - | 8,122 | 118 | |||||||||||||||
Residential real estate
|
560 | 560 | - | 849 | 7 | |||||||||||||||
Consumer and other
|
- | - | - | 9 | - | |||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial and industrial
|
78 | 78 | 54 | 71 | - | |||||||||||||||
Construction
|
3,406 | 5,481 | 610 | 2,568 | - | |||||||||||||||
Commercial real estate
|
10,651 | 11,453 | 493 | 10,379 | 299 | |||||||||||||||
Residential real estate
|
684 | 684 | 233 | 449 | 1 | |||||||||||||||
Consumer and other
|
- | - | - | - | - | |||||||||||||||
Total:
|
||||||||||||||||||||
Commercial and industrial
|
$ | 78 | $ | 78 | $ | 54 | $ | 259 | $ | - | ||||||||||
Construction
|
6,636 | 9,016 | 610 | 5,453 | 38 | |||||||||||||||
Commercial real estate
|
15,514 | 16,737 | 493 | 18,501 | 417 | |||||||||||||||
Residential real estate
|
1,244 | 1,244 | 233 | 1,298 | 8 | |||||||||||||||
Consumer and other
|
- | - | - | 9 | - | |||||||||||||||
$ | 23,472 | $ | 27,075 | $ | 1,390 | $ | 25,519 | $ | 463 | |||||||||||
December 31, 2009
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial and industrial
|
$ | 879 | $ | 879 | $ | - | $ | 1,342 | $ | 9 | ||||||||||
Construction
|
2,025 | 2,025 | - | 1,468 | 40 | |||||||||||||||
Commercial real estate
|
14,358 | 14,816 | - | 8,818 | 385 | |||||||||||||||
Residential real estate
|
1,433 | 1,433 | - | 1,200 | 6 | |||||||||||||||
Consumer and other
|
- | - | - | 3 | - | |||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial and industrial
|
185 | 185 | 13 | 115 | 7 | |||||||||||||||
Construction
|
2,282 | 3,914 | 550 | 3,261 | - | |||||||||||||||
Commercial real estate
|
3,613 | 3,613 | 1,079 | 2,499 | 41 | |||||||||||||||
Residential real estate
|
13 | 13 | 6 | 3 | - | |||||||||||||||
Consumer and other
|
16 | 16 | 9 | 10 | - | |||||||||||||||
Total:
|
||||||||||||||||||||
Commercial and industrial
|
$ | 1,064 | $ | 1,064 | $ | 13 | $ | 1,457 | $ | 16 | ||||||||||
Construction
|
4,307 | 5,939 | 550 | 4,729 | 40 | |||||||||||||||
Commercial real estate
|
17,971 | 18,429 | 1,079 | 11,317 | 426 | |||||||||||||||
Residential real estate
|
1,446 | 1,446 | 6 | 1,203 | 6 | |||||||||||||||
Consumer and other
|
16 | 16 | 9 | 13 | - | |||||||||||||||
$ | 24,804 | $ | 26,894 | $ | 1,657 | $ | 18,719 | $ | 488 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 7
|
– PREMISES AND EQUIPMENT
|
(Dollars in thousands)
|
2010
|
2009
|
||||||
Land and land improvements
|
$ | 1,973 | $ | 1,959 | ||||
Building and building improvements
|
5,891 | 5,876 | ||||||
Leasehold improvements
|
396 | 396 | ||||||
Furniture, fixtures and equipment
|
6,396 | 6,184 | ||||||
Assets in progress
|
187 | 137 | ||||||
14,843 | 14,552 | |||||||
Accumulated depreciation
|
(8,094 | ) | (7,487 | ) | ||||
Premises and equipment, net
|
$ | 6,749 | $ | 7,065 |
NOTE 8
|
– DEPOSITS
|
(Dollars in thousands)
|
2010
|
2009
|
||||||
Non-interest bearing demand
|
$ | 35,362 | $ | 34,155 | ||||
Savings, money market and interest-bearing demand
|
258,252 | 236,204 | ||||||
Time deposits less than $100 thousand
|
62,094 | 63,464 | ||||||
Time deposits $100 thousand and over
|
30,259 | 38,252 | ||||||
Total deposits
|
$ | 385,967 | $ | 372,075 |
2010
|
$ | 62,231 | ||
2011
|
8,314 | |||
2012
|
15,921 | |||
2013
|
1,040 | |||
2014
|
4,442 | |||
Thereafter
|
405 | |||
$ | 92,353 |
NOTE 9
|
– BORROWINGS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Initial
|
Interest
|
Balance at December 31,
|
|||||||||||
Maturity Date
|
Conversion Date
|
Rate
|
2010
|
2009
|
|||||||||
November 3, 2010
|
N/A | 5.00 | % | $ | - | $ | 3,090 | ||||||
December 21, 2010
|
December 21, 2003
|
5.14 | % | - | 4,000 | ||||||||
December 7, 2016
|
December 7, 2008
|
4.00 | % | 5,000 | 5,000 | ||||||||
June 21, 2017
|
June 21, 2008
|
4.60 | % | 6,000 | 6,000 | ||||||||
December 7, 2017
|
December 7, 2017
|
3.97 | % | 5,000 | 5,000 | ||||||||
December 26, 2017
|
December 26, 2009
|
3.66 | % | 5,000 | 5,000 | ||||||||
December 26, 2017
|
December 26, 2010
|
3.79 | % | 5,000 | 5,000 | ||||||||
$ | 26,000 | $ | 33,090 |
2011
|
$ | - | ||
2012
|
- | |||
2013
|
- | |||
2014
|
- | |||
2015
|
- | |||
Thereafter
|
26,000 | |||
$ | 26,000 |
NOTE 10
|
– JUNIOR SUBORDINATED DEBENTURES AND MANDATORY REDEEMABLE CAPITAL DEBENTURES
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 11
|
– LEASE COMMITMENTS AND TOTAL RENTAL EXPENSE
|
2011
|
$ | 447 | ||
2012
|
369 | |||
2013
|
340 | |||
2014
|
188 | |||
2015
|
115 | |||
Thereafter
|
65 | |||
$ | 1,524 |
NOTE 12
|
– EMPLOYEE BENEFIT PLANS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 13
|
– COMPREHENSIVE INCOME
|
(Dollars in thousands)
|
2010
|
2009
|
||||||
Unrealized gains (losses) on available for sale securities
|
$ | (281 | ) | $ | 1,272 | |||
Less: reclassification adjustments for realized gains (losses) and
|
||||||||
impairment write-downs included in net income
|
(119 | ) | 134 | |||||
Net unrealized gains (losses)
|
(162 | ) | 1,138 | |||||
Tax effect
|
64 | (455 | ) | |||||
Net of tax amount
|
$ | (98 | ) | $ | 683 |
NOTE 14
|
– EARNINGS PER SHARE
|
(In Thousands, Except per Share Amounts)
|
Income
(Numerator)
|
Shares
(Denominator)
|
Per Share
Amount
|
|||||||||
Year Ended December 31, 2010:
|
||||||||||||
Basic earnings per share:
|
||||||||||||
Net income applicable to common stockholders
|
$ | 2,176 | 3,250 | $ | 0.67 | |||||||
Effect of dilutive securities:
|
||||||||||||
Stock options and nonvested stock awards
|
- | 50 | ||||||||||
Diluted earnings per share:
|
||||||||||||
Net income applicable to common stockholders
|
||||||||||||
and assumed conversions
|
$ | 2,176 | 3,300 | $ | 0.66 |
Year Ended December 31, 2009:
|
||||||||||||
Basic earnings per share:
|
||||||||||||
Net loss applicable to common stockholders
|
$ | 2,011 | 3,248 | $ | 0.62 | |||||||
Effect of dilutive securities:
|
||||||||||||
Stock options and nonvested stock awards
|
- | 11 | ||||||||||
Diluted earnings per share:
|
||||||||||||
Net loss applicable to common stockholders
|
||||||||||||
and assumed conversions
|
$ | 2,011 | 3,259 | $ | 0.62 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 15
|
– STOCK OPTION PLANS
|
2010
|
2009
|
|||||||||||||||
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value
|
|||||||||||||
Restricted stock, beginning of year
|
13,975 | $ | 8.34 | 12,945 | $ | 12.68 | ||||||||||
Granted
|
95,303 | 4.44 | 9,570 | 4.75 | ||||||||||||
Forfeited
|
(2,743 | ) | 5.52 | (3,646 | ) | 7.96 | ||||||||||
Vested
|
(4,544 | ) | 9.65 | (4,894 | ) | 12.73 | ||||||||||
Restricted stock, end of year
|
101,991 | $ | 4.71 | 13,975 | $ | 8.34 |
Number of shares
|
||||
2011
|
6,675 | |||
2012
|
20,970 | |||
2013
|
22,035 | |||
2014
|
17,732 | |||
2015
|
16,508 | |||
2016
|
16,508 | |||
2017
|
1,563 | |||
101,991 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Number of Shares
|
||||||||
2010
|
2009
|
|||||||
Accumulated shares granted
|
117,379 | 24,819 | ||||||
Vested during the year
|
4,544 | 4,894 |
Number of
Shares
|
Weighted
Average Exercise
Price per Share
|
Weighted
Average
Contractual Term
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding, December 31, 2008
|
217,371 | $ | 12.34 | |||||||||||||
Options expired
|
(1,234 | ) | 9.50 | |||||||||||||
Options forfeited
|
(28,775 | ) | 11.93 | |||||||||||||
Outstanding, December 31, 2009
|
187,362 | 12.43 | ||||||||||||||
Options expired
|
(1,234 | ) | 6.87 | |||||||||||||
Options forfeited
|
(70,053 | ) | 12.69 | |||||||||||||
Outstanding, December 31, 2010
|
116,075 | $ | 12.33 | 3.06 | $ | - | ||||||||||
Exercisable, December 31, 2010
|
116,075 | $ | 12.33 | 3.06 | $ | - |
Exercise
Price
|
Number
Outstanding
|
Remaining
Contractual Life
|
Number
Exercisable
|
|||||||||||
8.86 | 19,483 | 2.1 | 19,483 | |||||||||||
8.90 | 5,788 | 1.1 | 5,788 | |||||||||||
8.99 | 11,447 | 2.8 | 11,447 | |||||||||||
9.33 | 5,875 | 1.8 | 5,875 | |||||||||||
12.63 | 7,826 | 4.8 | 7,826 | |||||||||||
13.39 | 19,416 | 4.1 | 19,416 | |||||||||||
14.67 | 39,532 | 3.1 | 39,532 | |||||||||||
16.45 | 6,708 | 3.8 | 6,708 | |||||||||||
116,075 | 116,075 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 16
|
– INCOME TAXES
|
(Dollars in thousands)
|
2010
|
2009
|
||||||
Current:
|
||||||||
Federal
|
$ | 525 | $ | (344 | ) | |||
State
|
142 | (180 | ) | |||||
667 | (524 | ) | ||||||
Deferred:
|
||||||||
Federal
|
(122 | ) | 723 | |||||
State
|
(3 | ) | 253 | |||||
(125 | ) | 976 | ||||||
$ | 542 | $ | 452 |
(Dollars in thousands)
|
2010
|
2009
|
||||||||||||||
Federal income tax (benefit) at statutory rate
|
$ | 924 | 34 | % | $ | 837 | 34 | % | ||||||||
Tax exempt interest
|
(382 | ) | (14 | ) | (410 | ) | (17 | ) | ||||||||
State income tax (benefit), net of federal income tax effect
|
92 | 3 | 49 | 2 | ||||||||||||
Bank owned life insurance
|
(107 | ) | (4 | ) | (55 | ) | (2 | ) | ||||||||
Other
|
15 | 1 | 31 | 1 | ||||||||||||
$ | 542 | 20 | % | $ | 452 | 18 | % |
(Dollars in thousands)
|
2010
|
2009
|
||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$ | 2,555 | $ | 2,195 | ||||
Deferred compensation
|
606 | 602 | ||||||
Alternate minimum tax
|
110 | - | ||||||
Foreclosed real estate
|
56 | 356 | ||||||
Intangible assets
|
46 | 52 | ||||||
Other
|
122 | 105 | ||||||
Total Deferred Tax Assets
|
3,495 | 3,310 | ||||||
Deferred tax liabilities:
|
||||||||
Premises and equipment
|
(180 | ) | (181 | ) | ||||
Prepaid expenses
|
(171 | ) | (178 | ) | ||||
OTTI Impairment
|
(68 | ) | - | |||||
Unrealized gain on securities, available for sale
|
(32 | ) | (96 | ) | ||||
Total Deferred Tax Liabilities
|
(451 | ) | (455 | ) | ||||
Net Deferred Tax Asset
|
$ | 3,044 | $ | 2,855 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 17
|
– TRANSACTIONS WITH EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS
|
(Dollars in thousands)
|
2010
|
|||
Balance, beginning
|
$ | 3,116 | ||
Disbursements
|
2,716 | |||
Repayments
|
(1,566 | ) | ||
Balance, ending
|
$ | 4,266 |
(Dollars in thousands)
|
2010
|
2009
|
||||||
Commitments to grant loans
|
$ | 12,631 | $ | 8,636 | ||||
Unfunded commitments under lines of credit
|
30,506 | 30,268 | ||||||
Outstanding standby letters of credit
|
2,103 | 2,157 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 19
|
– REGULATORY MATTERS
|
Actual
|
For Capital Adequacy
Purposes
|
To be Well
Capitalized under Prompt Corrective Action Provisions
|
||||||||||||||||
(Dollars in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||
As of December 31, 2010
|
||||||||||||||||||
Total capital (to risk-weighted assets)
|
$ | 47,636 | 13.63 | % | $ | >27,959 |
≥8.00%
|
$ | >34,949 |
≥10.00%
|
||||||||
Tier I capital (to risk-weighted assets)
|
43,242 | 12.37 |
>13,980
|
≥4.00
|
>20,969
|
≥6.00
|
||||||||||||
Tier I capital (to average assets)
|
43,242 | 9.04 |
>19,140
|
≥4.00
|
>23,925
|
≥5.00
|
||||||||||||
As of December 31, 2009
|
||||||||||||||||||
Total capital (to risk-weighted assets)
|
$ | 45,019 | 13.17 | % | $ | ≥27,351 |
≥8.00%
|
$ | ≥ 34,189 |
≥
10.00%
|
||||||||
Tier I capital (to risk-weighted assets)
|
40,730 | 11.91 |
≥13,676
|
≥4.00
|
≥20,513
|
≥6.00
|
||||||||||||
Tier I capital (to average assets)
|
40,730 | 9.07 |
≥17,956
|
≥4.00
|
≥22,444
|
≥5.00
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 20
|
– PARENT COMPANY ONLY FINANCIAL
|
December 31,
|
||||||||
(Dollars in thousands)
|
2010
|
2009
|
||||||
Assets:
|
||||||||
Cash
|
$ | 856 | $ | 830 | ||||
Investment in subsidiary
|
46,677 | 44,385 | ||||||
Securities, available for sale
|
474 | 582 | ||||||
Loans
|
967 | 1,004 | ||||||
Accrued interest and other assets
|
705 | 688 | ||||||
Total Assets
|
$ | 49,679 | $ | 47,489 | ||||
Liabilities and Stockholders' Equity:
|
||||||||
Other liabilities
|
$ | 126 | $ | 75 | ||||
Junior subordinated debentures
|
12,887 | 12,887 | ||||||
Stockholders' Equity
|
36,666 | 34,527 | ||||||
Total Liabilities and Stockholders’ Equity
|
$ | 49,679 | $ | 47,489 |
Year Ended December 31,
|
||||||||
(Dollars in thousands)
|
2010
|
2009
|
||||||
Dividends from banking subsidiary
|
$ | - | $ | 99 | ||||
Interest and fees on loans
|
61 | 64 | ||||||
Interest on investments
|
16 | 26 | ||||||
Net realized loss on sale of securities
|
(3 | ) | - | |||||
Impairment charge on equity securities
|
(171 | ) | - | |||||
Interest expense on debentures
|
(225 | ) | (306 | ) | ||||
Other expenses
|
(181 | ) | (152 | ) | ||||
Loss before Income Tax Benefit and Equity in
|
||||||||
Undistributed Net Income of Banking Subsidiary
|
(503 | ) | (269 | ) | ||||
Income tax benefit
|
171 | 125 | ||||||
Loss before Equity in Undistributed Net
|
||||||||
Income of Banking Subsidiary
|
(332 | ) | (144 | ) | ||||
Equity in undistributed net income of banking subsidiary
|
2,121 | 1,768 | ||||||
Equity in undistributed net income of nonbanking subsidiary
|
387 | 387 | ||||||
Net Income
|
$ | 2,176 | $ | 2,011 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Year Ended December 31
|
||||||||
(Dollars in thousands)
|
2010
|
2009
|
||||||
Cash Flows from Operating Activities:
|
||||||||
Net Income
|
$ | 2,176 | $ | 2,011 | ||||
Adjustments to reconcile net income to net cash provided by
|
||||||||
operating activities:
|
||||||||
Net change in other assets and liabilities
|
19 | 1,009 | ||||||
Equity in undistributed net income of banking subsidiary
|
(2,508 | ) | (2,154 | ) | ||||
Net Cash Provided (Used) by Operating Activities
|
(313 | ) | 866 | |||||
Cash Flows Used In Investing Activities:
|
||||||||
Securities available for sale:
|
||||||||
Maturities, calls and principal repayments
|
306 | 171 | ||||||
Net decrease in loans
|
37 | 34 | ||||||
Capital contribution to banking subsidiary
|
- | (1,124 | ) | |||||
Net Cash Provided (Used) In Investing Activities
|
343 | (919 | ) | |||||
Cash Flows from Financing Activities:
|
||||||||
Cash dividends paid, net of reinvestments
|
- | (99 | ) | |||||
Purchase of treasury stock
|
(4 | ) | (30 | ) | ||||
Net Cash Used In Financing Activities
|
(4 | ) | (129 | ) | ||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
26 | (182 | ) | |||||
Cash and Cash Equivalents - Beginning of Year
|
830 | 1,012 | ||||||
Cash and Cash Equivalents - End of Year
|
$ | 856 | $ | 830 |
NOTE 21
|
– CONTINGENCIES
|
Exhibit Number
|
Description
|
|
3.1
|
Certificate of Incorporation (incorporated by reference to Exhibit 99.4 to the Registration Statement on Form 8-B filed with the SEC on December 13, 1996.)
|
|
3.2
|
Amendment to Certificate of Incorporation (incorporated by reference to Exhibit A to the Definitive Proxy Statement on Schedule 14-A filed with the SEC on March 31, 1997.)
|
|
3.3
|
Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit A to the Definitive Proxy Statement on Schedule 14-A filed with the SEC on January 28, 2009.)
|
|
3.4
|
Amended and Restated By-laws (incorporated by reference to Exhibit 3.II to the Current Report on Form 8-K filed with the SEC on April 28, 2010.)
|
|
10.1*
|
1995 Incentive Stock Option Plan (incorporated by reference to Exhibit 99.6 to the Registration Statement on Form 8-B filed with the SEC on December 13, 1996.)
|
|
10.2*
|
2001 Stock Option Plan (incorporated by reference to Exhibit B to the Definitive Proxy Statement on Schedule 14-A filed with the SEC on March 19, 2001.)
|
|
10.3*
|
2004 Equity Incentive Plan (incorporated by reference to Exhibit C to the Definitive Proxy Statement on Schedule 14-A filed with the SEC on March 15, 2005.)
|
|
10.4*
|
Amended and Restated Director Deferred Compensation Agreement (incorporated by reference to Exhibit 10 to the Current Report on Form 8-K filed with the SEC on December 19, 2008.)
|
|
10.5*
|
Amended and Restated Executive Incentive and Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on January 26, 2010.)
|
|
10.6*
|
Employment Agreement by and between the Company, the Bank and Donald L. Kovach, dated July 15, 2009 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on July 20, 2009.)
|
|
10.8*†
|
Salary Continuation Agreement, dated March 15, 2000, by and between the Company and Donald L. Kovach.
|
|
10.9*†
|
Amendment #1 to the Salary Continuation Agreement with Donald L. Kovach dated June 11, 2002.
|
|
10.10*
|
Amendment #2 to the Salary Continuation Agreement with Donald L. Kovach dated January 7, 2004 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on March 23, 2004.)
|
|
10.11*
|
Amendment #3 to the Salary Continuation Agreement with Donald L. Kovach dated October 17, 2007 (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed with the SEC on November 14, 2007.)
|
|
10.12*
|
Employment Agreement by and between the Bank and Tammy Case dated February 20, 2008 (incorporated by reference to Exhibit 10.B to the Current Report on Form 8-K filed with the SEC on February 26, 2008.)
|
|
10.13*
|
Employment Agreement by and between Tri-State Insurance Agency, Inc. and George Lista dated September 1, 2006 (incorporated by reference to Exhibit 10.A to the Current Report on Form 8-K filed with the SEC on September 7, 2006.)
|
|
10.14*
|
Employment Agreement by and between the Company, Bank and Anthony Labozzetta dated January 20, 2010 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on January 26, 2010.)
|
|
10.15*
|
Employment Agreement by and between the Company, Bank and Steven M. Fusco dated June 23, 2010 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 29, 2010.)
|
|
List of Subsidiaries.
|
||
Consent of ParenteBeard LLC.
|
||
Certification of pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification of pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
†
|
Filed herewith.
|
*
|
Management contract or compensatory plan or arrangement.
|
|
(a)
|
a reorganization, merger, consolidation or sale of all or substantially all of the assets of the Company, or a similar transaction in which the Company is not the resulting entity;
|
|
(b)
|
individuals who constitute the Incumbent Board (as herein defined) of the Company cease for any reason to constitute a majority thereof;
|
|
(c)
|
an event of a nature that would be required to be reported in response to Item I of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or
|
|
(d)
|
Without limitation, a change in control shall be deemed to have occurred at such time as (i) any “person” (as the term is used in Section 13(d) and 14(d) of the Exchange Act) other than the Company or the trustees or any administration of any employee stock ownership plan and trust, or any other employee benefit plans, established by the Company from time to time is or becomes a “beneficial owner” (as defined in Rule 13-d under the Exchange Act) directly or indirectly, of securities of the Company representing 25% or more of the Company’s outstanding securities ordinarily having the right to vote at the election of directors; or
|
|
(e)
|
A proxy statement soliciting proxies from stockholders of the Company is disseminated by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan or transaction are exchanged or converted into cash or property or securities not issued by the Company;
|
|
(f)
|
A tender offer is made for 25% or more of the voting securities of the Company and the shareholder owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender and such tendered shares have been accepted by the tender offeror.
|
EXEUCTIVE:
|
COMPANY:
|
|
SUSSEX COUNTY STATE BANK
|
||
/s/ Donald L. Kovach
|
/s/ Terry H. Thompson
|
|
Donald L. Kovach
|
By: Terry H. Thompson
|
|
Title: EVP/COO
|
6.1
|
Claims Procedure
. A Participant or beneficiary (“Claimant”) who had not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits as follows:
|
|
6.1.1
|
Initiation — Written Claim
. The claimant initiates a claim by submitting to the Company a written claim for the benefits.
|
|
6.1.2
|
Timing of Company Response
. The Company shall respond to such claimant within 90 days after receiving the claim. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 90 day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision.
|
|
6.1.3
|
Notice of Decision
. If the Company denies part or all of the claim, the Company shall notify the claimant in writing of such denial. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:
|
|
6.1.3.1.1
|
The specific reasons for the denial,
|
|
6.1.3.1.2
|
A reference to the specific provisions of the Plan on which the denial is based,
|
|
6.1.3.1.3
|
A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,
|
|
6.1.3.1.4
|
An explanation of the Plan’s review procedures and the time limits applicable to such procedures, and
|
|
6.1.3.1.5
|
A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.
|
6.2
|
Review Procedure
. If the Company denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Company of the denial, as follows:
|
|
6.2.1
|
Initiation — Written Request
. To initiate the review, the claimant, within 60 days after receiving the Company’s notice of denial, must file with the Company a written request for review.
|
|
6.2.2
|
Additional Submissions — Information Access
. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Company shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.
|
|
6.2.3
|
Consideration on Review
. In considering the review, the Company shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
|
|
6.2.4
|
Timing of Company Response
. The Company shall respond in writing to such claimant within 60 days after receiving the request for review. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 60 days by notifying the claimant in writing, prior to the end of the initial 60 day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision.
|
|
6.2.5
|
Notice of Decision
. The Company shall notify the claimant in writing of its decision on review. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:
|
|
6.2.5.1
|
The specific reasons for the denial,
|
|
6.2.5.2
|
A reference to the specific provisions of the Plan on which the denial is based,
|
|
6.2.5.1
|
The specific reasons for the denial,
|
|
6.2.5.2
|
A reference to the specific provisions of the Plan on which the denial is based,
|
|
6.2.5.3
|
A statement that the claimant is entitled to receive, upon request free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits, and
|
|
6.2.5.4
|
A statement of the claimant’s right to bring a civil action under ERISA Section 502(a)
|
Executive
|
Company
|
|
Sussex Bank
|
||
/s/ David L. Kovach
|
/s/ Terry H. Thompson
|
|
David L. Kovach
|
Terry H. Thompson
|
|
Executive Vice President/
|
||
Chief Operating Officer
|
|
1.
|
Sussex Bank
|
|
1.
|
I have reviewed this year end report on Form 10-K of Sussex Bancorp;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: March 16, 2011
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/s/ Anthony Labozzetta
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Anthony Labozzetta
|
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Chief Executive Officer and President
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(Principal Executive Officer)
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1.
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I have reviewed this year end report on Form 10-K of Sussex Bancorp;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 16, 2011
|
/s/ Steven M. Fusco
|
Steven M. Fusco
|
|
Chief Financial Officer and Senior Vice President
|
|
(Principal Financial Officer)
|
|
A)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) and
|
|
B)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Sussex Bancorp as of the dates and for the periods covered by the Report.
|
Date: March 16, 2011
|
/s/ Anthony Labozzetta
|
|
Anthony Labozzetta
|
||
Chief Executive Officer and President
|
||
(Principal Executive Officer)
|
||
/s/ Steven M. Fusco
|
|
|
Steven M. Fusco
|
||
Chief Financial Officer and Senior Vice President
|
||
(Principal Financial Officer)
|