Sussex Bancorp Reports Operating Results (10-Q)
Sussex Bancorp has a market cap of $17 million; its shares were traded at around $5.24 with a P/E ratio of 8.1 and P/S ratio of 0.6.
Highlight of Business Operations:Overview - The Company realized net income of $305 thousand for the second quarter of 2010, a decrease of $290 thousand from net income of $595 thousand reported for the same period in 2009. Basic and diluted earnings per share for the three months ended June 30, 2010 were $0.09 compared to the basic and diluted earnings per share of $0.18 for the comparable period of 2009. The decrease in net income and earnings per share are largely the result of an increased provision for loan losses, an impairment write-down on equity securities and severance expenses.
The decrease in net income reflects a $541 thousand increase in the provision for loan losses and a $310 thousand decrease in non-interest income offset by a $260 thousand increase in net interest income and a decline in non-interest expense of $164 thousand. During the second quarter of 2010, our net interest income increased $260 thousand compared to the prior year period, as our total interest expense improved by $651 thousand, while interest income declined $391 thousand. These results reflect management s effort to reduce funding costs, which helped improve the Company s net interest margin while yields in the securities and loan portfolios declined, reflecting the current low interest rate environment.
Net interest income, on a fully taxable equivalent basis (a 39% tax rate), increased $234 thousand, or 6.1%, to $4.1 million for the three months ended June 30, 2010 from $3.9 million for the second quarter of 2009. Although the average balance in interest earning assets decreased $3.1 million, or 0.7%, to $445.8 million for the three months ended June 30, 2010, the average balance in total loans increased $5.9 million, or 1.8%, to $331.0 million. Overall the average balance in interest bearing liabilities decreased $2.5 million, or 0.6 %, to $402.9 million during the same three month period, as NOW account average balances increased $6.5 million or 11.3%.
Total interest income on securities, on a fully taxable equivalent basis, decreased $379 thousand, to $850 thousand for the quarter ended June 30, 2010 from $1.2 million for the second quarter of 2009. This decline was driven by a 73 basis point decrease in the yield on securities from 5.06% in the second quarter of 2009 to 4.33% for the second quarter of 2010, as the average balance of total securities decreased $18.6 million, or 19.1% between the two second quarter periods. The decrease in the average balance in the securities portfolio reflects a $15.9 million decline in taxable securities and a $2.7 million decrease in tax-exempt securities. The decrease in security balances between the two second quarter periods was used in part to fund loan growth
Other interest-earning assets include federal funds sold and interest bearing deposits in other banks. The average balances in other interest-earning asset increased $9.6 million to $36.0 million in the second quarter of 2010 from $26.4 million during the second quarter a year earlier. The yield on these assets declined to 0.20% in the second quarter of 2010 from 0.24% during the same period a year earlier, as the interest earned increased $2 thousand to $18 thousand in the second quarter of 2010.
The interest earned on total loans receivable decreased $40 thousand to $4.7 million for the second quarter of 2010 from $4.8 million for the second quarter in 2009, while the average balance in loans receivable increased $5.8 million, or 1.8%, to $331.0 million in the current three month period from $325.2 million in the same period of 2009. The average rate earned on loans decreased 16 basis points from 5.91% for the three months ended June 30, 2009 to 5.75% for the same period in 2010. The increase in our loan portfolio average balance reflects our continuing efforts to build market share and remain a source of credit for businesses in our communities. Approximately 7 basis points of the decrease in yield is related to lower market rates of interest, while the remaining 9 basis point decline can be attributed to an $10.0 million increase in non-accrual loan balances between the two quarterly periods.
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