Sussex Bancorp Reports Operating Results (10-Q)
Sussex Bancorp has a market cap of $17.88 million; its shares were traded at around $5.5 with a P/E ratio of 9.82 and P/S ratio of 0.63.
Highlight of Business Operations:Overview - The Company realized net income of $631 thousand for the third quarter of 2010, a decrease of $266 thousand from net income of $897 thousand reported for the same period in 2009. Basic and diluted earnings per share for the three months ended September 30, 2010 were $0.19 compared to the basic and diluted earnings per share of $0.28 for the comparable period of 2009. The decrease in net income reflects a $142 thousand increase in the provision for loan losses, a $131 thousand increase in non-interest expenses and a $104 thousand decrease in non-interest income, offset by a decrease in the provision for income taxes of $183 thousand. The increase in non-interest expense was largely due to an increase in write-downs on foreclosed real estate and higher loan collection costs. The decline in non-interest income is largely due to lower other income, insurance commissions, and security gains as compared to last year.
Net income before taxes on the Company s segment operations from Tri-State decreased $125 thousand resulting in a net loss before taxes of $46 thousand in the third quarter of 2010 compared to net income before taxes of $79 thousand in the same period in 2009. This decline was the combination of insurance commission and fee income decreasing $63 thousand and other expenses increasing $62 thousand between the two third quarter periods.
Net interest income, on a fully taxable equivalent basis (a 39% tax rate), decreased $83 thousand, or 1.9%, to $4.3 million for the three months ended September 30, 2010 from $4.4 million for the third quarter of 2009. The decline was due to the decrease in the yield on our interest earning assets declining faster then the cost of interest bearing liabilities, leading to a decrease in the net interest margin, on a fully taxable equivalent basis, of 26 basis points to 3.78% for the three months ended September 30, 2010 compared to 4.04% for the same period in 2009. This decline reflects a 61 basis points decrease in the yield on total earning assets to 4.99%, which was in part offset by a 42 basis points decline in the cost of total interest bearing liabilities to 1.33% for the three month period ended September 30, 2010 as compared to the same period a year earlier. The decrease in yield on earning assets reflects the decrease in market rates of interest, largely in the securities portfolio, and the effect of a $9.1 million increase in non-performing loan balances between the two third quarter periods. The decrease in cost of interest bearing liabilities is related to management actively reducing the rates paid on interest bearing core deposits and the repricing of time deposits in a lower market rate environment between the two third quarter periods.
The decline in net interest income for the three months ended September 30, 2010 as a result of the decrease in the net interest margin was mostly offset by an increase of $20.7 million, or 4.8%, in average balances in interest earning assets to $448.5 million and a $23.5 million, or 6.2%, increase in total interest bearing liabilities to $406.3 million as compared to the same period last year.
Total interest income on securities, on a fully taxable equivalent basis, decreased $266 thousand, to $848 thousand for the quarter ended September 30, 2010 from $1.1 million for the third quarter of 2009. This decline was driven by a 69 basis point decrease in the yield on securities from 4.89% to 4.20% between the two third quarter periods and lower average balances of total securities, which decreased $10.2 million, or 11.3% between the two same periods. The decrease in the average balance in the securities portfolio reflects an $11.6 million decline in taxable securities and a $1.4 million increase in tax-exempt securities. The decrease in taxable security balances was largely due to an increase in calls and maturities between the two third quarter periods.
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