President's Message

Our results this past year prove that we have a strong plan, and as we continue to achieve our milestones, we come closer to being a top performing Company.

The operating environment we faced in 2014 was arguably as challenging, if not more, than I described in last year’s message. However, our Company overcame these pressures and produced some outstanding results. We continue to compete and win in the markets we serve, producing outstanding organic growth in our commercial loan book and our noninterest-bearing demand accounts, as well as in our insurance business. The growth in our business lines, along with a reduction in credit costs, has produced an 82% increase in net income over the prior year. We also continue to create value for our shareholders, which is evidenced by delivering a total return of 31.8% for 2014 that significantly surpassed the SNL U.S. Bank index of 11.8% for the same time period.

We continue to build value because we have a sound business plan and have leaders who can collaborate and adapt to overcome many challenges, while remaining true to our guiding principles. As we continue to build our business, we are seeing positive momentum in our financials results. Strong growth in our principal business lines continues to drive the improvement in our operating performance. Our commercial loan group closed $113 million in new loans, resulting in 26.9% growth over the prior year. Our success in organically growing our commercial loan book can be largely attributed to our ability to attract and retain talented lending and business development teams. We have made great strides in transforming our Company’s loan portfolio. As of year-end 2014, approximately 73% of our loan portfolio was originated over the past five years utilizing the improved credit standards of the new management team.

Our Retail group is focused on building core deposits, and as such, grew noninterest-bearing demand accounts 21.1%, which improved our overall deposit composition. In addition, our subsidiary, Tri-State Insurance Agency, Inc. continues to build its business and the insurance commissions and fees. Insurance represents more than half of the Company’s Other Income. Tri-State is now producing a very respectable return on investment, which was 13.6%, quickly approaching our target of 15%.

As of February 25, 2015, our stock price has increased approximately 34% and 142% from year-end 2013 and 2011, respectively. Since January 1, 2010, our total return is 215.2%, far outpacing the SNL U.S. Bank index of 76.7%.



We remain committed to being a good corporate citizen by giving back and helping the communities we serve through numerous donations, charitable giving and volunteerism. The Company, its subsidiaries and our SB Foundation increased these efforts in 2014. In addition to our volunteerism, we made donations of over $91,000, a more than 44% increase over last year.

As we look ahead, the slow economic recovery, low interest rates, intensified competition, and rising regulatory demands persist; therefore, we remain in a challenging operating environment. Banking is also experiencing a rapid paradigm shift in how products and services are delivered to customers, including from nonbank competition. To that end, while we have made changes to our delivery channels, more changes need to be made. We are implementing what we term our “Digital Bank,” which is aimed at enhancing the customer experience through digital delivery channels. We will do so by working to ensure that our digital channels have best-in-class functionality to remove hassles and make it simple, fast, and easy for our customers to bank with us anytime and from anyplace.

In March 2015, we opened a new location in Astoria, Queens, which has a branch office and space for our regional lenders. The new branch model is meaningfully different from the traditional branch model. It will be much smaller, have a new staffing model and utilize more technology.

I remain confident about our Team. We will adapt to the new challenges and continue to deliver value to our shareholders. I would like to thank our board of directors, our shareholders, our customers, and our employees for their confidence and support. We look forward to continuing our positive momentum by building on our success. 



Anthony Labozzetta
President & CEO
Sussex Bank