SUN BANCORP, INC. /NJ 
By In the news release, Sun Bancorp, Inc. Reports Fourth Quarter and Full Year Results for 2009, issued
Sun Bancorp, Inc. Reports Fourth Quarter and Full Year Results for 2009
VINELAND, N.J., Jan. 27 /PRNewswire-FirstCall/ -- Sun Bancorp, Inc. (Nasdaq: SNBC) reported today a net loss available to common shareholders of $6.3 million, or $0.27 per diluted share, for the fourth quarter ended December 31, 2009, compared to net income of $4.3 million, or $0.18 per diluted share, for the fourth quarter of 2008. During the fourth quarter 2009 the Company recorded a loan loss provision of $19.5 million, or $0.50 per share, and incurred pre-tax other-than-temporary impairment (OTTI) charges of $351,000, or $0.01 per share, which compares to a $7.6 million provision for loan losses, or $0.19 per share, and OTTI charges of $7.5 million, or $0.19 per share, for fourth quarter 2008. In addition, the fourth quarter 2008 included a net gain on sale of branches of $11.5 million, or $0.29 per share.
For the year ended December 31, 2009, the Company reported a net loss available to common shareholders of $22.4 million, or $0.97 per diluted share, compared to net income of $14.9 million, or $0.62 per diluted share, in the prior year period.
The following were key items which affected the results for the year ended December 31, 2009:
-- Loan loss provision of $46.7 million, or $1.19 per share, as compared to
$20.0 million, or $0.49 per share for 2008.
-- OTTI charges of $7.1 million, or $0.18 per share, as compared to $7.5
million, or $0.19 for 2008.
-- A special assessment by the Federal Deposit Insurance Corporation (FDIC)
of 5 basis points resulting in a charge of $1.6 million, or $0.04 per
share.
-- The Company's participation in the Troubled Asset Relief Program (TARP)
which resulted in $5.4 million in preferred stock dividends and discount
accretion, or $0.23 per share.
"We are eager to close out one of the most difficult and disappointing economic years in the history of our Country and our Company," said Thomas X. Geisel, president and chief executive officer of Sun Bancorp. "Although the current economic, regulatory and banking industry headwinds have not completely subsided, we believe that we have taken all appropriate measures within our control to position Sun Bancorp to return to profitability in 2010. This is evidenced by the quarterly improvements throughout the year in our core operating and margin performance. Had there not been an increase over our planned loan loss provision, OTTI charges and the impact of participating in TARP, all largely driven by the uncontrollable effects of the economy, the Company would have been profitable in 2009. Our principal strategic objective is to emerge from this cycle as the dominant New Jersey-based bank in the markets we serve, while continuing to provide value to our customers and shareholders."
Selected core operating highlights for the quarter continue to reflect favorable trending throughout all of 2009, as follows:
-- The net interest margin was 3.64% for fourth quarter 2009, as compared
to 3.36% for linked quarter, 3.01% for the second quarter and 2.74% for
first quarter 2009. The net interest margin was 3.26% for the fourth
quarter 2008. The margin increase throughout 2009 reflects the
Company's focus on margin improvement initiatives on both sides of the
balance sheet.
-- Net interest income was $28.6 million (tax-equivalent basis) for the
fourth quarter 2009 as compared to $27.0 million for the linked quarter,
$24.3 million for the second quarter and $22.3 million for first quarter
2009. Net interest income was $25.9 million for fourth quarter 2008.
-- The yield on average loans was 4.92% for fourth quarter 2009, an
increase of 4 basis points from 4.88% for the linked quarter, an
increase of 9 basis points from 4.83% for second quarter and an increase
of 20 basis points from 4.72% for first quarter 2009.
-- The cost of average interest-bearing deposits was 1.37% for the fourth
quarter 2009, a decrease of 22 basis points from 1.59% for the linked
quarter, a decrease of 58 basis points from 1.95% for the second quarter
and a decrease of 82 basis points from 2.19% for the first quarter. The
cost of average interest-bearing deposits also decreased 113 basis
points from 2.50% for the fourth quarter 2008.
Other key financial highlights include:
-- Total assets were $3.58 billion at December 31, 2009, as compared to
$3.55 billion at September 30, 2009 and $3.62 billion at December 31,
2008.
-- Total loans before allowance for loan losses were $2.72 billion at
December 31, 2009, as compared to $2.71 billion at September 30, 2009
and $2.74 billion at December 31, 2008. Commercial loans, on average,
were essentially level on a linked quarter basis, residential mortgages
and home equity loans decreased on average 1.0% and 1.8%, respectively.
-- The provision for loan losses was $19.5 million for the fourth quarter,
increasing the allowance for loan losses to 2.21% of outstanding loans
at December 31, 2009 as compared to 1.70% at September 30, 2009 and
1.36% at December 31, 2008. The provision for loan losses for the
fourth quarter was 0.72% of average loans, as compared to 0.59% of
average loans for the linked third quarter 2009 and 0.28% of average
loans for the comparable prior year quarter. Net charge-offs during the
fourth quarter were $5.6 million, or 0.21% of average loans, as compared
to $14.5 million, or 0.53% of average loans, for the linked quarter and
$4.4 million, or 0.16% of average loans outstanding, for the comparable
prior year quarter. The provision for loan losses for the year ended
December 31, 2009 was $46.7 million, or 1.71% of average loans, as
compared to $20.0 million, or 0.77% of average loans, for the same
period in 2008. Net charge-offs for the year ended December 31, 2009
was $24.0 million, or 0.88% of average loans, as compared to $9.7
million, or 0.37% of average loans, for the comparable prior year.
-- Total non-performing assets were $105.4 million at December 31, 2009, or
3.86% of total loans and real estate owned, as compared to $94.1 million
at September 30, 2009, or 3.46% of total loans and real estate owned,
and $48.8 million, or 1.78%, at December 31, 2008. The allowance for
loan losses to non-performing loans was 62.56% at December 31, 2009, as
compared to 54.58% at September 30, 2009, and 79.69% at December 31,
2008.
-- Total deposits were $2.91 billion at December 31, 2009, which were
essentially level with September 30, 2009 and December 31, 2008, which
were at $2.93 billion and $2.90 billion, respectively. Average deposits
declined $60.0 million over the linked quarter as average certificates
of deposit decreased $125.5 million, or 11.9%, offset by an increase in
average core deposits of $65.5 million, or 3.5%.
-- The fourth quarter net interest margin was 3.64%, as compared to 3.36%
for the linked quarter and 3.26% for the fourth quarter 2008. The net
interest margin was 3.18% for the year ended December 31, 2009, as
compared to 3.30% for the prior year. The interest rate spread as
compared to the linked third quarter increased 35 basis points to 3.41%,
with a yield increase of 11 basis points on interest-earnings assets,
offset by a decrease in the cost of interest-bearing liabilities of 24
basis points. Average interest-earning assets for the quarter of $3.15
billion remained relatively stable from prior year quarter, while
decreasing 2.2% over the linked quarter. The interest rate spread for
the year ended December 31, 2009 was 2.87%, as compared to 2.83% for the
comparable prior year.
-- Total operating non-interest income for the quarter ended December 31,
2009 of $5.9 million decreased $512,000, or 8.0%, over the linked
quarter and $227,000, or 3.7%, over the comparable prior year period.
The decrease over the linked quarter was primarily due to a decrease in
investment products income of $397,000 as a result of lower volume and a
decrease in gain on sale of loans of $108,000, primarily related to SBA
loans. The decrease over the comparable prior year period was primarily
attributable to a decrease in gain on derivative instruments of $361,000
due to a planned decline in transaction volume, a decrease in investment
products income of $191,000 as a result of lower volume and a reduction
in service charges on deposit accounts, such as cycle service, NSF and
overdraft fees, of $113,000. These decreases were offset with an
increase in gain on sale of loans of $399,000 primarily related to
mortgages sold in the secondary market. Total operating non-interest
income for the year ended December 31, 2009 decreased $4.0 million, or
14.0%, to $24.2 million from $28.1 million in 2008. The decrease over
prior year was primarily attributable to a reduction in service charges
on deposit accounts of $1.5 million, a decrease in gain on derivative
instruments of $2.3 million due to a planned decline in transaction
volume, a decrease in bank owned life insurance (BOLI) income of
$768,000 due to lower yields earned on the separate account policy and a
decrease in investment products income of $372,000 as a result of
customer migration toward lower yielding commission products. These
decreases were offset by an increase in gain on sale of loans of $1.0
million related to mortgages sold in the secondary market.
-- Total operating non-interest expense for the quarter ended December 31,
2009 decreased $1.3 million, or 4.7%, to $25.6 million in comparison to
the linked quarter and increased $2.9 million, or $12.7%, over the
comparable prior year period. Salaries and benefits decreased $1.7
million and cost of real estate owned decreased $826,000 in comparison
to the linked third quarter. These decreases were primarily attributed
to non-recurring charges recognized during the third quarter, which
included severance and other related charges of $934,000 and an $800,000
write-down on the carrying value of one commercial property. These
decreases were offset by an increase in advertising expense of $535,000
stemming from brand awareness and customer acquisition campaigns in the
fourth quarter, an increase in off-balance sheet reserves of $239,000
and an increase in consulting fees of $219,000. The increase over the
prior year period was primarily attributable to an increase in salaries
and benefits of $1.8 million and insurance expense of $611,000.
Salaries and benefits increased due to the addition of several key
management and business line staff, and severance and other related
charges, while insurance expense increased primarily due to higher FDIC
assessment rates, additional coverage under the Temporary Liquidity
Guarantee Program (TLGP) and an overall increase in assessable deposits.
Further increases over the prior year period included additional
off-balance sheet reserves of $276,000 and problem loan costs of
$225,000. Total operating non-interest expense for the year ended
December 31, 2009 increased $11.6 million, or 12.6%, to $103.9 million
over the prior year 2008. Salaries and benefits increased $4.4 million
due to the addition of several key management and business line staff,
severance and other related charges, and an increase in health benefits.
Insurance expense increased $4.8 million primarily due to higher FDIC
assessment rates, additional coverage under the Temporary Liquidity
Guarantee Program (TLGP) and an overall increase in assessable deposits.
In addition, cost of real estate owned increased $1.8 million as a
result of the write-down of two properties for a total of $950,000
combined with an overall net gain of $589,000 recognized on the sale of
four other real estate properties during 2008.
-- The income tax benefit is a result of the pre-tax loss in combination
with the relatively large levels of tax-free income earned on tax-exempt
securities and BOLI policies.
-- The Company's ratio of tangible equity to tangible assets was 6.25% at
December 31, 2009, as compared to 6.45% at September 30, 2009, and 6.10%
at December 31, 2008.
-- The Company's capital ratios continue to remain strong and Sun National
Bank is "well capitalized" by all regulatory standards. At December 31,
2009 Sun National Bank's total risk-based capital ratio is approximately
10.80% and the leverage capital ratio is approximately 8.62%.
The Company will hold its regularly scheduled conference call on Thursday, January 28, 2010, at 11:00 a.m. (ET). Participants may listen to the live Web cast through the Sun Bancorp Web site at www.sunnb.com. Participants are advised to log on 10 minutes ahead of the scheduled start of the call. An Internet-based replay will be available at the Web site for two weeks following the call.
Sun Bancorp, Inc. is a $3.6 billion asset bank holding company headquartered in Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving customers through 70 locations in New Jersey. The Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. For more information about Sun National Bank and Sun Bancorp, Inc., visit www.sunnb.com.
The foregoing material contains forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
SUN BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (Unaudited)
--------------------------------
(Dollars in thousands, except per share data)
For the Three Months Ended For the Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Profitability for the period:
Net interest income $28,068 $25,472 $100,157 $99,661
Provision for
loan losses 19,479 7,617 46,666 20,000
Non-interest income 5,541 10,076 17,070 32,299
Non-interest expense 25,594 22,712 103,928 92,640
(Loss) income before
income taxes (11,464) 5,219 (33,367) 19,320
Net (loss) income (6,254) 4,253 (17,045) 14,894
Net (loss) income
Available to common
shareholders $(6,254) $4,253 $(22,396) $14,894
================= ======= ====== ======== =======
Financial ratios:
Return on average
assets (1) (0.70)% 0.49% (0.47)% 0.44%
Return on average
equity (1) (6.86)% 4.71% (4.42)% 4.09%
Return on average
tangible equity (1),(2) (11.28)% 7.94% (7.06)% 6.92%
Net interest margin (1) 3.64% 3.26% 3.18% 3.30%
Efficiency ratio 76.15% 63.89% 88.66% 70.20%
Efficiency ratio,
excluding non-operating
income and non-operating
expense (3) 75.37% 71.89% 83.58% 72.24%
Earnings per common
share (4):
Basic $(0.27) $0.18 $(0.97) $0.63
Diluted $(0.27) $0.18 $(0.97) $0.62
Average equity to
average assets 10.15% 10.38% 10.69% 10.72%
----------------- ----- ----- ----- -----
December 31,
------------
2009 2008
---- ----
At period-end:
Total assets $3,578,852 $3,622,126
Total deposits 2,909,268 2,896,364
Loans receivable, net of allowance
for loan losses 2,657,694 2,702,516
Investments 457,192 453,584
Borrowings 146,193 154,097
Junior subordinated debentures 92,786 92,786
Shareholders' equity 356,654 358,508
Credit quality and capital ratios:
Allowance for loan losses to gross loans 2.21% 1.36%
Non-performing assets to gross
loans and real estate owned 3.86% 1.78%
Allowance for loan losses to non-performing
loans 62.56% 79.69%
Total capital (to risk-weighted assets) (5):
Sun Bancorp, Inc. 11.31% 11.37%
Sun National Bank 10.80% 10.84%
Tier 1 capital (to risk-weighted assets) (5):
Sun Bancorp, Inc. 10.05% 10.17%
Sun National Bank 9.54% 9.64%
Leverage ratio (5):
Sun Bancorp, Inc. 9.08% 9.58%
Sun National Bank 8.62% 9.10%
Book value (4) $15.29 $15.57
Tangible book value (4) $9.19 $9.20
----------------------- ----- -----
(1) Amounts for the three months ended are annualized.
(2) Return on average tangible equity is computed by
dividing annualized net income for the period by average
tangible equity. Average tangible equity equals average
equity less average identifiable intangible assets and
goodwill.
(3) Efficiency ratio, excluding non-operating income and non-operating
expense, is computed by dividing non-interest expense for the period by
the summation of net interest income and non-interest income. Net
interest income for the year ended December 31, 2008 excludes the
write-off of $791,000 of unamortized costs on redeemed trust preferred
securities. Non-interest income for the three months and year ended
December 31, 2009 exclude a net impairment loss on available for sale
securities of $351,000 and $7.1 million, respectively. Non-interest
income for the three months and year ended December 31, 2008 excludes a
net gain of $11.5 million on the sale of branches and bank property and
an impairment charge of $7.5 million on available for sale securities.
Non-interest income for the year ended December 31, 2008 also excludes a
gain on redemption of Visa stock of $207,000. Non-interest expense for
the year ended December 31, 2008 excludes a $250,000 executive sign-on
incentive and $72,000 in lease buyout charges.
(4) Data is adjusted for a 5% stock dividend issued in May
2009.
(5) December 31, 2009 capital ratios are estimated,
subject to regulatory filings.
SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION (Unaudited)
------------------------------------
(Dollars in thousands, except par
value)
December 31,
------------
2009 2008
---- ----
ASSETS
Cash and due from banks $53,857 $31,237
Interest-earning bank balances 5,263 26,784
Federal funds sold - 412
------------------ --- ---
Cash and cash equivalents 59,120 58,433
Investment securities available for
sale (amortized cost of $435,267 and
$444,628 at December 31, 2009 and
2008, respectively) 434,738 423,513
Investment securities held to maturity
(estimated fair value of $7,121 and
$13,601 at December 31, 2009 and 2008,
respectively) 6,955 13,765
Loans receivable (net of allowance for
loan losses of $59,953 and $37,309 at
December 31, 2009 and 2008,
respectively) 2,657,694 2,702,516
Restricted equity investments 15,499 16,306
Bank properties and equipment, net 53,246 48,642
Real estate owned, net 9,527 1,962
Accrued interest receivable 12,235 12,254
Goodwill 127,894 127,894
Intangible assets, net 14,316 18,769
Deferred taxes, net 20,706 16,707
Bank owned life insurance (BOLI) 77,753 75,504
Other assets 89,169 105,861
------------ ------ -------
Total assets $3,578,852 $3,622,126
============ ========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $2,909,268 $2,896,364
Federal funds purchased 89,000 71,500
Securities sold under agreements to
repurchase -customers 18,677 20,327
Advances from the Federal Home Loan
Bank of New York (FHLBNY) 15,215 42,081
Securities sold under agreements to
repurchase -FHLBNY 15,000 15,000
Obligations under capital lease 8,301 5,189
Junior subordinated debentures 92,786 92,786
Other liabilities 73,951 120,371
----------------- ------ -------
Total liabilities 3,222,198 3,263,618
----------------- --------- ---------
SHAREHOLDERS' EQUITY
Preferred stock, $1 par value,
1,000,000 shares authorized; none
issued - -
Common stock, $1 par value, 50,000,000
shares authorized; 25,435,994 shares
issued and 23,329,271 shares
outstanding at December 31, 2009;
24,037,431 shares issued and
21,930,708 shares outstanding at
December 31, 2008 25,436 24,037
Additional paid-in capital 362,164 351,430
Retained earnings (4,512) 22,580
Accumulated other comprehensive loss (149) (13,377)
Deferred compensation plan trust (123) -
Treasury stock at cost, 2,106,723
shares at December 31, 2009 and 2008 (26,162) (26,162)
------------------------------------- ------- -------
Total shareholders' equity 356,654 358,508
-------------------------- ------- -------
Total liabilities and shareholders'
equity $3,578,852 $3,622,126
=================================== ========== ==========
SUN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
---------------------------------------------
(Dollars in thousands, except share and per share amounts)
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
INTEREST INCOME
Interest and fees on loans $33,324 $38,050 $131,811 $154,154
Interest on taxable
investment securities 3,286 4,043 14,627 15,976
Interest on non-taxable
investment securities 1,034 822 3,729 3,256
Dividends on restricted
equity investments 223 187 832 983
Interest on federal
funds sold - 31 - 265
------------------- --- --- --- ---
Total interest income 37,867 43,133 150,999 174,634
--------------------- ------ ------ ------- -------
INTEREST EXPENSE
Interest on deposits 8,225 15,677 44,357 65,852
Interest on funds borrowed 550 527 2,061 3,407
Interest on junior
subordinated debentures 1,024 1,457 4,424 5,714
------------------------ ----- ----- ----- -----
Total interest expense 9,799 17,661 50,842 74,973
---------------------- ----- ------ ------ ------
Net interest income 28,068 25,472 100,157 99,661
PROVISION FOR LOAN LOSSES 19,479 7,617 46,666 20,000
------------------------- ------ ----- ------ ------
Net Interest income after
provision for loan losses 8,589 17,855 53,491 79,661
-------------------------- ----- ------ ------ ------
NON-INTEREST INCOME
Service charges on
deposit accounts 3,150 3,263 12,440 13,918
Other service charges 85 82 331 317
Gain on sale of loans 603 204 2,352 1,325
Gain on derivative instruments 50 411 262 2,578
Investment products income 497 688 2,669 3,041
BOLI income 600 661 2,249 3,017
Net gain on sale of branches - 11,454 - 11,454
Net impairment losses on
available for sale securities
(1):
Total impairment losses (2,615) (7,497) (9,379) (7,497)
Portion of loss recognized
in other comprehensive
income (before taxes) 2,264 - 2,264 -
----- --- ----- ---
Net impairment losses
recognized in earnings (351) (7,497) (7,115) (7,497)
Other 907 810 3,882 4,146
----- --- --- ----- -----
Total non-interest income 5,541 10,076 17,070 32,299
------------------------- ----- ------ ------ ------
NON-INTEREST EXPENSE
Salaries and employee benefits 12,415 10,643 51,748 47,623
Occupancy expense 2,797 2,919 11,403 11,683
Equipment expense 1,732 1,609 6,574 6,421
Data processing expense 1,021 1,120 4,063 4,459
Amortization of Intangible
assets 921 1,178 4,453 4,710
Insurance expense 1,512 901 7,804 3,043
Professional fees 713 745 2,193 2,335
Advertising expense 786 849 2,453 2,368
Real estate owned expense (income),
net 28 (116) 1,155 (628)
Other 3,669 2,864 12,082 10,626
----- ----- ----- ------ ------
Total non-interest expense 25,594 22,712 103,928 92,640
-------------------------- ------ ------ ------- ------
(LOSS) INCOME BEFORE
INCOME TAXES (11,464) 5,219 (33,367) 19,320
INCOME TAX (BENEFIT) EXPENSE (5,210) 966 (16,322) 4,426
---------------------------- ------ --- ------- -----
NET (LOSS) INCOME (6,254) 4,253 (17,045) 14,894
Preferred stock dividends
and discount accretion - - 5,351 -
----------------------- --- --- ----- ---
NET (LOSS) INCOME AVAILABLE
TO COMMON SHAREHOLDERS $(6,254) $4,253 $(22,396) $14,894
======================= ======= ====== ======== =======
Basic (loss) earnings
per share (2) $(0.27) $0.18 $(0.97) $0.63
===================== ====== ===== ====== =====
Diluted (loss) earnings
per share (2) $(0.27) $0.18 $(0.97) $0.62
======================= ====== ===== ====== =====
Weighted average shares
- basic (2) 23,223,463 23,323,693 23,134,424 23,647,009
======================= ========== ========== ========== ==========
Weighted average shares
- diluted (2) 23,223,463 23,410,606 23,134,424 23,958,224
======================== ========== ========== ========== ==========
(1) For the three months and year ended December 31, 2009, the OTTI
is recognized in accordance with the new guidance impacting Financial
Accounting Standards Board Accounting Standards Codification 320-10,
which was adopted on January 1, 2009. The OTTI for periods prior to
January 1, 2009 are recognized based on guidance in effect prior to the
adoption of the new guidance.
(2) Data is adjusted for a 5% stock dividend issued in May 2009.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
---------------------------------------------------------
(Dollars in thousands)
2009 2009 2009
---- ---- ----
Q4 Q3 Q2
--- --- ---
Balance sheet at quarter
end:
Loans:
Commercial and industrial $2,249,365 $2,234,616 $2,240,368
Home equity 258,592 261,206 265,407
Second mortgage 68,592 71,578 73,856
Residential real estate 75,322 72,292 79,627
Other 65,776 70,072 74,714
----- ------ ------ ----
Total gross loans 2,717,647 2,709,764 2,733,972
Allowance for loan losses (59,953) (46,067) (44,316)
------------------------- ------- ------- -------
Net loans 2,657,694 2,663,697 2,689,656
Goodwill 127,894 127,894 127,894
Intangible assets, net 14,316 15,237 16,414
Total assets 3,578,852 3,545,639 3,561,110
Total deposits 2,909,268 2,932,880 2,875,502
Federal funds purchased 89,000 6,000 87,500
Securities sold under
agreements to repurchase
-customers 18,677 21,018 17,398
Advances from FHLBNY 15,215 15,512 15,805
Securities sold under
agreements to repurchase
-FHLBNY 15,000 15,000 15,000
Obligations under capital
lease 8,301 8,343 8,383
Junior subordinated
debentures 92,786 92,786 92,786
Total shareholders'
equity 356,654 362,457 360,660
Quarterly average balance
sheet:
Loans:
Commercial and industrial $2,238,579 $2,247,234 $2,236,745
Home equity 260,382 263,494 268,276
Second mortgage 69,844 72,830 75,967
Residential real estate 75,890 76,626 75,812
Other 66,698 70,790 75,133
----- ------ ------ ----
Total gross loans 2,711,393 2,730,974 2,731,933
Securities and other
interest-earning assets 433,706 486,274 491,348
Total interest-earning
assets 3,145,099 3,217,248 3,223,281
Total assets 3,590,339 3,593,037 3,611,679
Non-interest-bearing
demand deposits 480,080 476,478 431,836
Total deposits 2,886,322 2,946,281 2,975,358
Total interest-bearing
liabilities 2,652,540 2,663,226 2,705,069
Total shareholders'
equity 364,531 365,440 370,196
Capital and credit
quality measures:
Total capital (to risk-
weighted
assets) (1):
Sun Bancorp, Inc. 11.31% 11.48% 11.62
Sun National Bank 10.80% 10.99% 11.15
Tier 1 capital (to risk-
weighted assets) (1):
Sun Bancorp, Inc. 10.05% 10.23% 10.37
Sun National Bank 9.54% 9.74% 9.90
Leverage ratio (1):
Sun Bancorp, Inc. 9.08% 9.21% 9.29
Sun National Bank 8.62% 8.78% 8.88
Average equity to average
assets 10.15% 10.17% 10.25
Allowance for loan losses
to total gross loans 2.21% 1.70% 1.62
Non-performing assets to
total gross loans and
real estate owned 3.86% 3.46% 2.70
Allowance for loan losses
to non-performing loans 62.56% 54.58% 69.82
Other data:
Net charge-offs (5,593) (14,486) (2,040)
Non-performing assets:
Non-accrual loans $87,882 $80,333 $55,801
Loans past due 90 days
and accruing 7,958 4,067 7,675
Real estate owned, net 9,527 9,667 10,620
---------------------- ----- ----- ----
Total non-performing $105,367 $94,067 $74,096
assets ======== ======= =======
2009 2008
---- ----
Q1 Q4
--- ---
Balance sheet at quarter end:
Loans:
Commercial and industrial $2,243,698 $2,234,202
Home equity 268,122 274,360
Second mortgage 78,589 84,388
Residential real estate 69,971 67,473
Other 77,638 79,402
----- ------ ------
Total gross loans 2,738,018 2,739,825
Allowance for loan losses (39,406) (37,309)
------------------------- ------- -------
Net loans 2,698,612 2,702,516
Goodwill 127,894 127,894
Intangible assets, net 17,592 18,769
Total assets 3,635,697 3,622,126
Total deposits 2,930,084 2,896,364
Federal funds purchased - 71,500
Securities sold under agreements to
repurchase -customers 14,170 20,327
Advances from FHLBNY 16,096 42,081
Securities sold under agreements to
repurchase -FHLBNY 15,000 15,000
Obligations under capital lease 5,171 5,189
Junior subordinated debentures 92,786 92,786
Total shareholders' equity 447,984 358,508
Quarterly average balance
sheet:
Loans:
Commercial and industrial $2,229,016 $2,195,218
Home equity 268,921 275,791
Second mortgage 81,854 85,530
Residential real estate 70,868 62,481
Other 79,324 81,426
----- ------ ------
Total gross loans 2,729,983 2,700,446
Securities and other interest-earning
assets 527,318 476,305
Total interest-earning assets 3,257,301 3,176,751
Total assets 3,644,558 3,483,145
Non-interest-bearing demand deposits 397,237 407,151
Total deposits 2,936,452 2,916,153
Total interest-bearing liabilities 2,694,326 2,679,673
Total shareholders' equity 445,040 361,513
Capital and credit quality measures:
Total capital (to risk-weighted
assets) (1):
Sun Bancorp, Inc. 14.32% 11.37
Sun National Bank 10.99% 10.84
Tier 1 capital (to risk-weighted
assets) (1):
Sun Bancorp, Inc. 13.07% 10.17
Sun National Bank 9.74% 9.64
Leverage ratio (1):
Sun Bancorp, Inc. 11.81% 9.58
Sun National Bank 8.80% 9.10
Average equity to average assets 12.21% 10.38
Allowance for loan losses to total
gross loans 1.44% 1.36
Non-performing assets to total gross
loans and real estate owned 2.34% 1.78
Allowance for loan losses to non-
performing loans 73.76% 79.69
Other data:
Net charge-offs (1,903) (4,428)
Non-performing assets:
Non-accrual loans $50,481 $42,233
Loans past due 90 days and accruing 2,945 4,587
Real estate owned, net 10,834 1,962
---------------------- ------ -----
Total non-performing $64,260 $48,782
assets ======= =======
(1) December 31, 2009 capital ratios are estimated, subject to
regulatory filings.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
---------------------------------------------------------
(Dollars in thousands, except share and per share data)
2009 2009 2009
Q4 Q3 Q2
--- --- ---
Profitability for the quarter:
Tax-equivalent interest income $38,425 $38,413 $38,276
Interest expense 9,799 11,426 14,017
Tax-equivalent net interest income 28,626 26,987 24,259
Tax-equivalent adjustment 558 521 475
Provision for loan losses 19,479 16,237 6,950
Non-interest income excluding net
gain on sale of branches and net
impairment losses on available for
sale securities 5,892 6,404 6,290
Net gain on sale of branches - - -
Net impairment losses on available
for sale securities (351) (1,928) (4,558)
Non-interest expense excluding
amortization of intangible assets 24,673 25,690 26,472
Amortization of intangible assets 921 1,177 1,178
(Loss) income before income taxes (11,464) (12,162) (9,084)
Income tax (benefit) expense (5,210) (5,620) (4,450)
Net (loss) income (6,254) (6,542) (4,634)
Net (loss) income available to $(6,254) $(6,542) $(8,780)
============================== ======= ======= =======
common shareholders
===================
Financial ratios:
Return on average assets (1) (0.70) % (0.73) % (0.51) %
Return on average equity (1) (6.86) % (7.16) % (5.01) %
Return on average tangible equity
(1),(2) (11.28) % (11.81) % (8.23) %
Net interest margin (1) 3.64 % 3.36 % 3.01 %
Efficiency ratio 76.15 % 86.83 % 108.36 %
Efficiency ratio, excluding non-
operating income and non-
operating expense 75.37 % 81.74 % 91.94 %
Per share data (3):
(Loss) earnings per common
share:
Basic $(0.27) $(0.28) $(0.38)
Diluted $(0.27) $(0.28) $(0.38)
Book value $15.29 $15.63 $15.59
Tangible book value $9.19 $9.46 $9.35
Average basic shares (3) 23,223,463 23,162,992 23,103,975
Average diluted shares (3) 23,223,463 23,162,992 23,103,975
Operating non-interest income:
Service charges on deposit accounts $3,150 $3,150 $3,096
Other service charges 85 85 79
Gain on sale of loans 603 711 693
Gain on derivative instruments 50 - 85
Investment products income 497 894 756
BOLI income 600 575 561
Other income 907 989 1,020
------------ --- --- -----
Total operating non-interest 5,892 6,404 6,290
---------------------------- ----- ----- -----
income
------
Non-operating income (4):
Net gain on sale of branches - - -
Net impairment losses on available
for sale securities recognized in
earnings (351) (1,928) (4,558)
---------------------------------- ---- ------ ------
Total non-operating income (351) (1,928) (4,558)
-------------------------- ---- ------ ------
Total non-interest income $5,541 $4,476 $1,732
========================== ====== ====== ======
Operating non-interest expense:
Salaries and employee benefits $12,415 $14,154 $13,216
Occupancy expense 2,797 2,689 2,782
Equipment expense 1,732 1,619 1,685
Data processing expense 1,021 980 1,052
Amortization of intangible assets 921 1,177 1,178
Insurance expense 1,512 1,519 3,330
Professional fees 713 595 507
Advertising expense 786 251 871
Real estate owned expense 28 854 93
(income), net
Other expenses 3,669 3,029 2,936
-------------- ----- ----- -----
Total operating non-interest 25,594 26,867 27,650
---------------------------- ------ ------ ------
expense
-------
Total non-interest expense $25,594 $26,867 $27,650
========================== ======= ======= =======
2009 2008
Q1 Q4
--- ---
Profitability for the quarter:
Tax-equivalent interest income $37,894 $43,574
Interest expense 15,600 17,661
Tax-equivalent net interest income 22,294 25,913
Tax-equivalent adjustment 455 441
Provision for loan losses 4,000 7,617
Non-interest income excluding net
gain on sale of branches and net
impairment losses on available for
sale securities 5,599 6,119
Net gain on sale of branches - 11,454
Net impairment losses on available
for sale securities (278) (7,497)
Non-interest expense excluding
amortization of intangible assets 22,640 21,534
Amortization of intangible assets 1,177 1,178
(Loss) income before income taxes (657) 5,219
Income tax (benefit) expense (1,042) 966
Net (loss) income 385 4,253
Net (loss) income available to $(820) $4,253
============================== ===== ======
common shareholders
===================
Financial ratios:
Return on average assets (1) 0.04 % 0.49 %
Return on average equity (1) 0.35 % 4.71 %
Return on average tangible equity
(1),(2) 0.52 % 7.94 %
Net interest margin (1) 2.74 % 3.26 %
63.89
Efficiency ratio 87.69 % %
Efficiency ratio, excluding non-
operating income and non-
operating expense 86.80 % 71.89 %
Per share data (3):
(Loss) earnings per common
share:
Basic $(0.04) $0.18
Diluted $(0.04) $0.18
Book value $15.72 $15.57
Tangible book value $9.41 $9.20
Average basic shares (3) 23,043,056 23,323,693
Average diluted shares (3) 23,043,056 23,410,606
Operating non-interest income:
Service charges on deposit accounts $3,044 $3,263
Other service charges 82 82
Gain on sale of loans 345 204
Gain on derivative instruments 127 411
Investment products income 522 688
BOLI income 513 661
Other income 966 810
------------ --- ---
Total operating non-interest 5,599 6,119
---------------------------- ----- -----
income
------
Non-operating income (4):
Net gain on sale of branches - 11,454
Net impairment losses on available
for sale securities recognized in
earnings (278) (7,497)
---------------------------------- ---- ------
Total non-operating income (278) 3,957
-------------------------- ---- -----
Total non-interest income $5,321 $10,076
========================= ====== =======
Operating non-interest expense:
Salaries and employee benefits $11,963 $10,643
Occupancy expense 3,135 2,919
Equipment expense 1,538 1,609
Data processing expense 1,010 1,120
Amortization of intangible assets 1,177 1,178
Insurance expense 1,443 901
Professional fees 378 745
Advertising expense 545 849
Real estate owned expense 180 (116)
(income), net
Other expenses 2,448 2,864
-------------- ----- -----
Total operating non-interest 23,817 22,712
---------------------------- ------ ------
expense
-------
Total non-interest expense $23,817 $22,712
========================== ======= =======
(1) Amounts are annualized.
(2) Return on average tangible equity is computed by dividing
annualized net income for the period by average tangible equity.
Average tangible equity equals average equity less average
identifiable intangible assets and goodwill.
(3) Data is adjusted for a 5% stock dividend issued in May 2009.
(4) Amount consists of items which the Company believes are not a
result of normal operations.
SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (Unaudited)
(Dollars in thousands)
For the Three Months Ended
December 31, 2009
--------------------------
Average Income/ Yield/
Balance Expense Cost
------------------------ ------- ------- ------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $2,238,579 $26,939 4.81%
Home equity 260,382 3,139 4.82
Second mortgage 69,844 1,130 6.47
Residential real estate 75,890 971 5.12
Other 66,698 1,145 6.87
------ -----
Total loans receivable 2,711,393 33,324 4.92
Investment securities (3) 425,637 5,099 4.79
Interest-earning bank balances 8,069 2 0.10
Federal funds sold - - -
-- --
Total interest-earning assets 3,145,099 38,425 4.89
--------- ------
Cash and due from banks 97,729
Bank properties and equipment, net 53,147
Goodwill and intangible assets, net 142,778
Other assets 151,586
-------
Total non-interest-earning assets 445,240
-------
Total assets $3,590,339
==========
Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits $1,175,432 2,703 0.92%
Savings deposits 299,055 673 0.90
Time deposits 931,755 4,849 2.08
------- -----
Total interest-bearing deposit
accounts 2,406,242 8,225 1.37
--------- ------
Short-term borrowings:
Federal funds purchased 94,366 53 0.22
Securities sold under agreements
to repurchase - customers 20,508 10 0.20
Long-term borrowings:
FHLBNY advances (4) 30,316 349 4.60
Obligations under capital lease 8,322 138 6.63
Junior subordinated debentures 92,786 1,024 4.41
------ -----
Total borrowings 246,298 1,574 2.56
------- -----
Total interest-bearing liabilities 2,652,540 9,799 1.48
--------- -----
Non-interest-bearing demand deposits 480,080
Other liabilities 93,188
------
Total non-interest bearing liabilities 573,268
-------
Total liabilities 3,225,808
Shareholders' equity 364,531
-------
Total liabilities and shareholders'
equity $3,590,339
==========
Net interest income $28,626
=======
Interest rate spread (5) 3.41%
=====
Net interest margin (6) 3.64%
=====
Ratio of average interest-earning
assets to average interest-bearing
liabilities 118.57%
=======
SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (Unaudited)
(Dollars in thousands)
For the Three Months Ended
December 31, 2008
--------------------------
Average Income/ Yield/
Balance Expense Cost
------------------------ ------- ------- ------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $2,195,218 $30,604 5.58%
Home equity 275,791 3,694 5.36
Second mortgage 85,530 1,396 6.53
Residential real estate 62,481 962 6.16
Other 81,426 1,394 6.85
------ -----
Total loans receivable 2,700,446 38,050 5.64
Investment securities (3) 428,159 5,417 5.06
Interest-earning bank balances 34,299 76 0.89
Federal funds sold 13,847 31 0.90
------ --
Total interest-earning assets 3,176,751 43,574 5.49
--------- ------
Cash and due from banks 51,709
Bank properties and equipment, net 48,247
Goodwill and intangible assets, net 147,380
Other assets 59,058
------
Total non-interest-earning assets 306,394
-------
Total assets $3,483,145
==========
Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits $1,012,525 3,808 1.50%
Savings deposits 318,720 1,309 1.64
Time deposits 1,177,757 10,560 3.59
--------- ------
Total interest-bearing deposit
accounts 2,509,002 15,677 2.50
--------- ------
Short-term borrowings:
Federal funds purchased 9,810 17 0.69
Securities sold under agreements
to repurchase - customers 29,989 33 0.44
Long-term borrowings:
FHLBNY advances (4) 32,890 382 4.65
Obligations under capital lease 5,196 95 7.31
Junior subordinated debentures 92,786 1,457 6.28
Total borrowings 170,671 1,984 4.65
------- -----
Total interest-bearing
liabilities 2,679,673 17,661 2.64
--------- ------
Non-interest-bearing
demand deposits 407,151
Other liabilities 34,808
------
Total non-interest bearing
liabilities 441,959
-------
Total liabilities 3,121,632
Shareholders' equity 361,513
-------
Total liabilities and shareholders'
equity $3,483,145
==========
Net interest income $25,913
=======
Interest rate spread (5) 2.85%
=====
Net interest margin (6) 3.26%
=====
Ratio of average interest-earning
assets to average interest-bearing
liabilities 118.55%
=======
--------------------------------------------------------------------------
(1) Average balances include non-accrual loans.
(2) Loan fees are included in interest income and the amount is not
material for this analysis.
(3) Interest earned on non-taxable investment securities is shown
on a tax equivalent basis assuming a 35% marginal federal tax rate
for all periods. The fully taxable equivalent adjustment for three
months ended December 31, 2009 and 2008 was $558,000 and $441,000,
respectively.
(4) Amounts include Advances from FHLBNY and Securities sold under
agreements to repu
