VINELAND, N.J., July 21, 2008 (PRIME NEWSWIRE) -- Sun Bancorp, Inc. (Nasdaq:SNBC) reported today second quarter net income of $2.3 million, or $0.10 per share, compared to net income of $4.9 million, or $0.21 per share, for the second quarter of 2007. The prior year comparable quarter includes net charges of approximately $751,000 (pre-tax), or $0.02 per share. The charges represent approximately $541,000 of write-off of unamortized issuance costs of redeemed Sun Trust III trust preferred securities, an early extinguishment of debt charge of $124,000 for an FHLB borrowing prepayment, and $86,000 of severance related expenses.
For the six months ended June 30, 2008, the Company reported net income of $6.5 million, or $0.28 per share, compared to $9.6 million, or $0.40 per share, in the prior period. Net income for the prior year period includes net charges of approximately $1.6 million (pre-tax), or $0.05 per share. The charges were a result of $2.4 million of severance related expenses, the $541,000 write-off of unamortized issuance costs of redeemed Sun Trust III trust preferred securities, and an early extinguishment of debt charge of $124,000 for an FHLB borrowing prepayment, offset by a net gain of $1.4 million realized in the first quarter 2007 from the sale of branches.
"As previously announced, we recorded a $6.5 million provision for loan losses during the second quarter, increasing our reserve coverage to 1.19%," said Thomas X. Geisel, president and chief executive officer of Sun Bancorp, Inc. "Clearly, our top priority during the quarter and this year is credit quality -- closely monitoring the financial status of borrowers throughout our markets, gathering information, working on the early detection of potential problems, taking pre-emptive steps where necessary and doing the analysis required to maintain adequate reserves. We are operating in an environment where credit skills and expertise are paramount. Among the independent New Jersey banking institutions, we feel we are well-equipped to manage our way through this cycle.
"We know that capital strength and preservation is also a priority. We have been judiciously repurchasing shares at attractive pricing and will continue to selectively do so, but not to the detriment of our healthy equity position and capital adequacy. Our total common equity available to shareholders currently stands at $360.3 million, with average equity to average assets at 10.92%, tangible capital at 6.45% and our total risk-based capital ratio for Sun National Bank at a level of 10.86%. These measures are well in excess of regulatory minimums for an institution to be considered well-capitalized.
"On the operating side, during the second quarter we did grow loans 3.4% over the linked first quarter, bringing year-to-date loan growth to a respectable 7.7% over where we stood at June 30, 2007. Deposits grew 2.5%, or $68.4 million, over the linked first quarter, which is an encouraging result of our efforts to do a better job selling in the branches and in bringing in new lower-cost core deposit relationships. Non-interest income is growing as we continue to emphasize this area, and our overall expense control efforts remain firm," said Geisel.
The following is an overview of the key financial highlights for the quarter:
* Total assets were $3.425 billion at June 30, 2008, compared to $3.325 billion at June 30, 2007 and $3.366 billion at March 31, 2008.
* Total loans before allowance for loan losses were $2.637 billion at June 30, 2008, an increase of $188.6 million, or 7.7% over total loans at June 30, 2007. Linked quarter loan growth approximated 3.4%.
* Total non-performing assets were $34.1 million at June 30, 2008, or 1.29% of total loans and real estate owned, compared to $30.7 million, or 1.20% at March 31, 2008 and $16.5 million, or 0.67% at June 30, 2007. Net charge-offs for the quarter were $2.9 million and the loan loss provision was $6.5 million, or 0.11% and 0.25% of average loans outstanding, respectively. Net charge-offs and the loan loss provision as a percentage of average loans outstanding were both 0.04% for June 30, 2007 and 0.05% and 0.08% for the linked quarter, respectively. The allowance for loan losses to total loans is 1.19% at June 30, 2008, compared to 1.07% at June 30, 2007 and 1.09% at March 31, 2008. The allowance for loans losses to non-performing loans was 97.30% at June 30, 2008, compared to 169.98% at June 30, 2007 and 102.60% at March 31, 2008. As previously disclosed in our release of July 2, 2008, the current quarter loan loss provision of $6.5 million and the increase in allowance for loan losses is a result of internal downgrades to existing watch list credits, primarily attributable to two commercial loans (a commercial relationship and a commercial real estate development, the former of which is currently performing). The Company expects at this time that net charge-offs will approximate 0.30% of average loans for 2008.
* Total deposits were $2.782 billion at June 30, 2008, an increase of $56.4 million, or 2.1%, over deposits at June 30, 2007, and an increase of $68.4 million, or 2.5%, over the linked first quarter.
* Net interest income (tax-equivalent basis) of $25.0 million for the quarter compares to $23.9 million for the comparable prior year period and $25.1 million for the linked first quarter 2008. Net interest margin for the quarter of 3.30% compares to 3.19% for the comparable prior year period and 3.35% for the linked first quarter 2008. Net interest margin for the six months ended June 30, 2008 of 3.32%, compares to 3.26% for the comparable prior year period.
* Total operating non-interest income for the quarter of $7.8 million increased $1.5 million, or 24.0%, over the comparable prior year period and increased $634,000, or 8.8%, over the linked first quarter 2008. The increase over the prior year period was primarily attributable to an increase in net gain on derivative instruments of $512,000, an increase in BOLI income of $288,000 and an increase in Sun Financial Services revenue earned on investment products provided by a third-party broker-dealer of $561,000. The increase in investment products revenue during the current quarter over the comparable prior year period was primarily attributable, as previously reported, to the internalization of the Company's investment products sales force, which previously operated under an agreement with the independent third-party broker-dealer. The increase in operating non-interest income over the linked quarter was primarily attributable to an increase in net gain on derivative instruments of $398,000 and an increase in service charges on deposit accounts of $168,000.
* Total operating non-interest expenses for the quarter of $22.9 million increased $1.1 million, or 5.1%, over the comparable prior year period and decreased $730,000, or 3.1%, over the linked first quarter 2008. While the current employee count has remained essentially flat over the last 12 months, salaries and benefits includes an increase in salaries of $358,000, an increase in sales commissions of $494,000, and an increase in stock compensation expense of $133,000. The increase in sales commissions over the comparable prior year period is primarily attributable to the previously discussed internalization of the Company's investment products sales force. In addition, FDIC insurance increased $219,000 over the comparable prior year period. The decrease in operating non-interest expense over the linked quarter was primarily attributable to an overall net gain recognized on the sale of three other real estate properties during the quarter of $539,000 and a decrease in advertising expense of $215,000.
The Company will hold its regularly scheduled conference call on Tuesday, July 22, 2008, at 1:30 p.m. (ET). Participants may listen to the live Web cast through the Sun Bancorp Web site at http://www.sunnb.com. Participants are advised to log on 10 minutes ahead of the scheduled start of the call. An Internet-based replay also will be available at the Web site for two weeks following the call.
Sun Bancorp, Inc. is a bank holding company headquartered in Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving customers through nearly 70 branch locations in New Jersey and New Castle County, Delaware. The bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the Federal Deposit Insurance Corporation (FDIC). For more information about Sun National Bank and Sun Bancorp, Inc., visit http://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 For the
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2008 2007 2008 2007
---------------------------------------------------------------------
Profitability for the period:
Net interest income $24,564 $23,550 $49,227 $47,883
Provision for loan losses 6,527 950 8,660 1,700
Non-interest income 7,802 6,305 15,177 13,322
Non-interest expense 22,913 22,018 46,878 45,589
Income before income taxes 2,926 6,887 8,866 13,916
Net income $ 2,329 $ 4,912 $ 6,512 $ 9,597
=====================================================================
Financial ratios:
Return on average assets (1) 0.28% 0.59% 0.39% 0.58%
Return on average equity (1) 2.53% 5.56% 3.55% 5.50%
Return on average tangible
equity (1),(2) 4.27% 9.88% 6.01% 9.90%
Net interest margin (1) 3.30% 3.19% 3.32% 3.26%
Efficiency ratio 70.79% 73.75% 72.79% 74.49%
Efficiency ratio, excluding
non-operating income and
non-operating expense (3) 70.79% 71.77% 72.52% 71.42%
Earnings per common share (4):
Basic $ 0.10 $ 0.22 $ 0.29 $ 0.42
Diluted $ 0.10 $ 0.21 $ 0.28 $ 0.40
Average equity to
average assets 10.92% 10.57% 10.97% 10.51%
June 30,
----------------------- December 31,
2008 2007 2007
---------------------------------------------------------------------
At period-end:
Total assets $3,424,968 $3,324,633 $3,338,392
Total deposits 2,782,180 2,725,747 2,699,091
Loans receivable, net of
allowance for loan losses 2,605,864 2,422,627 2,482,917
Investments 419,087 501,694 461,639
Borrowings 164,750 115,932 154,213
Junior subordinated debentures 92,786 97,941 97,941
Shareholders' equity 360,268 355,758 362,177
Credit quality and capital ratios:
Allowance for loan losses to
gross loans 1.19% 1.07% 1.08%
Non-performing assets to gross
loans and real estate owned 1.29% 0.67% 1.18%
Allowance for loan losses to
non-performing loans 97.30% 169.98% 95.77%
Total capital (to risk-weighted
assets) (5):
Sun Bancorp, Inc. 11.54% 11.80% 11.82%
Sun National Bank 10.86% 10.74% 11.06%
Tier 1 capital (to risk-weighted
assets) (5):
Sun Bancorp, Inc. 10.46% 10.83% 10.86%
Sun National Bank 9.78% 9.77% 10.09%
Leverage ratio (5):
Sun Bancorp, Inc. 9.57% 9.46% 9.67%
Sun National Bank 8.95% 8.54% 9.00%
Book value(4) $ 16.02 $ 15.44 $ 15.89
Tangible book value(4) $ 9.39 $ 8.77 $ 9.25
(1) Amounts for the three and six 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 three and
six months ended June 30, 2007 excludes a write-off of $541,000
of unamortized costs on redeemed trust preferred securities.
Non-interest income for the six months ended June 30, 2008
excludes a gain on redemption of Visa stock of $207,000 as
compared to the six months ended June 30, 2007, which excludes a
net gain of $1.4 million from the sale of branches. Non-interest
expense for the six months ended June 30, 2008 excludes a
$250,000 executive sign-on incentive and $72,000 in lease buyout
charges. Non-interest expense for the three and six months ended
June 30, 2007 excludes $86,000 and $2.4 million, respectively, of
severance related expenses and $124,000 as a result of early
extinguishment of FHLB borrowing.
(4) Data is adjusted for a 5% stock dividend declared in April
2008.
(5) June 30, 2008 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)
June 30, December 31,
2008 2007
---------------------------------------------------------------------
ASSETS
Cash and due from banks $ 87,038 $ 81,479
Interest-earning bank balances 1,557 2,380
Federal funds sold 247 2,654
---------------------------------------------------------------------
Cash and cash equivalents 88,842 86,513
Investment securities available for sale
(amortized cost - $395,515 and $427,378 at
June 30, 2008 and December 31, 2007,
respectively) 384,944 425,805
Investment securities held to maturity
(estimated fair value - $16,036 and
$18,755 at June 30, 2008 and December 31,
2007, respectively) 16,209 18,965
Loans receivable (net of allowance for loan
losses - $31,490 and $27,002 at June 30,
2008 and December 31, 2007, respectively) 2,605,864 2,482,917
Restricted equity investments 17,934 16,869
Bank properties and equipment, net 48,385 48,118
Real estate owned, net 1,714 1,449
Accrued interest receivable 12,379 15,018
Goodwill 127,894 127,894
Intangible assets, net 21,124 23,479
Deferred taxes, net 8,282 3,169
Bank owned life insurance (BOLI) 74,066 72,487
Other assets 17,331 15,709
---------------------------------------------------------------------
Total assets $3,424,968 $3,338,392
=====================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $2,782,180 $2,699,091
Federal funds purchased 29,500 30,000
Securities sold under agreements to
repurchase - customers 36,149 40,472
Advances from the Federal Home
Loan Bank (FHLB) 38,877 63,483
Securities sold under agreements to
repurchase - FHLB 55,000 15,000
Obligation under capital lease 5,224 5,258
Junior subordinated debentures 92,786 97,941
Other liabilities 24,984 24,970
---------------------------------------------------------------------
Total liabilities 3,064,700 2,976,215
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $1 par value, 1,000,000
shares authorized, none issued -- --
Common stock, $1 par value, 50,000,000
shares authorized; 23,871,334 shares
issued and 22,495,011 shares outstanding
at June 30, 2008; 22,722,655 shares issued
and 21,712,132 shares outstanding at
December 31, 2007 23,871 22,723
Additional paid-in capital 349,558 336,668
Retained earnings 14,198 20,338
Accumulated other comprehensive loss (6,854) (1,027)
Treasury stock at cost, 1,376,323 shares
and 1,010,523 shares at June 30, 2008
and December 31, 2007, respectively (20,505) (16,525)
---------------------------------------------------------------------
Total shareholders' equity 360,268 362,177
---------------------------------------------------------------------
Total liabilities and
shareholders' equity $3,424,968 $3,338,392
=====================================================================
SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
For the For the
Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
2008 2007 2008 2007
---------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $37,890 $43,403 $78,285 $86,514
Interest on taxable investment
securities 3,807 4,500 7,990 9,034
Interest on non-taxable
investment securities 843 733 1,604 1,391
Dividends on restricted equity
investments 277 281 546 547
Interest on federal funds sold 66 741 97 1,263
---------------------------------------------------------------------
Total interest income 42,883 49,658 88,522 98,749
---------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 15,957 22,077 34,270 42,911
Interest on borrowed funds 1,008 1,558 2,127 3,329
Interest on junior subordinated
debentures 1,354 2,473 2,898 4,626
---------------------------------------------------------------------
Total interest expense 18,319 26,108 39,295 50,866
---------------------------------------------------------------------
Net interest income 24,564 23,550 49,227 47,883
PROVISION FOR LOAN LOSSES 6,527 950 8,660 1,700
---------------------------------------------------------------------
Net interest income after
provision for loan losses 18,037 22,600 40,567 46,183
---------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit
accounts 3,561 3,552 6,954 6,681
Other service charges 75 75 153 147
Net gain on sale of branches -- -- -- 1,443
Net gain on sale of bank
property & equipment -- 12 -- 12
Net gain on sale of loans 411 447 835 955
Net gain on derivative
instruments 1,037 525 1,676 759
Investment products income 848 287 1,625 480
BOLI income 772 484 1,578 953
Other 1,098 923 2,356 1,892
---------------------------------------------------------------------
Total non-interest income 7,802 6,305 15,177 13,322
---------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 12,283 11,023 24,703 23,612
Occupancy expense 2,810 2,717 5,852 5,729
Equipment expense 1,666 1,829 3,290 3,780
Amortization of intangible
assets 1,178 1,178 2,355 2,360
Data processing expense 1,065 1,100 2,185 2,108
Professional fees 483 566 1,048 1,377
Insurance expense 728 522 1,397 780
Advertising expense 484 509 1,183 982
Other 2,216 2,574 4,865 4,861
---------------------------------------------------------------------
Total non-interest expense 22,913 22,018 46,878 45,589
---------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,926 6,887 8,866 13,916
INCOME TAXES 597 1,975 2,354 4,319
---------------------------------------------------------------------
NET INCOME $ 2,329 $ 4,912 $ 6,512 $ 9,597
=====================================================================
Basic earnings per share (1) $ 0.10 $ 0.22 $ 0.29 $ 0.42
=====================================================================
Diluted earnings per share (1) $ 0.10 $ 0.21 $ 0.28 $ 0.40
=====================================================================
(1) Data is adjusted for a 5% stock dividend declared in April 2008.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands)
2008 2008 2007
Q2 Q1 Q4
---------------------------------------------------------------------
Balance sheet at quarter end:
Loans:
Commercial and industrial $ 2,146,163 $ 2,061,640 $ 2,024,728
Home equity 264,354 267,023 264,965
Second mortgage 83,720 81,090 81,063
Residential real estate 56,334 53,616 49,750
Other 86,783 87,593 89,413
---------------------------------------------------------------------
Total gross loans 2,637,354 2,550,962 2,509,919
Allowance for loan losses (31,490) (27,904) (27,002)
---------------------------------------------------------------------
Net loans 2,605,864 2,523,058 2,482,917
Goodwill 127,894 127,894 127,894
Intangible assets, net 21,124 22,301 23,479
Total assets 3,424,968 3,366,357 3,338,392
Total deposits 2,782,180 2,713,756 2,699,091
Federal funds purchased 29,500 56,000 30,000
Securities sold under
agreements to repurchase -
customers 36,149 36,938 40,472
Advances from the Federal
Home Loan Bank (FHLB) 38,877 47,187 63,483
Securities sold under
agreements to repurchase -
FHLB 55,000 15,000 15,000
Obligation under capital
lease 5,224 5,241 5,258
Junior subordinated
debentures 92,786 92,786 97,941
Total shareholders' equity 360,268 364,242 362,177
Quarterly average balance sheet:
Loans:
Commercial and industrial $ 2,099,090 $ 2,037,548 $ 2,030,928
Home equity 265,481 267,836 263,245
Second mortgage 82,604 80,819 80,400
Residential real estate 52,332 50,012 50,734
Other 86,198 86,602 87,155
---------------------------------------------------------------------
Total gross loans 2,585,705 2,522,817 2,512,462
Securities and other
interest-earning assets 450,888 469,322 468,418
Total interest-earning assets 3,036,593 2,992,139 2,980,880
Total assets 3,368,523 3,326,064 3,322,686
Non-interest-bearing demand
deposits 430,568 416,612 434,066
Total deposits 2,755,778 2,701,630 2,689,326
Total interest-bearing
liabilities 2,539,882 2,509,725 2,499,003
Total shareholders' equity 367,824 366,400 363,302
Capital and credit quality
measures:
Total capital
(to risk-weighted
assets) (1):
Sun Bancorp, Inc. 11.54% 11.70% 11.82%
Sun National Bank 10.86% 10.93% 11.06%
Tier 1 capital (to
risk-weighted assets) (1):
Sun Bancorp, Inc. 10.46% 10.71% 10.86%
Sun National Bank 9.78% 9.94% 10.09%
Leverage ratio (1):
Sun Bancorp, Inc. 9.57% 9.67% 9.67%
Sun National Bank 8.95% 8.98% 9.00%
Average equity to
average assets 10.92% 11.02% 10.93%
Allowance for loan losses to
total gross loans 1.19% 1.09% 1.08%
Non-performing assets to
total gross loans and real
estate owned 1.29% 1.20% 1.18%
Allowance for loan losses to
non-performing loans 97.30% 102.60% 95.77%
Other data:
Net charge-offs $ (2,941) $ (1,231) $ (4,781)
=====================================================================
Non-performing assets:
Non-accrual loans $ 31,323 $ 26,567 $ 26,853
Loans past due 90 days and
accruing 1,042 631 1,343
Real estate owned, net 1,714 3,476 1,449
---------------------------------------------------------------------
Total non-performing
assets $ 34,079 $ 30,674 $ 29,645
=====================================================================
2007 2007
Q3 Q2
-------------------------------------------------------
Balance sheet at quarter end:
Loans:
Commercial and industrial $ 1,990,027 $ 1,985,584
Home equity 258,991 245,283
Second mortgage 79,464 79,120
Residential real estate 54,601 47,101
Other 91,094 91,618
-------------------------------------------------------
Total gross loans 2,474,177 2,448,706
Allowance for loan losses (26,340) (26,079)
--------------------------------------------------------
Net loans 2,447,837 2,422,627
Goodwill 127,935 127,936
Intangible assets, net 24,656 25,833
Total assets 3,295,576 3,324,633
Total deposits 2,682,286 2,725,747
Federal funds purchased -- --
Securities sold under
agreements to repurchase -
customers 46,499 44,612
Advances from the Federal Home
Loan Bank (FHLB) 64,763 66,029
Securities sold under
agreements to repurchase -
FHLB 15,000 --
Obligation under capital lease 5,275 5,291
Junior subordinated debentures 97,941 97,941
Total shareholders' equity 361,645 355,758
Quarterly average balance
sheet:
Loans:
Commercial and industrial 1,981,778 $ 1,978,175
Home equity 250,474 240,150
Second mortgage 78,643 77,442
Residential real estate 49,635 39,193
Other 89,566 91,578
-------------------------------------------------------
Total gross loans 2,450,096 2,426,538
Securities and other
interest-earning assets 509,016 577,669
Total interest-earning assets 2,959,112 3,004,207
Total assets 3,292,687 3,341,506
Non-interest-bearing demand
deposits 462,173 458,851
Total deposits 2,682,879 2,724,554
Total interest-bearing
liabilities 2,445,187 2,501,896
Total shareholders' equity 359,949 353,280
Capital and credit quality
measures:
Total capital (to
risk-weighted assets) (1):
Sun Bancorp, Inc. 11.97% 11.80%
Sun National Bank 11.03% 10.74%
Tier 1 capital (to
risk-weighted assets) (1):
Sun Bancorp, Inc. 10.99% 10.83%
Sun National Bank 10.05% 9.77%
Leverage ratio (1):
Sun Bancorp, Inc. 9.80% 9.46%
Sun National Bank 8.95% 8.54%
Average equity to average assets 10.93% 10.57%
Allowance for loan losses to
total gross loans 1.06% 1.07%
Non-performing assets to
total gross
loans and real estate owned 0.90% 0.67%
Allowance for loan losses to
non-performing loans 127.11% 169.98%
Other data:
Net charge-offs $ (999) $ (898)
========================================================
Non-performing assets:
Non-accrual loans $ 18,157 $ 14,505
Loans past due 90 days and
accruing 2,565 837
Real estate owned, net 1,449 1,165
--------------------------------------------------------
Total non-performing
assets $ 22,171 $ 16,507
========================================================
(1) June 30, 2008 capital ratios are estimated, subject to regulatory
filings.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands, except per share data)
2008 2008 2007
Q2 Q1 Q4
---------------------------------------------------------------------
Profitability for the quarter:
Tax-equivalent interest
income $ 43,337 $ 46,049 $ 49,443
Interest expense 18,319 20,976 23,554
Tax-equivalent net interest
income 25,018 25,073 25,889
Tax-equivalent adjustment 454 410 391
Provision for loan losses 6,527 2,133 5,443
Non-interest income 7,802 7,375 6,822
Non-interest expense,
excluding amortization of
intangible assets 21,735 22,788 20,351
Amortization of intangible
assets 1,178 1,177 1,177
Income before income taxes 2,926 5,940 5,349
Income tax expense 597 1,757 1,479
Net income $ 2,329 $ 4,183 $ 3,870
=====================================================================
Financial ratios:
Return on average assets (1) 0.28% 0.50% 0.47%
Return on average equity (1) 2.53% 4.57% 4.26%
Return on average tangible
equity (1),(2) 4.27% 7.77% 7.33%
Net interest margin (1) 3.30% 3.35% 3.47%
Efficiency ratio 70.79% 74.80% 66.61%
Efficiency ratio, excluding
non-operating income and
non-operating expense 70.79% 74.28% 66.61%
Per share data(3):
Earnings per common
share:
Basic $ 0.10 $ 0.18 $ 0.17
Diluted $ 0.10 $ 0.18 $ 0.16
Book value $ 16.02 $ 16.00 $ 15.89
Tangible book value $ 9.39 $ 9.40 $ 9.25
Average basic shares(3) 22,696,171 22,786,251 22,916,950
Average diluted shares(3) 23,220,775 23,266,872 23,557,090
Operating non-interest income:
Service charges on deposit
accounts $ 3,561 $ 3,393 $ 3,421
Other service charges 75 78 85
Gain on sale of loans 411 424 342
Net gain on derivative
instruments 1,037 639 511
Investment products income 848 777 272
BOLI income 772 806 990
Other 1,098 1,051 1,201
---------------------------------------------------------------------
Total operating
non-interest income 7,802 7,168 6,822
---------------------------------------------------------------------
Non-operating income (4):
Gain on Visa stock redemption -- 207 --
---------------------------------------------------------------------
Total non-operating income -- 207 --
---------------------------------------------------------------------
Total non-interest income $ 7,802 $ 7,375 $ 6,822
=====================================================================
Operating non-interest expense:
Salaries and employee
benefits $ 12,283 $ 12,170 $ 11,004
Occupancy expense 2,810 2,970 2,830
Equipment expense 1,666 1,624 1,660
Amortization of intangible
assets 1,178 1,177 1,177
Data processing expense 1,065 1,120 1,078
Professional fees 483 565 327
Insurance expense 728 669 695
Advertising expense 484 699 459
Other expenses 2,216 2,649 2,298
---------------------------------------------------------------------
Total operating
non-interest expense 22,913 23,643 21,528
---------------------------------------------------------------------
Non-operating expense (4):
Lease buy-out expenses and
other branch rationalization
charges -- 72 --
Severance and other related
expenses -- -- --
Executive sign-on incentive -- 250 --
Early extinguishment
of borrowings -- -- --
---------------------------------------------------------------------
Total non-operating expense -- 322 --
---------------------------------------------------------------------
Total non-interest expense $ 22,913 $ 23,965 $ 21,528
=====================================================================
2007 2007
Q3 Q2
-------------------------------------------------------
Profitability for the quarter:
Tax-equivalent interest
income $ 50,406 $ 50,049
Interest expense 24,567 26,108
Tax-equivalent net interest
income 25,839 23,941
Tax-equivalent adjustment 384 391
Provision for loan losses 1,260 950
Non-interest income 6,011 6,305
Non-interest expense,
excluding amortization of
intangible assets 20,669 20,840
Amortization of intangible
assets 1,177 1,178
Income before income taxes 8,360 6,887
Income tax expense 2,475 1,975
Net income $ 5,885 $ 4,912
=======================================================
Financial ratios:
Return on average assets (1) 0.71% 0.59%
Return on average equity (1) 6.54% 5.56%
Return on average tangible
equity (1),(2) 11.39% 9.88%
Net interest margin (1) 3.49% 3.19%
Efficiency ratio 69.43% 73.75%
Efficiency ratio, excluding
non-operating income and
non-operating expense 68.30% 71.77%
Per share data(3):
Earnings per common
share:
Basic $ 0.25 $ 0.22
Diluted $ 0.25 $ 0.21
Book value $ 15.70 $ 15.44
Tangible book value $ 9.07 $ 8.77
Average basic shares(3) 23,147,677 22,825,286
Average diluted shares(3) 23,872,401 23,804,307
Operating non-interest income:
Service charges on deposit
accounts $ 3,585 $ 3,552
Other service charges 75 75
Gain on sale of loans 392 447
Net gain on derivative
instruments 297 525
Investment products income 222 287
BOLI income 484 484
Other 956 935
-------------------------------------------------------
Total operating non-interest
income 6,011 6,305
-------------------------------------------------------
Non-operating income (4):
Gain on Visa stock redemption -- --
-------------------------------------------------------
Total non-operating income -- --
-------------------------------------------------------
Total non-interest income $ 6,011 $ 6,305
=======================================================
Operating non-interest expense:
Salaries and employee
benefits $ 10,816 $ 10,937
Occupancy expense 2,773 2,717
Equipment expense 1,732 1,829
Amortization of intangible
assets 1,177 1,178
Data processing expense 1,063 1,100
Professional fees 406 566
Insurance expense 644 522
Advertising expense 415 509
Other expenses 2,635 2,450
-------------------------------------------------------
Total operating non-interest
expense 21,661 21,808
-------------------------------------------------------
Non-operating expense (4):
Lease buy-out expenses and
other branch rationalization
charges 185 --
Severance and other related
expenses -- 86
Executive sign-on incentive -- --
Early extinguishment of
borrowings -- 124
-------------------------------------------------------
Total non-operating expense 185 210
-------------------------------------------------------
Total non-interest expense $ 21,846 $ 22,018
=======================================================
(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 declared in April 2008.
(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
June 30, 2008
---------------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $ 2,099,090 $ 30,340 5.78%
Home equity 265,481 3,925 5.91
Second mortgage 82,604 1,335 6.46
Residential real estate 52,332 818 6.25
Other 86,198 1,472 6.83
----------- -----------
Total loans receivable 2,585,705 37,890 5.86
Investment securities (3) 426,652 5,331 5.00
Interest-earning
bank balances 9,929 50 2.01
Federal funds sold 14,307 66 1.85
----------- -----------
Total interest-earning
assets 3,036,593 43,337 5.71
----------- -----------
Cash and due from banks 58,723
Bank properties and
equipment, net 48,371
Goodwill and intangible
assets, net 149,746
Other assets 75,090
-----------
Total non-interest-earning
assets 331,930
-----------
Total assets $ 3,368,523
===========
Interest-bearing liabilities:
Interest-bearing
deposit accounts:
Interest-bearing
demand deposits $ 801,486 3,047 1.52%
Savings deposits 422,807 1,866 1.77
Time deposits 1,100,917 11,044 4.01
----------- -----------
Total interest-bearing
deposit accounts 2,325,210 15,957 2.75
----------- -----------
Borrowed money:
Federal funds purchased 28,256 172 2.43
Securities sold
under agreements to
repurchase - customers 35,839 108 1.21
FHLB advances (4) 52,561 633 4.82
Junior subordinated
debentures 92,786 1,354 5.84
Obligation under
capital lease 5,230 95 7.27
----------- -----------
Total borrowings 214,672 2,362 4.40
----------- -----------
Total interest-bearing
liabilities 2,539,882 18,319 2.89
----------- -----------
Non-interest-bearing
demand deposits 430,568
Other liabilities 30,249
-----------
Total non-interest-bearing
liabilities 460,817
-----------
Total liabilities 3,000,699
Shareholders' equity 367,824
-----------
Total liabilities and
shareholders' equity $ 3,368,523
===========
Net interest income $ 25,018
===========
Interest rate spread (5) 2.82%
===========
Net interest margin (6) 3.30%
===========
Ratio of average
interest-earning assets to
average interest-bearing
liabilities 119.56%
===========
For the Three Months Ended
June 30, 2007
---------------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $ 1,978,175 $ 35,648 7.21%
Home equity 240,150 3,945 6.57
Second mortgage 77,442 1,238 6.39
Residential real estate 39,193 747 7.62
Other 91,578 1,825 7.97
----------- -----------
Total loans receivable 2,426,538 43,403 7.15
Investment securities (3) 505,315 5,764 4.56
Interest-earning
bank balances 16,457 141 3.43
Federal funds sold 55,897 741 5.30
----------- -----------
Total interest-earning
assets 3,004,207 50,049 6.66
----------- -----------
Cash and due from banks 71,814
Bank properties and
equipment, net 42,958
Goodwill and intangible
assets, net 154,494
Other assets 68,033
-----------
Total non-interest-earning
assets 337,299
-----------
Total assets $ 3,341,506
===========
Interest-bearing liabilities:
Interest-bearing
deposit accounts:
Interest-bearing demand
deposits $ 741,568 5,873 3.17%
Savings deposits 467,455 3,508 3.00
Time deposits 1,056,680 12,696 4.81
----------- -----------
Total interest-bearing
deposit accounts 2,265,703 22,077 3.90
----------- -----------
Borrowed money:
Federal funds purchased 863 13 6.03
Securities sold under
agreements to repurchase
- customers 43,011 498 4.63
FHLB advances (4) 86,136 950 4.41
Junior subordinated
debentures 100,887 2,473 9.81
Obligation under capital
lease 5,296 97 7.33
----------- -----------
Total borrowings 236,193 4,031 6.83
----------- -----------
Total interest-bearing
liabilities 2,501,896 26,108 4.17
----------- -----------
Non-interest-bearing
demand deposits 458,851
Other liabilities 27,479
-----------
Total non-interest-bearing
liabilities 486,330
-----------
Total liabilities 2,988,226
Shareholders' equity 353,280
-----------
Total liabilities and
shareholders' equity $ 3,341,506
===========
Net interest income $ 23,941
===========
Interest rate spread (5) 2.49%
===========
Net interest margin (6) 3.19%
===========
Ratio of average
interest-earning assets to
average interest-bearing
liabilities 120.08%
===========
(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.
(4) Amounts include advances from FHLB and securities sold under
agreements to repurchase - FHLB.
(5) Interest rate spread represents the difference between the average
yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage
of average interest-earning assets.
SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (unaudited)
(Dollars in thousands)
For the Six Months Ended
June 30, 2008
---------------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $ 2,068,319 $ 62,846 6.08%
Home equity 266,659 8,080 6.06
Second mortgage 81,711 2,653 6.49
Residential real estate 51,172 1,636 6.39
Other 86,400 3,070 7.11
----------- -----------
Total loans receivable 2,554,261 78,285 6.13
Investment securities (3) 441,009 10,867 4.93
Interest-earning
bank balances 10,009 137 2.74
Federal funds sold 9,087 97 2.13
----------- -----------
Total interest-earning
assets 3,014,366 89,386 5.93
----------- -----------
Cash and due from banks 57,639
Bank properties and
equipment, net 48,132
Goodwill and intangible
assets, net 150,335
Other assets 76,821
-----------
Total non-interest-earning
assets 332,927
-----------
Total assets $ 3,347,293
===========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 777,959 6,367 1.64%
Savings deposits 442,378 4,671 2.11
Time deposits 1,084,777 23,232 4.28
----------- -----------
Total interest-bearing
deposit accounts 2,305,114 34,270 2.97
----------- -----------
Borrowed money:
Federal funds purchased 23,001 302 2.63
Securities sold under
agreements to repurchase
- customers 37,269 341 1.83
FHLB advances (4) 61,224 1,293 4.22
Junior subordinated
debentures 92,956 2,898 6.24
Obligation under capital
lease 5,239 191 7.29
----------- -----------
Total borrowings 219,689 5,025 4.57
----------- -----------
Total interest-bearing
liabilities 2,524,803 39,295 3.11
----------- -----------
Non-interest-bearing
demand deposits 423,590
Other liabilities 31,788
-----------
Total non-interest-bearing
liabilities 455,378
-----------
Total liabilities 2,980,181
Shareholders' equity 367,112
-----------
Total liabilities and
shareholders' equity $ 3,347,293
===========
Net interest income $ 50,091
===========
Interest rate spread (5) 2.82%
===========
Net interest margin (6) 3.32%
===========
Ratio of average
interest-earning assets
to average interest-bearing
liabilities 119.39%
===========
For the Six Months Ended
June 30, 2007
---------------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $ 1,967,243 $ 71,152 7.23%
Home equity 237,011 7,770 6.56
Second mortgage 76,808 2,428 6.32
Residential real estate 38,456 1,504 7.82
Other 92,138 3,660 7.94
----------- -----------
Total loans receivable 2,411,656 86,514 7.17
Investment securities (3) 503,836 11,336 4.50
Interest-earning
bank balances 17,405 377 4.33
Federal funds sold 47,928 1,263 5.27
----------- -----------
Total interest-earning
assets 2,980,825 99,490 6.68
----------- -----------
Cash and due from banks 72,228
Bank properties and
equipment, net 42,681
Goodwill and intangible
assets, net 155,198
Other assets 71,384
-----------
Total non-interest-earning
assets 341,491
-----------
Total assets $ 3,322,316
===========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 751,258 11,808 3.14%
Savings deposits 453,690 6,601 2.91
Time deposits 1,031,301 24,502 4.75
----------- -----------
Total interest-bearing
deposit accounts 2,236,249 42,911 3.84
----------- -----------
Borrowed money:
Federal funds purchased 450 13 5.78
Securities sold under
agreements to repurchase
- customers 44,163 1,026 4.65
FHLB advances (4) 93,670 2,096 4.48
Junior subordinated
debentures 104,548 4,626 8.85
Obligation under capital
lease 5,304 194 7.32
----------- -----------
Total borrowings 248,135 7,955 6.41
----------- -----------
Total interest-bearing
liabilities 2,484,384 50,866 4.09
----------- -----------
Non-interest-bearing
demand deposits 458,528
Other liabilities 30,382
-----------
Total non-interest-bearing
liabilities 488,910
-----------
Total liabilities 2,973,294
Shareholders' equity 349,022
-----------
Total liabilities and
shareholders' equity $ 3,322,316
===========
Net interest income $ 48,624
===========
Interest rate spread (5) 2.59%
===========
Net interest margin (6) 3.26%
===========
Ratio of average
interest-earning assets
to average interest-bearing
liabilities 119.98%
===========
(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.
(4) Amounts include advances from FHLB and securities sold under
agreements to repurchase - FHLB.
(5) Interest rate spread represents the difference between the average
yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(6) Net interest margin represents net interest income as a
percentage of average interest-earning assets.