Market Overview

Sun Bancorp, Inc. Reports Third Quarter 2012 Results

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VINELAND, N.J., Oct. 24, 2012 /PRNewswire/ -- Sun Bancorp, Inc. (NASDAQ: SNBC) reported today net income available to common shareholders of $1.2 million, or $0.01 per diluted share, for the quarter ended September 30, 2012, compared to net income available to common shareholders of $2.7 million, or $0.03 per diluted share, for the third quarter of 2011.

The following are key items and events that occurred during the third quarter of 2012:

  • Provision expense totaled $1.9 million as compared to $510 thousand in the second quarter of 2012. The allowance for loan losses equaled $49.0 million at quarter end, a decrease of $2.4 million from June 30, 2012, and an increase of $7.3 million from December 31, 2011. The allowance for loan losses equaled 2.12% of gross loans held for investment and 40.6% of non-performing loans as compared to 2.29% and 49.4% and 1.82% and 38.7%, respectively, at June 30, 2012 and December 31, 2011.
  • Commercial loan production remained strong at $113 million during the third quarter versus $65 million in the linked quarter as the Company continues to originate strong credits for the portfolio.
  • The net interest margin equaled 3.41% versus 3.53% in the linked quarter. The current quarter margin was negatively impacted by $507 thousand of interest reversals as well as a decline in commercial loan yields. The interest reversals were due primarily to approximately $24 million in loan balances for two relationships which were moved to non-accrual status.  Although these two relationships were current at September 30, 2012 and are well secured, the Company elected to designate these loans as non-accrual because certain agreed upon financial metrics were not met. Excluding these two credits, the Company continued to experience reductions in the portfolio resulting from its ongoing efforts to manage the workout portfolio.
  • Non-interest income increased $2.1 million to $9.6 million as compared to the linked quarter primarily due to an increase of $2.3 million in gains on the sale of mortgage loans. The Company's residential mortgage platform has continued its strong growth as $240 million in residential mortgage loans were recorded and $120 million sold during the third quarter as compared to $139 million and $86 million, respectively, in the linked quarter.
  • Total risk-based capital was 14.30% at September 30, 2012, well above the regulatory required level.

"Our parallel efforts to strengthen and grow the company continued through the third quarter of this year," said Thomas X. Geisel, Sun's President and Chief Executive Officer.  "We are encouraged by the growth of our residential mortgage platform, and have demonstrated our competitive advantage with strong commercial loan production and a robust pipeline despite the difficult economic environment.  We will continue to focus our efforts on asset resolution, business growth and loan origination as we advance our corporate strategy for the balance of 2012."

Discussion of Results:

Balance Sheet

  • Total assets were $3.18 billion at September 30, 2012 and December 31, 2011 and $3.24 billion at September 30, 2011. 
  • Gross loans held-for-investment were $2.31 billion at September 30, 2012, as compared to $2.29 billion at December 31, 2011 and $2.30 billion at September 30, 2011. This increase is the result of growth in the residential mortgage portfolio.
  • Deposits increased by $38.8 million from the linked quarter to $2.65 billion at September 30, 2012.  The increase was due to seasonal public funds activity.
  • Borrowings increased by $27.7 million from the linked quarter in order to fund the residential loan growth during the period.

Net Interest Income and Margin

  • On a tax equivalent basis, net interest income decreased $552 thousand over the linked quarter to $24.5 million. The net interest margin decreased 12 basis points to 3.41% from 3.53% for the linked quarter, and 20 basis points as compared to the same prior year quarter. The average yield on interest-earning assets decreased 17 basis points over the linked quarter from 4.16% to 3.99%. This decrease is due to $547 thousand of interest reversals, primarily related to two credits, recorded during the quarter as well as declining commercial loan yields resulting from legacy loans maturing and/or re-setting at lower rates. The average cost of interest-bearing liabilities decreased seven basis points to 0.73% as interest-bearing deposit costs declined by four basis points and trust preferred debt rates re-set at lower levels.  The margin variance from the prior year is due to the continuing pressures in the current interest rate environment.

Non-Interest Income

  • Non-interest income was $9.6 million for the quarter ended September 30, 2012, an increase of $2.1 million from the linked quarter of $7.5 million and $3.8 million above the comparable prior year quarter of $5.8 million. The increase from the linked quarter was primarily attributable to an increase of $2.3 million in gains on the sale of mortgage loans. Included in this increase is a $1.5 million positive mark-to-market adjustment as the Company elected the fair value option on its loans held-for-sale, effective July 1, 2012. The Company also recognized $630 thousand of net gains on forward commitments and interest rate lock commitments within its residential mortgage portfolio.  These increases were partially offset by a decrease of $430 thousand in gains on the sale of investment securities from the prior quarter.  In addition, there was a decrease of $238 thousand from the linked quarter in income from investment services.  The increase from the prior year period is due to an increase of $3.5 million in mortgage gains and a prior year derivative credit valuation loss of $309 thousand

Non-Interest Expense

  • The Company incurred $30.9 million of non-interest expense in the third quarter of 2012, an increase of $273 thousand over the linked quarter and an increase of $3.9 million from the comparable prior year quarter. Problem loan costs increased by $880 thousand due to $1.3 million in real estate tax expenses recognized on one non-performing relationship. Excluding this item, the normalized run rate for problem loan costs continues to decline. Salaries and benefits increased $372 thousand due to increased mortgage production. These items were mostly offset by a $544 thousand decline in advertising expense due to prior period Boomerang campaign expenses as well as a $455 thousand decrease in mortgage recourse expense. The increase in non-interest expense from the prior year period is due primarily to additional salaries and benefits expense associated with the mortgage expansion in 2012.

Asset Quality

  • The provision for loan losses for the third quarter was $1.9 million, as compared to $510 thousand in the linked quarter and $2.3 million in the comparable prior year quarter. The allowance for loan losses was $49.0 million at September 30, 2012, or 2.12% of gross loans held-for-investment, as compared to the allowance for loan losses to gross loans held-for-investment of 1.82% at December 31, 2011 and 2.39% at September 30, 2011.  Net charge-offs recorded in the current quarter were $4.2 million, or 0.18% of average loans, as compared to $1.2 million, or 0.06% of average loans for the linked quarter and $5.8 million, or 0.25% of average loans outstanding for the comparable prior year quarter.
  • Total non-performing assets were $126.4 million, or 5.32% of total gross loans held-for-investment, loans held-for-sale and real estate owned at September 30, 2012, as compared to $110.1 million, or 4.84% and $140.8 million, or 6.04%, respectively, at June 30, 2012 and September 30, 2011. Non-performing loans increased to $120.8 million at September 30, 2012 as compared to $104.0 million at June 30, 2012. This increase is due primarily to the aforementioned transfer of two credit relationships in the aggregate amount of $24 million into non-performing status at September 30, 2012; partially offset by $6.9 million in net paydowns out of the category.

Capital

  • Stockholders' equity totaled $287.5 million at September 30, 2012 compared to $309.1 million at December 31, 2011. The Company's tangible equity to tangible assets ratio was 7.81% at September 30, 2012, as compared to 8.41% at December 31, 2011.  At September 30, 2012, the Company's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 14.30%, 12.73%, and 10.43%, respectively.  At September 30, 2012, Sun National Bank's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 13.63%, 12.37%, and 10.12%, respectively. 

The Company will hold its regularly scheduled conference call on Thursday, October 25, 2012, at 11:00 a.m. (ET).  Participants may listen to the live webcast via the "Investor Relations" section of the Sun Bancorp, Inc. website 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. (Nasdaq: SNBC) is a $3.18 billion asset bank holding company headquartered in Vineland, New Jersey, with its executive offices located in Mt. Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a full service commercial bank serving customers through more than 60 locations in New Jersey. Sun National Bank was named one of Forbes magazine's "Most Trustworthy Companies" for five consecutive years. 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 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.

Non-GAAP Financial Measures

This release references tax-equivalent interest income and non-operating income and expenses. Tax-equivalent interest income is a non-GAAP financial measure. Tax-equivalent interest income assumes a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the three months ended September 30, 2012 and 2011 were $212 thousand and $292 thousand, respectively. The fully taxable equivalent adjustments for the nine months ended September 30, 2012 and 2011 were $661 thousand and $1.1 million, respectively. The fully taxable equivalent adjustment for the three months ended June 30, 2012 was $217 thousand. Non-operating income (loss) is also a non-GAAP financial measure. Non-operating income (loss) includes impairment losses recognized on available for sale securities included in earnings. There were no non-operating income (loss) items for the three months ended September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011, and September 30, 2011. Non-operating loss during the nine months ended September 30, 2011 was $250 thousand.

 

SUN BANCORP, INC. AND SUBSIDIARIES



FINANCIAL HIGHLIGHTS (Unaudited)



(Dollars in thousands, except per share amounts)









For the Three Months Ended



For the Nine Months Ended





September 30,



September 30,







2012



2011



2012



2011



Profitability for the period:



















    Net interest income



$

24,334



$

26,181



$

73,867



$

77,799



    Provision for loan losses





1,868





2,321





33,061





67,440



    Non-interest income





9,588





5,770





22.635





6,664



    Non-interest expense





30,860





26,973





89,010





82,999



    Income (loss) before income taxes





1,194





2,657





(25,569)





(65,976)



    Net income (loss)





1,228





2,680





(25,535)





(65,986)



    Net income (loss) available to common shareholders



$

1,228



$

2,680



$

(25,535)



$

(65,986)































Financial ratios:



























    Return on average assets(1) 





0.16

%



0.33

%



(1.08)

%



(2.66)

%

    Return on average equity(1)





1.70

%



3.48

%



(11,52)

%



(29.80)

%

    Return on average tangible equity(1),(2)





1.99

%



4.10

%



(13.51)

%



(35.51)

%

    Net interest margin(1)





3.41

%



3.61

%



3.47

%



3.49

%

    Efficiency ratio





90.97

%



84.42

%



92.24

%



98.27

%

    Efficiency ratio, excluding non-operating income and non-operating expense(3)





90.97

%



84.42

%



92.24

%



97.98

%





























    Earnings (loss) per common share:



























        Basic



$

0.01



$

0.03



$

(0.30)



$

(0.90)



        Diluted 



$

0.01



$

0.03



$

(0.30)



$

(0.90)































    Average equity to

average assets





9.17

%



9.52

%



9.41

%



8.93

%





September 30,



  December 31,







2012

2011



2011



At period-end:











    Total assets



$

3,180,535



$

3,236,219



$

3,183,916



    Total deposits





2,646,807





2,727,650





2,667,977



    Loans receivable, net of allowance for loan losses





2,261,980





2,251,176



2,249,455



    Loans held-for-sale(4)





60,676





20,868





23,192



    Investments





527,034





557,380





532,715



    Borrowings





78,011





32,010





31,269



    Junior subordinated debentures





92,786





92,786





92,786



    Shareholders' equity





287,480





308,055





309,083

























Credit quality and capital ratios:





















    Allowance for loan losses to gross loans     held-for-investment





2.12

%



2.39

%



1.82

%

    Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned





5.32

%



6.04

%



4.86

%

    Allowance for loan losses to non-performing loans held-for-investment





40.56

%



42.23

%



38.69

%























Total capital (to risk-weighted assets):





















        Sun Bancorp, Inc.





14.30

%



14.85

%



15.22

%

        Sun National Bank





13.63

%



13.07

%



13.39

%

Tier 1 capital (to risk-weighted assets):





















        Sun Bancorp, Inc.





12.73

%



13.59

%



13.96

%

        Sun National Bank





12.37

%



11.81

%



12.13

%

Leverage ratio:





















        Sun Bancorp, Inc.





10.43

%



11.08

%



11.09

%

        Sun National Bank





10.12

%



9.64

%



9.64

%























    Book value per common share



$

3.34



$

3.60



$

3.61



    Tangible book value per common share



$

2.85



$

3.06



$

3.08



(1) Amounts for the three and nine 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. Non-interest income for the nine months ended September 30, 2011 excludes net impairment losses on available for sale securities of $250 thousand.

(4) Amount at September 30, 2011 includes $5.2 million of commercial real estate loans marked at fair value.















































 

SUN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(Dollars in thousands, except par value amounts)





September 30,

2012



December 31, 2011

ASSETS







Cash and due from banks

$

75,555



$

68,773

Interest-earning bank balances



8,299





51,049

Cash and cash equivalents



83,854





119,822

Investment securities available for sale (amortized cost of $503,432 and $514,488 at September 30, 2012 and December 31, 2011, respectively)



508,173





515,545

Investment securities held to maturity (estimated fair value of $884 and $1,413 at September 30, 2012 and December 31, 2011, respectively)



821





1,344

Loans receivable (net of allowance for loan losses of $49,016 and $41,667 at September 30, 2012 and December 31, 2011, respectively)



2,261,980





2,249,455

  Loans held-for-sale, at cost



-





23,192

Loans held-for-sale, at fair value



60,676





-

Restricted equity investments



18,040





15,826

Bank properties and equipment, net



51,630





54,756

Real estate owned



5,513





5,020

Accrued interest receivable



8,183





8,912

Goodwill



38,188





38,188

Intangible assets



4,183





6,947

Bank owned life insurance (BOLI)



76,369





74,871

Other assets



62,925





70,038

Total assets

$

3,180,535



$

3,183,916













LIABILITIES AND SHAREHOLDERS' EQUITY











Liabilities:











Deposits

$

2,646,807



$

2,667,977

Federal funds purchased



30,000





-

Securities sold under agreements to repurchase – customers



3,587





5,668

Advances from the Federal Home Loan Bank of New York (FHLBNY)



16,749





2,733

Securities sold under agreements to repurchase – FHLBNY



20,000





15,000

Obligations under capital lease



7,675





7,868

Junior subordinated debentures



92,786





92,786

Deferred taxes, net



1,937





432

Other liabilities



73,514





82,369

Total liabilities



2,893,055





2,874,833













Shareholders' equity:











Preferred stock, $1 par value, 1,000,000 shares authorized; none issued



-





-

Common stock, $1 par value, 100,000,000 shares authorized; 88,143,024 shares issued and 86,036,301 shares outstanding at September 30, 2012; 87,825,038 shares issued and 85,718,315 shares outstanding at December 31, 2011



88,171





87,825

Additional paid-in capital



505,954





504,508

Retained deficit



(283,055)





(257,520)

Accumulated other comprehensive income



2,804





625

Deferred compensation plan trust



(232)





(193)

Treasury stock at cost, 2,106,723 shares at  September 30, 2012 and December 31, 2011



(26,162)





(26,162)

Total shareholders' equity



287,480





309,083

Total liabilities and shareholders' equity

$

3,180,535



$

3,183,916

 

SUN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands, except per share amounts)





























For the Three Months

Ended September 30,





For the Nine Months Ended September 30,





2012





2011





2012





2011

INTEREST INCOME























Interest and fees on loans

$

25,631



$

28,149



$

78,037



$

85,115

Interest on taxable investment securities



2,221





2,603





7,278





8,086

Interest on non-taxable investment securities



393





542





1,228





1,984

Dividends on restricted equity investments



224





216





735





679

Total interest income



28,469





31,510





87,278





95,864

INTEREST EXPENSE























Interest on deposits



3,279





4,298





10,410





14,696

Interest on funds borrowed



259





356





978





1,067

Interest on junior subordinated debentures



597





675





2,023





2,302

Total interest expense



4,135





5,329





13,411





18,065

Net interest income



24,334





26,181





73,867





77,799

PROVISION FOR LOAN LOSSES



1,868





2,321





33,061





67,440

Net Interest income after provision for loan losses



22,466





23,860





40,806





10,359

NON-INTEREST INCOME























Service charges on deposit accounts



2,848





2,838





8,246





8,090

Other service charges



69





85





222





259

Gain on sale of loans



4,204





708





6,785





2,341

Impairment losses on available for sale securities



-





-





-





(250)

Gain on sale of investment securities



-





-





430





1,408

Investment products income



510





562





1,690





2,460

BOLI income



489





549





1,498





1,655

Derivative credit valuation adjustment



(198)





(309)





(525)





(12,324)

Other



1,666





1,337





4,289





3,025

Total non-interest income



9,588





5,770





22,635





6,664

NON-INTEREST EXPENSE























Salaries and employee benefits



16,128





13,619





46,655





39,490

Occupancy expense



3,275





3,021





9,595





9,730

Equipment expense



1,866





1,899





5,394





5,484

Amortization of intangible assets



922





922





2,764





2,764

Data processing expense



1,084





1,058





3,246





3,234

Professional fees



578





879





1,814





2,859

Insurance expenses



1,375





1,479





4,318





4,753

Advertising expense



464





395





1,769





2,282

Problem loan expense



2,154





1,506





4,905





6,476

Real estate owned expense, net



779





448





1,350





1,078

Office supplies expense



302





315





949





984

Other



1,933





1,432





6,251





3,865

Total non-interest expense



30,860





26,973





89,010





82,999

INCOME (LOSS) BEFORE INCOME TAXES



1,194





2,657





(25,569)





(65,976)

INCOME TAX (BENEFIT) EXPENSE



(34)





(23)





(34)





10

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

$

1,228



$

2,680



$

(25,535)



$

(65,986)

























Basic earnings (loss) per share

$

0.01



$

0.03



$

(0.30)



$

(0.90)

Diluted earnings (loss) per share

$

0.01



$

0.03



$

(0.30)



$

(0.90)

Weighted average shares – basic

86,001,929



84,429,644



85,888,236



73,643,303

Weighted average shares - diluted

86,047,655



84,538,449



85,888,236



73,643,303

 

SUN BANCORP, INC. AND SUBSIDIARIES

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)

(Dollars in thousands)





2012



2012



2012



2011



2011



Q3



Q2



Q1



Q4



Q3

Balance sheet at quarter end: 



















Cash and cash equivalents

$

83,854



$

115,891



$

87,553



$

119,822



$

134,209

Investment securities



527,034





549,849





576,457





532,715





557,380

Loans held-for-investment: 





























        Commercial and industrial



1,802,060





1,794,830





1,820,054





1,878,026





1,899,231

        Home equity 



212,911





217,768





219,926





224,517





230,098

        Second mortgage 



32,610





36,429





38,815





41,470





45,030

        Residential real estate 



224,346





153,373





109,807





100,438





82,967

        Other 



39,069





42,486





36,952





46,671





49,077

            Total gross loans held-for-investment



2,310,996





2,244,886





2,225,554





2,291,122





2,306,403

Allowance for loan losses 



(49,016)





(51,394)





(52,127)





(41,667)





(55,227)

            Net loans held-for-investment



2,261,980





2,193,492





2,173,427





2,249,455





2,251,176

   Loans held-for-sale



60,676





24,672





25,034





23,192





20,868

    Goodwill 



38,188





38,188





38,188





38,188





38,188

    Intangible assets



4,183





5,104





6,025





6,947





7,868

    Total assets 



3,180,535





3,133,487





3,113,269





3,183,916





3,236,219

    Total deposits



2,646,807





2,608,034





2,631,652





2,667,977





2,727,650

   Federal funds purchased



30,000





-





-





-





-

    Securities sold under agreements to repurchase – customers



3,587





5,454





5,870





5,668





6,026

    Advances from FHLBNY



16,749





22,080





2,408





2,733





3,054

    Securities sold under agreements to repurchase – FHLBNY



20,000





15,000





15,000





15,000





15,000

    Obligations under capital lease



7,675





7,740





7,805





7,868





7,930

    Junior subordinated debentures



92,786





92,786





92,786





92,786





92,786

    Total shareholders' equity



287,480





284,768





283,163





309,083





308,055

Quarterly average balance sheet: 





























    Loans(1)





























        Commercial and industrial 

$

1,805,623



$

1,815,704



$

1,849,216



$

1,910,635



$

1,901,394

        Home equity



215,542





218,910





220,411





226,345





232,458

        Second mortgage 



35,816





38,545





41,346





44,600





47,844

        Residential real estate



230,259





155,479





123,567





111,514





89,010

        Other



33,658





34,765





41,733





46,248





49,361

            Total gross loans 



2,320,898





2,263,403





2,276,273





2,339,342





2,320,067

    Securities and other interest-earning assets 



555,846





583,788





580,349





602,485





616,679

    Total interest-earning assets 



2,876,744





2,847,191





2,856,622





2,941,827





2,936,746

    Total assets 



3,153,668





3,116,627





3,154,984





3,229,699





3,234,551

    Non-interest-bearing demand deposits 



504,936





493,707





487,088





536,558





528,505

    Total deposits 



2,642,048





2,604,083





2,621,736





2,706,772





2,716,542

    Total interest-bearing liabilities 



2,279,177





2,259,370





2,265,830





2,294,786





2,313,896

    Total shareholders' equity 



289,129





285,667





312,281





310,786





308,025

Capital and credit quality measures:





























Total capital (to risk-weighted assets) (2):





























        Sun Bancorp, Inc.



14.30%





14.61%





14.49%





15.22%





14.85%

        Sun National Bank



13.63%





13.90%





13.77%





13.39%





13.07%

    Tier 1 capital (to risk-weighted assets) (2):





























        Sun Bancorp, Inc.



12.73%





13.00%





12.86%





13.96%





13.59%

        Sun National Bank



12.37%





12.64%





12.51%





12.13%





11.81%

    Leverage ratio:





























        Sun Bancorp, Inc.



10.43%





10.45%





10.21%





11.09%





11.08%

        Sun National Bank



10.12%





10.15%





9.93%





9.64%





9.64%































    Average equity to average assets



9.17%





9.17%





9.91%





9.62%





9.52%

    Allowance for loan losses to total gross loans held-for-investment 



 

2.12%





 

2.29%





 

2.34%





 

1.82%





2.39%

    Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned



5.32%





4.84%





5.27%





4.86%





6.04%

    Allowance for loan losses to non-performing loans held-for-investment



 

40.56%





 

49.44%





 

45.52%





 

38.69%





42.23%































Other data:





























Net charge-offs



(4,246)





(1,243)





(20,223)





(20,386)





(5,809)

Non-performing assets:





























            Non-accrual loans

$

95,383



$

79,696



$

87,847



$

89,656



$

107,665

        Non-accrual loans held-for-sale



-





-





-





-





5,186

            Troubled debt restructurings, non-accrual



25,454





24,256





26,674





17,875





22,353

            Loans past due 90 days and accruing



-





-





74





154





744

            Real estate owned, net 



5,513





6,116





4,165





5,020





4,893

                Total non-performing assets



126,350





110,068





118,760





112,705





140,841

(1)      Average balances include non-accrual loans and loans held-for-sale

(2)      September 30, 2012 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 amounts)





2012



2012



2012



2011



2011



Q3



Q2



Q1



Q4



Q3

Profitability for the quarter:



















Tax-equivalent interest income

$

28,681



$

29,619



$

29,641



$

31,087



$

31,802

Interest expense



4,135





4,519





4,758





5,087





5,329

Tax-equivalent net interest income



24,546





25,098





24,883





26,000





26,473

Tax-equivalent adjustment



212





217





233





271





292

Provision for loan losses



1,868





510





30,683





6,826





2,321

Non-interest income excluding net impairment losses on available for sale securities



9,588





7,527





5,519





6,804





5,770

Non-interest expense excluding amortization of intangible assets



29,938





29,666





26,643





26,305





26,051

Amortization of intangible assets



922





921





921





921





922

Income (loss) before income taxes



1,194





1,313





(28,078)





(1,519)





2,657

Income tax benefit



(34)





-





-





-





(23)

Net income (loss)



1,228





1,313





(28,078)





(1,519)





2,680

Net income (loss) available to common shareholders

$

 

1,228



$

 

1,313



$

 

(28,078)



$

 

(1,519)



$

2,680

Financial ratios:





























Return on average assets (1)



0.16%





0.17%





(3.56)%





(0.19)%





0.33%

Return on average equity (1)



1.70%





1.84%





(35.97)%





(1.96)%





3.48%

Return on average tangible equity (1),(2)



1.99%





2.17%





(41.97)%





(2.29)%





4.10%

Net interest margin (1)



3.41%





3.53%





3.48%





3.54%





3.61%

Efficiency ratio



90.97%





94.38%





91.37%





83.69%





84.42%

Per share data:





























Income (loss) per common share:





























Basic

$

0.01



$

0.02



$

(0.34)



$

(0.02)



$

0.03

Diluted

$

0.01



$

0.02



$

(0.34)



$

(0.02)



$

0.03

Book value

$

3.34



$

3.31



$

3.30



$

3.61



$

3.60

Tangible book value

$

2.85



$

2.81



$

2.78



$

3.08



$

3.06

Average basic shares

86,001,929



85,884,671



85,776,858



85,587,878



84,429,644

Average diluted shares

86,047,655



85,916,421



85,776,858



85,587,878



84,538,449

Operating non-interest income:





























Service charges on deposit accounts

$

2,848



$

2,730



$

2,668



$

2,799



$

2,838

Other service charges



69





80





73





71





85

Gain on sale of loans



4,204





1,865





716





906





708

Net gain on sale of available for sale securities



-





430





-





280





-

Investment products income



510





748





432





453





562

BOLI income



489





492





516





1,309





549

Derivative credit valuation adjustment



(198)





(13)





(314)





(214)





(309)

Other income



1,666





1,195





1,428





1,200





1,337

        Total non-interest income

$

9,588



$

7,527



$

5,519



$

6,804





5,770

Operating non-interest expense:





























 Salaries and employee benefits

$

16,128



$

15,756



$

14,771



$

13,011



$

13,619

    Occupancy expense



3,275





3,271





3,049





3,643





3,021

    Equipment expense



1,866





1,763





1,765





1,858





1,899

    Data processing expense



1,084





1,106





1,056





1,118





1,058

    Amortization of intangible assets



922





921





921





921





922

    Insurance expense



1,375





1,464





1,479





1,433





1,479

    Professional fees



578





757





479





412





879

    Advertising expense



464





1,008





297





664





395

    Problem loan costs



2,154





1,274





1,477





1,866





1,506

    Real estate owned expense,net



779





490





81





108





448

    Office supplies expense



302





328





319





323





315

    Other expense



1,933





2,449





1,870





1,869





1,432

       Total non-interest expense

$

30,860



$

30,587



$

27,564



$

27,226



$

26,973

(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.

 

SUN BANCORP, INC. AND SUBSIDIARIES





AVERAGE BALANCE SHEETS (Unaudited)



(Dollars in thousands)





























 For the Three Months Ended September 30,







2012





2011







Average



Income/



Yield/





Average



Income/



Yield/







Balance



Expense



Cost





Balance



Expense



Cost





Interest-earning assets:





























Loans receivable (1),(2):





























Commercial and industrial

$

1,805,623



$

20,139





4.46

%



$

1,901,394



$

23,028





4.84

%



Home equity



215,542





2,141





3.97







232,458





2,418





4.16





Second mortgage



35,816





518





5.79







47,844





698





5.84





Residential real estate



230,259





2,257





3.92







89,010





1,161





5.22





Other



33,658





576





6.85







49,361





844





6.84





Total loans receivable



2,320,898





25,631





4.42







2,320,067





28,149





4.85





Investment securities(3)



534,842





3,038





2.27







498,329





3,582





2.88





Interest-earning bank balances



21,004





12





0.23







118,350





71





0.24





Total interest-earning assets



2,876,744





28,681





3.99







2,936,746





31,802





4.33





Non-interest earning assets:









































  Cash and due from banks



75,627



















72,744

















  Bank properties and equipment, net



52,127



















55,461

















  Goodwill and intangible assets, net



42,826



















46,511

















  Other assets



106,344



















123,089

















Total non-interest-earning assets



276,924



















297,805

















Total assets

$

3,153,668

















$

3,234,551



























































Interest-bearing liabilities:









































Interest-bearing deposit accounts:









































Interest-bearing demand deposits

$

1,218,338



$

1,195





0.39

%



$

1,286,426



$

1,589





0.49

%



Savings deposits



264,112





225





0.34







270,196





321





0.48





Time deposits



654,662





1,859





1.14







631,415





2,388





1.51





Total interest-bearing deposit accounts



2,137,112





3,279





0.61







2,188,037





4,298





0.79





Short-term borrowings:









































Federal funds purchased



6,467





4





0.25







-





-





-





FHLBNY advances



20,000





22





0.44







-





-





-





Securities sold under agreements to repurchase - customers



4,925





2





0.16







6,952





1





0.06





Long-term borrowings:









































FHLBNY advances (4)



10,181





103





4.71







18,162





223





4.91





Obligations under capital lease



7,706





128





6.64







8,019





132





6.63





Junior subordinated debentures



92,786





597





2.57







92,786





675





2.91





Total borrowings



142,065





856





2.46







125,859





1,031





3.28





Total interest-bearing liabilities



2,279,177





4,135





0.73







2,313,896





5,329





0.92





Non-interest bearing liabilities:









































  Non-interest-bearing demand deposits



504,936



















528,505

















  Other liabilities



80,426



















84,125

















Total non-interest bearing liabilities



585,362



















612,630

















Total liabilities



2,864,539



















2.926,526

















Shareholders' equity 



289,129



















308,025

















Total liabilities and shareholders' equity

$

3,153,668

















$

3,234,551



























































Net interest income







$

24,546

















$

26,473











Interest rate spread (5)















3.26

%