Sun Bancorp, Inc. Reports Fourth Quarter and Full Year Results for 2008
VINELAND, N.J., Jan. 27, 2009 (GLOBE NEWSWIRE) -- Sun Bancorp, Inc. (Nasdaq:SNBC) reported today net income of $4.3 million, or $0.19 per share, for the quarter ended December 31, 2008, compared to net income of $3.9 million, or $0.16 per share, for the fourth quarter of 2007. The following were key items which affected net income for the current quarter:
* Pre-tax net gain on the sale of branches of $11.5 million, or $0.29 per share. * Pre-tax other-than-temporary impairment (OTTI) charges of $7.5 million, or $0.22 per share, on pooled trust preferred securities in the investment portfolio. * Increased level of loan loss provision for the quarter to $7.6 million, which compares to $3.7 million for the third quarter 2008 and $5.4 million for the fourth quarter 2007.
Net income for the year ended December 31, 2008 was $14.9 million, or $0.65 per share, compared to net income of $19.4 million, or $0.82 per share, for the prior year. Net income for the current year included a pre-tax net gain from the sale of branches in the fourth quarter of $11.5 million, or $0.29 per share, offset by OTTI charges of $7.5 million, or $0.22 per share, on pooled trust preferred securities in the investment portfolio. Net income for the prior year included pre-tax net charges of approximately $2.1 million, or $0.06 per share. The charges were a result of $2.4 million of severance related expenses, $791,000 to write-off unamortized issuance costs relating to the calls of Sun Capital Trust III and Sun Capital Trust IV trust preferred securities, $185,000 of branch consolidation costs, 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.
"The country is working through a very tough economic environment," said Thomas X. Geisel, president and chief executive officer of Sun Bancorp. "At the onset of the national economic downturn, New Jersey held up fairly well. However, as the downturn is persisting, New Jersey is mirroring the overall economy. The last six months is evidence of this trend.
"We are going to continue to be proactive during 2009 in reviewing and evaluating the quality of existing loans throughout each segment of the portfolio. Our goal for 2009 remains to intensively manage our loan portfolio for profitable balanced growth supported by consistent credit quality."
As previously announced, on January 9, 2009, the Company completed the sale of 89,310 shares of Preferred Stock, Series A under the U.S. Treasury's TARP Capital Purchase Plan for $89.3 million. "We are pleased to have qualified and been selected to participate in this program. The additional capital strength provided through this program will further support our lending activities and the expansion of services into our communities, as well as provide flexibility to evaluate future opportunities that may arise," said Geisel.
The Company's capital ratios continue to remain strong and are "well capitalized" by all regulatory standards. Had the Treasury's investment under the TARP Capital Purchase Plan been completed prior to December 31, 2008, the Company's leverage capital ratio at year-end would have increased from approximately 9.58% to approximately 12.25% and the total risk-based capital ratio would have increased from approximately 11.71% to approximately 14.43%. The Company's tangible equity ratio would have improved to 8.45% from 6.10% at December 31, 2008.
The following is an overview of the key financial highlights:
* Total assets were $3.622 billion at December 31, 2008, compared to $3.425 billion at September 30, 2008 and $3.338 billion at December 31, 2007. * Total loans before allowance for loan losses were $2.740 billion at December 31, 2008, an increase of $229.9 million, or 9.2%, over total loans at December 31, 2007. Linked quarter loan growth approximated 2.8%. * The loan loss provision for the quarter of $7.6 million, or 0.28% of average loans outstanding, compared to $5.4 million, or 0.22% of average loans outstanding, for the comparable prior year period and $3.7 million, or 0.14% of average loans outstanding, for the linked third quarter 2008. The loan loss provision for the year ended December 31, 2008 of $20.0 million compared to $8.4 million for the comparable prior year. The allowance for loan losses to total loans was 1.36% at December 31, 2008, compared to 1.08% at December 31, 2007 and 1.28% at September 30, 2008. Total non-performing assets were $48.8 million at December 31, 2008, or 1.78% of total loans and real estate owned, compared to $29.6 million, or 1.18%, at December 31, 2007, and $49.9 million, or 1.87%, at September 30, 2008. The allowance for loan losses to non-performing loans was 79.69% at December 31, 2008, compared to 95.77% at December 31, 2007 and 71.80% at September 30, 2008. Net charge-offs for the quarter of $4.4 million, or 0.16% of average loans outstanding, compared to $4.8 million, or 0.19% of average loans outstanding, for the comparable prior year quarter and $1.1 million, or 0.04% of average loans outstanding, for the linked third quarter 2008. Net charge-offs for the year ended December 31, 2008 of $9.7 million, or 0.37% of average loans outstanding, compared to $7.1 million, or 0.29% of average loans outstanding, for the comparable prior year. * Total deposits were $2.896 billion at December 31, 2008, an increase of $197.3 million, or 7.3%, over deposits at December 31, 2007. In October 2008, the Company sold its six branch offices located in Delaware, including deposits approximating $95 million. Normalized deposit growth, excluding sold deposits and brokered certificates of deposit, approximated 5.7%. * Net interest income (tax-equivalent basis) of $25.9 million for the quarter compares to $25.9 million for the comparable prior year period and $25.4 million for the linked third quarter. The net interest margin for the quarter of 3.26% compares to 3.47% for the comparable prior year period and 3.28% for the linked third quarter 2008. Net interest margin for the year ended December 31, 2008 of 3.30% compares to the prior year of 3.37%. * At December 31, 2008, the Company had two pooled trust-preferred securities classified as available for sale, with an original cost basis of $9.0 million and an estimated fair value of $1.5 million. The Company fully evaluated these securities and determined that the unrealized losses of $7.5 million are other-than-temporary and recognized a charge of $7.5 million for the quarter. In addition, the Company has two single trust-preferred securities with an original cost basis of $20 million and an estimated fair value of $10.3 million and a pooled trust-preferred security with an original cost basis of $8.8 million and an estimated fair value of $2.7 million, both classified as available for sale. The Company has reviewed these securities and determined that the decreases in estimated fair value are temporary. The Company performs ongoing analysis of the trust-preferred securities and, as a result, the above estimates are subject to change in future periods. * Total operating non-interest income for the fourth quarter of 2008 of $6.1 million decreased $703,000, or 10.3%, over the comparable prior year period. The decrease over prior year was attributable to a reduction in service charges on deposit accounts of $158,000, and a decrease in gain on sale of loans and gain on derivative instruments of $138,000 and $100,000, respectively, both due to a reduction in transaction volume. In addition, bank owned life insurance (BOLI) income decreased $329,000 primarily as a result of the recognition of $301,000 in 2007 related to the conversion of former general account BOLI policies to a separate account policy. These decreases were offset by an increase in Sun Financial Services revenue earned on investment products provided by a third- party broker of $416,000. In 2008, the Company internalized the Sun Financial Services investment products sales force, which previously operated under an agreement with an independent third-party broker-dealer. Total operating non-interest income decreased $927,000, or 13.2%, over the linked quarter primarily due to a reduction in service charges on deposit accounts of $438,000, a decrease in BOLI income of $117,000, and a decrease in gain on sale of loans and gain on derivative instruments of $82,000 and $80,000, respectively. Total operating non-interest income for the year 2008 of $28.1 million increased $3.4 million, or 13.9%, over 2007. The increase over prior year was primarily attributable to an increase in Sun Financial Services revenue earned on investment products provided by a third-party broker-dealer of $2.1 million, an increase in gain on derivative instruments of $1.0 million and an increase in BOLI income of $590,000. * Total operating non-interest expense for the quarter of $22.8 million increased $1.3 million, or 6.1%, over the comparable prior year period. The increase over prior year was due to an increase in advertising expense of $390,000, an increase in professional fees of $418,000, an increase of $223,000 in problem loan costs, and an increase in FDIC insurance of $152,000 due to higher assessable deposits and an increase in assessment rate. Total operating non-interest expense decreased $207,000 over the linked third quarter 2008 primarily due to a reduction in salaries and benefits of $1.6 million as a result of $1.9 million adjustment to annual incentives. This decrease was offset by an increase in advertising expense of $513,000, an increase in professional fees of $203,000, an increase in problem loan costs of $201,000 and an increase in insurance expense of $156,000. Total operating non-interest expense for the year of $92.4 million increased $6.2 million, or 7.2%, over the prior year primarily due to an increase in salaries and benefits of $3.9 million resulting from increases in sales commissions of $1.5 million, salary expense of $1.5 million and stock compensation expense of $662,000. The increase in sales commissions was attributable to the internalization of the Sun Financial Services sales force as previously discussed above. In addition, professional fees increased $549,000 mostly due to an increase in legal fees and FDIC insurance increased $838,000 primarily due to a one-time assessment credit of $526,000 recognized in 2007 and an increase in assessment rate and assessable deposits during 2008.
The Company will hold its regularly scheduled conference call on Wednesday, January 28, 2009, at 11:30 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 62 locations in New Jersey. 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.
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,
---------------------- ----------------------
2008 2007 2008 2007
---------------------------------------------------------------------
Profitability for the
period:
Net interest income $ 25,472 $ 25,498 $ 99,661 $ 98,836
Provision for loan
losses 7,617 5,443 20,000 8,403
Non-interest income 10,207 6,822 32,430 26,155
Non-interest expense 22,843 21,528 92,771 88,963
Income before income
taxes 5,219 5,349 19,320 27,625
Net income $ 4,253 $ 3,870 $ 14,894 $ 19,352
=====================================================================
Financial ratios:
Return on average
assets(1) 0.49% 0.47% 0.44% 0.58%
Return on average
equity(1) 4.71% 4.26% 4.09% 5.45%
Return on average
tangible equity(1),(2) 7.94% 7.33% 6.92% 9.61%
Net interest margin(1) 3.26% 3.47% 3.30% 3.37%
Efficiency ratio 64.02% 66.61% 69.66% 72.77%
Efficiency ratio,
excluding
non-operating income
and non-operating
expense(3) 72.31% 66.61% 72.45% 70.35%
Earnings per common
share(4):
Basic $ 0.19 $ 0.17 $ 0.66 $ 0.85
Diluted $ 0.19 $ 0.16 $ 0.65 $ 0.82
Average equity to
average assets 10.38% 10.93% 10.72% 10.72%
December 31,
----------------------
2008 2007
---------------------------------------------
At period-end:
Total assets $3,622,126 $3,338,392
Total deposits 2,896,364 2,699,091
Loans receivable, net
of allowance for
loan losses 2,702,516 2,482,917
Investments 453,584 461,639
Borrowings 154,097 154,213
Junior subordinated
debentures 92,786 97,941
Shareholders' equity 358,508 362,177
Credit quality and
capital ratios:
Allowance for loan
losses to gross loans 1.36% 1.08%
Non-performing assets
to gross loans and
real estate owned 1.78% 1.18%
Allowance for loan
losses to
non-performing loans 79.69% 127.11%
Total capital (to
risk-weighted
assets)(5):
Sun Bancorp, Inc. 11.71% 11.82%
Sun National Bank 11.17% 11.06%
Tier 1 capital (to
risk-weighted
assets)(5):
Sun Bancorp, Inc. 10.48% 10.86%
Sun National Bank 9.94% 10.09%
Leverage ratio(5):
Sun Bancorp, Inc. 9.58% 9.67%
Sun National Bank 9.08% 9.00%
Book value(4) $ 16.35 $ 15.89
Tangible book
value(4) $ 9.66 $ 9.25
(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, 2007 excludes the write-off of $791,000 of
unamortized costs on redeemed trust preferred securities.
Non-interest income for the three months ended December 31, 2008
excludes a net gain of $11.6 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 excludes a net gain of $11.6 million on the sale of branches and
bank property, an impairment charge of $7.5 million on available
for sale securities and a gain on redemption of Visa stock of
$207,000 as compared to the year ended December 31, 2007, which
excludes a net gain of $1.4 million from the sale of branches and a
gain on sale of bank equipment of $12,000. Non-interest expense for
the year ended December 31, 2008 excludes $72,000 in lease buyout
charges and $250,000 in executive sign-on incentive as compared
to the year ended December 31, 2007, which excludes $185,000
related to branch optimization, $2.4 million of severance related
expenses and $124,000 resulting from the early extinguishment of
an FHLB borrowing.
(4) Data is adjusted for a 5% stock dividend declared in April 2008.
(5) December 31, 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)
December 31, December 31,
2008 2007
---------------------------------------------------------------------
ASSETS
Cash and due from banks $ 31,237 $ 81,479
Interest-earning bank balances 26,784 2,380
Federal funds sold 412 2,654
---------------------------------------------------------------------
Cash and cash equivalents 58,433 86,513
Investment securities available for sale
(amortized cost - $444,628 and $427,378
at December 31, 2008 and December 31,
2007, respectively) 423,513 425,805
Investment securities held to maturity
(estimated fair value - $13,601 and
$18,755 at December 31, 2008 and
December 31, 2007, respectively) 13,765 18,965
Loans receivable (net of allowance for
loan losses - $37,309 and $27,002 at
December 31, 2008 and December 31, 2007,
respectively) 2,702,516 2,482,917
Restricted equity investments 16,306 16,869
Bank properties and equipment, net 48,642 48,118
Real estate owned, net 1,962 1,449
Accrued interest receivable 12,254 15,018
Goodwill 127,894 127,894
Intangible assets, net 18,769 23,479
Deferred taxes, net 16,707 3,169
Bank owned life insurance (BOLI) 75,504 72,487
Other assets 105,861 15,709
---------------------------------------------------------------------
Total assets $ 3,622,126 $ 3,338,392
=====================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $ 2,896,364 $ 2,699,091
Federal funds purchased 71,500 30,000
Securities sold under agreements to
repurchase - customers 20,327 40,472
Advances from the Federal Home Loan Bank
(FHLB) 42,081 63,483
Securities sold under agreements to
repurchase - FHLB 15,000 15,000
Obligation under capital lease 5,189 5,258
Junior subordinated debentures 92,786 97,941
Other liabilities 120,371 24,970
---------------------------------------------------------------------
Total liabilities 3,263,618 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; 24,037,431 shares
issued and 21,930,708 shares outstanding
at December 31, 2008; 22,722,655 shares
issued and 21,712,132 shares outstanding
at December 31, 2007 24,037 22,723
Additional paid-in capital 351,430 336,668
Retained earnings 22,580 20,338
Accumulated other comprehensive loss (13,377) (1,027)
Treasury stock at cost, 2,106,723 shares
and 1,010,523 shares at December 31, 2008
and December 31, 2007, respectively (26,162) (16,525)
---------------------------------------------------------------------
Total shareholders' equity 358,508 362,177
---------------------------------------------------------------------
Total liabilities and shareholders'
equity $ 3,622,126 $ 3,338,392
=====================================================================
SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
For the Three Months For the Year
Ended December 31, Ended December 31,
-------------------- ------------------
2008 2007 2008 2007
---------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $ 38,050 $ 43,651 $154,154 $174,427
Interest on taxable investment
securities 4,043 4,306 15,976 17,741
Interest on non-taxable
investment securities 822 728 3,256 2,818
Dividends on restricted equity
investments 187 281 983 1,112
Interest on federal funds sold 31 86 265 1,725
---------------------------------------------------------------------
Total interest income 43,133 49,052 174,634 197,823
---------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 15,677 20,211 65,852 84,252
Interest on borrowed funds 527 1,556 3,407 6,267
Interest on junior
subordinated debentures 1,457 1,787 5,714 8,468
---------------------------------------------------------------------
Total interest expense 17,661 23,554 74,973 98,987
---------------------------------------------------------------------
Net interest income 25,472 25,498 99,661 98,836
PROVISION FOR LOAN LOSSES 7,617 5,443 20,000 8,403
---------------------------------------------------------------------
Net interest income after
provision for loan losses 17,855 20,055 79,661 90,433
---------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit
accounts 3,263 3,421 13,918 13,687
Other service charges 82 85 317 307
Net gain on sale of branches 11,454 -- 11,454 1,443
Net gain on sale of bank
property & equipment 131 -- 131 12
Gain on sale of loans 204 342 1,325 1,689
Impairment charge on available
for sale securities (7,497) -- (7,497) --
Gain on derivative
instruments 411 511 2,578 1,567
Investment products income 688 272 3,041 974
BOLI income 661 990 3,017 2,427
Other 810 1,201 4,146 4,049
---------------------------------------------------------------------
Total non-interest income 10,207 6,822 32,430 26,155
---------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 10,643 11,004 47,623 45,432
Occupancy expense 2,919 2,830 11,683 11,491
Equipment expense 1,609 1,660 6,421 7,172
Amortization of intangible
assets 1,178 1,177 4,710 4,714
Data processing expense 1,120 1,078 4,459 4,249
Professional fees 745 327 2,335 2,110
Insurance expense 901 695 3,043 2,119
Advertising expense 849 459 2,368 1,856
Cost of real estate owned, net 15 17 (497) 103
Other 2,864 2,281 10,626 9,717
---------------------------------------------------------------------
Total non-interest expense 22,843 21,528 92,771 88,963
---------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 5,219 5,349 19,320 27,625
INCOME TAXES 966 1,479 4,426 8,273
---------------------------------------------------------------------
NET INCOME $ 4,253 $ 3,870 $ 14,894 $ 19,352
=====================================================================
Basic earnings per share(1) $ 0.19 $ 0.17 $ 0.66 $ 0.85
=====================================================================
Diluted earnings per share(1) $ 0.19 $ 0.16 $ 0.65 $ 0.82
=====================================================================
(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 2008 2008 2007
Q4 Q3 Q2 Q1 Q4
---------------------------------------------------------------------
Balance sheet
at quarter
end:
Loans:
Commercial
and
industrial $2,234,202 $2,164,523 $2,146,163 $2,061,640 $2,024,728
Home equity 274,360 271,197 264,354 267,023 264,965
Second
mortgage 84,388 85,734 83,720 81,090 81,063
Residential
real estate 67,473 61,845 56,334 53,616 49,750
Other 79,402 82,840 86,783 87,593 89,413
---------------------------------------------------------------------
Total gross
loans 2,739,825 2,666,139 2,637,354 2,550,962 2,509,919
Allowance for
loan losses (37,309) (34,120) (31,490) (27,904) (27,002)
---------------------------------------------------------------------
Net loans 2,702,516 2,632,019 2,605,864 2,523,058 2,482,917
Goodwill 127,894 127,894 127,894 127,894 127,894
Intangible
assets, net 18,769 19,947 21,124 22,301 23,479
Total assets 3,622,126 3,425,379 3,424,968 3,366,357 3,338,392
Total deposits 2,896,364 2,873,378 2,782,180 2,713,756 2,699,091
Federal funds
purchased 71,500 -- 29,500 56,000 30,000
Securities
sold under
agreements to
repurchase -
customers 20,327 38,359 36,149 36,938 40,472
Advances from
the Federal
Home Loan
Bank (FHLB) 42,081 19,551 38,877 47,187 63,483
Securities
sold under
agreements to
repurchase -
FHLB 15,000 15,000 55,000 15,000 15,000
Obligation
under capital
lease 5,189 5,207 5,224 5,241 5,258
Junior
subordinated
debentures 92,786 92,786 92,786 92,786 97,941
Total
shareholders'
equity 358,508 357,282 360,268 364,242 362,177
Quarterly
average
balance
sheet:
Loans:
Commercial
and
industrial $2,195,218 $2,146,204 $2,099,090 $2,037,548 $2,030,928
Home equity 275,791 268,178 265,481 267,836 263,245
Second
mortgage 85,530 84,404 82,604 80,819 80,400
Residential
real estate 62,481 57,471 52,332 50,012 50,734
Other 81,426 84,116 86,198 86,602 87,155
---------------------------------------------------------------------
Total gross
loans 2,700,446 2,640,373 2,585,705 2,522,817 2,512,462
Securities and
other
interest-
earning
assets 476,305 461,276 450,888 469,322 468,418
Total
interest-
earning
assets 3,176,751 3,101,649 3,036,593 2,992,139 2,980,880
Total assets 3,483,145 3,422,764 3,368,523 3,326,064 3,322,686
Non-interest-
bearing
demand
deposits 407,151 435,249 430,568 416,612 434,066
Total deposits 2,916,153 2,837,147 2,755,778 2,701,630 2,689,326
Total
interest-
bearing
liabilities 2,679,673 2,600,310 2,539,882 2,509,725 2,499,003
Total
shareholders'
equity 361,513 361,895 367,824 366,400 363,302
Capital and
credit quality
measures:
Total capital
(to risk-
weighted
assets)(1):
Sun Bancorp,
Inc. 11.71% 11.67% 11.50% 11.70% 11.82%
Sun National
Bank 11.17% 11.02% 10.83% 10.92% 11.06%
Tier 1 capital
(to risk-
weighted
assets)(1):
Sun Bancorp,
Inc. 10.48% 10.51% 10.42% 10.71% 10.86%
Sun National
Bank 9.94% 9.86% 9.75% 9.93% 10.09%
Leverage
ratio(1):
Sun Bancorp,
Inc. 9.58% 9.56% 9.57% 9.67% 9.67%
Sun National
Bank 9.08% 8.97% 8.97% 8.98% 9.00%
Average equity
to average
assets 10.38% 10.57% 10.92% 11.02% 10.93%
Allowance for
loan losses
to total
gross loans 1.36% 1.28% 1.19% 1.09% 1.08%
Non-performing
assets to
total gross
loans and
real estate
owned 1.78% 1.87% 1.29% 1.20% 1.18%
Allowance for
loan losses
to non-
performing
loans 79.69% 71.80% 97.30% 102.60% 95.77%
Other data:
Net charge-
offs (4,428) (1,093) (2,941) (1,231) (4,781)
=====================================================================
Non-
performing
assets:
Non-accrual
loans $ 42,233 $ 45,940 $ 31,323 $ 26,567 $ 26,853
Loans past
due 90 days
and
accruing 4,587 1,583 1,042 631 1,343
Real estate
owned, net 1,962 2,381 1,714 3,476 1,449
---------------------------------------------------------------------
Total non-
performing
assets $ 48,782 $ 49,904 $ 34,079 $ 30,674 $ 29,645
=====================================================================
(1) December 31, 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 2008 2008 2007
Q4 Q3 Q2 Q1 Q4
---------------------------------------------------------------------
Profitability
for the
quarter:
Tax-equivalent
interest
income $ 43,574 $ 43,426 $ 43,337 $ 46,049 $ 49,443
Interest
expense 17,661 18,017 18,319 20,976 23,554
Tax-
equivalent
net interest
income 25,913 25,409 25,018 25,073 25,889
Tax-
equivalent
adjustment 441 447 454 410 391
Provision for
loan losses 7,617 3,723 6,527 2,133 5,443
Non-interest
income
excluding net
gain on sale
of branches,
net gain on
sale of bank
property and
impairment
charge on
available for
sale
securities 6,119 7,046 7,802 7,375 6,822
Net gain on
sale of
branches 11,454 -- -- -- --
Net gain on
sale of bank
property 131 -- -- -- --
Impairment
charge on
available for
sale
securities (7,497) -- -- -- --
Non-interest
expense
excluding
amortization
of intangible
assets 21,665 21,873 21,735 22,788 20,351
Amortization
of intangible
assets 1,178 1,177 1,178 1,177 1,177
Income before
income taxes 5,219 5,235 2,926 5,940 5,349
Income tax
expense 966 1,106 597 1,757 1,479
Net income $ 4,253 $ 4,129 $ 2,329 $ 4,183 $ 3,870
=====================================================================
Financial
ratios:
Return on
average
assets(1) 0.49% 0.48% 0.28% 0.50% 0.47%
Return on
average
equity(1) 4.71% 4.56% 2.53% 4.57% 4.26%
Return on
average
tangible
equity(1),(2) 7.94% 7.74% 4.27% 7.77% 7.33%
Net interest
margin(1) 3.26% 3.28% 3.30% 3.35% 3.47%
Efficiency
ratio 64.02% 72.01% 70.79% 74.80% 66.61%
Efficiency
ratio,
excluding
non-operating
income and
non-operating
expense 72.31% 72.01% 70.79% 74.28% 66.61%
Per share
data(3):
Earnings per
common
share:
Basic $ 0.19 $ 0.18 $ 0.10 $ 0.18 $ 0.17
Diluted $ 0.19 $ 0.18 $ 0.10 $ 0.18 $ 0.16
Book value $ 16.35 $ 15.94 $ 16.02 $ 16.00 $ 15.89
Tangible book
value $ 9.66 $ 9.34 $ 9.39 $ 9.40 $ 9.25
Average basic
shares(3) 22,213,041 22,393,168 22,696,171 22,786,251 22,916,950
Average diluted
shares(3) 22,463,586 22,937,658 23,210,790 23,266,872 23,557,090
Operating
non-interest
income:
Service
charges on
deposit
accounts $ 3,263 $ 3,701 $ 3,561 $ 3,393 $ 3,421
Other service
charges 82 82 75 78 85
Gain on sale
of loans 204 286 411 424 342
Gain on
derivative
instruments 411 491 1,037 639 511
Investment
products
income 688 728 848 777 272
BOLI income 661 778 772 806 990
Other income 810 980 1,098 1,051 1,201
---------------------------------------------------------------------
Total
operating
non-interest
income 6,119 7,046 7,802 7,168 6,822
---------------------------------------------------------------------
Non-operating
income(4):
Net gain on
sale of
branches 11,454 -- -- -- --
Net gain on
sale of bank
property 131 -- -- -- --
Impairment
charge on
available for
sale
securities (7,497) -- -- -- --
Gain on Visa
stock
redemption -- -- -- 207 --
---------------------------------------------------------------------
Total non-
operating
income 4,088 -- -- 207 --
---------------------------------------------------------------------
Total non-
interest
income $ 10,207 $ 7,046 $ 7,802 $ 7,375 $ 6,822
=====================================================================
Operating
non-interest
expense:
Salaries and
employee
benefits $ 10,643 $ 12,277 $ 12,283 $ 12,170 $ 11,004
Occupancy
expense 2,919 2,912 2,810 2,970 2,830
Equipment
expense 1,609 1,522 1,666 1,624 1,660
Amortization
of intangible
assets 1,178 1,177 1,178 1,177 1,177
Data
processing
expense 1,120 1,154 1,065 1,120 1,078
Professional
fees 745 542 483 565 327
Insurance
expense 901 745 728 669 695
Advertising
expense 849 336 484 699 459
Cost of real
estate owned,
net 15 13 (534) 9 17
Other expenses 2,864 2,372 2,750 2,640 2,281
---------------------------------------------------------------------
Total
operating
non-interest
expense 22,843 23,050 22,913 23,643 21,528
---------------------------------------------------------------------
Non-operating
expense(4):
Lease buy-out
expenses and
other branch
rationali-
zation
charges -- -- -- 72 --
Executive
sign-on
incentive -- -- -- 250 --
---------------------------------------------------------------------
Total non-
operating
expense -- -- -- 322 --
---------------------------------------------------------------------
Total non-
interest
expense $ 22,843 $ 23,050 $ 22,913 $ 23,965 $ 21,528
=====================================================================
(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 For the Three Months Ended
December 31, 2008 December 31, 2007
-------------------------- --------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
---------------------------------------------------------------------
Interest-
earning
assets:
Loans
receivable
(1),(2):
Commercial
and
industrial $2,195,218 $ 30,604 5.58% $2,030,928 $ 35,603 7.01%
Home equity 275,791 3,694 5.36 263,245 4,177 6.35
Second
mortgage 85,530 1,396 6.53 80,400 1,343 6.68
Residential
real estate 62,481 962 6.16 50,734 881 6.95
Other 81,426 1,394 6.85 87,155 1,647 7.56
---------- -------- ---------- --------
Total loans
receivable 2,700,446 38,050 5.64 2,512,462 43,651 6.95
Investment
securities(3) 428,159 5,417 5.06 451,493 5,605 4.97
Interest-
earning bank
balances 34,299 76 0.89 9,911 101 4.08
Federal funds
sold 13,847 31 0.90 7,014 86 4.90
---------- -------- ---------- --------
Total
interest-
earning
assets 3,176,751 43,574 5.49 2,980,880 49,443 6.63
---------- -------- ---------- --------
Cash and due
from banks 51,709 64,168
Bank properties
and equipment,
net 48,247 45,983
Goodwill and
intangible
assets, net 147,380 152,147
Other assets 59,058 79,508
---------- ----------
Total non-
interest-
earning
assets 306,394 341,806
---------- ----------
Total
assets $3,483,145 $3,322,686
========== ==========
Interest-
bearing
liabilities:
Interest-
bearing
deposit
accounts:
Interest-
bearing
demand
deposits $1,012,525 3,808 1.50% $ 788,548 4,838 2.45%
Savings
deposits 318,720 1,309 1.64 446,530 3,104 2.78
Time
deposits 1,177,757 10,560 3.59 1,020,182 12,269 4.81
---------- -------- ---------- --------
Total
interest-
bearing
deposit
accounts 2,509,002 15,677 2.50 2,255,260 20,211 3.58
---------- -------- ---------- --------
Borrowed
money:
Federal funds
purchased 9,810 17 0.69 8,707 112 5.15
Securities
sold under
agreements
to
repurchase -
customers 29,989 33 0.44 46,656 466 4.00
FHLB
advances(4) 32,890 382 4.65 85,175 881 4.14
Obligation
under
capital
lease 5,196 95 7.31 5,264 97 7.37
Junior
subordinated
debentures 92,786 1,457 6.28 97,941 1,787 7.30
---------- -------- ---------- --------
Total
borrowings 170,671 1,984 4.65 243,743 3,343 5.49
---------- -------- ---------- --------
Total
interest-
bearing
liabilities 2,679,673 17,661 2.64 2,499,003 23,554 3.77
---------- -------- ---------- --------
Non-interest-
bearing demand
deposits 407,151 434,066
Other
liabilities 34,808 26,315
---------- ----------
Total
liabilities 3,121,632 2,959,384
Shareholders'
equity 361,513 363,302
---------- ----------
Total
liabilities
and
share-
holders'
equity $3,483,145 $3,322,686
========== ==========
Net interest
income $ 25,913 $ 25,889
======== ========
Interest rate
spread(5) 2.85% 2.86%
====== ======
Net interest
margin(6) 3.26% 3.47%
====== ======
Ratio of
average
interest-
earning assets
to average
interest-
bearing
liabilities 118.55% 119.28%
====== ======
(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 Year Ended For the Year Ended
December 31, 2008 December 31, 2007
-------------------------- --------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
---------------------------------------------------------------------
Interest-
earning
assets:
Loans
receivable
(1),(2):
Commercial
and
industrial $2,119,795 $123,693 5.84% $1,986,959 $142,891 7.19%
Home equity 269,336 15,574 5.78 247,017 16,010 6.48
Second
mortgage 83,348 5,433 6.52 78,176 5,060 6.47
Residential
real estate 55,598 3,509 6.31 44,368 3,362 7.58
Other 84,575 5,945 7.03 90,234 7,104 7.87
---------- -------- ---------- --------
Total loans
receivable 2,612,652 154,154 5.90 2,446,754 174,427 7.13
Investment
securities(3) 433,226 21,707 5.01 481,775 22,514 4.67
Interest-
earning bank
balances 15,967 260 1.63 13,871 673 4.85
Federal funds
sold 15,279 265 1.73 32,966 1,725 5.23
---------- -------- ---------- --------
Total
interest-
earning
assets 3,077,124 176,386 5.73 2,975,366 199,339 6.70
---------- -------- ---------- --------
Cash and due
from banks 56,104 68,963
Bank properties
and equipment,
net 48,179 44,014
Goodwill and
intangible
assets, net 149,150 153,957
Other assets 69,855 72,641
---------- ----------
Total non-
interest-
earning
assets 323,288 339,575
---------- ----------
Total
assets $3,400,412 $3,314,941
========== ==========
Interest-
bearing
liabilities:
Interest-
bearing
deposit
accounts:
Interest-
bearing
demand
deposits $ 874,463 14,355 1.64% $ 759,855 22,130 2.91%
Savings
deposits 395,288 7,632 1.93 455,096 13,214 2.90
Time
deposits 1,110,941 43,865 3.95 1,022,172 48,908 4.78
---------- -------- ---------- --------
Total
interest-
bearing
deposit
accounts 2,380,692 65,852 2.77 2,237,123 84,252 3.77
---------- -------- ---------- --------
Borrowed
money:
Federal funds
purchased 18,370 421 2.29 2,929 155 5.29
Securities
sold under
agreements
to
repurchase -
customers 34,976 478 1.37 44,213 1,961 4.44
FHLB
advances(4) 50,582 2,127 4.21 87,306 3,764 4.31
Obligation
under
capital
lease 5,221 381 7.30 5,288 387 7.32
Junior
subordinated
debentures 92,871 5,714 6.15 101,330 8,468 8.36
---------- -------- ---------- --------
Total
borrowings 202,020 9,121 4.51 241,066 14,735 6.11
---------- -------- ---------- --------
Total
interest-
bearing
liabilities 2,582,712 74,973 2.90 2,478,189 98,987 3.99
---------- -------- ---------- --------
Non-interest-
bearing demand
deposits 422,388 453,281
Other
liabilities 30,919 28,095
---------- ----------
Total
liabilities 3,036,019 2,959,565
Shareholders'
equity 364,393 355,376
---------- ----------
Total
liabilities
and
share-
holders'
equity $3,400,412 $3,314,941
========== ==========
Net interest
income $101,413 $100,352
======== ========
Interest rate
spread(5) 2.83% 2.71%
====== ======
Net interest
margin(6) 3.30% 3.37%
====== ======
Ratio of
average
interest-
earning assets
to average
interest-
bearing
liabilities 119.14% 120.06%
====== ======
(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.
CONTACT: Sun Bancorp, Inc.
Dan Chila, EVP, Chief Financial Officer
(856) 691-7700
