VINELAND, N.J., Oct. 27, 2008 (GLOBE NEWSWIRE) -- Sun Bancorp, Inc. (Nasdaq:SNBC) reported today third quarter net income of $4.1 million, or $0.18 per share, compared to net income of $5.9 million, or $0.25 per share, for the third quarter of 2007. The prior year comparable quarter included charges of approximately $435,000 (pre-tax), or $0.01 per share. The charges represented approximately $250,000 to write-off unamortized issuance costs relating to the call of Sun Trust IV trust preferred securities and $185,000 related to several branch consolidations during the quarter.
For the nine months ended September 30, 2008, the Company reported net income of $10.6 million, or $0.46 per share, compared to $15.5 million, or $0.65 per share, in the prior period. Net income for the prior year period included net charges of approximately $2.1 million (pre-tax), 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 Trust III and Sun 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.
"In this banking environment our team is doing everything to focus our efforts across the entire organization on meeting the credit needs of our established customers, reviewing and evaluating the quality of existing loans throughout each segment of the portfolio, and executing daily the fundamentals of relationship banking," said Thomas X. Geisel, president and chief executive officer of Sun Bancorp, Inc. "Last week we completed the sale of our Delaware branches, which solidifies the commitment to our core New Jersey franchise. Additionally, the net gain realized from this transaction reinforces our already strong capital base."
"Overall credit quality remains relatively stable and did not require a linked quarter increase to the loan loss provision. The total non-performing loan balance did rise, as expected, although mainly due to a single large credit relationship. Competition for core deposits continues to be very tough and the net interest margin remains under pressure. This is especially true now, as short-term rates are being driven higher by large national competitors with local market coverage who are aggressively trying to build liquidity through special offerings."
"As we move through the final months of the year, we expect to continue to intensively manage our loan portfolio for profitable balanced growth, supported by consistent credit quality -- that's our primary objective. We continue to strengthen our network across the New Jersey footprint and we like the underlying demographics. We want to support the growth efforts of our local customers as they, too, ride out the current cycle -- we feel we have the capital strength and the management talent to succeed in this mission," said Geisel.
The following is an overview of the key financial highlights for the quarter:
-- Total assets were $3.425 billion at September 30, 2008, compared
to $3.296 billion at September 30, 2007 and $3.425 billion at
June 30, 2008.
-- Total loans before allowance for loan losses were $2.666 billion
at September 30, 2008, an increase of $192.0 million, or 7.8%,
over September 30, 2007. Linked quarter loan growth approximated
1.1%.
-- The allowance for loan losses to totals loans was 1.28% at
September 30, 2008, compared to 1.06% at September 30, 2007 and
1.19% at June 30, 2008. The loan loss provision for the quarter
of $3.7 million (0.14% of average loans outstanding) compared to
$1.3 million (0.05% of average loans outstanding) for the
comparable prior year period and $6.5 million (0.25% of average
loans outstanding) for the linked second quarter 2008. The loan
loss provision for the nine months ended September 30, 2008 of
$12.4 million compared to $3.0 million for the comparable prior
year period. Total non-performing assets were $49.9 million at
September 30, 2008, or 1.87% of total loans and real estate
owned, compared to $34.1 million, or 1.29%, at June 30, 2008 and
$22.2 million, or 0.90%, at September 30, 2007. The allowance for
loan losses to non-performing loans was 71.80% at September 30,
2008, compared to 127.11% at September 30, 2007 and 97.30% at
June 30, 2008. Net charge-offs for the quarter of $1.1 million
(0.04% of average loans outstanding), were relatively flat in
comparison to the prior year period of $1.0 million (0.04% of
average loans outstanding), as compared to $2.9 million (0.11% of
average loans outstanding) for the linked second quarter 2008.
-- Net interest income (tax-equivalent basis) of $25.4 million for
the quarter compares to $25.8 million for the comparable prior
year period and $25.0 million for the linked second quarter 2008.
Net interest margin for the quarter of 3.28% compares to 3.49%
for the comparable prior year period and 3.30% for the linked
second quarter 2008. Net interest margin for the nine months
ended September 30, 2008 of 3.31%, compares to 3.34% for the
comparable prior year period.
-- Total operating non-interest income for the quarter of $7.0
million increased $1.0 million, or 17.2%, over the comparable
prior year period and decreased $756,000, or 9.7%, over the
linked second quarter 2008. The increase over the prior year
period was primarily attributable to an increase in Sun Financial
Services revenue earned on investment products provided by a
third-party broker-dealer of $506,000, an increase in BOLI income
of $294,000 and an increase in net gain on derivative instruments
of $194,000. 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 an independent
third-party broker-dealer. The decrease in operating non-interest
income over the linked quarter was primarily due to a decrease in
net gain on derivative instruments of $546,000, a decrease in
gain on sale of loans of $125,000, and a decrease in investment
products income of $120,000.
-- Total operating non-interest expense for the quarter of $23.1
million increased $1.4 million, or 6.4%, over the comparable
prior year period and was essentially flat over the linked
second quarter 2008. While the current employee count has
remained flat over the last 12 months, salaries and benefits
includes an increase in salaries of $558,000, an increase in
sales commissions of $205,000, and an increase in stock
compensation expense of $259,000. 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 sale force. In addition, FDIC
insurance increased $71,000 over the comparable prior year period
as a result of an increase in assessable deposits.
The Company will hold its regularly scheduled conference call on Monday, October 27, 2008, 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 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 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 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 Nine Months Ended
September 30, September 30,
---------------- ----------------
2008 2007 2008 2007
-------------------------------------------------------------------
Profitability for the period:
Net interest income $24,962 $25,455 $74,189 $73,338
Provision for loan losses 3,723 1,260 12,383 2,960
Non-interest income 7,046 6,011 22,223 19,333
Non-interest expense 23,050 21,846 69,928 67,435
Income before income taxes 5,235 8,360 14,101 22,276
Net income $ 4,129 $ 5,885 $10,641 $15,482
===================================================================
Financial ratios:
Return on average assets (1) 0.48% 0.71% 0.42% 0.62%
Return on average equity (1) 4.56% 6.54% 3.88% 5.85%
Return on average tangible
equity (1),(2) 7.74% 11.39% 6.58% 10.42%
Net interest margin (1) 3.28% 3.49% 3.31% 3.34%
Efficiency ratio 72.01% 69.43% 72.53% 72.77%
Efficiency ratio, excluding
non-operating income
and non-operating expense (3) 72.01% 68.30% 72.35% 70.35%
Earnings per common share (4):
Basic $ 0.18 $ 0.25 $ 0.47 $ 0.68
Diluted $ 0.18 $ 0.25 $ 0.46 $ 0.65
Average equity to
average assets 10.57% 10.93% 10.83% 10.65%
September 30, December 31,
---------------------- ----------
2008 2007 2007
--------------------------------------------------------------------
At period-end:
Total assets $3,425,379 $3,295,576 $3,338,392
Total deposits 2,873,378 2,682,286 2,699,091
Loans receivable, net of
allowance for loan losses 2,632,019 2,447,837 2,482,917
Investments 396,117 459,325 461,639
Borrowings 78,117 131,537 154,213
Junior subordinated debentures 92,786 97,941 97,941
Shareholders' equity 357,282 361,645 362,177
Credit quality and capital ratios:
Allowance for loan losses to
gross loans 1.28% 1.06% 1.08%
Non-performing assets to gross
loans and real estate owned 1.87% 0.90% 1.18%
Allowance for loan losses to
non-performing loans 71.80% 127.11% 95.77%
Total capital (to
risk-weighted assets) (5):
Sun Bancorp, Inc. 11.65% 11.97% 11.82%
Sun National Bank 11.00% 11.03% 11.06%
Tier 1 capital (to
risk-weighted assets) (5):
Sun Bancorp, Inc. 10.49% 10.99% 10.86%
Sun National Bank 9.84% 10.05% 10.09%
Leverage ratio (5):
Sun Bancorp, Inc. 9.56% 9.80% 9.67%
Sun National Bank 8.96% 8.95% 9.00%
Book value (4) $ 15.94 $ 15.70 $ 15.89
Tangible book value (4) $ 9.34 $ 9.07 $ 9.25
(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. Net interest income for the three and
nine months ended September 30, 2007, excludes the write-off of
$250,000 and $791,000, respectively, of unamortized costs on
redeemed trust preferred securities. Non-interest income for the
nine months ended September 30, 2008 excludes a gain on
redemption of Visa stock of $207,000 as compared to the nine
months ended September 30, 2007, which excludes a net gain of
$1.4 million from the sale of branches. Non-interest expense for
the three ended September 30, 2007 excludes $185,000 related to
branch optimization. Non-interest expense for the nine months
ended September 30, 2008 excludes a $250,000 executive sign-on
incentive and $72,000 in lease buyout charges as compared to the
nine months ended September 20, 2007 which excludes $124,000
resulting from the early extinguishment of an FHLB borrowing,
$185,000 related to branch optimization and $2.4 million of
severance related expenses.
(4) Data is adjusted for a 5% stock dividend declared in April 2008.
(5) September 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)
September 30, December 31,
2008 2007
---------- ----------
ASSETS
Cash and due from banks $ 55,595 $ 81,479
Interest-earning bank balances 2,221 2,380
Federal funds sold 24,382 2,654
-------------------------------------------------------------------
Cash and cash equivalents 82,198 86,513
Investment securities available for
sale (amortized cost - $386,709 and
$427,378 at September 30, 2008 and
December 31, 2007, respectively) 365,794 425,805
Investment securities held to maturity
(estimated fair value - $14,884 and
$18,755 at September 30, 2008 and
December 31, 2007, respectively) 15,040 18,965
Loans receivable (net of allowance for
loan losses - $34,120 and $27,002 at
September 30, 2008 and December 31,
2007, respectively) 2,632,019 2,482,917
Restricted equity investments 15,283 16,869
Bank properties and equipment, net 48,432 48,118
Real estate owned, net 2,381 1,449
Accrued interest receivable 12,219 15,018
Goodwill 127,894 127,894
Intangible assets, net 19,947 23,479
Deferred taxes, net 13,396 3,169
Bank owned life insurance (BOLI) 74,843 72,487
Other assets 15,933 15,709
-------------------------------------------------------------------
Total assets $3,425,379 $3,338,392
===================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $2,873,378 $2,699,091
Federal funds purchased -- 30,000
Securities sold under agreements to
repurchase - customers 38,359 40,472
Advances from the Federal Home Loan
Bank (FHLB) 19,551 63,483
Securities sold under agreements to
repurchase - FHLB 15,000 15,000
Obligation under capital lease 5,207 5,258
Junior subordinated debentures 92,786 97,941
Other liabilities 23,816 24,970
-------------------------------------------------------------------
Total liabilities 3,068,097 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; 23,975,894 shares
issued and 22,419,171 shares
outstanding at September 30, 2008;
22,722,655 shares issued and 21,712,132
shares outstanding at December 31, 2007 23,976 22,723
Additional paid-in capital 350,747 336,668
Retained earnings 18,327 20,338
Accumulated other comprehensive loss (13,582) (1,027)
Treasury stock at cost, 1,556,723 shares
and 1,010,523 shares at September 30,
2008 and December 31, 2007, respectively (22,186) (16,525)
-------------------------------------------------------------------
Total shareholders' equity 357,282 362,177
-------------------------------------------------------------------
Total liabilities and shareholders' equity $3,425,379 $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 Nine Months
Ended September 30, Ended September 30,
------------------ ------------------
2008 2007 2008 2007
---------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $ 37,819 $ 44,262 $116,104 $130,776
Interest on taxable
investment securities 3,943 4,401 11,933 13,435
Interest on non-taxable
investment securities 830 699 2,434 2,090
Dividends on restricted
equity investments 250 284 796 831
Interest on federal
funds sold 137 376 234 1,639
---------------------------------------------------------------------
Total interest income 42,979 50,022 131,501 148,771
---------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 15,905 21,130 50,175 64,041
Interest on borrowed funds 753 1,382 2,880 4,711
Interest on junior
subordinated debentures 1,359 2,055 4,257 6,681
---------------------------------------------------------------------
Total interest expense 18,017 24,567 57,312 75,433
---------------------------------------------------------------------
Net interest income 24,962 25,455 74,189 73,338
PROVISION FOR LOAN LOSSES 3,723 1,260 12,383 2,960
---------------------------------------------------------------------
Net interest income after
provision for loan losses 21,239 24,195 61,806 70,378
---------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on
deposit accounts 3,701 3,585 10,655 10,266
Other service charges 82 75 235 222
Net gain on sale of branches -- -- -- 1,443
Net gain on sale of bank
property & equipment -- -- -- 12
Gain on sale of loans 286 392 1,121 1,347
Net gain on derivative
instruments 491 297 2,167 1,056
Investment products income 728 222 2,353 702
BOLI income 778 484 2,356 1,437
Other 980 956 3,336 2,848
---------------------------------------------------------------------
Total non-interest income 7,046 6,011 22,223 19,333
---------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee
benefits 12,277 10,816 36,980 34,428
Occupancy expense 2,912 2,932 8,764 8,661
Equipment expense 1,522 1,732 4,812 5,512
Amortization of
intangible assets 1,177 1,177 3,532 3,537
Data processing expense 1,154 1,063 3,339 3,171
Professional fees 542 406 1,590 1,783
Insurance expense 745 644 2,142 1,424
Advertising expense 336 415 1,519 1,397
Cost of real estate
owned, net 13 70 (512) 86
Other 2,372 2,591 7,762 7,436
---------------------------------------------------------------------
Total non-interest expense 23,050 21,846 69,928 67,435
---------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 5,235 8,360 14,101 22,276
INCOME TAXES 1,106 2,475 3,460 6,794
---------------------------------------------------------------------
NET INCOME $ 4,129 $ 5,885 $ 10,641 $ 15,482
=====================================================================
Basic earnings per share (1) $ 0.18 $ 0.25 $ 0.47 $ 0.68
=====================================================================
Diluted earnings per
share (1) $ 0.18 $ 0.25 $ 0.46 $ 0.65
=====================================================================
(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
Q3 Q2 Q1
---------------------------------------------------------------------
Balance sheet at quarter end:
Loans:
Commercial and industrial $ 2,164,523 $ 2,146,163 $ 2,061,640
Home equity 271,197 264,354 267,023
Second mortgage 85,734 83,720 81,090
Residential real estate 61,845 56,334 53,616
Other 82,840 86,783 87,593
---------------------------------------------------------------------
Total gross loans 2,666,139 2,637,354 2,550,962
Allowance for loan losses (34,120) (31,490) (27,904)
---------------------------------------------------------------------
Net loans 2,632,019 2,605,864 2,523,058
Goodwill 127,894 127,894 127,894
Intangible assets, net 19,947 21,124 22,301
Total assets 3,425,379 3,424,968 3,366,357
Total deposits 2,873,378 2,782,180 2,713,756
Federal funds purchased -- 29,500 56,000
Securities sold under
agreements to repurchase -
customers 38,359 36,149 36,938
Advances from the Federal
Home Loan Bank (FHLB) 19,551 38,877 47,187
Securities sold under
agreements to repurchase -
FHLB 15,000 55,000 15,000
Obligation under capital
lease 5,207 5,224 5,241
Junior subordinated
debentures 92,786 92,786 92,786
Total shareholders' equity 357,282 360,268 364,242
Quarterly average balance
sheet:
Loans:
Commercial and industrial $ 2,146,204 $ 2,099,090 $ 2,037,548
Home equity 268,178 265,481 267,836
Second mortgage 84,404 82,604 80,819
Residential real estate 57,471 52,332 50,012
Other 84,116 86,198 86,602
---------------------------------------------------------------------
Total gross loans 2,640,373 2,585,705 2,522,817
Securities and other
interest-earning assets 461,276 450,888 469,322
Total interest-earning
assets 3,101,649 3,036,593 2,992,139
Total assets 3,422,764 3,368,523 3,326,064
Non-interest-bearing demand
deposits 435,249 430,568 416,612
Total deposits 2,837,147 2,755,778 2,701,630
Total interest-bearing
liabilities 2,600,310 2,539,882 2,509,725
Total shareholders' equity 361,895 367,824 366,400
Capital and credit quality
measures:
Total capital (to risk-
weighted assets) (1):
Sun Bancorp, Inc. 11.65% 11.50% 11.70%
Sun National Bank 11.00% 10.83% 10.92%
Tier 1 capital (to risk-
weighted assets) (1):
Sun Bancorp, Inc. 10.49% 10.42% 10.71%
Sun National Bank 9.84% 9.75% 9.93%
Leverage ratio (1):
Sun Bancorp, Inc. 9.56% 9.57% 9.67%
Sun National Bank 8.96% 8.97% 8.98%
Average equity to average
assets 10.57% 10.92% 11.02%
Allowance for loan losses to
total gross loans 1.28% 1.19% 1.09%
Non-performing assets to
total gross loans and real
estate owned 1.87% 1.29% 1.20%
Allowance for loan losses to
non-performing loans 71.80% 97.30% 102.60%
Other data:
Net charge-offs $ (1,093) $ (2,941) $ (1,231)
=====================================================================
Non-performing assets:
Non-accrual loans $ 45,940 $ 31,323 $ 26,567
Loans past due 90 days and
accruing 1,583 1,042 631
Real estate owned, net 2,381 1,714 3,476
---------------------------------------------------------------------
Total non-performing
assets $ 49,904 $ 34,079 $ 30,674
=====================================================================
2007 2007
Q4 Q3
---------------------------------------------------------------------
Balance sheet at quarter end:
Loans:
Commercial and industrial $ 2,024,728 $ 1,990,027
Home equity 264,965 258,991
Second mortgage 81,063 79,464
Residential real estate 49,750 54,601
Other 89,413 91,094
---------------------------------------------------------------------
Total gross loans 2,509,919 2,474,177
Allowance for loan losses (27,002) (26,340)
---------------------------------------------------------------------
Net loans 2,482,917 2,447,837
Goodwill 127,894 127,935
Intangible assets, net 23,479 24,656
Total assets 3,338,392 3,295,576
Total deposits 2,699,091 2,682,286
Federal funds purchased 30,000 --
Securities sold under
agreements to repurchase - customers 40,472 46,499
Advances from the Federal
Home Loan Bank (FHLB) 63,483 64,763
Securities sold under agreements to
repurchase - FHLB 15,000 15,000
Obligation under capital lease 5,258 5,275
Junior subordinated debentures 97,941 97,941
Total shareholders' equity 362,177 361,645
Quarterly average balance sheet:
Loans:
Commercial and industrial $ 2,030,928 $ 1,981,778
Home equity 263,245 250,474
Second mortgage 80,400 78,643
Residential real estate 50,734 49,635
Other 87,155 89,566
---------------------------------------------------------------------
Total gross loans 2,512,462 2,450,096
Securities and other
interest-earning assets 468,418 509,016
Total interest-earning assets 2,980,880 2,959,112
Total assets 3,322,686 3,292,687
Non-interest-bearing demand deposits 434,066 462,173
Total deposits 2,689,326 2,682,879
Total interest-bearing liabilities 2,499,003 2,445,187
Total shareholders' equity 363,302 359,949
Capital and credit quality measures:
Total capital (to risk-weighted
assets) (1):
Sun Bancorp, Inc. 11.82% 11.97%
Sun National Bank 11.06% 11.03%
Tier 1 capital (to risk-
weighted assets) (1):
Sun Bancorp, Inc. 10.86% 10.99%
Sun National Bank 10.09% 10.05%
Leverage ratio (1):
Sun Bancorp, Inc. 9.67% 9.80%
Sun National Bank 9.00% 8.95%
Average equity to average
assets 10.93% 10.93%
Allowance for loan losses to
total gross loans 1.08% 1.06%
Non-performing assets to
total gross loans and real
estate owned 1.18% 0.90%
Allowance for loan losses to
non-performing loans 95.77% 127.11%
Other data:
Net charge-offs $ (4,781) $ (999)
=====================================================================
Non-performing assets:
Non-accrual loans $ 26,853 $ 18,157
Loans past due 90 days and
accruing 1,343 2,565
Real estate owned, net 1,449 1,449
---------------------------------------------------------------------
Total non-performing
assets $ 29,645 $ 22,171
=====================================================================
(1) September 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 2008
Q3 Q2 Q1
---------------------------------------------------------------------
Profitability for the quarter:
Tax-equivalent interest
income $ 43,426 $ 43,337 $ 46,049
Interest expense 18,017 18,319 20,976
Tax-equivalent net interest
income 25,409 25,018 25,073
Tax-equivalent adjustment 447 454 410
Provision for loan losses 3,723 6,527 2,133
Non-interest income 7,046 7,802 7,375
Non-interest expense,
excluding amortization of
intangible assets 21,873 21,735 22,788
Amortization of intangible
assets 1,177 1,178 1,177
Income before income taxes 5,235 2,926 5,940
Income tax expense 1,106 597 1,757
Net income $ 4,129 $ 2,329 $ 4,183
=====================================================================
Financial ratios:
Return on average assets (1) 0.48% 0.28% 0.50%
Return on average equity (1) 4.56% 2.53% 4.57%
Return on average tangible
equity (1),(2) 7.74% 4.27% 7.77%
Net interest margin (1) 3.28% 3.30% 3.35%
Efficiency ratio 72.01% 70.79% 74.80%
Efficiency ratio, excluding
non-operating income and
non-operating expense 72.01% 70.79% 74.28%
Per share data (3):
Earnings per common share:
Basic $ 0.18 $ 0.10 $ 0.18
Diluted $ 0.18 $ 0.10 $ 0.18
Book value $ 15.94 $ 16.02 $ 16.00
Tangible book value $ 9.34 $ 9.39 $ 9.40
Average basic shares (3) 22,393,168 22,696,171 22,786,251
Average diluted shares (3) 22,836,610 23,210,790 23,266,872
Operating non-interest income:
Service charges on deposit
accounts $ 3,701 $ 3,561 $ 3,393
Other service charges 82 75 78
Gain on sale of loans 286 411 424
Net gain on derivative
instruments 491 1,037 639
Investment products income 728 848 777
BOLI income 778 772 806
Other income 980 1,098 1,051
---------------------------------------------------------------------
Total operating
non-interest income 7,046 7,802 7,168
---------------------------------------------------------------------
Non-operating income (4):
Gain on Visa stock redemption -- -- 207
---------------------------------------------------------------------
Total non-operating income -- -- 207
---------------------------------------------------------------------
Total non-interest income $ 7,046 $ 7,802 $ 7,375
=====================================================================
Operating non-interest expense:
Salaries and employee
benefits $ 12,277 $ 12,283 $ 12,170
Occupancy expense 2,912 2,810 2,970
Equipment expense 1,522 1,666 1,624
Amortization of intangible
assets 1,177 1,178 1,177
Data processing expense 1,154 1,065 1,120
Professional fees 542 483 565
Insurance expense 745 728 669
Advertising expense 336 484 699
Cost of real estate owned,
net 13 (534) 9
Other expenses 2,372 2,750 2,640
---------------------------------------------------------------------
Total operating
non-interest expense 23,050 22,913 23,643
---------------------------------------------------------------------
Non-operating expense (4):
Lease buy-out expenses and
other branch rationalization
charges -- -- 72
Executive sign-on incentive -- -- 250
---------------------------------------------------------------------
Total non-operating expense -- -- 322
---------------------------------------------------------------------
Total non-interest expense $ 23,050 $ 22,913 $ 23,965
=====================================================================
2007 2007
Q4 Q3
---------------------------------------------------------------------
Profitability for the quarter:
Tax-equivalent interest income $ 49,443 $ 50,406
Interest expense 23,554 24,567
Tax-equivalent net interest income 25,889 25,839
Tax-equivalent adjustment 391 384
Provision for loan losses 5,443 1,260
Non-interest income 6,822 6,011
Non-interest expense,
excluding amortization of
intangible assets 20,351 20,669
Amortization of intangible
assets 1,177 1,177
Income before income taxes 5,349 8,360
Income tax expense 1,479 2,475
Net income $ 3,870 $ 5,885
=====================================================================
Financial ratios:
Return on average assets (1) 0.47% 0.71%
Return on average equity (1) 4.26% 6.54%
Return on average tangible
equity (1),(2) 7.33% 11.39%
Net interest margin (1) 3.47% 3.49%
Efficiency ratio 66.61% 69.43%
Efficiency ratio, excluding
non-operating income and
non-operating expense 66.61% 68.30%
Per share data (3):
Earnings per common share:
Basic $ 0.17 $ 0.25
Diluted $ 0.16 $ 0.25
Book value $ 15.89 $ 15.70
Tangible book value $ 9.25 $ 9.07
Average basic shares (3) 22,916,950 23,147,677
Average diluted shares (3) 23,557,090 23,872,401
Operating non-interest income:
Service charges on deposit accounts $ 3,421 $ 3,585
Other service charges 85 75
Gain on sale of loans 342 392
Net gain on derivative
instruments 511 297
Investment products income 272 222
BOLI Income 990 484
Other income 1,201 956
---------------------------------------------------------------------
Total operating non-interest income 6,822 6,011
---------------------------------------------------------------------
Non-operating income (4):
Gain on Visa stock redemption -- --
---------------------------------------------------------------------
Total non-operating income -- --
---------------------------------------------------------------------
Total non-interest income $ 6,822 $ 6,011
=====================================================================
Operating non-interest expense:
Salaries and employee benefits $ 11,004 $ 10,816
Occupancy expense 2,830 2,773
Equipment expense 1,660 1,732
Amortization of intangible
assets 1,177 1,177
Data processing expense 1,078 1,063
Professional fees 327 406
Insurance expense 695 644
Advertising expense 459 415
Cost of real estate owned,
net 17 70
Other expenses 2,281 2,565
---------------------------------------------------------------------
Total operating
non-interest expense 21,528 21,661
---------------------------------------------------------------------
Non-operating expense (4):
Lease buy-out expenses and
other branch rationalization
charges -- 185
Executive sign-on incentive -- --
---------------------------------------------------------------------
Total non-operating expense -- 185
---------------------------------------------------------------------
Total non-interest expense $ 21,528 $ 21,846
=====================================================================
(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
September 30, 2008
----------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $2,146,204 $ 30,243 5.64%
Home equity 268,178 3,800 5.67
Second mortgage 84,404 1,384 6.56
Residential real estate 57,471 911 6.34
Other 84,116 1,481 7.04
---------- ----------
Total loans receivable 2,640,373 37,819 5.73
Investment securities (3) 422,897 5,423 5.13
Interest-earning bank balances 9,418 47 2.00
Federal funds sold 28,961 137 1.89
---------- ----------
Total interest-earning assets 3,101,649 43,426 5.60
---------- ----------
Cash and due from banks 57,463
Bank properties and equipment,
net 48,204
Goodwill and intangible assets,
net 148,577
Other assets 66,871
----------
Total non-interest-earning
assets 321,115
----------
Total assets $3,422,764
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 927,312 4,180 1.80%
Savings deposits 378,699 1,652 1.74
Time deposits 1,095,887 10,073 3.68
---------- ----------
Total interest-bearing
deposit accounts 2,401,898 15,905 2.65
---------- ----------
Borrowed money:
Federal funds purchased 17,766 102 2.30
Securities sold under
agreements to repurchase -
customers 35,426 104 1.17
FHLB advances (4) 47,221 452 3.83
Junior subordinated debentures 92,786 1,359 5.86
Obligation under capital lease 5,213 95 7.29
---------- ----------
Total borrowings 198,412 2,112 4.26
---------- ----------
Total interest-bearing
liabilities 2,600,310 18,017 2.77
---------- ----------
Non-interest-bearing demand
deposits 435,249
Other liabilities 25,310
----------
Total liabilities 3,060,869
Shareholders' equity 361,895
----------
Total liabilities and
shareholders' equity $3,422,764
==========
Net interest income $ 25,409
==========
Interest rate spread (5) 2.83%
======
Net interest margin (6) 3.28%
======
Ratio of average interest-earning
assets to average
interest-bearing liabilities 119.28%
======
For the Three Months Ended
September 30, 2007
----------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $1,981,778 $ 36,136 7.29%
Home equity 250,474 4,063 6.49
Second mortgage 78,643 1,289 6.56
Residential real estate 49,635 977 7.87
Other 89,566 1,797 8.03
---------- ----------
Total loans receivable 2,450,096 44,262 7.23
Investment securities (3) 468,653 5,573 4.76
Interest-earning bank balances 10,881 195 7.17
Federal funds sold 29,482 376 5.10
---------- ----------
Total interest-earning assets 2,959,112 50,406 6.81
---------- ----------
Cash and due from banks 67,334
Bank properties and equipment,
net 44,666
Goodwill and intangible assets,
net 153,326
Other assets 68,249
----------
Total non-interest-earning
assets 333,575
----------
Total assets $3,292,687
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 748,076 5,484 2.93%
Savings deposits 466,427 3,509 3.01
Time deposits 1,006,203 12,137 4.82
---------- ----------
Total interest-bearing
deposit accounts 2,220,706 21,130 3.81
---------- ----------
Borrowed money:
Federal funds purchased 2,028 30 5.92
Securities sold under
agreements to repurchase -
customers 41,868 469 4.48
FHLB advances (4) 76,916 787 4.09
Junior subordinated debentures 98,389 2,055 8.35
Obligation under capital lease 5,280 96 7.27
---------- ----------
Total borrowings 224,481 3,437 6.12
---------- ----------
Total interest-bearing
liabilities 2,445,187 24,567 4.02
---------- ----------
Non-interest-bearing demand
deposits 462,173
Other liabilities 25,378
----------
Total liabilities 2,932,738
Shareholders' equity 359,949
----------
Total liabilities and
shareholders' equity $3,292,687
==========
Net interest income $ 25,839
==========
Interest rate spread (5) 2.79%
======
Net interest margin (6) 3.49%
======
Ratio of average interest-earning
assets to average
interest-bearing liabilities 121.02%
======
(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 Nine Months Ended
September 30, 2008
---------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $2,094,470 $ 93,089 5.93%
Home equity 267,169 11,880 5.93
Second mortgage 82,615 4,037 6.52
Residential real estate 53,287 2,547 6.37
Other 85,633 4,551 7.09
---------- ----------
Total loans receivable 2,583,174 116,104 5.99
Investment securities (3) 434,928 16,290 4.99
Interest-earning bank balances 9,811 184 2.50
Federal funds sold 15,760 234 1.98
---------- ----------
Total interest-earning assets 3,043,673 132,812 5.82
---------- ----------
Cash and due from banks 57,580
Bank properties and equipment,
net 48,156
Goodwill and intangible assets,
net 149,744
Other assets 73,481
----------
Total non-interest-earning
assets 328,961
----------
Total assets $3,372,634
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 828,107 10,547 1.70%
Savings deposits 420,997 6,323 2.00
Time deposits 1,088,507 33,305 4.08
---------- ----------
Total interest-bearing
deposit accounts 2,337,611 50,175 2.86
---------- ----------
Borrowed money:
Federal funds purchased 21,244 404 2.54
Securities sold under
agreements to repurchase -
customers 36,650 445 1.62
FHLB advances (4) 56,522 1,745 4.12
Junior subordinated debentures 92,899 4,257 6.11
Obligation under capital lease 5,230 286 7.29
---------- ----------
Total borrowings 212,545 7,137 4.48
---------- ----------
Total interest-bearing
liabilities 2,550,156 57,312 3.00
---------- ----------
Non-interest-bearing demand
deposits 427,505
Other liabilities 29,613
----------
Total liabilities 3,007,274
Shareholders' equity 365,360
----------
Total liabilities and
shareholders' equity $3,372,634
==========
Net interest income $ 75,500
==========
Interest rate spread (5) 2.82%
======
Net interest margin (6) 3.31%
======
Ratio of average
interest-earning assets to
average interest-bearing
liabilities 119.35%
======
For the Nine Months Ended
September 30, 2007
---------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $1,972,141 $ 107,288 7.25%
Home equity 241,548 11,833 6.53
Second mortgage 77,426 3,717 6.40
Residential real estate 42,223 2,481 7.83
Other 91,272 5,457 7.97
---------- ----------
Total loans receivable 2,424,610 130,776 7.19
Investment securities (3) 491,980 16,909 4.58
Interest-earning bank balances 15,206 572 5.02
Federal funds sold 41,712 1,639 5.24
---------- ----------
Total interest-earning asset 2,973,508 149,896 6.72
---------- ----------
Cash and due from banks 70,578
Bank properties and equipment,
net 43,350
Goodwill and intangible assets,
net 154,567
Other assets 70,328
----------
Total non-interest-earning
assets 338,823
----------
Total assets $3,312,331
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 750,186 17,292 3.07%
Savings deposits 457,982 10,110 2.94
Time deposits 1,022,843 36,639 4.78
---------- ----------
Total interest-bearing
deposit accounts 2,231,011 64,041 3.83
---------- ----------
Borrowed money:
Federal funds purchased 982 43 5.84
Securities sold under
agreements to repurchase -
customers 43,390 1,495 4.59
FHLB advances (4) 88,024 2,883 4.37
Junior subordinated debenture 102,472 6,681 8.69
Obligation under capital leas 5,296 290 7.30
---------- ----------
Total borrowings 240,164 11,392 6.32
---------- ----------
Total interest-bearing
liabilities 2,471,175 75,433 4.07
---------- ----------
Non-interest-bearing demand
deposits 459,756
Other liabilities 28,696
----------
Total liabilities 2,959,627
Shareholders' equity 352,704
----------
Total liabilities and
shareholders' equity $3,312,331
==========
Net interest income $ 74,463
==========
Interest rate spread (5) 2.65%
======
Net interest margin (6) 3.34%
======
Ratio of average
interest-earning assets to
average interest-bearing
liabilities 120.33%
======
(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.