VINELAND, N.J., April 14, 2008 (PRIME NEWSWIRE) -- Sun Bancorp, Inc. (Nasdaq:SNBC) reported net income of $4.2 million, or $0.19 per share diluted, for the quarter ended March 31, 2008, compared to net income of $4.7 million, or $0.21 per share diluted, for the first quarter of 2007 and $3.9 million, or $0.17 per share diluted, for the linked fourth quarter of 2007. Net income for the first quarter 2007 included a net charge of approximately $874,000 (pre-tax), or $0.02 per share. The net charge was a result of severance and other related expenses of approximately $2.3 million (pre-tax), or $0.07 per share, offset by a net gain realized from the sale of three branches during the quarter of $1.4 million (pre-tax), or $0.05 per share.
"Net income for the first quarter was higher than the fourth quarter of 2007, albeit due to a lower loan loss provision. We hope to build a trend of sequentially improved results as we move through this year," said Thomas X. Geisel, president and chief executive officer. "In the current banking environment, our main priority is to maintain a vigilant watch over credit quality in our existing loan portfolios, while continuing to fill the loan pipelines with carefully selected new credits that will provide a trouble-free and profitable revenue stream. Everyone at Sun Bancorp clearly understands that executing well on these fundamental objectives will drive our performance in 2008."
"On the deposit side, we have had some recent success as a result of our merger disruption campaign targeted at our competitors, but the competition for gathering rationally priced core deposits is as tough as ever and our net interest margin will reflect this," said Geisel. "Capital adequacy and capital deployment are key industry issues now. The Company's capital strength is quite good, as evidenced by a tangible capital ratio of 6.66%. While we intend to continue to buy back our stock as prudent opportunities arise, we expect to do so in less volume (61,400 shares were repurchased during the first quarter 2008) in order to maintain our focus on capital preservation and growth."
The following is an overview of the key financial highlights for the quarter:
-- Total assets were $3.366 billion at March 31, 2008, compared to
$3.338 billion at December 31, 2007 and $3.327 billion at March
31, 2007.
-- Total loans before allowance for loan losses were $2.551 billion
at March 31, 2008, an increase of $135.1 million, or 5.6%, over
March 31, 2007, and an increase of $41.0 million, or 1.6%, over
December 31, 2007.
-- Total non-performing assets were $30.7 million at March 31, 2008,
or 1.20% of total loans and real estate owned, compared to $29.6
million, or 1.18%, at December 31, 2007 and $15.3 million, or
0.63%, at March 31, 2007. Net charge-offs for the quarter were
$1.2 million and the loan loss provision was $2.1 million, or
0.05% and 0.08% of average loans outstanding, respectively. Net
charge-offs and the loan loss provision as a percentage of
average loans outstanding were 0.02% and 0.03% for March 31, 2007
and 0.19% and 0.22% for December 31, 2007, respectively. The
allowance for loan losses to total loans is 1.09% at March 31,
2008, compared to 1.08% at March 31, 2007 and December 31, 2007.
The allowance for loan losses to non-performing loans was 102.60%
at March 31, 2008, compared to 177.14% at March 31, 2007 and
95.77% at December 31, 2007.
-- Total deposits were $2.714 billion at March 31, 2008, an increase
of $19.5 million, or 0.7%, over deposits at March 31, 2007. Total
deposits increased approximately 0.5% over the linked quarter.
The Company continues to rely on deposits as its primary
funding source. However, in continued efforts to balance
deposit growth and net interest margin, especially under the
current interest rate environment and highly competitive local
deposit pricing, the Company anticipates that other funding
sources may be more cost efficient.
-- Net interest income (tax-equivalent basis) of $25.1 million for
the quarter compares to $24.7 million for the comparable prior
year period and $25.9 million for the linked fourth quarter 2007.
Net interest margin for the quarter of 3.35% compares to 3.34%
for the comparable prior year period and 3.47% for the linked
fourth quarter 2007. The margin compression for the current
quarter primarily reflects the Federal Reserve's interest rate
reductions which totaled 200 basis points during the quarter.
These reductions caused interest-earning assets to re-price
downward faster than interest-bearing liabilities. The Company
expects that any further Fed rate reductions may cause further
margin compression. Assuming no further rate reductions, the
Company expects net interest margin to increase over the balance
of the year with the rollover of the short-term certificates of
deposit portfolio.
-- Total operating non-interest income for the quarter of $7.2
million increased $1.6 million, or 28.9%, over the comparable
prior year period and increased $364,000, or 5.3%, over the
linked fourth quarter 2007. The increase over the prior year was
primarily attributable to increases in service charges on deposit
accounts of $264,000, an increase in net gain on derivative
instruments of $405,000, an increase in BOLI income of $337,000
and an increase of $584,000 in Sun Financial Services revenue
earned on investment products provided by a third-party
broker-dealer. The increase in operating non-interest income over
the linked quarter was primarily attributable to an increase of
$505,000 in Sun Financial Services revenue earned on investment
products provided by a third-party broker-dealer and a net gain
on derivative instruments of $128,000. The increase in investment
products revenue during the current quarter in comparison to the
comparable prior year period and linked quarter was primarily
attributable to the internalization of the Company's investment
products sales force, which previously operated under an
agreement with the independent third-party broker-dealer. In
addition, BOLI income over the linked quarter decreased $185,000
as the Company realized a BOLI restructuring benefit of $301,000
in the previous quarter. The Company also realized a gain of
$207,000 during the current quarter from the mandatory redemption
of its Class B Visa shares in conjunction with Visa's initial
public offering on March 19, 2008.
-- Total operating non-interest expense for the quarter of $23.6
million increased $2.4 million, or 11.2%, over the comparable
prior year period and increased $2.1 million, or 9.8%, over the
linked fourth quarter 2007. While the current employee count has
remained essentially flat over the last 12 months, salaries and
benefits increased $1.5 million over the comparable prior year
period. The increase in salaries and benefits includes an
increase in salaries of $658,000, an increase in sales
commissions of $601,000, an increase in stock compensation
expense of $178,000 and an increase in employer payroll taxes of
$109,000. The increase in sales commission during the current
quarter was primarily attributable to the internalization of the
Company's investment products sales force which previously
operated under an agreement with the independent third-party
broker-dealer. The other increases over the comparable prior year
period include an increase in FDIC insurance of $396,000, an
increase in professional fees of $78,000, an increase in
advertising expense of $226,000 and an increase in problem loan
costs of $123,000. The current quarter increase in total
operating non-interest expense over the linked quarter is
impacted by an expense reduction of $545,000 in the Company's
reserve for unfunded loan commitments recognized in the fourth
quarter 2007. The increases over the linked quarter represent an
increase in salaries and benefits of $1.2 million, which includes
an increase in salaries of $441,000, an increase in sales
commissions of $307,000, an increase in stock compensation expense
of $87,000 and an increase in first quarter employer payroll taxes
of $457,000. The other noteworthy increases are primarily increased
professional fees of $238,000, increased advertising expense of
$240,000 and an increase in problem loan costs of $109,000.
The Company will hold its regularly scheduled conference call on Tuesday, April 15, 2008, at 1:30 p.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 multi-state bank holding company headquartered in Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving customers through nearly 70 branch locations in New Jersey and New Castle County, Delaware. The bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the Federal Deposit Insurance Corporation (FDIC). For more information about Sun National Bank and Sun Bancorp, Inc., visit 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
-----------------------------------
March 31, December 31,
----------------------
2008 2007 2007
---------------------------------------------------------------------
Profitability for the period:
Net interest income $ 24,663 $ 24,333 $ 25,498
Provision for loan losses 2,133 750 5,443
Non-interest income 7,375 7,017 6,822
Non-interest expense 23,965 23,571 21,528
Income before income taxes 5,940 7,029 5,349
Net income $ 4,183 $ 4,685 $ 3,870
=====================================================================
Financial ratios:
Return on average assets(1) 0.50% 0.57% 0.47%
Return on average equity(1) 4.57% 5.44% 4.26%
Return on average tangible
equity(1),(2) 7.77% 9.93% 7.33%
Net interest margin(1) 3.35% 3.34% 3.47%
Efficiency ratio 74.80% 75.19% 66.61%
Efficiency ratio, excluding
non-operating income and
non-operating expense(3) 74.28% 71.07% 66.61%
Earnings per common share(4):
Basic $ 0.19 $ 0.22 $ 0.18
Diluted $ 0.19 $ 0.21 $ 0.17
Average equity to average
assets 11.02% 10.44% 10.93%
March 31, December 31,
----------------------
2008 2007 2007
---------------------------------------------------------------------
At period-end:
Total assets $3,366,105 $3,326,681 $3,338,392
Total deposits 2,713,756 2,694,304 2,699,091
Loans receivable, net of
allowance for loan losses 2,523,058 2,389,842 2,482,917
Investments 451,727 502,592 461,639
Borrowings 160,366 149,799 154,213
Junior subordinated
debentures 92,786 108,250 97,941
Shareholders' equity 364,242 348,595 362,177
Credit quality and capital
ratios:
Allowance for loan losses
to total gross loans 1.09% 1.08% 1.08%
Non-performing assets to
total gross loans and real
estate owned 1.20% 0.63% 1.18%
Allowance for loan losses
to non-performing loans 102.60% 177.14% 95.77%
Total capital (to risk-
weighted assets)(5):
Sun Bancorp, Inc. 11.71% 11.98% 11.82%
Sun National Bank 10.83% 10.64% 11.06%
Tier 1 capital (to risk-
weighted assets)(5):
Sun Bancorp, Inc. 10.72% 11.00% 10.86%
Sun National Bank 9.84% 9.66% 10.09%
Leverage ratio(5):
Sun Bancorp, Inc. 9.67% 9.58% 9.67%
Sun National Bank 8.87% 8.42% 9.00%
Book value $ 16.80 $ 16.16 $ 16.68
Tangible book value $ 9.88 $ 8.98 $ 9.71
(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 expenses, 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
three months ended March 31, 2008 excludes a gain on the
mandatory redemption of Visa stock of $207,000 as compared to
the exclusion of a net gain of $1.4 million from the sale of
branches for the same period in 2007. Non-interest expense
for the three months ended March 31, 2008 excludes a $250,000
executive sign-on incentive and $72,000 in lease buyout
charges as compared to the exclusion of $2.3 million in
severance related expenses for the same period in 2007.
(4) Data is adjusted for a 5% stock dividend declared in April 2007.
(5) March 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)
March 31, December 31,
2008 2007
---------------------------------------------------------------------
ASSETS
Cash and due from banks $ 80,962 $ 81,479
Interest-earning bank balances 1,944 2,380
Federal funds sold 187 2,654
---------------------------------------------------------------------
Cash and cash equivalents 83,093 86,513
Investment securities available for sale
(amortized cost - $421,635 and $427,378
at March 31, 2008 and December 31, 2007,
respectively) 416,969 425,805
Investment securities held to maturity
(estimated fair value - $17,768 and
$18,755 at March 31, 2008 and December
31, 2007, respectively) 17,698 18,965
Loans receivable (net of allowance for
loan losses - $27,904 and $27,002 at
March 31, 2008 and December 31, 2007,
respectively) 2,523,058 2,482,917
Restricted equity investments 17,060 16,869
Bank properties and equipment, net 48,141 48,118
Real estate owned, net 3,476 1,449
Accrued interest receivable 13,365 15,018
Goodwill 127,894 127,894
Intangible assets, net 22,301 23,479
Deferred taxes, net 4,260 3,169
Bank owned life insurance 73,293 72,487
Other assets 15,497 15,709
---------------------------------------------------------------------
Total assets $3,366,105 $3,338,392
=====================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $2,713,756 $2,699,091
Federal funds purchased 36,000 30,000
Securities sold under agreements to
repurchase - customers 36,938 40,472
Advances from the Federal Home Loan Bank
(FHLB) 67,187 63,483
Securities sold under agreements to
repurchase - FHLB 15,000 15,000
Obligation under capital lease 5,241 5,258
Junior subordinated debentures 92,786 97,941
Other liabilities 34,955 24,970
---------------------------------------------------------------------
Total liabilities 3,001,863 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; 22,747,247 shares
issued and 21,675,324 shares outstanding
at March 31, 2008; 22,722,655 shares
issued and 21,712,132 shares outstanding
at December 31, 2007 22,747 22,723
Additional paid-in capital 337,321 336,668
Retained earnings 24,521 20,338
Accumulated other comprehensive loss (3,040) (1,027)
Treasury stock at cost, 1,071,923 shares
and 1,010,523 shares at March 31, 2008
and December 31, 2007, respectively (17,307) (16,525)
---------------------------------------------------------------------
Total shareholders' equity 364,242 362,177
---------------------------------------------------------------------
Total liabilities and shareholders'
equity $3,366,105 $3,338,392
=====================================================================
SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
For the
Three Months
Ended March 31,
------------------
2008 2007
---------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $40,395 $43,111
Interest on taxable investment securities 4,183 4,534
Interest on non-taxable investment securities 761 658
Dividends on restricted equity investments 269 266
Interest on federal funds sold 31 522
---------------------------------------------------------------------
Total interest income 45,639 49,091
---------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 18,313 20,834
Interest on borrowed funds 1,119 1,771
Interest on junior subordinated debentures 1,544 2,153
---------------------------------------------------------------------
Total interest expense 20,976 24,758
---------------------------------------------------------------------
Net interest income 24,663 24,333
PROVISION FOR LOAN LOSSES 2,133 750
---------------------------------------------------------------------
Net interest income after provision for
loan losses 22,530 23,583
---------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit accounts 3,393 3,129
Other service charges 78 72
Net gain on sale of branches -- 1,443
Net gain on sale of loans 424 508
Net gain on derivative instruments 639 234
Other 2,841 1,631
---------------------------------------------------------------------
Total non-interest income 7,375 7,017
---------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 12,420 12,589
Occupancy expense 3,042 3,012
Equipment expense 1,624 1,951
Amortization of intangible assets 1,177 1,182
Data processing expense 1,120 1,008
Professional fees 565 811
Insurance expense 669 258
Advertising expense 699 473
Other 2,649 2,287
---------------------------------------------------------------------
Total non-interest expense 23,965 23,571
---------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 5,940 7,029
INCOME TAXES 1,757 2,344
---------------------------------------------------------------------
NET INCOME $ 4,183 $ 4,685
=====================================================================
Basic earnings per share(1) $ 0.19 $ 0.22
=====================================================================
Diluted earnings per share(1) $ 0.19 $ 0.21
=====================================================================
(1) Data is adjusted for a 5% stock dividend declared in April 2007.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands)
2008 2007 2007
Q1 Q4 Q3
-------------------------------------------------------------------
Balance sheet at quarter end:
Loans:
Commercial and
industrial $2,061,640 $2,024,728 $1,990,027
Home equity 267,023 264,965 258,991
Second mortgage 81,090 81,063 79,464
Residential real estate 53,616 49,750 54,601
Other 87,593 89,413 91,094
-------------------------------------------------------------------
Total gross loans 2,550,962 2,509,919 2,474,177
Allowance for loan losses (27,904) (27,002) (26,340)
-------------------------------------------------------------------
Net loans 2,523,058 2,482,917 2,447,837
Goodwill 127,894 127,894 127,935
Intangible assets, net 22,301 23,479 24,656
Total assets 3,366,105 3,338,392 3,295,576
Total deposits 2,713,756 2,699,091 2,682,286
Federal funds purchased 36,000 30,000 --
Securities sold under
agreements to repurchase -
customers 36,938 40,472 46,499
Advances from the Federal
Home Loan Bank (FHLB) 67,187 63,483 64,763
Securities sold under
agreements to repurchase -
FHLB 15,000 15,000 15,000
Obligation under capital
lease 5,241 5,258 5,275
Junior subordinated
debentures 92,786 97,941 97,941
Total shareholders' equity 364,242 362,177 361,645
Quarterly average balance
sheet:
Loans:
Commercial and
industrial $2,037,548 $2,030,928 $1,981,778
Home equity 267,836 263,245 250,474
Second mortgage 80,819 80,400 78,643
Residential real estate 50,012 50,734 49,635
Other 86,602 87,155 89,566
-------------------------------------------------------------------
Total gross loans 2,522,817 2,512,462 2,450,096
Securities and other
interest-earning assets 469,322 468,418 509,016
Total interest-earning
assets 2,992,139 2,980,880 2,959,112
Total assets 3,326,061 3,322,686 3,292,687
Non-interest-bearing
demand deposits 416,612 434,066 462,173
Total deposits 2,701,630 2,689,326 2,682,879
Total interest-bearing
liabilities 2,509,725 2,499,003 2,445,187
Total shareholders' equity 366,400 363,302 359,949
Capital and credit quality
measures:
Total capital (to
risk-weighted assets)(1):
Sun Bancorp, Inc. 11.71% 11.82% 11.97%
Sun National Bank 10.83% 11.06% 11.06%
Tier I capital (to
risk-weighted assets)(1):
Sun Bancorp, Inc. 10.72% 10.86% 10.99%
Sun National Bank 9.84% 10.09% 10.05%
Leverage ratio(1):
Sun Bancorp, Inc. 9.67% 9.67% 9.80%
Sun National Bank 8.87% 9.00% 8.95%
Average equity to average
assets 11.02% 10.93% 10.93%
Allowance for loan losses
to total gross loans 1.09% 1.08% 1.06%
Non-performing assets to
total gross loans and
real estate owned 1.20% 1.18% 0.90%
Allowance for loan losses
to non-performing loans 102.60% 95.77% 127.11%
Other data:
Net charge-offs $ (1,231) $ (4,781) $ (999)
===================================================================
Non-performing assets:
Non-accrual loans $ 26,567 $ 26,853 $ 18,157
Loans past due 90 days
and accruing 631 1,343 2,565
Real estate owned, net 3,476 1,449 1,449
-------------------------------------------------------------------
Total non-performing
assets $ 30,674 $ 29,645 $ 22,171
===================================================================
2007 2007
Q2 Q1
-----------------------------------------------------
Balance sheet at quarter end:
Loans:
Commercial and
industrial $ 1,985,584 $ 1,972,491
Home equity 245,283 234,982
Second mortgage 79,120 76,449
Residential real estate 47,101 38,798
Other 91,618 93,149
-----------------------------------------------------
Total gross loans 2,448,706 2,415,869
Allowance for loan losses (26,079) (26,027)
-----------------------------------------------------
Net loans 2,422,627 2,389,842
Goodwill 127,936 127,936
Intangible assets, net 25,833 27,011
Total assets 3,324,633 3,326,681
Total deposits 2,725,747 2,694,304
Federal funds purchased -- 1,500
Securities sold under
agreements to repurchase -
customers 44,612 42,511
Advances from the Federal
Home Loan Bank (FHLB) 66,029 100,481
Securities sold under
agreements to repurchase -
FHLB -- --
Obligation under capital
lease 5,291 5,307
Junior subordinated
debentures 97,941 108,250
Total shareholders' equity 355,758 348,595
Quarterly average balance
sheet:
Loans:
Commercial and
industrial $ 1,978,175 $ 1,956,190
Home equity 240,150 233,837
Second mortgage 77,442 76,167
Residential real estate 39,193 37,710
Other 91,578 92,705
-----------------------------------------------------
Total gross loans 2,426,538 2,396,609
Securities and other
interest-earning assets 577,669 560,574
Total interest-earning
assets 3,004,207 2,957,183
Total assets 3,341,506 3,302,913
Non-interest-bearing
demand deposits 458,851 458,201
Total deposits 2,724,554 2,664,668
Total interest-bearing
liabilities 2,501,896 2,466,678
Total shareholders' equity 353,280 344,717
Capital and credit quality
measures:
Total capital (to
risk-weighted assets)(1):
Sun Bancorp, Inc. 11.80% 11.98%
Sun National Bank 10.74% 10.64%
Tier I capital (to
risk-weighted assets)(1):
Sun Bancorp, Inc. 10.83% 11.00%
Sun National Bank 9.77% 9.66%
Leverage ratio(1):
Sun Bancorp, Inc. 9.46% 9.58%
Sun National Bank 8.54% 8.42%
Average equity to average
assets 10.57% 10.44%
Allowance for loan losses
to total gross loans 1.07% 1.08%
Non-performing assets to
total gross loans and
real estate owned 0.67% 0.63%
Allowance for loan losses
to non-performing loans 169.98% 177.14%
Other data:
Net charge-offs $ (898) $ (381)
=====================================================
Non-performing assets:
Non-accrual loans $ 14,505 $ 14,147
Loans past due 90 days
and accruing 837 546
Real estate owned, net 1,165 600
-----------------------------------------------------
Total non-performing
assets $ 16,507 $ 15,293
=====================================================
(1) March 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 2007 2007
Q1 Q4 Q3
---------------------------------------------------------------------
Profitability for the quarter:
Tax-equivalent interest
income $ 46,049 $ 49,443 $ 50,406
Interest expense 20,976 23,554 24,567
Tax-equivalent net interest
income 25,073 25,889 25,839
Tax-equivalent adjustment 410 391 384
Provision for loan losses 2,133 5,443 1,260
Non-interest income,
excluding net gain on sale
of branches and gain on sale
of bank property and
equipment 7,375 6,822 6,011
Net gain on sale of branches -- -- --
Gain on sale of bank
property & equipment -- -- --
Non-interest expense,
excluding amortization of
intangible assets 22,788 20,351 20,669
Amortization of intangible
assets 1,177 1,177 1,177
Income before income taxes 5,940 5,349 8,360
Income tax expense 1,757 1,479 2,475
Net income $ 4,183 $ 3,870 $ 5,885
=====================================================================
Financial ratios:
Return on average assets(1) 0.50% 0.47% 0.71%
Return on average equity(1) 4.57% 4.26% 6.54%
Return on average tangible
equity (1),(2) 7.77% 7.33% 11.39%
Net interest margin(1) 3.35% 3.47% 3.49%
Efficiency ratio 74.80% 66.61% 69.43%
Efficiency ratio, excluding
non-operating income and
non-operating expense 74.28% 66.61% 68.30%
Per share data:
Earnings per common share(3):
Basic $ 0.19 $ 0.18 $ 0.27
Diluted $ 0.19 $ 0.17 $ 0.26
Book value $ 16.80 $ 16.68 $ 16.48
Tangible book value $ 9.88 $ 9.71 $ 9.53
Average basic shares 21,701,191 21,825,667 22,045,407
Average diluted shares 22,158,926 22,435,324 22,735,620
Operating non-interest income:
Service charges on deposit
accounts $ 3,393 $ 3,421 $ 3,585
Other service charges 78 85 75
Gain on sale of loans 424 342 392
Net gain on derivative
instruments 639 511 297
Other 2,634 2,463 1,662
---------------------------------------------------------------------
Total operating non-interest
income 7,168 6,822 6,011
---------------------------------------------------------------------
Non-operating income(4):
Gain on Visa stock redemption 207 -- --
Net gain on sale of branches -- -- --
Gain on sale of bank
property & equipment -- -- --
---------------------------------------------------------------------
Total non-operating income 207 -- --
---------------------------------------------------------------------
Total non-interest income $ 7,375 $ 6,822 $ 6,011
=====================================================================
Operating non- interest
expense:
Salaries and employee
benefits $ 12,170 $ 11,004 $ 10,816
Occupancy expense 2,970 2,830 2,773
Equipment expense 1,624 1,660 1,732
Amortization of intangible
assets 1,177 1,177 1,177
Data processing expense 1,120 1,078 1,063
Professional fees 565 327 406
Insurance expense 669 695 644
Advertising expense 699 459 415
Other expenses 2,649 2,298 2,635
---------------------------------------------------------------------
Total operating non-interest
expense 23,643 21,528 21,661
---------------------------------------------------------------------
Non-operating
expense(4):
Lease buy-out expenses and
other branch rationalization
charges 72 -- 185
Severance and other related
expenses -- -- --
Executive sign-on incentive 250 -- --
Early extinguishment of
borrowings -- -- --
---------------------------------------------------------------------
Total non-operating
expense 322 -- 185
---------------------------------------------------------------------
Total non-interest expense $ 23,965 $ 21,528 $ 21,846
=====================================================================
2007 2007
Q2 Q1
---------------------------------------------------------------------
Profitability for the quarter:
Tax-equivalent interest
income $ 50,049 $ 49,441
Interest expense 26,108 24,758
Tax-equivalent net interest
income 23,941 24,683
Tax-equivalent adjustment 391 350
Provision for loan losses 950 750
Non-interest income,
excluding net gain on sale
of branches and gain on sale
of bank property and
equipment 6,293 5,574
Net gain on sale of branches -- 1,443
Gain on sale of bank
property & equipment 12 --
Non-interest expense,
excluding amortization of
intangible assets 20,840 22,389
Amortization of intangible
assets 1,178 1,182
Income before income taxes 6,887 7,029
Income tax expense 1,975 2,344
Net income $ 4,912 $ 4,685
===================================================================
Financial ratios:
Return on average assets(1) 0.59% 0.57%
Return on average equity(1) 5.56% 5.44%
Return on average tangible
equity (1),(2) 9.88% 9.93%
Net interest margin(1) 3.19% 3.34%
Efficiency ratio 73.75% 75.19%
Efficiency ratio, excluding
non-operating income and
non-operating expense 71.77% 71.07%
Per share data:
Earnings per common share(3):
Basic $ 0.23 $ 0.22
Diluted $ 0.22 $ 0.21
Book value $ 16.21 $ 16.16
Tangible book value $ 9.21 $ 8.98
Average basic shares 21,738,367 21,547,912
Average diluted shares 22,670,769 22,596,591
Operating non-interest income:
Service charges on deposit
accounts $ 3,552 $ 3,129
Other service charges 75 72
Gain on sale of loans 447 508
Net gain on derivative
instruments 525 234
Other 1,694 1,631
-------------------------------------------------------------------
Total operating non-interest
income 6,293 5,574
-------------------------------------------------------------------
Non-operating income(4):
Gain on Visa stock redemption -- --
Net gain on sale of branches -- 1,443
Gain on sale of bank
property & equipment 12 --
-------------------------------------------------------------------
Total non-operating income 12 1,443
-------------------------------------------------------------------
Total non-interest income $ 6,305 $ 7,017
===================================================================
Operating non- interest
expense:
Salaries and employee
benefits $ 10,937 $ 10,626
Occupancy expense 2,717 3,012
Equipment expense 1,829 1,951
Amortization of intangible
assets 1,178 1,182
Data processing expense 1,100 1,008
Professional fees 566 487
Insurance expense 522 258
Advertising expense 509 473
Other expenses 2,450 2,257
-------------------------------------------------------------------
Total operating non-interest
expense 21,808 21,254
-------------------------------------------------------------------
Non-operating
expense(4):
Lease buy-out expenses and
other branch rationalization
charges -- --
Severance and other related
expenses 86 2,317
Executive sign-on incentive -- --
Early extinguishment of
borrowings 124 --
-------------------------------------------------------------------
Total non-operating
expense 210 2,317
-------------------------------------------------------------------
Total non-interest expense $ 22,018 $ 23,571
===================================================================
(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 2007.
(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
March 31, 2008
--------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable(1),(2):
Commercial and industrial $2,037,548 $32,506 6.38%
Home equity 267,836 4,155 6.21
Second mortgage 80,819 1,318 6.52
Residential real estate 50,012 818 6.54
Other 86,602 1,598 7.38
---------- -------
Total loans receivable 2,522,817 40,395 6.40
Investment securities(3) 455,366 5,536 4.86
Interest-earning bank balances 10,090 87 3.45
Federal funds sold 3,866 31 3.21
---------- -------
Total interest-earning assets 2,992,139 46,049 6.16
---------- -------
Cash and due from banks 56,555
Bank properties and equipment, net 47,891
Goodwill and intangible assets, net 150,923
Other assets 78,553
----------
Total non-interest-earning
assets 333,922
----------
Total assets $3,326,061
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 754,432 3,319 1.76%
Savings deposits 461,949 2,806 2.43
Time deposits 1,068,637 12,188 4.56
---------- -------
Total interest-bearing
deposit accounts 2,285,018 18,313 3.21
---------- -------
Borrowed money:
Federal funds purchased 13,791 113 3.28
Securities sold under
agreements to repurchase -
customers 38,700 233 2.41
FHLB advances(4) 73,843 677 3.67
Junior subordinated debentures 93,126 1,544 6.63
Obligation under capital lease 5,247 96 7.32
---------- -------
Total borrowings 224,707 2,663 4.74
---------- -------
Total interest-bearing
liabilities 2,509,725 20,976 3.34
---------- -------
Non-interest-bearing demand
deposits 416,612
Other liabilities 33,324
----------
Total non-interest-bearing
liabilities 449,936
----------
Total liabilities 2,959,661
Shareholders' equity 366,400
----------
Total liabilities and
shareholders' equity $3,326,061
==========
Net interest income $25,073
=======
Interest rate spread(5) 2.82%
=======
Net interest margin(6) 3.35%
=======
Ratio of average interest-earning
assets to average interest-bearing
liabilities 119.22%
=======
For the Three Months Ended
March 31, 2007
--------------------------------
Average Income/ Yield/
Balance Expense Cost
---------------------------------------------------------------------
Interest-earning assets:
Loans receivable(1),(2):
Commercial and industrial $1,956,190 $35,504 7.26%
Home equity 233,837 3,825 6.54
Second mortgage 76,167 1,190 6.25
Residential real estate 37,710 757 8.03
Other 92,705 1,835 7.92
---------- -------
Total loans receivable 2,396,609 43,111 7.20
Investment securities(3) 502,341 5,572 4.44
Interest-earning bank balances 18,363 236 5.14
Federal funds sold 39,870 522 5.24
---------- -------
Total interest-earning assets 2,957,183 49,441 6.69
---------- -------
Cash and due from banks 72,646
Bank properties and equipment, net 42,402
Goodwill and intangible assets, net 155,910
Other assets 74,772
----------
Total non-interest-earning
assets 345,730
----------
Total assets $3,302,913
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 761,056 5,935 3.12%
Savings deposits 439,772 3,093 2.81
Time deposits 1,005,639 11,806 4.70
---------- -------
Total interest-bearing
deposit accounts 2,206,467 20,834 3.78
---------- -------
Borrowed money:
Federal funds purchased 33 -- --
Securities sold under
agreements to repurchase -
customers 45,328 528 4.66
FHLB advances(4) 101,288 1,146 4.53
Junior subordinated debentures 108,250 2,153 7.96
Obligation under capital lease 5,312 97 7.30
---------- -------
Total borrowings 260,211 3,924 6.03
---------- -------
Total interest-bearing
liabilities 2,466,678 24,758 4.01
---------- -------
Non-interest-bearing demand
deposits 458,201
Other liabilities 33,317
----------
Total non-interest-bearing
liabilities 491,518
----------
Total liabilities 2,958,196
Shareholders' equity 344,717
----------
Total liabilities and
shareholders' equity $3,302,913
==========
Net interest income $24,683
=======
Interest rate spread(5) 2.68%
=======
Net interest margin(6) 3.34%
=======
Ratio of average interest-earning
assets to average interest-bearing
liabilities 119.89%
=======
(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.