VINELAND, N.J., July 20, 2009 (GLOBE NEWSWIRE) -- Sun Bancorp, Inc. (Nasdaq:SNBC) reported today a net loss available to common shareholders of $8.8 million, or $0.38 net loss per diluted share, for the second quarter ended June 30, 2009, compared to net income of $2.3 million, or $0.10 per diluted share, for the second quarter of 2008.
For the six months ended June 30, 2009, the Company reported a net loss available to common shareholders of $9.6 million, or $0.42 net loss per diluted share, compared to net income of $6.5 million, or $0.27 per diluted share, in the prior year period.
The second quarter results include the following one-time items:
* On April 8, 2009, the Company completed the repurchase of all 89,310 shares of preferred stock issued under the U.S. Treasury's Capital Purchase Program (CPP) of the Troubled Assets Relief Program (TARP). As a result of the repayment, the Company recognized a $4.0 million acceleration of the accretion of original issuance discount (OID) and deferred issuance costs, in addition to the second quarter preferred dividend earned through the date of repurchase of $87,000, for a combined $4.1 million, or $0.18 per diluted share, charge to earnings available to common shareholders for the second quarter. The impact upon net income for the six months ended June 30, 2009 of the preferred dividends and accretion of the OID and deferred issuance costs was $5.4 million, or $0.23 per diluted share. * On May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment based upon each insured depository institution's assets minus Tier 1 capital as of June 30, 2009. The Company recognized a charge of approximately $1.6 million, or $0.04 per diluted share, in the second quarter for this special assessment. The special assessment is payable on September 30, 2009. * The Company recognized a pre-tax impairment charge during the quarter of $4.6 million, or $0.12 per diluted share, due to further deterioration of underlying collateral on a pooled trust preferred security. This security, which had an original cost basis of $7.0 million, had been previously written down $515,000 in accordance with the Financial Accounting Standards Board Staff Position on the recognition and presentation of other-than-temporary impairments, which the Company previously adopted in the first quarter of 2009.
Selected core operating highlights reflecting favorable performance in the second quarter include:
* Second quarter net interest income of $24.3 million (tax-equivalent basis) compared favorably to $22.3 million for the linked first quarter 2009. The second quarter net interest margin increased to 3.01% compared to 2.74% for the linked first quarter 2009. Net interest income for the second quarter a year ago was $25.0 million and the net interest margin was 3.30%. * The average cost of interest-bearing deposits for the second quarter of 1.95% decreased 24 basis points over the linked first quarter 2009. The yield on average loans of 4.83% for the second quarter increased 11 basis points over the linked first quarter 2009. * Total non-performing assets remained relatively low compared to industry trends at $74.1 million, or 2.70% of total loans and real estate owned, at June 30, 2009, compared to $64.3 million, or 2.34%, at March 31, 2009, and $34.1 million, or 1.29%, at June 30, 2008.
"The combined costs of completing our TARP repayment, funding the FDIC's special deposit insurance assessment, and the further write down of the trust preferred security in our investment portfolio accounted for about $10.3 million pre-tax, or $0.34 per diluted share, and essentially offset the income that we did produce," said Thomas X. Geisel, president and chief executive officer.
"This unprecedented operating environment and the effects of the one-time charges we encountered can't obscure the fact that our credit quality, in terms of our level of non-performers as a percentage of total loans, remains favorable compared to industry trends."
"Furthermore, we have created positive momentum gathering and pricing core deposits, and originating and renewing loans across the portfolios, with an intense focus on profitability, as evidenced by the improvement in our linked-quarter net interest margin," Geisel said.
Other key financial highlights include:
* Total assets were $3.561 billion at June 30, 2009, compared to $3.425 billion at June 30, 2008, and $3.636 billion at March 31, 2009. * Total loans before allowance for loan losses were $2.734 billion at June 30, 2009, an increase of $96.6 million, or 3.7%, over total loans at June 30, 2008. Total loans on a linked quarter basis are essentially level. Commercial loans on average were essentially level on a linked quarter basis, residential mortgages increased on average 7.0% and home equity loans decreased on average 1.9%. * The loan loss provision for the quarter of $6.95 million, or 0.25% of average loans outstanding, compares to $6.5 million, or 0.25% of average loans outstanding, for the comparable prior year period and $4.0 million, or 0.15% of average loans outstanding, for the linked first quarter 2009. The allowance for loan losses to total loans was 1.62% at June 30, 2009 compared to 1.19% at June 30, 2008 and 1.44% at March 31, 2009. Total non-performing assets were $74.1 million at June 30, 2009, or 2.70% of total loans and real estate owned, compared to $34.1 million, or 1.29%, at June 30, 2008 and $64.3 million, or 2.34%, at March 31, 2009. The allowance for loan losses to non-performing loans was 69.82% at June 30, 2009, compared to 97.30% at June 30, 2008 and 73.76% at March 31, 2009. Net charge-offs for the quarter of $2.0 million, or 0.07% of average loans outstanding, compared to $2.9 million, or 0.11% of average loans outstanding, for the comparable prior year quarter and $1.9 million, or 0.07% of average loans outstanding, for the linked first quarter 2009. * Total deposits were $2.876 billion at June 30, 2009, an increase of $93.3 million, or 3.4%, over total deposits at June 30, 2008 and a decrease of $54.6 million, or 1.9%, over the linked first quarter 2009. The decrease over the linked quarter is primarily from certificates of deposits as the Company aggressively lowered deposit interest rates while managing overall funding and liquidity. The average cost of interest-bearing deposits for the quarter of 1.95% decreased 24 basis points over the linked first quarter 2009. * Net interest income (tax-equivalent basis) of $24.3 million for the quarter compares to $25.0 million for the comparable prior year period and $22.3 million for the linked first quarter 2009. The net interest margin for the quarter increased to 3.01% compared to 2.74% for the linked first quarter 2009 and 3.30% for the comparable prior year period. The margin increase over the linked first quarter 2009 of 27 basis points reflects the Company's focus on margin improvement initiatives on both sides of the balance sheet. The interest rate spread over the linked first quarter increased 35 basis points, with a yield increase of 10 basis points on interest-earnings assets offset by a decrease in the cost of interest-bearing liabilities of 25 basis points. Average interest- earning assets for the quarter of $3.2 billion decreased by 1.0% over the linked first quarter 2009. The decreasing margin trend through the linked first quarter 2009 was primarily attributable to the reduction in market interest rates, which caused interest- earning assets to re-price downward faster than interest-bearing liabilities. Additionally, as we have previously noted, the yield on total loans has been negatively impacted as approximately 50% of the total loan portfolio is variable rate indexed to LIBOR or prime rate. * Total operating non-interest income for the quarter of $6.3 million, which excludes the impairment charge of $4.6 million, decreased $1.5 million, or 19.4%, over the comparable prior year period and increased $691,000, or 12.3%, over the linked first quarter 2009. The decrease over the prior year period was primarily attributable to a decrease in gain on derivative instruments of $952,000 due to a planned decline in transaction volume, a reduction in service charges on deposit accounts, such as NSF and overdraft fees of $465,000, and a decrease in bank owned life insurance (BOLI) income of $211,000 due to lower yields earned on the separate account policy. These decreases were offset with an increase in gain on sale of loans of $282,000, primarily related to mortgages sold in the secondary market. The increase over the linked first quarter 2009 was primarily due to an increase in gain on sale of mortgage loans of $348,000 as a result of an increase in refinancing volume, an increase in investment products income of $234,000, and an increase in service charges on deposit accounts of $52,000. * Total operating non-interest expense for the quarter of $27.7 million increased $4.7 million, or 20.7%, over the comparable prior year period and increased $3.8 million, or 16.1%, over the linked first quarter 2009. The increase over the prior year period was primarily attributable to an increase in FDIC insurance of $2.4 million, which includes the $1.6 million special assessment and $770,000 as a result of an increase in assessment rates, additional coverage under the Temporary Liquidity Guarantee Program (TLGP) and an overall increase in assessable deposits. Salaries and benefits increased $933,000 primarily due to the addition of several key management and business line staff, and increases in commissions and healthcare costs. In addition, cost of real estate owned increased $627,000, which was primarily due to the recognition of a $558,000 net gain on the sale of three properties during the second quarter of 2008 and advertising expense increased $387,000 due to the recent "Switch to Sun" campaign. The increase over the linked first quarter 2009 was also primarily attributable to an increase in FDIC insurance of $1.7 million, which includes the special assessment of $1.6 million. In addition, salaries and benefits increased $1.3 million due to the addition of several key management and business line staff and an increase in healthcare costs, advertising expense increased $326,000 due to the recent "Switch to Sun" campaign, and problem loan costs increased $297,000. * The income tax benefit is a result of the pre-tax loss in combination with the relatively large levels of tax-free income earned on tax-exempt securities and BOLI policies. * The Company's ratio of tangible equity to tangible assets was 6.33% at June 30, 2009 compared to 6.45% at June 30, 2008 and 6.11% and March 31, 2009.
The Company will hold its regularly scheduled conference call on Tuesday, July 21, 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 70 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 For the Six
Months Ended Months Ended
June 30, June 30,
----------------- -----------------
2009 2008 2009 2008
--------------------------------------------------------------------
Profitability for the period:
Net interest income $23,784 $24,564 $45,623 $49,227
Provision for loan losses 6,950 6,527 10,950 8,660
Non-interest income 1,732 7,802 7,053 15,177
Non-interest expense 27,650 22,913 51,467 46,878
Income before income taxes (9,084) 2,926 (9,741) 8,866
Net (loss) income (4,634) 2,329 (4,249) 6,512
Net (loss) income available
to common shareholders $(8,780) $ 2,329 $(9,600) $ 6,512
====================================================================
Financial ratios:
Return on average assets(1) (0.51)% 0.28% (0.23)% 0.39%
Return on average equity(1) (5.01)% 2.53% (2.09)% 3.55%
Return on average tangible
equity(1),(2) (8.23)% 4.27% (3.25)% 6.01%
Net interest margin(1) 3.01% 3.30% 2.87% 3.32%
Efficiency ratio 108.36% 70.79% 97.70% 72.79%
Efficiency ratio, excluding
non-operating income and
non-operating expense(3) 91.94% 70.79% 89.49% 72.52%
Earnings per common share(4):
Basic $ (0.38) $ 0.10 $ (0.42) $ 0.27
Diluted $ (0.38) $ 0.10 $ (0.42) $ 0.27
Average equity to average
assets 10.25% 10.92% 11.23% 10.97%
June 30,
------------------------ December 31,
2009 2008 2008
---------------------------------------------------------------------
At period-end:
Total assets $ 3,561,110 $ 3,424,968 $ 3,622,126
Total deposits 2,875,502 2,782,180 2,896,364
Loans receivable, net of
allowance for loan losses 2,689,656 2,605,864 2,702,516
Investments 431,231 419,087 453,584
Borrowings 144,086 164,750 154,097
Junior subordinated debentures 92,786 92,786 92,786
Shareholders' equity 360,660 360,268 358,508
Credit quality and capital
ratios:
Allowance for loan losses to
gross loans 1.62% 1.19% 1.36%
Non-performing assets to gross
loans and real estate owned 2.70% 1.29% 1.78%
Allowance for loan losses to
non-performing loans 69.82% 97.30% 79.69%
Total capital (to risk-weighted
assets)(5):
Sun Bancorp, Inc. 11.52% 11.50% 11.37%
Sun National Bank 11.06% 10.83% 10.84%
Tier 1 capital (to
risk-weighted assets)(5):
Sun Bancorp, Inc. 10.27% 10.42% 10.17%
Sun National Bank 9.81% 9.75% 9.64%
Leverage ratio(5):
Sun Bancorp, Inc. 9.29% 9.57% 9.58%
Sun National Bank 8.87% 8.97% 9.10%
Book value(4) $ 15.59 $ 15.25 $ 15.57
Tangible book value(4) $ 9.35 $ 8.94 $ 9.20
(1) Amounts for the three and six months ended are annualized.
(2) Return on average tangible equity is computed by dividing
annualized net income for the period by average tangible equity.
Average tangible equity equals average equity less average
identifiable intangible assets and goodwill.
(3) Efficiency ratio, excluding non-operating income and
non-operating expense, is computed by dividing non-interest
expense for the period by the summation of net interest income
and non-interest income. Non-interest income for the three and
six months ended June 30, 2009 exclude a net impairment loss on
available for sale securities of $4.6 million and $4.8 million,
respectively. Non-interest income for the six months ended June
30, 2008 excludes a gain on the mandatory redemption of Visa
stock of $207,000. Non-interest expense for the six months ended
June 30, 2008 excludes a $250,000 executive sign-on incentive and
$72,000 in lease buyout charges.
(4) Data is adjusted for a 5% stock dividend issued in May 2009.
(5) June 30, 2009 capital ratios are estimated, subject to regulatory
filings.
SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
(Dollars in thousands, except par value)
June 30, December 31,
2009 2008
---------------------------------------------------------------------
ASSETS
Cash and due from banks $ 53,020 $ 31,237
Interest-earning bank balances 2,846 26,784
Federal funds sold -- 412
---------------------------------------------------------------------
Cash and cash equivalents 55,866 58,433
Investment securities available for sale
(amortized cost - $418,700 and $444,628 at
June 30, 2009 and December 31, 2008,
respectively) 406,082 423,513
Investment securities held to maturity
(estimated fair value - $9,646 and $13,601
at June 30, 2009 and December 31, 2008,
respectively) 9,639 13,765
Loans receivable (net of allowance for loan
losses - $44,316 and $37,309 at June 30,
2009 and December 31, 2008, respectively) 2,689,656 2,702,516
Restricted equity investments 15,510 16,306
Bank properties and equipment, net 52,502 48,642
Real estate owned, net 10,620 1,962
Accrued interest receivable 11,269 12,254
Goodwill 127,894 127,894
Intangible assets, net 16,414 18,769
Deferred taxes, net 16,476 16,707
Bank owned life insurance (BOLI) 76,578 75,504
Other assets 72,604 105,861
---------------------------------------------------------------------
Total assets $ 3,561,110 $ 3,622,126
=====================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $ 2,875,502 $ 2,896,364
Federal funds purchased 87,500 71,500
Securities sold under agreements to
repurchase - customers 17,398 20,327
Advances from the Federal Home Loan Bank of
New York (FHLBNY) 15,805 42,081
Securities sold under agreements to
repurchase - FHLBNY 15,000 15,000
Obligation under capital lease 8,383 5,189
Junior subordinated debentures 92,786 92,786
Other liabilities 88,076 120,371
---------------------------------------------------------------------
Total liabilities 3,200,450 3,263,618
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $1 par value, 1,089,310
shares authorized; none issued -- --
Common stock, $1 par value, 50,000,000
shares authorized; 25,250,583 shares issued
and 23,140,520 shares outstanding at
June 30, 2009; 24,037,431 shares issued and
21,930,708 shares outstanding at
December 31, 2008 25,251 24,037
Additional paid-in capital 361,095 351,430
Retained earnings 8,285 22,580
Accumulated other comprehensive loss (7,788) (13,377)
Deferred compensation plan trust (21) --
Treasury stock at cost, 2,106,723 shares at
June 30, 2009 and December 31, 2008 (26,162) (26,162)
---------------------------------------------------------------------
Total shareholders' equity 360,660 358,508
---------------------------------------------------------------------
Total liabilities and shareholders' equity $ 3,561,110 $ 3,622,126
=====================================================================
SUN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share and per share amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------------------------------------------------------------------
INTEREST INCOME
Interest and fees on
loans $ 32,996 $ 37,890 $ 65,188 $ 78,285
Interest on taxable
investment securities 3,706 3,807 7,936 7,990
Interest on
non-taxable
investment securities 882 843 1,726 1,604
Dividends on
restricted equity
investments 217 277 390 546
Interest on federal
funds sold -- 66 -- 97
---------------------------------------------------------------------
Total interest income 37,801 42,883 75,240 88,522
---------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 12,405 15,957 26,335 34,270
Interest on funds
borrowed 479 1,008 963 2,127
Interest on junior
subordinated
debentures 1,133 1,354 2,319 2,898
---------------------------------------------------------------------
Total interest
expense 14,017 18,319 29,617 39,295
---------------------------------------------------------------------
Net interest income 23,784 24,564 45,623 49,227
PROVISION FOR LOAN
LOSSES 6,950 6,527 10,950 8,660
---------------------------------------------------------------------
Net Interest income
after provision for
loan losses 16,834 18,037 34,673 40,567
---------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on
deposit accounts 3,096 3,561 6,140 6,954
Other service charges 79 75 161 153
Gain on sale of loans 693 411 1,038 835
Gain on derivative
instruments 85 1,037 212 1,676
Investment products
income 756 848 1,278 1,625
BOLI income 561 772 1,074 1,578
Net impairment losses
on available for sale
securities(1) (4,558) -- (4,836) --
Other 1,020 1,098 1,986 2,356
---------------------------------------------------------------------
Total non-interest
income 1,732 7,802 7,053 15,177
---------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee
benefits 13,216 12,283 25,179 24,703
Occupancy expense 2,782 2,810 5,917 5,852
Equipment expense 1,685 1,666 3,223 3,290
Data processing
expense 1,052 1,065 2,062 2,185
Amortization of
intangible assets 1,178 1,178 2,355 2,355
Insurance expense 3,330 728 4,773 1,397
Professional fees 507 483 885 1,048
Advertising expense 871 484 1,416 1,183
Real estate owned
expense, net 93 (534) 273 (525)
Other 2,936 2,750 5,384 5,390
---------------------------------------------------------------------
Total non-interest
expense 27,650 22,913 51,467 46,878
---------------------------------------------------------------------
(LOSS) INCOME BEFORE
INCOME TAXES (9,084) 2,926 (9,741) 8,866
INCOME TAX (BENEFIT)
EXPENSE (4,450) 597 (5,492) 2,354
---------------------------------------------------------------------
NET (LOSS) INCOME (4,634) 2,329 (4,249) 6,512
Preferred stock
dividend and
discount accretion 4,146 -- 5,351 --
---------------------------------------------------------------------
NET (LOSS) INCOME
AVAILABLE TO COMMON
SHAREHOLDERS $ (8,780) $ 2,239 $ (9,600) $ 6,512
=====================================================================
Basic earnings per
share(2) $ (0.38) $ 0.10 $ (0.42) $ 0.27
=====================================================================
Diluted earnings per
share(2) $ (0.38) $ 0.10 $ (0.42) $ 0.27
=====================================================================
Weighted average
shares - basic(2) 23,103,975 23,830,980 23,073,683 23,878,272
=====================================================================
Weighted average
shares - diluted(2) 23,138,215 24,371,330 23,095,433 24,481,106
=====================================================================
(1) Total impairment losses on available for sale securities for the
three and six months ended were $256,000 and $1,449,000,
respectively, with a portion of the losses transferred from other
comprehensive income, before taxes, of $4,302,000 and 3,387,000,
respectively.
(2) Data is adjusted for a 5% stock dividend issued in May 2009.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands)
2009 2009 2008 2008 2008
Q2 Q1 Q4 Q3 Q2
---------------------------------------------------------------------
Balance sheet
at quarter
end:
Loans:
Commercial
and
industrial $2,240,368 $2,243,698 $2,234,202 $2,164,523 $2,146,163
Home equity 265,407 268,122 274,360 271,197 264,354
Second
mortgage 73,856 78,589 84,388 85,734 83,720
Residential
real estate 79,627 69,971 67,473 61,845 56,334
Other 74,714 77,638 79,402 82,840 86,783
---------------------------------------------------------------------
Total gross
loans 2,733,972 2,738,018 2,739,825 2,666,139 2,637,354
Allowance for
loan losses (44,316) (39,406) (37,309) (34,120) (31,490)
---------------------------------------------------------------------
Net loans 2,689,656 2,698,612 2,702,516 2,632,019 2,605,864
Goodwill 127,894 127,894 127,894 127,894 127,894
Intangible
assets, net 16,414 17,592 18,769 19,947 21,124
Total assets 3,561,110 3,635,697 3,622,126 3,425,379 3,424,968
Total
deposits 2,875,502 2,930,084 2,896,364 2,873,378 2,782,180
Federal funds
purchased 87,500 -- 71,500 -- 29,500
Securities
sold under
agreements to
repurchase -
customers 17,398 14,170 20,327 38,359 36,149
Advances from
FHLBNY 15,805 16,096 42,081 19,551 38,877
Securities
sold under
agreements to
repurchase -
FHLBNY 15,000 15,000 15,000 15,000 55,000
Obligation
under capital
lease 8,383 5,171 5,189 5,207 5,224
Junior
subordinated
debentures 92,786 92,786 92,786 92,786 92,786
Total
shareholders'
equity 360,660 447,984 358,508 357,282 360,268
Quarterly
average
balance sheet:
Loans:
Commercial
and
industrial $2,236,745 $2,229,016 $2,195,218 $2,146,204 $2,099,090
Home equity 268,276 268,921 275,791 268,178 265,481
Second
mortgage 75,967 81,854 85,530 84,404 82,604
Residential
real estate 75,812 70,868 62,481 57,471 52,332
Other 75,133 79,324 81,426 84,116 86,198
---------------------------------------------------------------------
Total gross
loans 2,731,933 2,729,983 2,700,446 2,640,373 2,585,705
Securities and
other
interest-
earning
assets 491,348 527,318 476,305 461,276 450,888
Total
interest-
earning
assets 3,223,281 3,257,301 3,176,751 3,101,649 3,036,593
Total assets 3,611,679 3,644,558 3,483,145 3,422,764 3,368,523
Non-interest-
bearing
demand
deposits 431,836 397,237 407,151 435,249 430,568
Total deposits 2,975,358 2,936,452 2,916,153 2,837,147 2,755,778
Total
interest-
bearing
liabilities 2,705,069 2,694,326 2,679,673 2,600,310 2,539,882
Total
shareholders'
equity 370,196 445,040 361,513 361,895 367,824
Capital and
credit quality
measures:
Total capital
(to risk-
weighted
assets)(1):
Sun Bancorp,
Inc. 11.52% 14.32% 11.37% 11.67% 11.50%
Sun National
Bank 11.06% 10.99% 10.84% 11.02% 10.83%
Tier 1 capital
(to risk-
weighted
assets)(1):
Sun Bancorp,
Inc. 10.27% 13.07% 10.17% 10.51% 10.42%
Sun National
Bank 9.81% 9.74% 9.64% 9.86% 9.75%
Leverage
ratio(1):
Sun Bancorp,
Inc. 9.29% 11.81% 9.58% 9.56% 9.57%
Sun National
Bank 8.87% 8.80% 9.10% 8.97% 8.97%
Average equity
to average
assets 10.25% 12.21% 10.38% 10.57% 10.92%
Allowance for
loan losses
to total
gross loans 1.62% 1.44% 1.36% 1.28% 1.19%
Non-performing
assets to
total gross
loans and
real estate
owned 2.70% 2.34% 1.78% 1.87% 1.29%
Allowance for
loan losses
to non-
performing
loans 69.82% 73.76% 79.69% 71.80% 97.30%
Other data:
Net charge-
offs (2,040) (1,903) (4,428) (1,093) (2,941)
Non-
performing
assets:
Non-accrual
loans $ 55,801 $ 50,481 $ 42,233 $ 45,940 $ 31,323
Loans past
due 90
days and
accruing 7,675 2,945 4,587 1,583 1,042
Real estate
owned, net 10,620 10,834 1,962 2,381 1,714
---------------------------------------------------------------------
Total
non-
performing
assets $ 74,096 $ 64,260 $ 48,782 $ 49,904 $ 34,079
=====================================================================
(1) June 30, 2009 capital ratios are estimated, subject to regulatory
filings.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands, except share and per share data)
2009 2009 2008
Q2 Q1 Q4
---------------------------------------------------------------------
Profitability for the quarter:
Tax-equivalent interest income $ 38,276 $ 37,894 $ 43,574
Interest expense 14,017 15,600 17,661
Tax-equivalent net interest
income 24,259 22,294 25,913
Tax-equivalent adjustment 475 455 441
Provision for loan losses 6,950 4,000 7,617
Non-interest income excluding
net gain on sale of branches and
net impairment losses on
available for sale securities 6,290 5,599 6,119
Net gain on sale of branches -- -- 11,454
Net impairment losses on
available for sale securities (4,558) (278) (7,497)
Non-interest expense excluding
amortization of intangible
assets 26,472 22,640 21,534
Amortization of intangible
assets 1,178 1,177 1,178
(Loss) Income before income
taxes (9,084) (657) 5,219
Income tax (benefit) expense (4,450) (1,042) 966
Net (loss) income (4,634) 385 4,253
Net (loss) income available to
common shareholders $ (8,780) $ (820) $ 4,253
=====================================================================
Financial ratios:
Return on average assets(1) (0.51)% 0.04% 0.49%
Return on average equity(1) (5.01)% 0.35% 4.71%
Return on average tangible
equity(1),(2) (8.23)% 0.52% 7.94%
Net interest margin(1) 3.01% 2.74% 3.26%
Efficiency ratio 108.36% 87.69% 63.89%
Efficiency ratio, excluding
non-operating income and
non-operating expense 91.94% 86.80% 71.89%
Per share data (3):
(Loss) Earnings per common
share:
Basic $ (0.38) $ (0.04) $ 0.18
Diluted $ (0.38) $ (0.04) $ 0.18
Book value $ 15.59 $ 15.72 $ 15.57
Tangible book value $ 9.35 $ 9.41 $ 9.20
Average basic shares(3) 23,103,975 23,043,056 23,323,693
Average diluted shares(3) 23,138,215 23,051,383 23,410,606
Operating non-interest income:
Service charges on deposit
accounts $ 3,096 $ 3,044 $ 3,263
Other service charges 79 82 82
Gain on sale of loans 693 345 204
Gain on derivative instruments 85 127 411
Investment products income 756 522 688
BOLI income 561 513 661
Other income 1,020 966 810
---------------------------------------------------------------------
Total operating non-interest
income 6,290 5,599 6,119
---------------------------------------------------------------------
Non-operating income(4):
Net gain on sale of branches -- -- 11,454
Net impairment losses on
available for sale securities
recognized in earnings (4,558) (278) (7,497)
---------------------------------------------------------------------
Total non-operating income (4,558) (278) 3,957
---------------------------------------------------------------------
Total non-interest income $ 1,732 $ 5,321 $ 10,076
=====================================================================
Operating non-interest expense:
Salaries and employee benefits $ 13,216 $ 11,963 $ 10,643
Occupancy expense 2,782 3,135 2,919
Equipment expense 1,685 1,538 1,609
Data processing expense 1,052 1,010 1,120
Amortization of intangible
assets 1,178 1,177 1,178
Insurance expense 3,330 1,443 901
Professional fees 507 378 745
Advertising expense 871 545 849
Real estate owned expense
(income), net 93 180 (116)
Other expenses 2,936 2,448 2,864
---------------------------------------------------------------------
Total operating non-interest
expense 27,650 23,817 22,712
---------------------------------------------------------------------
Total non-interest expense $ 27,650 $ 23,817 $ 22,712
=====================================================================
2008 2008
Q3 Q2
---------------------------------------------------------------------
Profitability for the quarter:
Tax-equivalent interest income $ 43,426 $ 43,337
Interest expense 18,017 18,319
Tax-equivalent net interest income 25,409 25,018
Tax-equivalent adjustment 447 454
Provision for loan losses 3,723 6,527
Non-interest income excluding net gain on
sale of branches and net impairment losses
on available for sale securities 7,046 7,802
Net gain on sale of branches -- --
Net impairment losses on available for sale
securities -- --
Non-interest expense excluding amortization
of intangible assets 21,873 21,735
Amortization of intangible assets 1,177 1,178
(Loss) Income before income taxes 5,235 2,926
Income tax (benefit) expense 1,106 597
Net (loss) income 4,129 2,329
Net (loss) income available to common
shareholders $ 4,129 $ 2,329
=====================================================================
Financial ratios:
Return on average assets(1) 0.48% 0.28%
Return on average equity(1) 4.56% 2.53%
Return on average tangible equity(1),(2) 7.74% 4.27%
Net interest margin(1) 3.28% 3.30%
Efficiency ratio 72.01% 70.79%
Efficiency ratio, excluding non-operating
income and non-operating expense 72.01% 70.79%
Per share data(3):
(Loss) Earnings per common share:
Basic $ 0.18 $ 0.10
Diluted $ 0.17 $ 0.10
Book value $ 15.18 $ 15.25
Tangible book value $ 8.90 $ 8.94
Average basic shares(3) 23,512,826 23,830,980
Average diluted shares(3) 24,084,540 24,371,330
Operating non-interest income:
Service charges on deposit accounts $ 3,701 $ 3,561
Other service charges 82 75
Gain on sale of loans 286 411
Gain on derivative instruments 491 1,037
Investment products income 728 848
BOLI income 778 772
Other income 980 1,098
---------------------------------------------------------------------
Total operating non-interest income 7,046 7,802
---------------------------------------------------------------------
Non-operating income(4):
Net gain on sale of branches -- --
Net impairment losses on available for sale
securities recognized in earnings -- --
---------------------------------------------------------------------
Total non-operating income -- --
---------------------------------------------------------------------
Total non-interest income $ 7,046 $ 7,802
=====================================================================
Operating non-interest expense:
Salaries and employee benefits $ 12,277 $ 12,283
Occupancy expense 2,912 2,810
Equipment expense 1,522 1,666
Data processing expense 1,154 1,065
Amortization of intangible assets 1,177 1,178
Insurance expense 745 728
Professional fees 542 483
Advertising expense 336 484
Real estate owned expense (income), net 13 (534)
Other expenses 2,372 2,750
---------------------------------------------------------------------
Total operating non-interest expense 23,050 22,913
---------------------------------------------------------------------
Total non-interest expense $ 23,050 $ 22,913
=====================================================================
(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 issued in May 2009.
(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
June 30, 2009 June, 2008
--------------------------- --------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
----------------------------------------------------------------------
Interest-earning
assets:
Loans receivable
(1),(2):
Commercial and
industrial $2,236,745 $26,107 4.67% $2,099,090 $30,340 5.78%
Home equity 268,276 3,332 4.97 265,481 3,925 5.91
Second mortgage 75,967 1,226 6.46 82,604 1,335 6.46
Residential
real estate 75,812 1,095 5.78 52,332 818 6.25
Other 75,133 1,236 6.58 86,198 1,472 6.83
---------- ------- ---------- -------
Total loans
receivable 2,731,933 32,996 4.83 2,585,705 37,890 5.86
Investment
securities(3) 445,456 5,258 4.72 426,652 5,331 5.00
Interest-earning
bank balances 45,892 22 0.19 9,929 50 2.01
Federal funds
sold -- -- -- 14,307 66 1.85
---------- ------- ---------- -------
Total
interest-
earning
assets 3,223,281 38,276 4.75 3,036,593 43,337 5.71
---------- ------- ---------- -------
Cash and due from
banks 48,777 58,723
Bank properties
and equipment,
net 48,343 48,371
Goodwill and
intangible
assets, net 145,033 149,746
Other assets 146,245 75,090
---------- ----------
Total non-
interest-
earning
assets 388,398 331,930
---------- ----------
Total assets $3,611,679 $3,368,523
========== ==========
Interest-bearing
liabilities:
Interest-bearing
deposit
accounts:
Interest-
bearing demand
deposits $1,019,000 2,565 1.01% $ 801,486 3,047 1.52%
Savings
deposits 295,010 725 0.98 422,807 1,866 1.77
Time deposits 1,229,512 9,115 2.97 1,100,917 11,044 4.01
---------- ------- ---------- -------
Total
interest-
bearing
deposit
accounts 2,543,522 12,405 1.95 2,325,210 15,957 2.75
---------- ------- ---------- -------
Borrowed money:
Federal funds
purchased 16,632 20 0.48 28,256 172 2.43
Securities sold
under
agreements to
repurchase -
customers 15,996 10 0.25 35,839 108 1.21
FHLBNY
advances(4) 30,903 355 4.60 52,561 633 4.82
Obligation
under capital
lease 5,230 94 7.19 92,786 1,354 5.84
Junior
subordinated
debentures 92,786 1,133 4.88 5,230 95 7.27
---------- ------- ---------- -------
Total
borrowings 161,547 1,612 3.99 214,672 2,362 4.40
---------- ------- ---------- -------
Total
interest-
bearing
liabilities 2,705,069 14,017 2.07 2,539,882 18,319 2.89
---------- ------- ---------- -------
Non-interest-
bearing demand
deposits 431,836 430,568
Other liabilities 104,578 30,249
---------- ----------
Total
non-interest
bearing
liabilities 536,414 460,817
Total
liabilities 3,241,483 3,000,699
Shareholders'
equity 370,196 367,824
---------- ----------
Total
liabilities
and
shareholders'
equity $3,611,679 $3,368,523
========== ==========
Net interest
income $24,259 $25,018
======= =======
Interest rate
spread(5) 2.68% 2.82%
====== ======
Net interest
margin(6) 3.01% 3.30%
====== ======
Ratio of average
interest-earning
assets to
average
interest-bearing
liabilities 119.16% 119.56%
====== ======
----------------------------------------------------------------------
(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 FHLBNY and Securities sold under
agreements to repurchase - FHLBNY.
(5) Interest rate spread represents the difference between the
average yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(6) Net interest margin represents net interest income as a
percentage of average interest-earning assets.
SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (unaudited)
(Dollars in thousands)
For the Six Months Ended For the Six Months Ended
June 30, 2009 June 30, 2008
-------------------------- --------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
----------------------------------------------------------------------
Interest-earning
assets:
Loans
receivable
(1),(2):
Commercial and
industrial $2,232,902 $51,184 4.58% $2,068,319 $62,846 6.08%
Home equity 268,597 6,832 5.09 266,659 8,080 6.06
Second
mortgage 78,894 2,533 6.42 81,711 2,653 6.49
Residential
real estate 73,354 2,165 5.90 51,172 1,636 6.39
Other 77,217 2,474 6.41 86,400 3,070 7.11
---------- ------- ---------- -------
Total loans
receivable 2,730,964 65,188 4.77 2,554,261 78,285 6.13
Investment
securities(3) 456,118 10,924 4.79 441,009 10,867 4.93
Interest-earning
bank balances 52,927 58 0.22 10,009 137 2.74
Federal funds
sold 189 -- -- 9,087 97 2.13
---------- ------- ---------- -------
Total
interest-
earning
assets 3,240,198 76,170 4.70 3,014,366 89,386 5.93
---------- ------- ---------- -------
Cash and due
from banks 48,955 57,639
Bank properties
and equipment,
net 48,806 48,132
Goodwill and
intangible
assets, net 145,618 150,335
Other assets 144,851 76,821
---------- ----------
Total non-
interest-
earning
assets 387,830 332,927
---------- ----------
Total assets $3,628,028 $3,347,293
========== ==========
Interest-bearing
liabilities:
Interest-
bearing
deposit
accounts:
Interest-
bearing
demand
deposits $1,001,284 5,311 1.06% $ 777,959 6,367 1.64%
Savings
deposits 296,293 1,571 1.06 442,378 4,671 2.11
Time deposits 1,243,804 19,453 3.13 1,084,777 23,232 4.28
---------- ------- ---------- -------
Total
interest-
bearing
deposit
accounts 2,541,381 26,335 2.07 2,305,114 34,270 2.97
---------- ------- ---------- -------
Borrowed money:
Federal funds
purchased 10,133 25 0.49 23,001 302 2.63
Securities
sold under
agreements to
repurchase -
customers 16,302 20 0.25 37,269 341 1.83
FHLBNY
advances(4) 33,922 729 4.30 61,224 1,293 4.22
Obligations
under capital
lease 5,204 189 7.26 92,956 2,898 6.24
Junior
subordinated
debentures 92,786 2,319 5.00 5,239 191 7.29
---------- ------- ---------- -------
Total
borrowings 158,347 3,282 4.15 219,689 5,025 4.57
---------- ------- ---------- -------
Total
interest-
bearing
liabilities 2,699,728 29,617 2.19 2,524,803 39,295 3.11
---------- ------- ---------- -------
Non-interest-
bearing demand
deposits 414,632 423,590
Other
liabilities 106,257 31,788
---------- ----------
Total non-
interest-
bearing
liabilities 520,889 455,378
---------- ----------
Total
liabilities 3,220,617 2,980,181
Shareholders'
equity 407,411 367,112
---------- ----------
Total
liabilities
and
shareholders'
equity $3,628,028 $3,347,293
========== ==========
Net interest
income $46,553 $50,091
======= =======
Interest rate
spread(5) 2.51% 2.82%
====== ======
Net interest
margin(6) 2.87% 3.32%
====== ======
Ratio of average
interest-
earning assets
to average
interest-
bearing
liabilities 120.02% 119.39%
====== ======
---------------------------------------------------------------------
(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 FHLBNY and Securities sold under
agreements to repurchase - FHLBNY.
(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.