EX-99 2 exhibit99.htm EXHIBIT 99 - PRESS RELEASE exhibit99.htm

Sun Bancorp Inc Logo
 

 
 

For Immediate Release

Sun Bancorp, Inc. Reports 2Q 2015 Net Income of $2.8 Million, or $0.15 per share; Improvement in Loan Growth, Capital Ratios and Expense Management
 
Contact:                 Mike Dinneen
Senior Vice President
(856) 552-5013
mdinneen@sunnb.com
 
 

Mount Laurel, N.J. – July 27, 2015

 
Second Quarter Highlights
·  
Net income of $2.8 million, or $0.15 per share, for the quarter ended June 30, 2015, and $5.6 million, or $0.30 per share, for first half of 2015.
·  
Net loan growth of $95 million, or 6.5%, in second quarter.
·  
Solid capital foundation in place as tangible equity to assets improves from 6.6% in at June 30, 2014 to 9.2% at June 30, 2015.
·  
Asset quality metrics remain strong with non-performing assets down 68% since June 30, 2014 to $6.2 million, or 0.3% of total assets at June 30, 2015.
·  
Excess liquidity has declined, but remains elevated: average interest bearing cash totaled $329 million in the second quarter as liquidity deployment efforts increased, as compared to $475 million in the first quarter.
·  
Quarterly operating expenses fall to $18.4 million with successful achievement of cost reduction goals representing an impressive 43% reduction when compared to the 2013 quarterly average.

Sun Bancorp, Inc. (NASDAQ: SNBC) (the "Company"), the holding company for Sun National Bank (the “Bank”), is reporting net income of $2.8 million, or $0.15 per diluted share, for the quarter ended June 30, 2015, compared to net income of $2.8 million, or $0.15 per diluted share, for the quarter ended March 31, 2015 and a net loss of $24.2 million, or a loss of $1.39 per diluted share, for the quarter ended June 30, 2014.

“We are generally pleased with the results of the second quarter and even more so with the underlying trends,” said Thomas M. O’Brien, President & CEO.  “The major restructuring announced at this time last year represented an aggressive multi-pronged attack on several legacy conditions which were creating unacceptable operating losses year after year.  In a few short quarters, we have successfully executed on the restructuring plan as evidenced by this quarter’s results.  Most impressively, operating expenses which had been running at $32.5 million per quarter in 2013 have been reduced by 43% to $18.4 million while capital ratios are much improved and net interest margin has begun to rebound.  Additionally, the Company’s asset quality measures which had been deficient for many years are now among the strongest in the region.  We knew that it would be a challenge to execute on so many initiatives while preparing to build back revenues in our new, more narrowly focused commercial banking strategies.  This renewed focus on growth combined with our ongoing efforts to improve cost efficiency and operate in a safe and sound manner has set the stage for creating shareholder value.”

Discussion of Results:

Balance Sheet

Total assets decreased to $2.38 billion at June 30, 2015, as compared to $2.43 billion at March 31, 2015 and $2.72 billion at December 31, 2014.  The decrease was due primarily to a decrease in cash and cash equivalents, partially offset by loan growth.  The Bank’s liquidity levels remain elevated, although cash and cash equivalents decreased to $278.9 million at June 30, 2015, as compared to $388.0 million at March 31, 2015 and $548.4 million at December 31, 2014. The overall decrease in cash and cash equivalents over the recent three and six month periods was primarily due to increases in loan originations, purchases of several multifamily loan participations and the completion of the sale of seven Bank locations in the first quarter of 2015.

Gross loans held-for-investment totaled $1.59 billion at June 30, 2015, as compared to $1.46 billion at March 31, 2015 and $1.49 billion at December 31, 2014.  The increase during the second quarter of 2015 was due primarily to the Bank funding approximately $48 million of 50% participation interest in multi-family loans residing in our market area, while organic loan originations totaled $137 million, including approximately $113 million in commercial real estate and $24 million in commercial and industrial loans.

Deposits were $1.88 billion at June 30, 2015, as compared to $1.96 billion at March 31, 2015 and $2.09 billion at December 31, 2014. The Bank continues to experience deposit reductions as a result of managed run-off of higher yielding municipal accounts and pricing of certain retail deposits.

The Bank designated $4.6 million in loans, $34.7 million in deposits, $580 thousand of cash and $375 thousand of fixed assets into held-for-sale at June 30, 2015 related to the pending sale of its Hammonton branch location to Cape Bank, which is scheduled to close in the third quarter of 2015. The Bank expects to record a gain on the sale of this location at closing.

“We began to see the results of our liquidity deployment efforts in the second quarter,” said O’Brien.  “Against the backdrop of our new relationship-based business development approach, we enjoyed net loan growth through our commercial platform, and the Bank’s non-interest demand deposits increased each month through the second quarter.  Continued relationship-based originations and the pending Hammonton branch sale will help us continue to further optimize our liquidity and right size our balance sheet.  While liquidity remains elevated, we have taken a cautious approach to its deployment in light of conflicting economic conditions.”

Net Interest Income and Margin

The net interest margin was 2.79% for the three months ended June 30, 2015 as compared to 2.57% for the three months ended March 31, 2015 and 3.03% for the three months ended June 30, 2014.  The increase in net interest margin for the three months ended June 30, 2015 as compared to the three months ended March 31, 2015 is primarily due to the increase in the average commercial loan balances, which increased by $43.6 million, or 4% over the prior quarter and a reduction in average cash balances.

“Our net interest margin continues to be below its optimal level as a result of our excess liquidity,” said O’Brien. “However, we are pleased with the net interest income increase from the first quarter as a result of the growth in our loan portfolio,” said O’Brien.  “Once we fully deploy our excess liquidity, we anticipate seeing our margin stabilize in the range of 3.10% to 3.20%.  We also continued to manage our deposit interest expense to more accurately reflect the market and the costs of providing our banking services, which led to a further decrease in deposit interest expense in the second quarter.  We believe our relationship approach to originating loans and gathering deposits is expected to gradually bring our net interest margin to forecasted levels.”

Non-Interest Income

Non-interest income was $4.9 million for the quarter ended June 30, 2015, as compared to $13.1 million and $4.0 million for the quarters ended March 31, 2015 and June 30, 2014, respectively. The decrease from the linked quarter was primarily attributable to a $9.2 million gain on the sale of seven Cape May area bank locations that was completed in the first quarter of 2015. Offsetting this decrease was a gain of $1.2 million on the sale of loans in the three months ended June 30, 2015. There were modest declines in deposit service charges and fees of $155 thousand and $614 thousand from the quarters ended March 31, 2015 and June 30, 2014, respectively, due to the overall reduction in accounts as a result of the branch reductions that have occurred over the past year. The three months ended June 30, 2014 included swap termination costs of $1.4 million associated with commercial loan sales recorded as a reduction of other income.  The quarter ended June 30, 2014 also included net mortgage banking revenue of $529 thousand, compared to $0 in the current quarter due to the prior year closure of the Company’s mortgage banking operations.

Non-Interest Expense

Non-interest expense for the second quarter of 2015 was $18.4 million, a decrease of $6.9 million from the first quarter of 2015 and a decrease of $15.3 million from the second quarter of 2014. During the first quarter of 2015, the Company recorded several restructuring charges related to the finalization of the Bank’s branch rationalization efforts, including $3.3 million of expenses associated with the pending branch consolidations and the sale of the Hammonton branch location. In the first quarter of 2015, problem loan expense of $988 thousand included $667 thousand of one-time costs associated with loan sales. In the second quarter of 2015, the balance in this category was $38 thousand due to significantly reduced volume.

“While we are still carrying lingering occupancy costs from our previously-announced branch consolidations, our quarterly expenses fell to $18.4 million, representing an annualized run rate of $73 million, well below our previous annualized level of $130 million in 2013,” said O’Brien.  “We are pleased with this substantial decline in operating expenses in the one year since our restructuring announcement, and it has effectively liberated the Bank from the substantial legacy expense burdens that were a consistent impediment to our operating profitability.  As a result, we are now actively investing our resources into relationship revenue generation and business development activities and the fruits of that labor are beginning to pay off.  With the remainder of our branch consolidations and pending Cape Bank sale taking place throughout the third quarter, we anticipate approaching a normalized operating expense run rate in the fourth quarter.  We will however, experience the final $500 thousand residual accelerated depreciation expense on these locations in the upcoming third quarter.”

Asset Quality

Non-performing assets continued to decline in the second quarter as the balance declined from $10.7 million at March 31, 2015 to $6.2 million at June 30, 2015 due to the sale of non-performing loans held-for-sale during the second quarter. Non-performing loans held-for-investment to total gross loans held-for-investment remained relatively flat at 0.37% at June 30, 2015 as compared to 0.36% at March 31, 2015 and declined from 0.73% at December 31, 2014.

There was negative provision for loan losses of $1.2 million recorded during the second quarter of 2015 compared to no provision for loan losses in the first quarter of 2015 and $14.8 million of provision for loan losses in the second quarter of 2014. In the second quarter of 2015, the Bank recorded gross recoveries of $2.1 million and recorded gross charge-offs of $1.1 million related to the transfer of problem loans to held-for-sale. The Bank recorded net recoveries of $615 thousand in the second quarter of 2015 as compared to net charge-offs of $2.3 million in the first quarter of 2015 and net charge-offs of $20.2 million in the second quarter of 2014. The allowance for loan losses was $20.3 million, or 1.29% of gross loans held-for-investment, at June 30, 2015, as compared to $20.9 million, or 1.41% of gross loans held-for-investment, at March 31, 2015 and $23.2 million, or 1.54% of gross loans held-for-investment, at December 31, 2014. The allowance for loan losses was 347% of non-performing loans held-for-investment at June 30, 2015 as compared to 383% at March 31, 2015 and 210% at December 31, 2014.

“Our asset quality metrics continue to be strong,” said O’Brien.  “Now that we have reduced our classified loans to very low levels, we are focused on proactively managing the risk in the existing portfolio and underwriting new deals conservatively to ensure that our risk profile remains safe and sound.  We are extremely pleased with the progress we have made in improving the quality of our portfolio.”

Capital

At June 30, 2015, the capital ratios of the Company and the Bank increased due to planned balance sheet runoff and net income of $2.8 million in the second quarter of 2015. At June 30, 2015, the Bank’s Tier 1 common equity risk-based capital ratio, total risk-based capital ratio, Tier 1 risk-based capital ratio and leverage capital ratio were approximately 17.5%, 18.8%, 17.5% and 11.5%, respectively. At June 30, 2015, the Company’s Tier 1 common equity risk-based capital ratio, total risk-based capital ratio, Tier 1 risk-based capital ratio and leverage capital ratio were approximately 13.8%, 20.8%, 17.2%, and 11.3%, respectively. The Company’s tangible equity to tangible assets ratio was 9.2% at June 30, 2015, as compared to 8.8% at March 31, 2015 and 7.7% at December 31, 2014.

“With two consecutive profitable quarters, we have been able to internally generate $5.6 million in capital through the first six months of 2015,” said O’Brien. “That, along with declining total assets and a further reduction in risk-weighted assets improved our solid regulatory capital ratios.  Our asset quality and capital metrics are near the top of our peer group.  This solid foundation gives us the capacity to now prudently grow our loan portfolio and revenues.  This quarter, we began to make progress in reducing our stubbornly-elevated efficiency ratio.  While we continue to have work ahead of us in growing revenue, managing expenses, controlling risk and building a brand, our goal remains to consistently create shareholder value and obtain the removal of our regulatory order.  This quarter is another significant step forward and it demonstrated our ability to generate earnings and operate with safe and sound practices.”

Conference Call

The Company will hold a conference call on Monday, July 27, 2015 at 11:00 AM (EST) to discuss results and answer questions from analysts and investors.  Participants may listen to or participate in the Company’s earnings conference call via the following:
·  
Participants Toll-Free Number: 888-765-5574
·  
Conference ID: 5330628

About Sun Bancorp, Inc.

Sun Bancorp, Inc. (NASDAQ: SNBC) is a $2.38 billion asset bank holding company headquartered in Mount Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a community bank serving customers throughout New Jersey. Sun National 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.sunnationalbank.com.
  
Cautionary Note Regarding Forward-Looking Statements

The foregoing material contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, which may be identified by the use of such words as “allow,” “anticipate,” “believe,” “continues,” “could,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “potential,” “predict,” “project,” “reflects,” “should,” “typically,” “usually,” “view,” “will,” “would,” and similar terms and phrases, including references to assumptions.  Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Sun Bancorp, Inc. (the “Company”) and its wholly-owned subsidiary Sun National Bank (the “Bank”), the banking industry, the economy in general, expectations of the business environment in which the Company operates, projections of future performance and other statements contained herein that are not historical facts.  These remarks are based upon current management expectations, and may, therefore, involve risks and uncertainties that cannot be predicted or quantified and are beyond the Company’s control and are subject to a variety of uncertainties that could cause future results to vary materially from the Company’s historical performance, or from current expectations.  Factors that could cause actual results to differ from those expressed or implied by such forward-looking statements include, but are not limited to: (i)  the ability of the Bank to comply with its written agreement with the Office of the Comptroller of the Currency (the “OCC”) or the individual minimum capital ratio for the Bank established by the OCC; (ii) the Company’s ability to attract and retain key management and staff; (iii) changes in business strategy or an inability to execute strategy due to the occurrence of unanticipated events; (iv) the ability to complete any or all of the transactions contemplated in the Company’s comprehensive strategic restructuring plan on the terms currently contemplated; (v) the ability to attract deposits and other sources of liquidity; (vi) changes in the financial performance and/or condition of the Bank’s borrowers; (vii) changes in consumer spending, borrowing and saving habits; (viii) the ability to increase market share and control expenses; (ix) changes in estimates of future loan loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (x) local, regional and national economic conditions and events and the impact they may have on the Company and its customers; (xi) volatility in the credit and equity markets and its effect on the general economy; (xii) the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs; (xii) the overall quality of the composition of the Company’s loan and securities portfolios; (xiv) inflation, interest rate, securities market and monetary fluctuations;(xv) legislative and regulatory changes, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and impending regulations, changes in banking, securities and tax laws and regulations and their application by regulators and changes in the scope and cost of the Federal Deposit Insurance Corporation insurance and other coverages; (xvi) the effects of, and changes in, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (xvii) competition among providers of financial services; (xviii) other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services and the other risks detailed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-K for the fiscal year ended December 31, 2014, the Company’s Form 10-Q for the quarter ended March 31, 2015 and in other filings made pursuant to the Securities Exchange Act of 1934, as amended.  No undue reliance should be placed 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 such forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Non-GAAP Financial Measures (Unaudited)
 This news release references tangible book value per common share and return on average tangible equity, which are non-GAAP financial measures. Management believes that tangible book value per common share and return on average tangible equity are meaningful financial measures because they are two of the measures we use to assess capital adequacy.

 
 
 

 
 
Tangible book value per common share (dollars in thousands)

The following reconciles shareholders’ equity to tangible equity by reducing shareholders’ equity by the intangible asset balance at June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, and June 30, 2014.

 
June
30, 2015
 
March
31, 2015
 
December
31, 2014
 
September
30, 2014
 
June
30, 2014
                   
Tangible book value per common share:
                 
   Shareholders’ equity
$
252,926
 
$
249, 235
 
$
245,323
 
$
247,047
 
$
227,656
  Less: Intangible assets
 
38,188
   
38,188
   
38,188
   
38,188
   
38,426
Tangible equity
$
214,738
 
$
211,047
 
$
207,135
 
$
208,859
 
$
189,230
                             
  Common stock
 
18,901
   
18,901
   
18,901
   
18,885
   
17,752
  Less: Treasury stock
 
237
   
282
   
285
   
300
   
319
Total outstanding shares
 
18,664
   
18,619
   
18,616
   
18,585
   
17,433
                             
Tangible book value per common share:
$
11.51
 
$
11.34
 
$
11.13
 
$
11.24
 
$
10.85

 
 
Return on Average Tangible Equity (dollars in thousands)
 
The following provides the calculation of return on tangible equity for the three months ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, and June 30, 2014.
                                                  Three Months Ended
 
 
June
30, 2015
 
March
31, 2015
 
December
 31, 2014
 
September
30, 2014
 
June
30, 2014
                   
Net income(loss)
$
2,825
 
$
2,776
 
$
(2,829
)
$
(825
)
$
(24,248)
                             
Average tangible equity:
                           
   Average shareholders’ equity
$
252,391
 
$
249,970
 
$
249,313
 
$
243,020
 
$
254,116
  Less: Average intangible assets
 
38,188
   
38,188
   
38,188
   
38,281
   
38,568
Average tangible equity
$
214,203
 
$
211,782
 
$
211,125
 
$
204,739
 
$
215,548
                             
Return on average tangible equity(1):
 
5.3
%
 
5.2
%
 
(5.4)
%
 
(1.6)
%
 
 (45.0)%
 
June
30, 2015
 
March
31, 2015
 
December
31, 2014
 
September
30, 2014
 
June
30, 2014
                   
Net income(loss)
$
2,825
 
$
2,776
 
$
(2,829
)
$
(825
)
$
(24,248)
                             
Average tangible equity:
                           
   Average shareholders’ equity
$
252,391
 
$
249,970
 
$
249,313
 
$
243,020
 
$
254,116
  Less: Average intangible assets
 
38,188
   
38,188
   
38,188
   
38,281
   
38,568
Average tangible equity
$
214,203
 
$
211,782
 
$
211,125
 
$
204,739
 
$
215,548
                             
Return on average tangible equity(1):
 
5.3
%
 
5.2
%
 
(5.4)
%
 
(1.6)
%
 
 (45.0)%
 
(1) Annualized
 
 

 

SUN BANCORP, INC. AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS (Unaudited)
     
(Dollars in thousands, except share and per share amounts)
     
 
For the Three Months Ended
 
For the Six Months Ended
 
 
June 30,
 
June 30,
 
   
2015
 
2014
 
2015
 
2014
 
Profitability for the period:
                 
    Net interest income
 
$
15,375
 
$
20,612
 
$
30,566
 
$
42,004
 
    Provision for loan losses
   
(1,218
)
 
14,803
   
(1,218
 
14,803
 
    Non-interest income
   
4,879
   
3,977
   
17,966
   
8,926
 
    Non-interest expense
   
18,363
   
33,677
   
43,581
   
61,565
 
    Income(loss) before income taxes
   
3,109
   
(23,891
)
 
6,169
   
(25,438
)
    Income tax expense
   
284
   
357
   
568
   
716
 
    Net income(loss) available to common shareholders
 
$
2,825
 
$
(24,248
)
$
5,601
 
$
(26,154
)
                           
Financial ratios:
                         
    Return on average assets(1)
   
0.5
%
 
(3.3)
%
 
0.4
%
 
(1.7)
%
    Return on average equity(1)
   
4.5
%
 
(38.2)
%
 
4.5
%
 
(20.7)
%
    Return on average tangible equity(1),(2)
   
5.3
%
 
(45.0)
%
 
5.3
%
 
(24.5)
%
    Net interest margin(1)
   
2.79
%
 
3.03
%
 
2.68
%
 
3.05
%
    Efficiency ratio
 
 
91
%
 
137
%
 
90
%
 
121
%
    Income(loss) per common share:
                         
        Basic(3)
 
$
0.15
 
$
(1.39
)
$
0.30
 
$
(1.50
)
        Diluted(3)  
 
$
0.15
 
$
(1.39
)
$
0.30
 
$
(1.50
)
                           
    Average equity to average assets
   
10.4
%
 
8.5
%
 
10.0
%
 
8.37
%
             
   
June 30,
 
December 31,
   
   
2015
2014
 
2014
       
At period-end:
               
    Total assets
 
$
2,379,023
 
$
2,894,658
   
 2,715,348
       
    Total deposits
   
1,876,721
   
2,272,765
   
 2,091,904
       
    Loans receivable, net of allowance for loan losses
   
1,558,576
   
1,827,724
   
 1,486,898
       
    Loans held-for-sale
   
2,006
   
29,171
   
4,083
       
    Investments
   
353,245
   
454,051
   
409,950
       
    Borrowings
   
92,578
   
68,734
   
  68,978
       
    Junior subordinated debentures
   
92,786
   
92,786
   
  92,786
       
    Shareholders’ equity
   
252,926
   
227,656
   
  245,323
       
                           
Credit quality and capital ratios:
                         
    Allowance for loan losses to gross loans held-for- investment
   
1.29
%
 
1.53
%
 
1.54
%
     
   Non-performing loans held-for-investment to gross loans
    held-for-investment
   
0.37
%
 
                  0.76
%
 
                  0.73
%
     
    Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned
   
0.71
%
 
1.02
%
 
1.03
%
     
    Allowance for loan losses to non-performing loans held-for-investment
   
347
%
 
202
%
 
210
%
     
                           
Tier 1 common equity risk-based capital(4)(5):
                         
        Sun Bancorp, Inc.
   
13.8
%
 
-
   
-
       
        Sun National Bank
   
17.5
%
 
-
   
-
       
  Total risk-based capital(4):
                         
        Sun Bancorp, Inc.
   
20.8
%
 
15.0
%
 
19.3
%
     
        Sun National Bank
   
18.8
%
 
14.5
%
 
17.4
%
     
Tier 1 risk-based capital(4):
                         
        Sun Bancorp, Inc.
   
17.2
%
 
12.4
%
 
16.7
%
     
        Sun National Bank
   
17.5
%
 
13.2
%
 
16.1
%
     
Leverage capital(4):
                         
        Sun Bancorp, Inc.
   
11.3
%
 
8.6
%
 
10.1
%
     
        Sun National Bank
   
11.5
%
 
9.1
%
 
9.7
%
     
    Book value per common share (3)
 
$
13.55
 
$
13.39
 
$
13.18
       
    Tangible book value per common share (3)
 
$
11.51
 
$
11.34
 
$
11.13
       
(1) Amounts for the three months ended are annualized.
 
(2) Return on average tangible equity, a non-GAAP measure, 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) Prior periods were retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014.
(4) June 30, 2015 capital ratios are estimated, subject to regulatory filings.
(5) The Basel III guidelines and the Dodd-Frank Act established a new minimum Tier 1 common equity risk-based capital ratio, effective January 1, 2015.
 

 
 
 
 

 
 
 
SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands, except par value amounts)
 
June 30,  2015
 
December 31, 2014
 
ASSETS
       
Cash and due from banks
$
28,544
 
$
42,548
 
Interest-earning bank balances
 
250,319
   
505,885
 
Cash and cash equivalents
 
278,863
   
548,433
 
  Restricted cash
 
5,000
   
13,000
 
Investment securities available for sale (amortized cost of $336,979 and $394,733 at June 30, 2015 and December 31, 2014, respectively)
 
337,229
   
394,500
 
Investment securities held to maturity (estimated fair value of $470 and $501 at June 30, 2015 and December 31, 2014, respectively)
 
462
   
489
 
Loans receivable (net of allowance for loan losses of $20,331 and $23,246 at June 30, 2015 and December 31, 2014, respectively)
 
1,558,599
   
1,486,898
 
Loans held-for-sale, at lower of cost or market
 
2,006
   
4,083
 
Branch assets held-for-sale
 
5,604
   
69,064
 
Restricted equity investments, at cost
 
15,554
   
14,961
 
Bank properties and equipment, net
 
35,090
   
40,155
 
Real estate owned
 
-
   
522
 
Accrued interest receivable
 
5,233
   
5,397
 
Goodwill
 
38,188
   
38,188
 
Bank owned life insurance (BOLI)
 
80,147
   
79,132
 
Other assets
 
17,048
   
20,526
 
Total assets
$
2,379,023
 
$
2,715,348
 
             
LIABILITIES AND SHAREHOLDERS’ EQUITY
           
Liabilities:
           
Deposits
$
1,876,721
 
$
2,091,904
 
Branch deposits held-for-sale
 
34,689
   
183,395
 
Securities sold under agreements to repurchase – customers
 
-
   
1,156
 
Advances from the Federal Home Loan Bank of New York (FHLBNY)
 
85,698
   
60,787
 
Obligations under capital lease
 
6,880
   
7,035
 
Junior subordinated debentures
 
92,786
   
92,786
 
Deferred taxes, net
 
2,275
   
1,514
 
Other liabilities
 
27,048
   
31,448
 
Total liabilities
 
2,126,097
   
2,470,025
 
             
Shareholders’ equity:
           
Preferred stock, $1 par value, 1,000,000 shares authorized; none issued
 
-
   
-
 
Common stock, $5 par value, 40,000,000 shares authorized; 18,901,124 shares issued and 18,664,268 shares outstanding at June 30, 2015; 18,900,877 shares issued and 18,615,950 shares outstanding at December 31, 2014
 
94,506
   
94,508
 
Additional paid-in capital
 
511,975
   
514,071
 
Retained deficit
 
(342,158
)
 
(347,761
)
Accumulated other comprehensive loss
 
148
   
(138
)
Deferred compensation plan trust
 
(599
)
 
(599
)
Treasury stock at cost, 236,856 shares at June 30, 2015; and 284,927 shares at December 31, 2014
 
(10,946
)
 
(14,757
)
Total shareholders’ equity
 
252,926
   
245,324
 
Total liabilities and shareholders’ equity
$
2,379,023
 
$
2,715,348
 
 
 

 

SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)
                         
   
For the Three Months Ended June 30,
     
For the Six Months Ended June 30,
 
   
2015
   
2014
     
2015
   
2014
 
INTEREST INCOME
                         
Interest and fees on loans
$
15,451
 
$
21,067
   
$
30,549
 
$
42,916
 
Interest on taxable investment securities
 
1,831
   
2,193
     
3,877
   
4,443
 
Interest on non-taxable investment securities
 
309
   
308
     
615
   
617
 
Dividends on restricted equity investments
 
202
   
209
     
411
   
441
 
Total interest income
 
17,793
   
23,777
     
35,452
   
48,417
 
INTEREST EXPENSE
                         
Interest on deposits
 
1,337
   
2,188
     
2,843
   
4,469
 
Interest on funds borrowed
 
536
   
443
     
966
   
879
 
Interest on junior subordinated debentures
 
545
   
534
     
1,077
   
1,065
 
Total interest expense
 
2,418
   
3,165
     
4,886
   
6,413
 
Net interest income
 
15,375
   
20,612
     
30,566
   
42,004
 
PROVISION FOR LOAN LOSSES
 
(1,218
)
 
14,803
     
(1,218
 
14,803
 
Net interest income after provision for loan losses
 
16,593
   
5,809
     
31,784
   
27,201
 
NON-INTEREST INCOME
                         
Deposit service charges and fees
 
1,849
   
2,463
     
3,853
   
4,858
 
Interchange fees
 
554
   
629
     
1,098
   
1,192
 
Mortgage banking revenue, net
 
-
   
529
     
-
   
1,164
 
Gain on sale of bank branches
 
-
   
-
     
9,235
   
-
 
Gain on sale of loans
 
1,226
   
-
     
1,239
   
-
 
Investment products income
 
488
   
715
 
   
1,077
   
1,332
 
BOLI income
 
503
   
469
     
1,015
   
930
 
Other
 
259
   
(828)
     
449
   
(550
Total non-interest income
 
4,879
   
3,977
     
17,966
   
8,926
 
NON-INTEREST EXPENSE
                         
Salaries and employee benefits
 
9,120
   
16,803
     
19,710
   
30,584
 
Occupancy expense
 
3,034
   
3,552
     
8,001
   
7,818
 
Equipment expense
 
1,500
   
2,356
     
5,014
   
4,105
 
Data processing expense
 
1,304
   
1,281
     
2,612
   
2,478
 
Professional fees
 
711
   
2,353
     
1,547
   
3,839
 
Insurance expenses
 
1,094
   
1,358
     
2,341
   
2,825
 
Advertising expense
 
223
   
523
     
458
   
1,109
 
Problem loan expense
 
38
   
566
     
1,026
   
1,198
 
Other
 
1,339
   
4,885
     
2,872
   
7,609
 
Total non-interest expense
 
18,363
   
33,677
     
43,581
   
61,565
 
INCOME(LOSS) BEFORE INCOME TAXES
 
3,109
   
(23,891
)
   
6,169
   
(25,438
)
INCOME TAX EXPENSE
 
284
   
357
     
568
   
716
 
NET INCOME(LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
2,825
 
$
(24,248
)
 
$
5,601
 
$
(26,154
)
                           
Basic earnings(loss) per share(1)
$
0.15
 
$
(1.39
)
 
$
0.30
 
$
(1.50
)
Diluted earnings(loss) per share(1)
$
0.15
 
$
(1.39
)
 
$
0.30
 
$
(1.50
)
Weighted average shares – basic(1)
18,632,526
 
17,417,829
   
18,624,585
 
17,383,192
 
Weighted average shares - diluted(1)
18,684,597
 
17,417,829
   
18,663,721
 
17,383,192
 
(1) Prior periods were retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014
 
 

 

SUN BANCORP, INC. AND SUBSIDIARIES
 
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
 
(Dollars in thousands)
 
 
2015
 
2015
 
2014
 
2014
 
2014
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Balance sheet at quarter end: 
                   
Cash and cash equivalents
 $
278,863
 
$
388,021
 
 $
548,433
 
$
504,353
 
$
330,440
 
Restricted cash
 
5,000
   
13,000
   
13,000
   
13,000
   
26,000
 
Investment securities
 
353,245
   
367,178
   
409,950
   
425,079
   
454,051
 
Loans held-for-investment: 
                             
        Commercial and industrial
 
1,153,310
   
1,042,821
   
1,052,932
   
1,196,767
   
1,363,900
 
        Home equity 
 
139,789
   
145,806
   
174,165
   
173,227
   
186,953
 
        Residential real estate 
 
266,312
   
273,118
   
276,993
   
299,838
   
298,063
 
        Other 
 
19,519
   
22,427
   
6,054
   
6,577
   
7,200
 
            Total gross loans held-for-investment
 
1,578,930
   
1,484,172
   
1,510,144
   
1,676,409
   
1,856,116
 
Allowance for loan losses 
 
(20,331
)
 
(20,916
)
 
(23,246
)
 
(26,540
)
 
(28,392
)
            Net loans held-for-investment
 
1,558,599
   
1,463,256
   
1,486,898
   
1,649,869
   
1,827,724
 
   Loans held-for-sale
 
2,006
   
4,766
   
4,083
   
7,365
   
29,171
 
   Branch assets held-for-sale
 
5,604
   
5,419
   
69,064
   
31,408
   
34,058
 
    Goodwill 
 
38,188
   
38,188
   
38,188
   
38,188
   
38,188
 
    Intangible assets
 
-
   
-
   
-
   
-
   
238
 
    Total assets 
 
2,379,023
   
2,436,391
   
2,715,348
   
2,820,202
   
2,894,658
 
   Total deposits
 
1,876,721
   
1,959,556
   
2,091,904
   
2,170,627
   
2,272,765
 
   Branch deposits held-for-sale
 
34,689
   
33,381
   
183,395
   
192,068
   
160,769
 
    Securities sold under agreements to repurchase - customers
 
-
   
156
   
1,156
   
963
   
670
 
    Advances from FHLBNY
 
85,698
   
60,743
   
60,787
   
60,830
   
60,873
 
    Obligations under capital lease
 
6,880
   
6,958
   
7,035
   
7,111
   
7,191
 
    Junior subordinated debentures
 
92,786
   
92,786
   
92,786
   
   92,786
   
92,786
 
    Total shareholders' equity
 
252,926
   
249,235
   
245,323
   
247,047
   
227,656
 
Quarterly average balance sheet: 
                             
    Loans(1)
                             
        Commercial and industrial 
$
1,095,202
 
$
1,051,610
 
$
1,145,297
 
$
1,292,705
 
$
1,480,491
 
        Home equity
 
161,698
   
183,753
   
196,841
   
201,754
   
210,068
 
        Residential real estate
 
271,585
   
284,197
   
301,326
   
322,751
   
338,028
 
        Other
 
2,122
   
3,233
   
3,391
   
3,755
   
23,196
 
            Total gross loans 
 
1,530,607
   
1,522,793
   
1,646,855
   
1,820,965
   
2,051,783
 
    Securities and other interest-earning assets 
 
699,687
   
867,633
   
923,909
   
840,541
   
694,529
 
    Total interest-earning assets 
 
2,230,294
   
2,390,426
   
2,570,764
   
2,661,506
   
2,746,312
 
    Total assets 
 
2,419,520
   
2,600,231
   
2,785,525
   
2,888,920
   
2,982,427
 
    Non-interest-bearing demand deposits 
 
521,563
   
559,793
   
608,396
   
612,775
   
573,290
 
Total deposits
 
1,956,592
   
2,162,142
   
2,331,934
   
2,429,606
   
2,519,901
 
    Total interest-bearing liabilities 
 
1,617,176
   
1,763,062
   
1,885,250
   
1,978,480
   
2,108,103
 
    Total shareholders' equity 
 
252,391
   
249,970
   
249,313
   
243,020
   
254,116
 
Capital and credit quality measures:
                             
   Tier 1 common equity risk-based capital (2))(3):
                             
       Sun Bancorp, Inc.
 
13.8
%
 
13.4
%
 
-
   
-
   
-
 
       Sun National Bank
 
17.5
%
 
17.2
%
 
-
   
-
   
-
 
Total risk-based capital (2):
                             
        Sun Bancorp, Inc.
 
20.8
%
 
20.4
%
 
  19.3
%
 
17.9
%
 
15.0
%
        Sun National Bank
 
18.8
%
 
18.4
%
 
  17.4
%
 
16.2
%
 
  14.5
%
    Tier 1 risk-based capital (2):
                               
        Sun Bancorp, Inc.
 
17.2
%
 
16.8
%
 
16.7
%
 
15.6
%
 
12.4
%
        Sun National Bank
 
17.5
%
 
17.1
%
 
16.1
%
 
14.9
%
 
13.2
%
    Leverage capital (2):
                             
        Sun Bancorp, Inc.
 
11.3
%
 
10.3
%
 
10.1
%
 
9.8
%
 
8.6
%
        Sun National Bank
 
11.5
%
 
10.5
%
 
9.7
%
 
9.4
%
 
9.1
%
                               
    Average equity to average assets
 
10.4
%
 
9.6
%
 
9.0
%
 
8.4
%
 
8.5
%
    Allowance for loan losses to total gross loans held-for-investment 
 
1.29
%
 
1.41
%
 
 
1.54
%
 
1.58
%
 
 
1.50
%
   Non-performing loans held-for-investment to gross loans held-for-investment
 
0.37
%
 
0.36
%
 
0.73
%
 
0.84
%
 
0.76
 
%
    Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned
 
0.40
%
 
0.72
%
 
1.03
%
 
1.07
%
 
1.02
%
    Allowance for loan losses to non-performing loans held-for-investment
 
 
347
%
 
 
383
%
 
 
210
%
 
 
188
%
 
 
202
%
                               
Other data:
                             
Net recoveries (charge-offs)
615
 
 $
(2,312)
 
$
(3,294)
 
$
(1,852)
 
(20,179)
 
Classified loans
 
7,940
   
8,461
   
24,261
   
21,022
   
33,077
 
Classified assets
 
11,147
   
11,998
   
27,986
   
25,338
   
38,226
 
Non-performing assets:
                             
           Non-accrual loans
 
5,156
   
4,611
   
10,729
   
13,561
   
13,470
 
       Non-accrual loans held-for-sale
 
389
   
4,766
   
4,083
   
2,770
   
4,086
 
           Troubled debt restructurings, non-accrual
 
702
   
854
   
318
   
528
   
583
 
           Real estate owned, net 
 
-
   
468
   
522
   
1,084
   
1,327
 
                Total non-performing assets
6,247
 
10,699
 
15,652
 
$
   17,943
 
 $
19,466
 
(1) Average balances include non-accrual loans and loans held-for-sale.
(2) June 30, 2015 capital ratios are estimated, subject to regulatory filings.
(3) The Basel III guidelines and the Dodd-Frank Act established a new minimum Tier 1 common equity risk-based capital ratio, effective January 1, 2015.
 
 
 

 
SUN BANCORP, INC. AND SUBSIDIARIES
 
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
 
(Dollars in thousands, except share and per share amounts)
 
 
2015
 
2015
 
2014
 
2014
 
2014
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Profitability for the quarter:
                   
Net interest income
$
15,375
 
$
15,191
 
$
17,026
 
$
18,921
 
$
20,612
 
Provision for loan losses
 
(1,218
)
 
-
   
-
   
-
   
14,803
 
Non-interest income
 
4,879
   
13,087
   
4,142
   
4,695
   
3,977
 
Non-interest expense excluding amortization of intangible assets
 
18,363
   
25,218
   
23,705
   
23,894
   
33,394
 
Amortization of intangible assets
 
-
   
-
   
-
   
238
   
283
 
Income(loss) before income taxes
 
3,109
   
3,060
   
(2,537
)
 
(516
)
 
(23,891
)
Income tax expense
 
284
   
284
   
292
   
309
   
357
 
Net income(loss) available to common shareholders
$
 
 
2,825
 
$
 
 
2,776
 
$
 
 
(2,829)
 
$
 
 
(825)
 
$
 
 
(24,248)
 
Financial ratios:
                             
Return on average assets (1)
 
0.5
%
 
0.4
%
 
(0.4)
%
 
(0.1)
%
 
(3.3)
%
Return on average equity (1)
 
5.0
%
 
4.4
%
 
(4.5)
%
 
(1.4)
%
 
(38.2)
%
Return on average tangible equity (1),(2)
 
5.3
%
 
5.2
%
 
(5.4)
%
 
(1.6)
%
 
(45.0)
%
Net interest margin (1)
 
2.79
%
 
2.57
%
 
2.67
%
 
2.87
%
 
3.03
%
Efficiency ratio
 
91
%
 
89
%
 
112
%
 
      95
%
 
      137
%
Per share data:
                             
Income(loss) per common share:
                             
Basic(3)
$
0.15
 
$
0.15
 
$
(0.15
)
$
(0.05
)
$
(1.39
)
Diluted(3)
$
0.15
 
$
0.15
 
$
(0.15
)
$
(0.05
)
$
(1.39
)
Book value(3)
$
13.55
 
$
13.39
 
$
13.18
 
$
13.29
 
$
13.06
 
Tangible book value(3)
$
11.51
 
$
11.34
 
$
11.13
 
$
11.24
 
$
10.85
 
Average basic shares(3)
18,632,526
 
18,616,537
 
18,589,717
 
17,417,829
 
17,348,169
 
Average diluted shares(3)
18,684,597
 
18,639,501
 
18,589,717
 
17,417,829
 
17,348,169
 
Non-interest income:
                             
Deposit service charges and fees
$
1,849
 
$
2,004
 
$
2,383
 
$
2,541
 
$
2,463
 
Interchange fees
 
554
   
544
   
540
   
624
   
629
 
Mortgage banking revenue, net
 
-
   
-
   
29
   
423
   
529
 
Gain on sale of loans
 
1,226
   
-
   
-
   
-
   
-
 
Net gain on sale of bank branches
 
-
   
9,235
   
-
   
-
   
-
 
Investment products income
 
488
   
589
   
480
   
635
   
715
 
BOLI income
 
503
   
512
   
482
   
484
   
469
 
Other income
 
259
   
203
   
228
   
(42
)
 
(828
)
        Total non-interest income
$
4,879
 
$
13,087
 
$
4,142
 
$
4,695
 
$
3,977
 
Non-interest expense:
                             
 Salaries and employee benefits
$
9,120
 
$
10,590
 
$
9,412
 
$
11,818
 
$
16,803
 
    Occupancy expense
 
3,034
   
4,967
   
5,432
   
2,980
   
3,552
 
    Equipment expense
 
1,500
   
3,514
   
1,487
   
1,695
   
2,356
 
    Data processing expense
 
1,304
   
1,308
   
1,202
   
1,299
   
1,281
 
    Professional fees
 
711
   
836
   
1,225
   
1,423
   
2,353
 
    Insurance expense
 
1,094
   
1,247
   
1,299
   
1,443
   
1,358
 
    Advertising expense
 
223
   
235
   
386
   
567
   
523
 
    Problem loan expense
 
38
   
988
   
547
   
294
   
566
 
    Other expense
 
1,339
   
1,533
   
2,715
   
2,613
   
4,885
 
       Total non-interest expense
 $
18,363
 
 $
25,218
 
 $
23,705
 
24,132
 
 $
33,677
 
(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) Prior periods were retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014.

 
 
 

 
 
 
SUN BANCORP, INC. AND SUBSIDIARIES
   
AVERAGE BALANCE SHEETS (Unaudited)
 
(Dollars in thousands)
           
 
 For the Three Months Ended June 30,
   
 
2015
   
2014
   
 
Average
 
Income/
 
Yield/
   
Average
 
Income/
 
Yield/
   
 
Balance
 
Expense
 
Cost
   
Balance
 
Expense
 
Cost
   
Interest-earning assets:
                           
Loans receivable (1),(2):
                           
Commercial and industrial
$
1,095,202
 
$
11,285
   
4.12
%
 
$
1,480,491
 
$
15,385
   
4.16
%
 
Home equity
 
161,698
   
1,685
   
4.17
     
185,710
   
1,777
   
3.83
   
Residential real estate
 
271,585
   
2,443
   
3.60
     
338,028
   
3,187
   
3.77
   
Other
 
2,122
   
39
 
 
7.35
     
47,554
   
717
   
6.03
   
Total loans receivable
 
1,530,607
   
15,452
   
4.04
     
2,051,783
   
21,066
   
4.11
   
Investment securities(3)
 
370,469
   
2,300
   
2.48
     
451,477
   
2,723
   
2.41
   
Interest-earning bank balances
 
329,218
   
208
   
0.25
     
243,052
   
154
   
0.25
   
Total interest-earning assets
 
2,230,294
   
17,960
   
3.22
     
2,746,312
   
23,943
   
3.49
   
Non-interest earning assets:
                                       
  Cash and due from banks
 
34,014
                 
67,196
               
  Bank properties and equipment, net
 
36,328
                 
47,586
               
  Goodwill and intangible assets, net
 
38,188
                 
38,568
               
  Other assets
 
80,696
                 
82,765
               
Total non-interest-earning assets
 
189,226
                 
236,115
               
Total assets
$
2,419,520
               
$
2,982,427
               
                                         
Interest-bearing liabilities:
                                       
Interest-bearing deposit accounts:
                                       
Interest-bearing demand deposits
$
793,954
 
 $
345
   
0.17
%
 
$
1,099,385
 
 $
790
   
0.29
%
 
Savings deposits
 
222,372
   
108
   
0.19
     
264,386
   
177
   
0.27
   
Time deposits
 
418,703
   
884
   
0.84
     
582,840
   
1,223
   
0.84
   
Total interest-bearing deposit accounts
 
1,435,029
   
1,337
   
0.37
     
1,946,611
   
2,190
   
0.45
   
Short-term borrowings:
                                       
Fed Funds Purchased
 
-
   
-
   
-
     
-
   
-
   
-
   
Securities sold under agreements to repurchase - customers
 
29
   
-
   
-
     
598
   
-
   
0.09
   
Long-term borrowings:
                                       
FHLBNY advances (4)
 
82,416
   
418
   
2.03
     
60,887
   
315
   
2.07
   
Obligations under capital lease
 
6,916
   
118
   
6.82
     
7,221
   
127
   
7.04
   
Junior subordinated debentures
 
92,786
   
545
   
2.35
     
92,786
   
533
   
2.30
   
Total borrowings
 
182,147
   
1,081
   
2.37
     
161,492
   
975
   
2.41
   
Total interest-bearing liabilities
 
1,617,176
   
2,418
   
0.60
     
2,108,103
   
3,165
   
0.60
   
Non-interest bearing liabilities:
                                       
  Non-interest-bearing demand deposits
 
521,563
                 
573,290
             
  Other liabilities
 
28,392
                 
46,918
               
Total non-interest bearing liabilities
 
549,955
                 
620,208
               
Total liabilities
 
2,167,131
                 
2,728,311
               
Shareholders' equity 
 
252,391
                 
254,116
               
Total liabilities and shareholders' equity
$
2,419,522
               
$
2,982,427
               
                                         
Net interest income
     
$
15,543
               
$
20,778
         
Interest rate spread (5)
             
2.62
%
               
2.89
%
 
Net interest margin (6)
             
2.79
%
               
3.03
%
 
Ratio of average interest-earning assets to average interest-bearing liabilities
             
138
%
               
130
%
 
     
(1)  Average balances include non-accrual loans and loans held-for-sale.
   
(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. The fully taxable equivalent adjustments for the three months ended June 30, 2015 and 2014 were $167 thousand and $166 thousand, respectively.
   
(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 June 30,
   
 
2015
   
2014
   
 
Average
 
Income/
 
Yield/
   
Average
 
Income/
 
Yield/
   
 
Balance
 
Expense
 
Cost
   
Balance
 
Expense
 
Cost
   
Interest-earning assets:
                           
Loans receivable (1),(2):
                           
Commercial
$
1,073,526
 
$
22,089
   
4.12
%
 
$
1,520,246
   
31,735
   
4.17
%
 
Home equity
 
172,664
   
3,533
   
4.09
     
210,986
   
4,222
   
4.00
   
Residential real estate
 
277,856
   
4,842
   
3.49
     
334,749
   
6,145
   
3.67
   
Other
 
2,675
   
84
   
6.28
     
24,100
   
814
   
6.76
   
Total loans receivable
 
1,526,721
   
30,548
   
4.00
     
2,090,081
   
42,916
   
4.11
   
Investment securities(3)
 
   381,494
   
4,729
   
2.48
     
   454,590
   
5,541
   
2.44
   
Interest-earning bank balances
 
401,702
   
505
   
0.25
     
231,645
   
292
   
0.25
   
Total interest-earning assets
 
2,309,917
   
35,782
   
3.10
     
2,776,316
   
48,749
   
3.51
   
Non-interest earning assets:
                                       
  Cash and due from banks
 
33,867
                 
41,269
               
  Restricted cash
 
6,464
                 
26,000
               
  Bank properties and equipment, net
 
39,465
                 
48,093
               
  Goodwill and intangible assets, net
 
38,188
                 
38,709
               
  Other assets
 
81,476
                 
85,303
               
Total non-interest-earning assets
 
199,460
                 
239,374
               
Total assets
$
2,509,377
               
$
3,015,690
               
                                         
Interest-bearing liabilities:
                                       
Interest-bearing deposit accounts:
                                       
Interest-bearing demand deposits
$
844,124
 
 $
751
   
0.18
%
 
$
1,124,284
   
1,597
   
0.28
%
 
Savings deposits
 
230,865
   
235
   
0.20
     
265,837
   
357
   
0.27
   
Time deposits
 
443,238
   
1,857
   
0.84
     
595,459
   
2,515
   
0.84
   
Total interest-bearing deposit accounts
 
1,518,227
   
2,843
   
0.37
     
1,985,580
   
4,469
   
0.45
   
Short-term borrowings:
                                       
Securities sold under agreements to repurchase - customers
 
101
   
-
   
-
     
502
   
-
   
-
 
 
Long-term borrowings:
                                       
FHLBNY advances (4)
 
71,647
   
728
   
2.03
     
60,908
   
628
   
2.06
   
Obligations under capital lease
 
6,955
   
238
 
 
6.84
     
7,257
   
250
   
6.89
   
Junior subordinated debentures
 
92,786
   
1,077
   
2.32
     
92,786
   
1,065
   
2.30
   
Total borrowings
 
171,489
   
2,043
   
2.38
     
161,453
   
1,943
   
2.41
   
Total interest-bearing liabilities
 
1,689,716
   
4,886
   
0.58
     
2,147,033
   
6,412
   
0.60
   
Non-interest bearing liabilities:
                                       
  Non-interest-bearing demand deposits
 
540,572
                 
566,486
             
  Other liabilities
 
27,902
                 
49,631
               
Total non-interest bearing liabilities
 
568,474
                 
616,117
               
Total liabilities
 
2,258,190
                 
2,763,150
               
Shareholders' equity 
 
251,187
                 
252,540
               
Total liabilities and shareholders' equity
$
2,509,377
               
$
3,015,690
               
                                         
Net interest income
     
$
30,896
               
$
42,337
         
Interest rate spread (5)
             
2.52
%
               
2.91
%
 
Net interest margin (6)
             
2.68
%
               
3.05
%
 
Ratio of average interest-earning assets to average interest-bearing liabilities
             
137
%
               
129
%
 
     
(1)  Average balances include non-accrual loans and loans held-for-sale.
   
(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. The fully taxable equivalent adjustments for the six months ended June 30, 2015 and 2014 were $330 thousand and $333 thousand, respectively.
   
(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 Three Months Ended
 
 
June 30, 2015
   
March 31, 2015
 
 
Average
 
Income/
 
Yield/
   
Average
 
Income/
 
Yield/
 
 
Balance
 
Expense
 
Cost
   
Balance
 
Expense
 
Cost
 
Interest-earning assets:
                         
Loans receivable (1),(2):
                         
Commercial and industrial
$
1,095,202
 
$
11,285
   
4.12
%
 
$
1,051,610
 
$
10,803
   
4.11
%
Home equity
 
161,698
   
1,685
   
4.17
     
183,753
   
1,848
   
4.02
 
Residential real estate
 
271,585
   
2,443
   
3.60
     
284,197
   
2,399
   
3.38
 
Other
 
2,122
   
39
 
 
7.35
     
3,233
   
47
   
5.82
 
Total loans receivable
 
1,530,607
   
15,452
   
4.04
     
1,522,793
   
15,097
   
3.97
 
Investment securities(3)
 
370,469
   
2,300
   
2.48
     
392,642
   
2,430
   
2.48
 
Interest-earning bank balances
 
329,218
   
208
   
0.25
     
474,991
   
297
   
0.25
 
Total interest-earning assets
 
2,230,294
   
17,960
   
3.22
     
2,390,426
   
17,824
   
2.98
 
Non-interest earning assets:
                                     
  Cash and due from banks
 
34,014
                 
46,718
             
  Bank properties and equipment, net
 
36,328
                 
42,638
             
  Goodwill and intangible assets, net
 
38,188
                 
38,188
             
  Other assets
 
80,696
                 
82,261
             
Total non-interest-earning assets
 
189,226
                 
209,805
             
Total assets
$
2,419,520
               
$
2,600,231
             
                                       
Interest-bearing liabilities:
                                     
Interest-bearing deposit accounts:
                                     
Interest-bearing demand deposits
$
793,954
 
 $
345
   
0.17
%
 
$
894,851
 
 $
406
   
0.18
%
Savings deposits
 
222,372
   
108
   
0.19
     
239,452
   
127
   
0.21
 
Time deposits
 
418,703
   
884
   
0.84
     
468,046
   
973
   
0.83
 
Total interest-bearing deposit accounts
 
1,435,029
   
1,337
   
0.37
     
1,602,349
   
1,506
   
0.38
 
Short-term borrowings:
                                     
Federal funds purchased
 
-
   
-
   
-
     
-
   
-
   
-
 
Securities sold under agreements to repurchase - customers
 
29
   
-
   
-
     
175
   
-
   
0.00
 
Long-term borrowings:
                                     
FHLBNY advances (4)
 
82,416
   
418
   
2.03
     
60,758
   
310
   
2.04
 
Obligations under capital lease
 
6,916
   
118
   
6.82
     
6,994
   
120
   
6.86
 
Junior subordinated debentures
 
92,786
   
545
   
2.35
     
92,786
   
533
   
2.30
 
Total borrowings
 
182,147
   
1,081
   
2.37
     
160,713
   
963
   
2.40
 
Total interest-bearing liabilities
 
1,617,176
   
2,418
   
0.60
     
1,763,062
   
2,469
   
0.56
 
Non-interest bearing liabilities:
                                     
  Non-interest-bearing demand deposits
 
521,563
                 
559,793
             
  Other liabilities
 
28,392
                 
27,406
             
Total non-interest bearing liabilities
 
549,955
                 
587,199
             
Total liabilities
 
2,167,131
                 
2,350,261
             
Shareholders' equity 
 
252,391
                 
249,970
             
Total liabilities and shareholders' equity
$
2,419,522
               
$
2,600,231
             
                                       
Net interest income
     
$
15,543
               
$
15,355
       
Interest rate spread (5)
             
2.62
%
               
2.42
%
Net interest margin (6)
             
2.79
%
               
2.57
%
Ratio of average interest-earning assets to average interest-bearing liabilities
             
138
%
               
136
%
   
(1)  Average balances include non-accrual loans and loans held-for-sale.
 
(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. The fully taxable equivalent adjustments for the three months ended June 30, 2015 and March 31, 2015 were $167 thousand and $164 thousand, respectively.
 
(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.
 

###