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

Sun Bancorp Inc Logo
 


For Immediate Release

Sun Bancorp, Inc. Announces 3Q 2014 Earnings; Significant Progress on Restructuring Initiative; Improved Capital Ratios and Asset Quality; Management Team Enhancements
 
Contact:                 Mike Dinneen
Senior Vice President, Director of Marketing
(856) 552-5013
mdinneen@sunnb.com
 
 

MOUNT LAUREL, N.J. – October 22, 2014 –

 
Third Quarter Highlights
·  
Significant progress in executing comprehensive strategic restructuring initiative.
·  
Successfully exited mortgage banking business, asset based lending and other high risk loan relationships.
·  
Non-interest expense fell 27% to $24.1 million versus $32.9 million in the year ago quarter.
·  
Successful completion of $20 million common equity raise: Sun Bancorp, Inc. Tier 1 Leverage Ratio increased to 9.8%
·  
Planned balance sheet reduction led to a $180 million decline in loans during the quarter.
·  
Average interest-earning cash balances grew by 67% during the quarter to $406 million.
·  
Continued improvement in asset quality as non-performing loans held-for-investment fell to $14.1 million, or 0.8% of loans, from $55.4 million, or 2.6% of loans, one year ago.

Sun Bancorp, Inc. (NASDAQ: SNBC) (the "Company"), the holding company for Sun National Bank (the “Bank”), reported today a net loss of $825 thousand, or a loss of $0.05 per diluted share, for the quarter ended September 30, 2014, compared to a net loss of $24.2 million, or a loss of $1.39 per diluted share, and a net loss of $4.9 million, or a loss of $0.28 per diluted share, for the second quarter of 2014 and the third quarter of 2013, respectively.  On a pre-tax basis, the Company had a loss of $516 thousand for the quarter ended September 30, 2014, compared to a pre-tax loss of $23.9 million and a pre-tax loss of $4.9 million for the second quarter of 2014 and the third quarter of 2013, respectively.

“During the third quarter, we successfully executed on all facets of our restructuring plans, and are now witnessing the initial impact.  While there remains much work ahead, we have made significant, transformational progress towards achieving the platform that will support our long-term success,” said President & CEO Thomas M. O’Brien.  “We have aggressively confronted both the substantial legacy barriers to performance, and at the same time have started to build a platform that can support meaningful revenue generation and growth.”

Discussion of Results:

Balance Sheet

The Company continues to execute on its previously stated objective of shrinking the balance sheet.  Overall in the third quarter, the Company reduced assets by $74.8 million.  This included reductions of $179.7 million in gross loans held-for-investment, $21.8 million in loans held-for-sale and $29.0 million in investments, partially offset by an increase of $173.9 million in cash and cash equivalents. Deposit balances declined by $102.1 million in the third quarter of 2014 to $2.17 billion due to planned deposit run-off, primarily related to public funds balances.

“Although we have experienced a year over year reduction in overall deposit balances, this was planned as certain non-strategic, higher rate deposit segments were re-priced.  We are continuing to emphasize building profitable business relationships with our commercial and consumer clients and we are pleased with the progress in this respect,” said O’Brien.

The Company had $26.3 million in loans held-for-sale and $192.1 million in deposits held-for-sale at September 30, 2014 related to the pending sale of seven branches to Sturdy Savings Bank which is scheduled to close in the first quarter of 2015.  Sturdy Savings Bank recently received all regulatory approval required for the acquisition of the branches and systems conversion planning has begun.  A first quarter 2015 transaction close remains the target.

Net Interest Income and Margin

The net interest margin declined 16 basis points to 2.87% for the three months ended September 30, 2014 from 3.03% in the linked quarter as commercial loan balances continue to decline and the Company’s cash balances remain elevated.  Average interest-earning deposits grew to $405.8 million, up $162.8 million from the linked quarter.  With the elevated level of loan payoffs, we saw an increase in prepayment penalties during the quarter which had a positive impact on net interest income.  Prepayment penalties totaled approximately $691 thousand in the quarter which boosted the net interest margin by 11 basis points.  These fees offset what would have been a larger decrease in net interest income for the quarter.  We expect to see prepayment penalty revenue decline in the coming quarters as payoffs normalize.

“The plan to significantly de-risk the loan portfolio inevitably leads to building liquidity.  It is a price that we fully anticipated and one that we believe is entirely prudent given the circumstances.  While our liquidity levels are expected to remain elevated, we have begun to build a focused commercial lending platform through which we can begin to deploy our excess cash balances into quality commercial loans,” said O’Brien.  “With new commercial banking leadership, as well as enhanced lending teams based in Edison, N.J. and Manhattan, the Bank is preparing for future loan growth.”

Non-Interest Income

Non-interest income was $4.7 million for the quarter ended September 30, 2014, as compared to $4.0 million for the quarter ended June 30, 2014 and $5.8 million for the comparable prior year quarter. The increase from the linked quarter of $718 thousand was primarily attributable to $1.2 million of negative derivative credit valuation adjustments in the prior quarter associated with commercial loan sales. Net mortgage banking income declined by $106 thousand from the second quarter of 2014 to $423 thousand for the third quarter of 2014 as the Company continues the orderly unwind of Sun Home Loans. The decrease in non-interest income from the prior year quarter is due primarily to a decline in net mortgage banking revenue.  Mortgage banking income is anticipated to fall to zero in future periods.  Going forward, a large percentage of non-interest income is expected to be derived from deposit fees and alternative investment fees which totaled $2.9 million in the third quarter of 2014.

Non-Interest Expense

Non-interest expense for the third quarter of 2014 was $24.1 million, a decrease of $9.3 million from the second quarter of 2014 and $8.8 million from the comparable prior year quarter. Salaries and benefits expense declined by $5.0 million from the second quarter due primarily to the severance charges recorded in the prior quarter as well as the overall impact of the previously announced workforce reduction.  The remaining decline in non-interest expense from the linked quarter is primarily due to prior period restructuring costs, loan sale transaction fees and the overall beneficial impact of ongoing expense reduction efforts.
“As we conclude the restructuring and corrective actions by 2015, our quarterly non-interest expense is anticipated to be approximately $20 million,” said O’Brien.  “While we’ve seen the initial results of the restructuring initiatives including bulk loan sales, capital raise, branch count reductions, and the exit of healthcare, asset-based lending, and mortgage banking businesses, our expenses still remain elevated in the short term since we are supporting activities tied to the conclusion of our restructuring efforts, including the pending sale of our Cape May locations, which is anticipated to close in the first quarter of 2015, as well as higher compliance-related costs related to our regulatory agreement.”

Asset Quality

Asset quality metrics remained strong with low levels of problem loans.  The Bank’s non-performing loans held-for-investment  were essentially flat at $14.1 million at September 30, 2014 as compared to the prior quarter and non-performing loans held-for-investment to total loans were stable at 0.8%.

 
During the third quarter, the Company completed the sale of $15.8 million of problem consumer loans that were placed into held-for-sale at June 30, 2014 as part of the balance sheet restructuring.  During the third quarter of 2014, the Company incurred an additional write down of $707 thousand for the remaining home equity loans in held-for-sale which have a balance of $2.8 million at September 30, 2014.  The Company is actively marketing this small portfolio for sale.
 

There was no provision expense recorded during the third quarter of 2014 compared to $14.8 million of provision expense in the linked quarter.  Net charge-offs were $1.9 million in the three months ended September 30, 2014 as compared to $20.2 million in the second quarter of 2014 and net recoveries of $123 thousand in the third quarter of 2013. The impact of the net charge-offs was directly offset by a decrease in required reserves as a result of the overall  reduction in loan balances noted above. The allowance for loan losses was $26.5 million, or 1.58% of gross loans held-for-investment, at September 30, 2014, as compared to $28.4 million, or 1.53% of gross loans held-for-investment, at June 30 2014 and $35.5 million, or 1.66% of gross loans held-for-investment, at December 31, 2013. 

Capital

In the third quarter, the Company announced the successful completion of a $20 million capital raise.  At September 30, 2014, the capital ratios of the Company and the Bank continued to exceed the levels mandated by the Federal Reserve and the Office of the Comptroller of the Currency, respectively.  At September 30, 2014, the Bank’s total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 16.2%, 14.9%, and 9.4%, respectively.  At September 30, 2014, the Company’s total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 17.9%, 15.5%, and 9.8%, respectively.  The Company’s tangible equity to tangible assets ratio was 7.5% at September 30, 2014, as compared to 6.6% at June 30, 2014. 

The Company will hold a conference call on Thursday, October 23, 2014 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:
 

·  
Toll-free participant dial-in: 800-210-9006
 
·  
Conference ID: 2587628
 

About Sun Bancorp

Sun Bancorp, Inc. (NASDAQ: SNBC) is a $2.82 billion asset bank holding company headquartered in Mount Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a full service commercial 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, concerning the financial condition, results of operations and business of the Company. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about events or results or otherwise are not statements of historical facts, including statements about the successful implementation of our comprehensive strategic restructuring plan to improve financial performance and capital, reduce costs, risk and operating complexity, and the timing of the completion of the transactions contemplated thereby, addressing the Company's long-standing obstacles to earnings, regulatory compliance and overall performance excellence, building a platform that can support meaningful revenue generation and growth and through which we can begin to deploy our excess cash balances into quality commercial loans, our preparations for future loan growth, our progress in building profitable deposit relationships with our commercial and consumer clients, anticipated reductions in non-interest expenses and the anticipated closing of the sale of certain branches in the first quarter of 2015. These statements may be identified by such words as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate” or similar words or variations of such terms.  Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that our strategic restructuring plan will improve our financial performance, improve our future capital levels, reduce our costs, or reduce our risks or operating complexity; that our strategic restructuring plan will be completed as and in the time frames anticipated; that we will adequately address long standing obstacles to earnings, regulatory compliance and overall performance excellence; that we will build a platform that can support meaningful revenue generation and growth and through which we can deploy our excess cash balances into quality commercial loans; that our preparations for future loan growth will be successful; that we will continue to make progress in building profitable deposit relationships with our commercial and consumer clients; that we will experience anticipated reductions in non-interest expenses; or that the closing of the sale of certain branches in the first quarter of 2015 will be completed successfully. We caution that such statements are subject to a number of uncertainties. 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) competition among providers of financial services; (ii) changes in laws and regulations, including without limitation changes in capital requirements under the federal prompt corrective action regulations; (iii) changes in business strategy or an inability to execute strategy due to the occurrence of unanticipated events; (iv) the failure to complete any or all of the transactions contemplated in the Company's comprehensive strategic restructuring plan on the terms currently contemplated; (v) failure to comply with the Bank’s agreement with the Office of the Comptroller of the Currency (the “OCC”); (vi) the cost of compliance with the agreement; (vii) local, regional and national economic conditions and events and the impact they may have on the Company, the Bank and its customers; (viii) the ability to attract deposits and other sources of liquidity; (ix) changes in the financial performance and/or condition of Bank's borrowers; (x) changes in the level of non-performing and classified assets and charge-offs; (xi) changes in estimates of future loan loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (xii) inflation, interest rate, securities market and monetary fluctuations; (xiii) changes in consumer spending, borrowing and saving habits; (xiv) the ability to increase market share and control expenses; (xv) volatility in the credit and equity markets and its effect on the general economy; (xvi) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; and (xvii) those 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, 2013, the Company's Form 10-Q for the three months ended June 30, 2014 and March 31, 2014, and in other filings made pursuant to the Securities Exchange Act of 1934, as amended. 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.

###
 

 
Non-GAAP Financial Measures (Unaudited)
 
This news release references tax-equivalent interest income. Tax-equivalent interest income is a non-GAAP financial measure. Tax-equivalent interest income assumes a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the three months ended September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013 were $166 thousand, $166 thousand, $166 thousand, $167 thousand, and $167 thousand, respectively. The fully taxable equivalent adjustments for the nine months ended September 30, 2014 and 2013 were $498 thousand, and $554 thousand, respectively. This release also references tangible book value per common share. Tangible book value per common share is a non-GAAP financial measure.  Tangible book value per common share is a ratio of tangible equity, shareholders’ equity less intangible assets, to outstanding common shares. Intangible assets at September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013 were $38.2 million, $38.4 million, $38.7 million, $39.0 million and $39.4 million, respectively.

Tax-equivalent interest income
The following reconciles net interest income to net interest income on a fully taxable equivalent basis using a 35% tax rate for the three months ended September 30, 2014,  June 30, 2014, March 31, 2014, December 31, 2013, and September 30, 2013 and nine months ended September 30, 2014 and September 30, 2013.
 
For Three Months Ended:
September 30, 2014
 
June 30, 2014
 
March 31, 2014
 
December 31, 2013
 
September 30, 2013
                   
Net interest income
$
18,921
 
$
20,612
 
$
21,392
 
$
21,935
 
$
22,980
Effect of tax exempt income 
 
166
   
166
   
166
   
167
   
167
Net interest income, tax equivalent basis
$
19,087
 
$
20,778
 
$
21,558
 
$
22,102
 
$
23,147


For Nine Months Ended:
   
September 30,
     
2014
2013
       
Net interest income
       
$
                                60,925
 
$   67,834
Effect of tax exempt income
         
498
                554
Net interest income, tax equivalent basis
       
$
61,423
 
$   68,388




Tangible book value per common share
The following reconciles shareholders’ equity to tangible equity by reducing shareholders’ equity by the intangible asset balance at September 30, 2014, June 30, 2014, March 31, 2014, December, 31, 2013, and September 30, 2013.

 
September 30, 2014
 
June 30, 2014
 
March 31, 2014
 
December 31, 2013
 
September 30, 2013
                   
Tangible book value per common share:
                 
   Shareholders’ equity
$
247,047
 
$
227,656
 
$
248,898
 
$
245,337
 
$
257,140
  Less: Intangible assets
 
38,188
   
38,426
   
38,709
   
38,993
   
39,448
Tangible equity
$
208,859
 
$
189,230
 
$
210,189
 
$
206,344
 
$
217,692
                             
  Common stock
 
18,885
   
17,752
   
17,742
   
17,742
   
17,724
  Less: Treasury stock
 
300
   
319
   
389
   
399
   
414
Total outstanding shares
 
18,585
   
17,433
   
17,353
   
17,343
   
17,310
                             
Tangible book value per common share:
$
11.24
 
$
10.85
 
$
12.11
 
$
11.90
 
$
12.58

 
 
 
 

 
 
 
SUN BANCORP, INC. AND SUBSIDIARIES
     
FINANCIAL HIGHLIGHTS (Unaudited)
     
(Dollars in thousands, except per share amounts)
     
 
For the Three Months Ended
 
For the Nine Months Ended
   
 
September 30,
 
September 30,
   
   
2014
 
2013
 
2014
 
2013
   
Profitability for the period:
                   
    Net interest income
 
$
18,921
 
$
22,980
 
$
60,925
 
$
67,834
   
    Provision for loan losses
   
-
   
724
   
14,803
   
(988
 
    Non-interest income
   
4,695
   
5,799
   
13,621
   
26,939
   
    Non-interest expense
   
24,132
   
32,917
   
85,697
   
97,492
   
    Loss before income taxes
   
(516
)
 
(4,862)
   
(25,954
)
 
(1,731)
   
    Income tax expense
    Net loss available to common shareholders
 
$
309
(825
 
)
$
-
(4,862)
 
$
1,025
(26,979
)
$
-
(1,731)
   
                             
Financial ratios:
                           
    Return on average assets(1)
   
(0.11)
%
 
(0.60)
%
 
(1.68)
%
 
(0.07)
%
 
    Return on average equity(1)
   
(1.4)
%
 
(7.5)
%
 
(19.8)
%
 
(0.9)
%
 
    Return on average tangible equity(1),(2)
   
(1.6)
%
 
(8.8)
%
 
(23.3)
%
 
(1.0)
%
 
    Net interest margin(1)
   
2.87
%
 
3.10
%
 
2.95
%
 
3.07
%
 
    Efficiency ratio
   
95
%
 
114
%
 
116
%
 
103
%
 
                             
    Loss per common share:
                           
        Basic(3)
 
$
(0.05
)
$
(0.28)
 
$
(1.54
)
$
(0.10)
   
        Diluted(3)  
 
$
(0.05
)
$
                                  (0.28)
 
$
(1.54
)
$
(0.10)
   
                             
    Average equity to average assets
   
8.41
%
 
7.99
%
 
8.47
%
 
8.12
%
 
 
 
 
September 30,
 
  December 31,
     
   
2014
2013
 
 2013
     
At period-end:
             
    Total assets
 
$
2,819,893
 
$
3,236,321
 
$
3,087,553
     
    Total deposits
   
2,170,627
   
2,752,693
   
2,621,571
     
    Loans receivable, net of allowance for loan losses
   
1,649,869
   
2,120,686
   
2,102,167
     
    Loans held-for-sale, at fair value
   
4,595
   
-
   
20,662
     
    Loans held-for-sale, at lower of cost or market
   
2,770
   
18,707
   
-
     
    Investments
   
425,079
   
425,029
   
457,797
     
    Branch deposits held-for-sale
   
192,068
   
-
   
-
     
    Borrowings
   
68,904
   
68,953
   
68,765
     
    Junior subordinated debentures
   
92,786
   
92,786
   
92,786
     
    Shareholders’ equity
   
247,047
   
257,140
   
245,337
     
                         
Credit quality and capital ratios:
                       
    Allowance for loan losses to gross loans held-for-investment
   
1.58
%
 
2.25
%
 
1.66
%
   
   Non-performing loans held-for-investment to gross loans
    held-for-investment
   
0.84
%
 
2.55
%
 
1.78
%
   
    Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned
   
1.09
%
 
2.76
%
 
1.87
%
   
    Allowance for loan losses to non-performing loans held-for-investment
   
187
%
 
88
%
 
94
%
   
                         
Total capital (to risk-weighted assets) (4):
                       
        Sun Bancorp, Inc.
   
17.9
%
 
14.7
%
 
14.4
%
   
        Sun National Bank
   
16.2
%
 
14.0
%
 
13.7
%
   
Tier 1 capital (to risk-weighted assets) (4):
                       
        Sun Bancorp, Inc.
   
15.6
%
 
12.8
%
 
12.3
   
        Sun National Bank
   
14.9
%
 
12.7
%
 
12.4
%
   
Leverage ratio:
                       
        Sun Bancorp, Inc.
   
9.8
%
 
9.1
%
 
9.0
%
   
        Sun National Bank
   
9.4
%
 
9.1
%
 
9.0
%
   
                         
    Book value per common share
 
$
13.29
 
$
14.85
 
$
14.15
     
    Tangible book value per common share
 
$
11.24
 
$
12.58
 
$
11.90
     
(1) Amounts for the three and nine months ended are annualized.
(2) Prior periods were retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014.
(3) 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.
(4) September 30, 2014 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 amounts)
 
September 30,
2014
 
December 31, 2013
 
ASSETS
       
Cash and due from banks
$
37,032
 
$
38,075
 
Interest-earning bank balances
 
467,321
   
229,687
 
Cash and cash equivalents
 
504,353
   
267,762
 
   Restricted cash
 
13,000
   
26,000
 
Investment securities available for sale (amortized cost of $410,354 and $452,023 at September 30, 2014 and December 31, 2013, respectively)
 
409,496
   
440,097
 
Investment securities held to maturity (estimated fair value of $645 and $692 at September 30, 2014 and December 31, 2013, respectively)
 
604
   
681
 
Loans receivable (net of allowance for loan losses of $26,540 and $35,537 at September 30, 2014 and December 31, 2013, respectively)
 
1,649,869
   
2,102,167
 
Loans held-for-sale, at fair value
 
4,595
   
20,662
 
Loans held-for-sale, at lower of cost or market
 
2,770
   
-
 
Branch assets held-for-sale
 
                                     31,408
   
-
 
Restricted equity investments, at cost
 
                                     14,979
   
17,019
 
Bank properties and equipment, net
 
41,610
   
49,095
 
Real estate owned
 
1,084
   
2,503
 
Accrued interest receivable
 
5,652
   
7,112
 
Goodwill
 
38,188
   
38,188
 
Intangible assets, net
 
-
   
805
 
Deferred taxes, net
 
-
   
4,575
 
Bank owned life insurance (BOLI)
 
                                     78,650
   
77,236
 
Other assets
 
23,635
   
33,651
 
Total assets
$
2,819,893
 
$
3,087,553
 
             
LIABILITIES AND SHAREHOLDERS’ EQUITY
           
Liabilities:
           
Deposits
$
2,170,627
 
$
2,621,571
 
Branch deposits held-for-sale
 
192,068
   
-
 
Securities sold under agreements to repurchase – customers
 
963
   
478
 
Advances from the Federal Home Loan Bank of New York (FHLBNY)
 
60,830
   
60,956
 
Obligations under capital lease
 
7,111
   
7,331
 
Junior subordinated debentures
 
92,786
   
92,786
 
Deferred taxes, net
 
662
   
-
 
Other liabilities
 
47,799
   
59,094
 
Total liabilities
 
2,572,846
   
2,842,216
 
             
Shareholders’ equity:
           
Preferred stock, $1 par value, 1,000,000 shares authorized; none issued
 
-
   
-
 
Common stock, $5 par value, 40,000,000 shares authorized; 18,884,782 shares issued and 18,585,036 shares outstanding at September 30, 2014; 17,742,207 shares issued and 17,342,883 shares outstanding at December 31, 2013(1)
 
94,415
   
88,711
 
Additional paid-in capital
 
515,390
   
506,719
 
Retained deficit
 
(344,933
)
 
(317,954
)
Accumulated other comprehensive loss
 
(508
)
 
(7,055
)
Deferred compensation plan trust
 
(599
)
 
(522
)
Treasury stock at cost, 299,746 shares at September 30, 2014; and 399,324 shares at December 31, 2013
 
(16,718
)
 
(24,562
)
Total shareholders’ equity
 
247,047
   
245,337
 
Total liabilities and shareholders’ equity
$
2,819,893
 
$
3,087,553
 
(1) Prior period share data was retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014




 
 

 



SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)
                         
   
For the Three Months
Ended September 30,
     
For the Nine Months Ended September 30,
 
   
2014
   
2013
     
2014
   
2013
 
INTEREST INCOME
                         
Interest and fees on loans
$
19,307
 
$
24,576
   
$
62,223
 
$
73,420
 
Interest on taxable investment securities
 
2,140
   
1,680
     
6,583
   
4,449
 
Interest on non-taxable investment securities
 
306
   
310
     
923
   
1,028
 
Dividends on restricted equity investments
 
202
   
222
     
643
   
685
 
Total interest income
 
21,955
   
26,788
     
70,372
   
79,582
 
INTEREST EXPENSE
                         
Interest on deposits
 
2,057
   
2,813
     
6,526
   
8,773
 
Interest on funds borrowed
 
435
   
                                            445
     
1,314
   
1,332
 
Interest on junior subordinated debentures
 
542
   
550
     
1,607
   
1,643
 
Total interest expense
 
3,034
   
3,808
     
9,447
   
11,748
 
Net interest income
 
18,921
   
22,980
     
60,925
   
67,834
 
PROVISION FOR LOAN LOSSES
 
-
 
 
724
 
   
14,803
   
(988)
 
Net Interest income after provision for loan losses
 
18,921
   
22,256
     
46,122
   
68,822
 
NON-INTEREST INCOME
                         
Service charges on deposit accounts
 
2,285
   
2,314
     
6,651
   
6,793
 
Mortgage banking revenue, net
 
423
   
1,593
     
1,190
   
10,598
 
Gain on sale of investment securities
 
-
   
2
     
50
   
3,489
 
  Investment products income
 
   635
   
 678
 
 
 
1,967
   
2,085
 
BOLI income
 
484
   
482
     
1,414
   
1,416
 
Derivative credit valuation adjustment
 
11
   
(380)
     
(1,189
)
 
(878
)
Other
 
857
   
1,110
     
3,538
   
3,436
 
Total non-interest income
 
4,695
   
5,799
     
13,621
   
26,939
 
NON-INTEREST EXPENSE
                         
Salaries and employee benefits
 
11,265
   
12,656
     
40,141
   
39,967
 
Commission expense
 
553
   
2,001
     
2,261
   
6,598
 
Occupancy expense
 
2,980
   
3,456
     
10,798
   
10,113
 
Equipment expense
 
1,695
   
1,796
     
5,800
   
5,485
 
Amortization of intangible assets
 
238
   
540
     
805
   
2,002
 
Data processing expense
 
1,299
   
995
     
3,777
   
3,021
 
Professional fees
 
1,423
   
5,947
     
5,262
   
13,355
 
Insurance expenses
 
1,443
   
1,496
     
4,268
   
4,468
 
Advertising expense
 
567
   
676
     
1,676
   
1,927
 
Problem loan expense
 
294
   
816
     
1,492
   
2,638
 
Real estate owned expense, net
 
71
   
252
     
917
   
1,741
 
Office supplies expense
 
217
   
192
     
753
   
612
 
Other
 
2,087
   
2,094
     
7,747
   
5,565
 
Total non-interest expense
 
24,132
   
32,917
     
85,697
   
97,492
 
LOSS BEFORE INCOME TAXES
 
(516
)
 
(4,862)
     
(25,954
)
 
(1,731)
 
INCOME TAX EXPENSE
 
309
   
-
     
1,025
   
-
 
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS
$
      (825
)
$
      (4,862)
   
$
(26,979
)
$
(1,731)
 
                           
Basic loss per share(1)
$
(0.05
)
$
(0.28)
   
$
(1.54
)
$
(0.10)
 
Diluted loss per share(1)
$
(0.05
)
$
                                        (0.28)
   
$
(1.54
)
$
(0.10)
 
Weighted average shares – basic(1)
17,949,643
 
17,299,917
   
17,574,246
 
17,271,373
 
Weighted average shares – diluted(1)
17,949,643
 
17,299,917
   
17,574,246
 
17,271,373
 
(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)
     
 
2014
 
2014
 
2014
 
2013
 
2013
   
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
   
Balance sheet at quarter end: 
                     
Cash and cash equivalents
 $
504,353
 
 $
330,440
 
$
282,095
 
 $
267,762
 
$
427,583
 
Restricted cash
 
13,000
   
26,000
   
26,000
   
26,000
   
26,000
 
Investment securities
 
425,079
   
454,051
   
456,724
   
457,797
   
425,029
 
Loans held-for-investment: 
                             
        Commercial
 
1,196,767
   
1,363,900
   
1,519,993
   
1,587,566
   
1,636,856
 
        Home equity 
 
151,369
   
165,671
   
184,936
   
188,478
   
192,135
 
        Second mortgage 
 
21,858
   
21,282
   
23,312
   
25,279
   
26,028
 
        Residential real estate 
 
299,838
   
298,063
   
326,945
   
305,552
   
281,537
 
        Other 
 
6,577
   
7,200
   
28,894
   
30,829
   
32,984
 
            Total gross loans held-for-investment
 
1,676,409
   
1,856,116
   
2,084,080
   
2,137,704
   
2,169,540
 
Allowance for loan losses 
 
(26,540
)
 
(28,392
)
 
(33,768
)
 
(35,537
)
 
(48,854
)
   Net loans held-for-investment
 
1,649,869
   
1,827,724
 
   
2,050,312
   
2,102,167
   
2,120,686
 
   Loans held-for-sale
 
7,365
   
29,171
   
16,048
   
20,662
   
18,707
 
   Branch assets held-for-sale
 
31,408
   
34,058
   
-
   
-
   
-
 
    Goodwill 
 
38,188
   
38,188
   
38,188
   
38,188
   
38,188
 
    Intangible assets, net
 
-
   
238
   
521
   
805
   
1,260
 
    Total assets 
 
2,819,893
   
2,894,658
   
3,038,467
   
3,087,553
   
3,236,321
 
    Total deposits
 
2,170,627
   
2,272,765
   
2,573,445
   
2,621,571
   
2,752,693
 
   Branch deposits held-for-sale
 
192,068
   
160,769
   
-
   
-
   
-
 
    Securities sold under agreements to repurchase - customers
 
963
   
670
   
471
   
478
   
554
 
    Advances from FHLBNY
 
60,830
   
60,873
   
60,915
   
60,956
   
60,997
 
    Obligations under capital lease
 
7,111
   
7,191
   
7,259
   
7,331
   
7,402
 
    Junior subordinated debentures
 
92,786
   
                             92,786
   
92,786
   
92,786
   
   92,786
 
    Total shareholders' equity
 
247,047
   
227,656
   
248,898
   
245,337
   
257,140
 
Quarterly average balance sheet: 
                             
    Loans(1)
                             
        Commercial
$
1,292,705
 
$
1,480,491
 
$
1,560,442
 
$
1,621,222
 
$
1,671,302
 
        Home equity
 
179,226
   
185,710
   
187,052
   
190,394
   
194,622
 
        Second mortgage 
 
22,528
   
24,358
   
24,863
   
26,142
   
27,041
 
        Residential real estate
 
322,751
   
338,028
   
331,433
   
312,977
   
299,667
 
        Other
 
3,755
   
23,196
   
25,014
   
26,134
   
27,723
 
            Total gross loans 
 
1,820,965
   
2,051,783
   
2,128,804
   
2,176,869
   
2,220,355
 
    Securities and other interest-earning assets 
 
840,541
   
694,529
   
677,850
   
782,200
   
763,575
 
    Total interest-earning assets 
 
2,661,506
   
2,746,312
   
2,806,654
   
2,959,069
   
2,983,930
 
    Total assets 
 
2,888,920
   
2,982,427
   
3,049,321
   
3,205,900
   
3,264,884
 
    Non-interest-bearing demand deposits 
 
612,775
   
573,290
   
559,606
   
585,530
   
549,684
 
    Total deposits 
 
2,429,606
   
2,519,901
   
2,584,588
   
2,718,905
   
2,746,820
 
    Total interest-bearing liabilities 
 
1,978,480
   
2,108,103
   
2,186,394
   
2,295,072
   
2,358,923
 
    Total shareholders' equity 
 
243,020
   
254,116
   
250,946
   
256,783
   
260,701
 
Capital and credit quality measures:
                             
Total capital (to risk-weighted assets)(2):
                             
        Sun Bancorp, Inc.
 
17.9
%
 
15.0
%
 
14.9
%
 
14.41
%
 
  14.72
%
        Sun National Bank
 
16.2
%
 
14.5
%
 
14.1
%
 
13.65
%
 
  13.96
%
    Tier 1 capital (to risk-weighted assets)(2):
                             
        Sun Bancorp, Inc.
 
15.6
%
 
12.4
%
 
12.8
%
 
12.34
%
 
12.76
%
        Sun National Bank
 
14.9
%
 
13.2
%
 
12.8
%
 
12.40
%
 
12.70
%
    Leverage ratio:
                             
        Sun Bancorp, Inc.
 
9.8
%
 
8.6
%
 
9.4
%
 
8.99
%
 
9.13
%
        Sun National Bank
 
9.4
%
 
9.1
%
 
9.5
%
 
9.02
%
 
9.09
%
                               
    Average equity to average assets
 
8.4
%
 
8.5
%
 
8.2
%
 
8.01
%
 
7.99
%
    Allowance for loan losses to total gross loans held-for-investment 
 
1.58
%
 
1.5
%
 
1.62
%
 
1.66
%
 
 
2.25
%
   Non-performing loans held-for-investment to gross loans held-for-investment
 
0.84
%
 
0.76
%
 
1.80
%
 
1.78
%
 
2.55
%
    Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned
 
1.07
%
 
1.02
%
 
1.91
%
 
1.87
%
 
2.76
%
    Allowance for loan losses to non-performing loans held-for-investment
 
 
188
%
 
 
202
 
%
 
 
90
 
%
 
 
94
 
%
 
 
88
 
%
                               
Other data:
                             
Net (charge-offs) recoveries
 
(1,852
)
 
(20,179
)
 
(1,768
)
 
(15,452
)
 
123
 
Non-performing assets:
                             
           Non-accrual loans
$
13,561
 
$
13,470
 
$
29,387
 
$
29,811
 
$
44,976
 
           Non-accrual loans held-for-sale
 
2,770
   
4,086
   
-
   
-
   
-
 
           Troubled debt restructurings, non-accrual
 
528
   
583
   
8,017
   
8,166
   
10,419
 
           Loans past due 90 days and accruing
 
-
   
-
   
42
   
-
   
-
 
           Real estate owned, net 
 
1,084
   
1,327
   
2,728
   
2,503
   
5,059
 
                Total non-performing assets
17,943
 
19,466
   
40,174
   
40,480
 
$
   60,454
 
(1) Average balances include non-accrual loans and loans held-for-sale.
(2) September 30, 2014 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 amounts)
                 
 
2014
 
2014
 
2014
 
2013
 
2013
                 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
                 
Profitability for the quarter:
                                   
Tax-equivalent interest income
$
22,121
 
$
23,943
 
$
24,806
 
$
25,667
 
$
26,955
                 
Interest expense
 
3,034
   
3,165
   
3,248
   
3,565
   
3,808
                 
Tax-equivalent net interest income
 
19,087
   
20,778
   
21,558
   
22,102
   
23,147
                 
Tax-equivalent adjustment
 
166
   
166
   
166
   
167
   
167
                 
Provision for loan losses
 
-
   
14,803
   
-
   
2,135
   
(724
)
               
Non-interest income
 
4,695
   
3,977
   
4,949
   
4,742
   
5,799
                 
Non-interest expense excluding amortization of intangible assets
 
23,894
   
33,394
   
27,604
   
32,002
   
32,377
                 
Amortization of intangible assets
 
238
   
283
   
284
   
455
   
540
                 
Loss before income taxes
 
(516
)
 
(23,891
)
 
(1,547
)
 
(7,915
)
 
(4,862
)
               
Income tax expense
 
309
   
357
   
359
   
297
   
-
                 
Net loss available to common shareholders
$
 
 
(825
 
 
)
$
 
 
(24,248
 
 
)
$
 
 
(1,906
 
 
)
$
 
 
(8,212
 
 
)
$
 
 
(4,862
 
 
)
               
Financial ratios:
                                             
Return on average assets(1)
 
(0.11)
%
 
(3.25)
%
 
(0.25)
%
 
(1.02)
%
 
(0.60)
%
               
Return on average equity(1)
 
(1.4)
%
 
(38.2)
%
 
(3.0)
%
 
(12.8)
%
 
(7.5)
%
               
Return on average tangible equity(1),(2)
 
(1.6)
%
 
(45.0)
%
 
(3.6)
%
 
(15.1)
%
 
(8.8)
%
               
Net interest margin(1)
 
2.87
%
 
3.03
%
 
3.07
%
 
2.99
%
 
3.10
%
               
Efficiency ratio
 
95
%
 
137
%
 
  106
%
 
122
%
 
  114
%
               
Per share data:
                                             
Loss per common share:
                                             
Basic(3)
$
(0.05
)
$
(1.39
)
$
(0.11
)
$
(0.47
)
$
(0.28)
                 
Diluted(3)
$
(0.05
)
$
(1.39
)
$
(0.11
)
$
(0.47
)
$
(0.28)
                 
Book value(3)
$
13.29
 
$
13.06
 
$
14.34
 
$
14.15
 
$
 14.86
                 
Tangible book value(3)
$
11.24
 
$
10.85
 
$
12.11
 
$
11.90
 
$
12.58
                 
Average basic shares(3)
17,949,643
 
17,417,829
 
17,348,169
 
17,316,673
 
17,299,917
                 
Average diluted shares(3)
17,949,643
 
17,417,829
 
17,348,169
 
17,316,673
 
17,299,917
                 
Non-interest income:
                                             
Service charges on deposit accounts
$
2,285
 
$
2,215
 
$
2,151
 
$
2,263
 
$
2,314
                 
Mortgage banking revenue, net
 
423
   
529
   
635
   
1,000
   
1,593
                 
Net gain on sale of investment securities
 
-
   
50
   
-
   
-
   
2
                 
Investment products income
 
635
   
715
   
617
   
599
   
678
                 
BOLI income
 
484
   
469
   
461
   
466
   
482
                 
Derivative credit valuation adjustment
 
11
   
(1,162
)
 
(38
)
 
(710
)
 
(380
)
               
Other income
 
857
   
1,161
   
1,123
   
1,124
   
1,110
                 
        Total non-interest income
$
4,695
 
$
3,977
 
$
4,949
 
$
4,742
 
$
5,799
                 
Non-interest expense:
                                             
  Salaries and employee benefits
$
11,265
 
$
15,992
 
$
12,884
 
$
13,070
 
$
12,656
                 
   Commission expense
 
553
   
811
   
897
   
    1,098
   
    2,001
                 
    Occupancy expense
 
2,980
   
3,552
   
4,266
   
3,406
   
3,456
                 
    Equipment expense
 
1,695
   
2,356
   
1,749
   
1,871
   
1,796
                 
    Amortization of intangible assets
 
238
   
283
   
                                           284
   
                    455
   
                      540
                 
    Data processing expense
 
1,299
   
1,281
   
1,197
   
1,223
   
995
                 
    Professional fees
 
1,423
   
2,353
   
1,486
   
4,891
   
5,947
                 
    Insurance expense
 
1,443
   
1,358
   
1,467
   
1,498
   
1,496
                 
    Advertising expense
 
567
   
523
   
586
   
903
   
676
                 
    Problem loan costs
 
294
   
566
   
632
   
769
   
816
                 
    Real estate owned expense, net
 
71
   
702
   
144
   
529
   
252
                 
    Office supplies expense
 
217
   
285
   
251
   
245
   
192
                 
    Other expense
 
2,087
   
3,615
   
2,045
   
2,499
   
2,094
                 
       Total non-interest expense
 $
24,132
 
33,677
 
 $
27,888
 
 $
32,457
 
32,917
                 
(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 September 30,
               
 
2014
   
2013
               
 
Average
 
Income/
 
Yield/
   
Average
 
Income/
 
Yield/
               
 
Balance
 
Expense
 
Cost
   
Balance
 
Expense
 
Cost
               
Interest-earning assets:
                                       
Loans receivable (1),(2):
                                       
Commercial
$
1,292,705
 
$
14,438
   
4,47
%
 
$
1,671,302
   
19,205
   
4.60
%
             
Home equity
 
179,226
   
1,749
   
3.90
     
194,622
   
1,892
   
3.89
               
Second mortgage
 
22,528
   
313
   
5.56
     
27,041
   
384
   
5.68
               
Residential real estate
 
322,751
   
2,737
   
3.39
     
299,667
   
2,620
   
3.50
               
Other
 
3,755
   
70
   
7.46
     
27,723
   
476
   
6.87
               
Total loans receivable
 
1,820,965
   
19,307
   
4.24
     
2,220,355
   
24,577
   
4.43
               
Investment securities(3)
 
434,721
   
2,562
   
2.36
     
414,189
   
2,203
   
2.13
               
Interest-earning bank balances
 
405,820
   
252
   
0.25
     
349,386
   
222
   
0.25
               
Total interest-earning assets
 
2,661,506
   
22,121
   
3.32
     
2,983,930
   
27,002
   
3.62
               
Non-interest earning assets:
                                                   
  Cash and due from banks
 
44,380
                 
46,336
                           
  Restricted cash
 
13,000
                 
26,000
                           
  Bank properties and equipment, net
 
46,162
                 
48,590
                           
  Goodwill and intangible assets, net
 
38,281
                 
39,717
                           
  Other assets
 
85,591
                 
120,311
                           
Total non-interest-earning assets
 
227,414
                 
280,954
                           
Total assets
$
2,888,920
               
$
3,264,884
                           
                                                     
Interest-bearing liabilities:
                                                   
Interest-bearing deposit accounts:
                                                   
Interest-bearing demand deposits
$
1,010,830
 
 $
707
   
0.28
%
 
$
1,263,160
   
1,064
   
0.34
%
             
Savings deposits
 
256,909
   
164
   
0.26
     
270,394
   
213
   
0.32
               
Time deposits
 
549,092
   
1,186
   
0.86
     
663,582
   
1,536
   
0.93
               
Total interest-bearing deposit accounts
 
1,816,831
   
2,057
   
0.45
     
2,197,136
   
2,813
   
0.51
               
Short-term borrowings:
                                                   
Securities sold under agreements to repurchase - customers
 
875
   
-
   
-
     
555
   
-
   
-
 
             
Long-term borrowings:
                                                   
FHLBNY advances (4)
 
60,845
   
318
   
2.09
     
61,011
   
321
   
2.10
               
Obligations under capital lease
 
7,143
   
117
 
 
6.55
     
7,435
   
124
   
6.67
               
Junior subordinated debentures
 
92,786
   
542
   
2.34
     
92,786
   
550
   
2.37
               
Total borrowings
 
161,649
   
977
   
2.42
     
161,787
   
995
   
2.46
               
Total interest-bearing liabilities
 
1,978,480
   
3,034
   
0.61
     
2,358,923
   
3,808
   
0.65
               
Non-interest bearing liabilities:
                                                   
  Non-interest-bearing demand deposits
 
612,775
                 
549,684
                         
  Other liabilities
 
54,645
                 
95,576
                           
Total non-interest bearing liabilities
 
667,420
                 
645,260
                           
Total liabilities
 
2,645,900
                 
3,004,183
                           
Shareholders' equity 
 
243,020
                 
260,701
                           
Total liabilities and shareholders' equity
$
2,888,920
               
$
3,264,884
                           
                                                     
Net interest income
     
$
19,087
               
$
23,194
                     
Interest rate spread (5)
             
2.71
%
               
2.97
%
             
Net interest margin (6)
             
2.87
%
               
3.11
%
             
Ratio of average interest-earning assets to average interest-bearing liabilities
             
135
%
               
127
%
             
                 
(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 September, 2014 and 2013 were $166 thousand and $167 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 Nine Months Ended September 30,
   
 
2014
   
2013
   
 
Average
 
Income/
 
Yield/
   
Average
 
Income/
 
Yield/
   
 
Balance
 
Expense
 
Cost
   
Balance
 
Expense
 
Cost
   
Interest-earning assets:
                           
Loans receivable (1),(2):
                           
Commercial
$
1,443,565
 
$
46,173
   
4.25
%
 
$
1,711,443
   
56,786
   
4.41
%
 
Home equity
 
183,967
   
5,288
   
3.82
     
198,688
   
5,709
   
3.82
   
Second mortgage
 
23,907
   
996
   
5.54
     
28,677
   
1,244
   
5.77
   
Residential real estate
 
330,706
   
8,881
   
3.57
     
312,496
   
8,176
   
3.48
   
Other
 
17,244
   
884
   
6.82
     
29,010
   
1,504
   
6.90
   
Total loans receivable
 
1,999,389
   
62,222
   
4.14
     
2,280,314
   
73,419
   
4.28
   
Investment securities(3)
 
   447,894
   
8,103
   
2.41
     
405,124
   
6,192
   
2.03
   
Interest-earning bank balances
 
290,342
   
544
   
0.25
     
279,288
   
525
   
0.25
   
Total interest-earning assets
 
2,737,625
   
70,869
   
3.44
     
2,964,726
   
80,136
   
3.59
   
Non-interest earning assets:
                                       
  Cash and due from banks
 
42,317
                 
72,025
               
  Restricted cash
 
21,619
                 
-
               
  Bank properties and equipment, net
 
47,442
                 
49,375
               
  Goodwill and intangible assets, net
 
38,565
                 
40,314
               
  Other assets
 
85,400
                 
104,933
               
Total non-interest-earning assets
 
235,343
                 
266,647
               
Total assets
$
2,972,968
               
$
3,231,373
               
                                         
Interest-bearing liabilities:
                                       
Interest-bearing deposit accounts:
                                       
Interest-bearing demand deposits
$
1,086,050
 
 $
2,304
   
0.28
%
 
$
1,249,777
   
3,269
   
0.35
%
 
Savings deposits
 
262,829
   
521
   
0.26
     
268,488
   
648
   
0.32
   
Time deposits
 
579,833
   
3,701
   
0.85
     
676,742
   
4,856
   
0.95
   
Total interest-bearing deposit accounts
 
1,928,712
   
6,526
   
0.45
     
2,195,007
   
8,773
   
0.53
   
Short-term borrowings:
                                       
Securities sold under agreements to repurchase - customers
 
627
   
-
   
-
     
1,920
   
2
   
0.14
 
 
Long-term borrowings:
                                       
FHLBNY advances (4)
 
60,887
   
946
   
2.07
     
61,073
   
955
   
2.08
   
Obligations under capital lease
 
7,219
   
367
 
 
6.76
     
7,503
   
375
   
6.65
   
Junior subordinated debentures
 
92,786
   
1,607
   
2.30
     
92,786
   
1,643
   
2.36
   
Total borrowings
 
161,519
   
2,920
   
2.40
     
163,282
   
2,975
   
2.42
   
Total interest-bearing liabilities
 
2,090,231
   
9,446
   
0.60
     
2,358,289
   
11,748
   
0.66
   
Non-interest bearing liabilities:
                                       
  Non-interest-bearing demand deposits
 
582,085
                 
529,322
             
  Other liabilities
 
51,321
                 
81,477
               
Total non-interest bearing liabilities
 
633,406
                 
610,799
               
Total liabilities
 
2,723,637
                 
2,969,088
               
Shareholders' equity 
 
249,331
                 
262,285
               
Total liabilities and shareholders' equity
$
2,972,968
               
$
3,231,372
               
                                         
Net interest income
     
$
61,423
               
$
68,388
         
Interest rate spread (5)
             
2.84
%
               
2.93
%
 
Net interest margin (6)
             
2.98
%
               
3.07
%
 
Ratio of average interest-earning assets to average interest-bearing liabilities
             
131
%
               
125
%
 
     
(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 nine months ended September 30, 2014 and 2013 were $498 thousand and $554 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
 
 
September 30, 2014
   
June 30, 2014
 
 
Average
 
Income/
 
Yield/
   
Average
 
Income/
 
Yield/
 
 
Balance
 
Expense
 
Cost
   
Balance
 
Expense
 
Cost
 
Interest-earning assets:
                         
Loans receivable (1),(2):
                         
Commercial
$
1,292,705
 
$
14,438
   
4,47
%
 
$
1,480,491
 
$
15,385
   
4.16
%
Home equity
 
179,226
   
1,749
   
3.90
     
185,710
   
1,777
   
3.83
 
Second mortgage
 
22,528
   
313
   
5.56
     
24,358
   
326
   
5.35
 
Residential real estate
 
322,751
   
2,737
   
3.39
     
338,028
   
3,187
   
3.77
 
Other
 
3,755
   
70
   
7.46
     
23,196
   
391
   
6.74
 
Total loans receivable
 
1,820,965
   
19,307
   
4.24
     
2,051,783
   
21,066
   
4.11
 
Investment securities (3)
 
434,721
   
2,562
   
2.36
     
451,477
   
2,723
   
2.41
 
Interest-earning bank balances
 
405,820
   
252
   
0.25
     
243,052
   
154
   
0.25
 
Total interest-earning assets
 
2,661,506
   
22,121
   
3.32
     
2,746,312
   
23,943
   
3.49
 
Non-interest earning assets:
                                     
  Cash and due from banks
 
44,380
                 
41,196
             
  Restricted cash
 
13,000
                 
26,000
             
  Bank properties and equipment, net
 
46,162
                 
47,586
             
  Goodwill and intangible assets, net
 
38,281
                 
38,568
             
  Other assets
 
85,591
                 
82,765
             
Total non-interest-earning assets
 
227,414
                 
236,115
             
Total assets
$
2,888,920
               
$
2,982,427
             
                                       
Interest-bearing liabilities:
                                     
Interest-bearing deposit accounts:
                                     
Interest-bearing demand deposits
$
1,010,830
 
 $
707
   
0.28
%
 
$
1,099,385
 
 $
790
   
0.29
%
Savings deposits
 
256,909
   
164
   
0.26
     
264,386
   
177
   
0.27
 
Time deposits
 
549,092
   
1,186
   
0.86
     
582,840
   
1,223
   
0.84
 
Total interest-bearing deposit accounts
 
1,816,831
   
2,057
   
0.45
     
1,946,611
   
2,190
   
0.45
 
Short-term borrowings:
                                     
Securities sold under agreements to repurchase - customers
 
875
   
-
   
-
     
598
   
-
   
-
 
Long-term borrowings:
                                     
FHLBNY advances (4)
 
60,845
   
318
   
2.09
     
60,887
   
315
   
2.07
 
Obligations under capital lease
 
7,143
   
117
 
 
6.55
     
7,221
   
127
   
7.04
 
Junior subordinated debentures
 
92,786
   
542
   
2.34
     
92,786
   
533
   
2.30
 
Total borrowings
 
161,649
   
977
   
2.42
     
161,492
   
975
   
2.41
 
Total interest-bearing liabilities
 
1,978,480
   
3,034
   
0.61
     
2,108,103
   
3,165
   
0.60
 
Non-interest bearing liabilities:
                                     
  Non-interest-bearing demand deposits
 
612,775
                 
573,290
             
  Other liabilities
 
54,645
                 
46,918
             
Total non-interest bearing liabilities
 
667,420
                 
620,208
             
Total liabilities
 
2,645,900
                 
2,728,311
             
Shareholders' equity 
 
243,020
                 
254,116
             
Total liabilities and shareholders' equity
$
2,888,920
               
$
2,982,427
             
                                       
Net interest income
     
$
19,087
               
$
20,778
       
Interest rate spread (5)
             
2.71
%
               
2. 89
%
Net interest margin (6)
             
2.87
%
               
3.03
%
Ratio of average interest-earning assets to average interest-bearing liabilities
             
135
%
               
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 adjustment for both the three months ended September 30, 2014 and June 30, 2014 was $166 thousand.
 
(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.