Sun Bancorp, Inc. Reports Third Quarter 2009 Results
- Press Release
- Source: Sun Bancorp, Inc.
- On 1:41 pm EDT, Tuesday October 27, 2009
VINELAND, N.J., Oct. 27 /PRNewswire-FirstCall/ -- Sun Bancorp, Inc. (Nasdaq: SNBC - News) reported today a net loss available to common shareholders of $6.5 million, or $0.28 net loss per diluted share, for the third quarter ended September 30, 2009, compared to net income of $4.1 million, or $0.17 per diluted share, for the third quarter of 2008.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| SNBC | 3.81 | -0.13 |
For the nine months ended September 30, 2009, the Company reported a net loss available to common shareholders of $16.1 million, or $0.70 net loss per diluted share, compared to net income of $10.6 million, or $0.44 per diluted share, in the prior year period.
"We believe we are moving proactively beyond the phase where the identification of problem assets inhibits forward momentum," said Thomas X. Geisel, president and chief executive officer. "While we have an experienced group who are focused on managing asset quality, the majority of our employees continue to seek and deliver on opportunities to grow the business in these still challenging times. Our loan loss provisions over the last several quarters and the increased level of charge-offs have obviously had a negative impact on our financial performance, but we expect these decisive actions will help to move us through this cycle as rapidly as possible and positively position us for 2010. Our goal is to focus all of the Company's resources on growing our position as the second largest banking company headquartered in New Jersey."
"In terms of our underlying operating performance, we have been doing very well," said Geisel. "Third quarter net interest income of $27.0 million (tax-equivalent basis) was up, versus $24.3 million for the linked quarter and $22.3 million for first quarter of 2009. Importantly, the net interest margin, the main driver of future profitability, increased to 3.36%, as compared to 3.01% for the linked quarter and 2.74% for first quarter 2009."
"Our cost of average interest-bearing deposits for the third quarter (1.59%) decreased 36 basis points over the linked quarter, 60 basis points over the first quarter 2009 and 106 basis points over third quarter 2008. And the return we produced (yield) on average loans for the third quarter was 4.88%, an increase of 5 basis points over the linked quarter and 16 basis points over first quarter 2009. These trends indicate we are successfully managing in the right direction the basic fundamentals of good community banking, despite a continuing tough operating environment," said Geisel.
As previously announced, results for the third quarter 2009 include the following charges:
- The Company recorded a $16.2 million provision for loan losses, or $0.41 per diluted share, increasing the allowance for loan losses to 1.70% of outstanding loans at September 30, 2009 as compared to 1.62% at June 30, 2009 and 1.36% at December 31, 2008. The provision for loan losses for the third quarter was 0.59% of average loans as compared to 0.25% of average loans for the linked second quarter 2009 and 0.14% of average loans for the comparable prior year quarter. Net charge-offs during the third quarter were $14.5 million, or 0.53% of average loans outstanding, as compared to $2.0 million, or 0.07% of average loans outstanding, for the linked quarter and $1.1 million, or 0.04% of average loans outstanding, for the comparable prior year quarter.
- The Company recognized a pre-tax impairment charge during the quarter of $1.9 million, or $0.05 per diluted share, due to further deterioration of underlying collateral on a pooled trust preferred security. This security, which had an original cost basis of $7.0 million, had been previously written down $5.1 million in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) guidance on the recognition and presentation of other-than-temporary impairments, which the Company previously adopted in the first quarter of 2009.
- The Company recognized a pre-tax write-down of $800,000, or $0.02 per diluted share, on the value of a commercial warehouse that is currently the largest property held as Real Estate Owned.
Selected core operating highlights reflecting favorable performance in the third quarter include:
- Third quarter net interest income of $27.0 million (tax-equivalent basis) compared favorably to $24.3 million for the linked quarter and $22.3 million for first quarter 2009. Net interest income was $25.4 million for third quarter 2008.
- The third quarter net interest margin increased to 3.36%, as compared to 3.01% for the linked quarter and 2.74% for first quarter 2009. The net interest margin was 3.28% for the third quarter 2008. The margin increase over the two quarters since year-end 2008 reflects the Company's focus on margin improvement initiatives on both sides of the balance sheet.
- The cost of average interest-bearing deposits for the third quarter of 1.59% decreased 36 basis points from 1.95% for the linked quarter, 60 basis points from 2.19% for first quarter 2009 and 106 basis points from 2.65% for third quarter 2008.
- The yield on average loans for the third quarter of 4.88% increased 5 basis points from 4.83% for the linked quarter and 16 basis points from 4.72% for first quarter 2009.
Other key financial highlights include:
- Total assets were $3.55 billion at September 30, 2009, as compared to $3.43 billion at September 30, 2008 and $3.56 billion at June 30, 2009.
- Total loans before allowance for loan losses were $2.71 billion at September 30, 2009, as compared to $2.67 billion at September 30, 2008 and $2.73 billion at June 30, 2009. Commercial loans, on average, were essentially level on a linked quarter basis, residential mortgages increased on average 1.1% and home equity loans decreased on average 2.3%.
- Total non-performing assets were $94.1 million at September 30, 2009, or 3.46% of total loans and real estate owned, compared to $74.1 million, or 2.70%, at June 30, 2009 and $49.9 million, or 1.87%, at September 30, 2008. The allowance for loan losses to non-performing loans was 54.58% at September 30, 2009, as compared to 69.82% at June 30, 2009 and 71.80% at September 30, 2008.
- Total deposits were $2.93 billion at September 30, 2009, an increase of $59.5 million, or 2.1%, from September 30, 2008 and $57.4 million, or 2.0%, from June 30, 2009. Average total deposits declined $29.1 million over the linked quarter as average certificates of deposit decreased $172.3 million, offset by an increase in average core deposits of $143.2 million, or 8.2%.
- The third quarter net interest margin was 3.36%, as compared to 3.01% for the linked quarter and 3.28% for third quarter 2008. The interest rate spread as compared to the linked second quarter increased 38 basis points, with a yield increase of 3 basis points on interest-earnings assets, offset by a decrease in the cost of interest-bearing liabilities of 35 basis points. Average interest-earning assets for the quarter of $3.22 billion remained relatively stable over the linked quarter.
- Total operating non-interest income for the quarter of $6.4 million, which excludes the impairment charge of $1.9 million, increased $114,000, or 1.8%, over the linked quarter, which excludes an impairment charge of $4.6 million, and decreased $642,000, or 9.1%, over the comparable prior year period. The increase over the linked quarter was primarily due to an increase in investment products income of $138,000 and an increase in service charges on deposit accounts, such as NSF and overdraft fees, of $54,000, offset by a decrease in gain on derivative instruments of $85,000 due to a planned decline in transaction volume. The decrease over the prior year period was primarily attributable to a reduction in service charges on deposit accounts of $551,000, a decrease in gain on derivative instruments of $491,000 due to a planned decline in transaction volume and a decrease in bank owned life insurance (BOLI) income of $203,000 due to lower yields earned on the separate account policy. These decreases were offset with an increase in gain on sale of loans of $425,000 and an increase in investment products income of $166,000.
- Total non-interest expense for the quarter of $26.9 million decreased $783,000, or 2.8%, over the linked quarter, and increased $3.8 million, or 16.6%, over the comparable prior year period. The decrease over the linked quarter was attributable to a reduction in insurance expense of $1.8 million as a result of the $1.6 million Federal Deposit Insurance Corporation (FDIC) special assessment recognized in the second quarter and a decrease in advertising expense of $620,000 due to the second quarter "Switch to Sun" campaign. These decreases were offset by an increase in salaries and benefits of $938,000 primarily due to severance and other related charges, and an increase in cost of real estate owned of $761,000 primarily due to an $800,000 write-down on the carrying value of one commercial property. The increase over the prior year period was attributable to an increase in salaries and benefits of $1.9 million due to the addition of several key management and business line staff, and severance and other related charges, an increase in cost of real estate owned of $841,000 primarily due to the aforementioned $800,000 write-down recognized on the carrying value of one commercial property and an increase in insurance expense of $774,000 primarily due to an increase in FDIC assessment rates, additional coverage under the Temporary Liquidity Guarantee Program (TLGP) and an overall increase in assessable deposits.
- The income tax benefit is a result of the pre-tax loss in combination with the relatively large levels of tax-free income earned on tax-exempt securities and BOLI policies.
- The Company's ratio of tangible equity to tangible assets was 6.45% at September 30, 2009, as compared to 6.33% at June 30, 2009 and 6.39% at September 30, 2008.
The Company will hold its regularly scheduled conference call on Wednesday, October 28, 2009, at 11:30 a.m. (ET). Participants may listen to the live Web cast through the Sun Bancorp Web site at www.sunnb.com. Participants are advised to log on 10 minutes ahead of the scheduled start of the call. An Internet-based replay will be available at the Web site for two weeks following the call.
Sun Bancorp, Inc. is a $3.5 billion asset bank holding company headquartered in Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving customers through 70 locations in New Jersey. The Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. For more information about Sun National Bank and Sun Bancorp, Inc., visit www.sunnb.com.
The foregoing material contains forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
SUN BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Profitability for
the period:
Net interest
income $26,466 $24,962 $ 72,089 $74,189
Provision for
loan losses 16,237 3,723 27,187 12,383
Non-interest
income 4,476 7,046 11,529 22,223
Non-interest
expense 26,867 23,050 78,334 69,928
(Loss)
income
before
income
taxes (12,162) 5,235 (21,903) 14,101
Net (loss)
income (6,542) 4,129 (10,791) 10,641
Net (loss)
income
available
to common
share-
holders $(6,542) $ 4,129 $(16,142) $10,641
======= ======= ======= ======== =======
Financial
ratios:
Return on
average
assets (1) (0.73) % 0.48 % (0.40) % 0.42 %
Return on
average
equity (1) (7.16) % 4.56 % (3.66) % 3.88 %
Return on
average
tangible
equity
(1),(2) (11.81) % 7.74 % (5.80) % 6.58 %
Net
interest
margin (1) 3.36 % 3.28 % 3.03 % 3.31 %
Efficiency
ratio 86.83 % 72.01 % 93.68 % 72.53 %
Efficiency
ratio,
excluding
non-operating
income and
non-operating
expense (3) 81.74 % 72.01 % 86.67 % 72.35 %
Earnings
per common
share (4):
Basic $ (0.28) $ 0.18 $ (0.70) $ 0.45
Diluted $ (0.28) $ 0.17 $ (0.70) $ 0.44
Average
equity to
average
assets 10.17 % 10.57 % 10.88 % 10.83 %
September 30,
------------- December 31,
2009 2008 2008
---- ---- ----
At period-end:
Total assets $3,545,639 $3,425,379 $3,622,126
Total deposits 2,932,880 2,873,378 2,896,364
Loans receivable, net of
allowance for loan
losses 2,663,697 2,632,019 2,702,516
Investments 428,696 396,117 453,584
Borrowings 65,873 78,117 154,097
Junior subordinated
debentures 92,786 92,786 92,786
Shareholders' equity 362,457 357,282 358,508
Credit quality and
capital ratios:
Allowance for loan losses
to gross loans 1.70 % 1.28 % 1.36 %
Non-performing assets to
gross loans and real
estate owned 3.46 % 1.87 % 1.78 %
Allowance for loan losses
to non-performing loans 54.58 % 71.80 % 79.69 %
Total capital (to
risk-weighted assets) (5):
Sun Bancorp, Inc. 11.60 % 11.67 % 11.37 %
Sun National Bank 11.11 % 11.02 % 10.84 %
Tier 1 capital (to
risk-weighted assets) (5):
Sun Bancorp, Inc. 10.34 % 10.51 % 10.17 %
Sun National Bank 9.85 % 9.86 % 9.64 %
Leverage ratio (5):
Sun Bancorp, Inc. 9.21 % 9.56 % 9.58 %
Sun National Bank 8.77 % 8.97 % 9.10 %
Book value (4) $ 15.63 $ 15.18 $ 15.57
Tangible book value (4) $ 9.46 $ 8.90 $ 9.20
(1) Amounts for the three and nine months ended are annualized.
(2) Return on average tangible equity is computed by dividing
annualized net income for the period by average tangible equity.
Average tangible equity equals average equity less average
identifiable intangible assets and goodwill.
(3) Efficiency ratio, excluding non-operating income and non-operating
expense, is computed by dividing non-interest expense for the period
by the summation of net interest income and non-interest income.
Non-interest income for the three and nine months ended September 30,
2009 exclude a net impairment loss on available for sale securities
of $1.9 million and $6.8 million, respectively. Non-interest income
for the nine months ended September 30, 2008 excludes a gain on the
mandatory redemption of Visa stock of $207,000. Non-interest
expense for the nine months ended September 30, 2008 excludes a
$250,000 executive sign-on incentive and $72,000 in lease buyout
charges.
(4) Data is adjusted for a 5% stock dividend issued in May 2009.
(5) September 30, 2009 capital ratios are estimated, subject to
regulatory filings.
SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION (Unaudited)
(Dollars in thousands, except par value)
September 30, December 31,
2009 2008
---- ----
ASSETS
Cash and due from banks $ 57,893 $ 31,237
Interest-earning bank balances 2,361 26,784
Federal funds sold - 412
------------------ ---------- ----------
Cash and cash equivalents 60,254 58,433
Investment securities available for
sale (amortized cost - $405,466 and
$444,628 at September 30, 2009 and
December 31, 2008, respectively) 405,141 423,513
Investment securities held to maturity
(estimated fair value - $8,221 and
$13,601 at September 30, 2009 and
December 31, 2008, respectively) 8,052 13,765
Loans receivable (net of allowance for
loan losses - $46,067 and $37,309 at
September 30, 2009 and December 31,
2008, respectively) 2,663,697 2,702,516
Restricted equity investments 15,503 16,306
Bank properties and equipment, net 52,537 48,642
Real estate owned, net 9,667 1,962
Accrued interest receivable 11,166 12,254
Goodwill 127,894 127,894
Intangible assets, net 15,237 18,769
Deferred taxes, net 13,965 16,707
Bank owned life insurance (BOLI) 77,153 75,504
Other assets 85,373 105,861
------------ ------ -------
Total assets $3,545,639 $3,622,126
============ ========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $2,932,880 $2,896,364
Federal funds purchased 6,000 71,500
Securities sold under agreements to
repurchase - customers 21,018 20,327
Advances from the Federal Home Loan
Bank of New York (FHLBNY) 15,512 42,081
Securities sold under agreements to
repurchase - FHLBNY 15,000 15,000
Obligations under capital lease 8,343 5,189
Junior subordinated debentures 92,786 92,786
Other liabilities 91,643 120,371
----------------- ------ -------
Total liabilities 3,183,182 3,263,618
----------------- --------- ---------
SHAREHOLDERS' EQUITY
Preferred stock, $1 par value,
1,000,000 shares authorized; none
issued - -
Common stock, $1 par value, 50,000,000
shares authorized; 25,295,153 shares
issued and 23,188,430 shares
outstanding at September 30, 2009;
24,037,431 shares issued and
21,930,708 shares outstanding at
December 31, 2008 25,295 24,037
Additional paid-in capital 361,571 351,430
Retained earnings 1,743 22,580
Accumulated other comprehensive gain (loss) 31 (13,377)
Deferred compensation plan trust (21) -
Treasury stock at cost, 2,106,723
shares at September 30, 2009 and
December 31, 2008 (26,162) (26,162)
--------------------------------- ------- -------
Total shareholders' equity 362,457 358,508
-------------------------- ------- -------
Total liabilities and shareholders'
equity $3,545,639 $3,622,126
=================================== ========== ==========
SUN BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except share and per share amounts)
For the Three Months Ended
September 30,
-------------
2009 2008
---- ----
INTEREST INCOME
Interest and fees on loans $ 33,299 $ 37,819
Interest on taxable investment
securities 3,405 3,943
Interest on non-taxable
investment securities 969 830
Dividends on restricted equity
investments 219 250
Interest on federal funds sold - 137
------------------------------ --- ---
Total interest income 37,892 42,979
--------------------- ------ ------
INTEREST EXPENSE
Interest on deposits 9,797 15,905
Interest on funds borrowed 548 753
Interest on junior
subordinated debentures 1,081 1,359
----------------------- ----- -----
Total interest expense 11,426 18,017
---------------------- ------ ------
Net interest income 26,466 24,962
PROVISION FOR LOAN LOSSES 16,237 3,723
------------------------- ------ -----
Net interest income after
provision for loan losses 10,229 21,239
------------------------- ------ ------
NON-INTEREST INCOME
Service charges on deposit
accounts 3,150 3,701
Other service charges 85 82
Gain on sale of loans 711 286
Gain on derivative instruments - 491
Investment products income 894 728
BOLI income 575 778
Net impairment losses on
available for sale
securities:
Total impairment losses (1,928) -
Portion of loss recognized in
other comprehensive income
(before taxes) - -
--- ---
Net impairment losses
recognized in earnings (1,928) -
Other 989 980
----- --- ---
Total non-interest income 4,476 7,046
------------------------- ----- -----
NON-INTEREST EXPENSE
Salaries and employee benefits 14,154 12,277
Occupancy expense 2,689 2,912
Equipment expense 1,619 1,522
Data processing expense 980 1,154
Amortization of intangible
assets 1,177 1,177
Insurance expense 1,519 745
Professional fees 595 542
Advertising expense 251 336
Real estate owned expense, net 854 13
Other 3,029 2,372
----- ----- -----
Total non-interest expense 26,867 23,050
-------------------------- ------ ------
(LOSS) INCOME BEFORE INCOME
TAXES (12,162) 5,235
INCOME TAX (BENEFIT) EXPENSE (5,620) 1,106
---------------------------- ------ -----
NET (LOSS) INCOME (6,542) 4,129
Preferred stock dividend and
discount accretion - -
---------------------------- --- ---
NET (LOSS) INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ (6,542) $ 4,129
============================== ====== =====
Basic (loss) earnings per
share (1) $ (0.28) $ 0.18
============================= ===== ====
Diluted (loss) earnings
per share (1) $ (0.28) $ 0.17
============================= ===== ====
Weighted average shares -
basic (1) 23,162,992 23,512,826
============================= ========== ==========
Weighted average shares
- diluted (1) 23,162,992 24,084,540
============================= ========== ==========
For the Nine Months Ended
September 30,
-------------
2009 2008
---- ----
INTEREST INCOME
Interest and fees on loans $ 98,487 $ 116,104
Interest on taxable investment
securities 11,341 11,933
Interest on non-taxable
investment securities 2,695 2,434
Dividends on restricted equity
investments 609 796
Interest on federal funds sold - 234
---------------------------- --- ---
Total interest income 113,132 131,501
--------------------- ------- -------
INTEREST EXPENSE
Interest on deposits 36,132 50,175
Interest on funds borrowed 1,511 2,880
Interest on junior
subordinated debentures 3,400 4,257
------------------------ ----- -----
Total interest expense 41,043 57,312
---------------------- ------ ------
Net interest income 72,089 74,189
PROVISION FOR LOAN LOSSES 27,187 12,383
------------------------- ------ ------
Net interest income after
provision for loan losses 44,902 61,806
-------------------------- ------ ------
NON-INTEREST INCOME
Service charges on deposit
accounts 9,290 10,655
Other service charges 246 235
Gain on sale of loans 1,749 1,121
Gain on derivative instruments 212 2,167
Investment products income 2,172 2,353
BOLI income 1,649 2,356
Net impairment losses on
available for sale
securities:
Total impairment losses (6,764) -
Portion of loss recognized in
other comprehensive income
(before taxes) - -
--- ---
Net impairment losses
recognized in earnings (6,764) -
Other 2,975 3,336
----- ----- -----
Total non-interest income 11,529 22,223
------------------------- ------ ------
NON-INTEREST EXPENSE
Salaries and employee benefits 39,333 36,980
Occupancy expense 8,606 8,764
Equipment expense 4,842 4,812
Data processing expense 3,042 3,339
Amortization of intangible
assets 3,532 3,532
Insurance expense 6,292 2,142
Professional fees 1,480 1,590
Advertising expense 1,667 1,519
Real estate owned expense, net 1,127 (512)
Other 8,413 7,762
----- ----- -----
Total non-interest expense 78,334 69,928
-------------------------- ------ ------
(LOSS) INCOME BEFORE INCOME
TAXES (21,903) 14,101
INCOME TAX (BENEFIT) EXPENSE (11,112) 3,460
------------------------------- ------- -----
NET (LOSS) INCOME (10,791) 10,641
Preferred stock dividend and
discount accretion 5,351 -
---------------------------- ----- ---
NET (LOSS) INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ (16,142) $ 10,641
============================== ======= ======
Basic (loss) earnings per
share (1) $ (0.70) $ 0.45
============================= ===== ====
Diluted (loss) earnings
per share (1) $ (0.70) $ 0.44
============================= ===== ====
Weighted average shares -
basic (1) 23,104,419 23,755,567
============================= ========== ==========
Weighted average shares
- diluted (1) 23,104,419 24,355,870
============================= ========== ==========
(1) Data is adjusted for a 5% stock dividend issued in May 2009.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands)
2009 2009 2009
Q3 Q2 Q1
-- -- --
Balance sheet at
quarter end:
Loans:
Commercial and
industrial $2,234,616 $2,240,368 $2,243,698
Home equity 261,206 265,407 268,122
Second mortgage 71,578 73,856 78,589
Residential real
estate 72,292 79,627 69,971
Other 70,072 74,714 77,638
----- ------ ------ ------
Total gross loans 2,709,764 2,733,972 2,738,018
Allowance for loan
losses (46,067) (44,316) (39,406)
------------------------- ------- ------- -------
Net loans 2,663,697 2,689,656 2,698,612
Goodwill 127,894 127,894 127,894
Intangible assets,
net 15,237 16,414 17,592
Total assets 3,545,639 3,561,110 3,635,697
Total deposits 2,932,880 2,875,502 2,930,084
Federal funds
purchased 6,000 87,500 -
Securities sold
under agreements
to repurchase -
customers 21,018 17,398 14,170
Advances from
FHLBNY 15,512 15,805 16,096
Securities sold
under agreements
to repurchase -
FHLBNY 15,000 15,000 15,000
Obligations under
capital lease 8,343 8,383 5,171
Junior subordinated
debentures 92,786 92,786 92,786
Total shareholders'
equity 362,457 360,660 447,984
Quarterly average
balance sheet:
Loans:
Commercial and
industrial $2,247,234 $2,236,745 $2,229,016
Home equity 263,494 268,276 268,921
Second mortgage 72,830 75,967 81,854
Residential real
estate 76,626 75,812 70,868
Other 70,790 75,133 79,324
----- ------ ------ ------
Total gross loans 2,730,974 2,731,933 2,729,983
Securities and
other
interest-earning
assets 486,274 491,348 527,318
Total
interest-earning
assets 3,217,248 3,223,281 3,257,301
Total assets 3,593,037 3,611,679 3,644,558
Non-interest-bearing
demand deposits 476,478 431,836 397,237
Total deposits 2,946,281 2,975,358 2,936,452
Total
interest-bearing
liabilities 2,663,226 2,705,069 2,694,326
Total shareholders'
equity 365,440 370,196 445,040
Capital and credit
quality measures:
Total capital
(to risk-weighted
assets) (1):
Sun Bancorp, Inc. 11.60 % 11.62 % 14.32 %
Sun National Bank 11.11 % 11.15 % 10.99 %
Tier 1
capital (to
risk-weighted
assets) (1):
Sun Bancorp, Inc. 10.34 % 10.37 % 13.07 %
Sun National Bank 9.85 % 9.90 % 9.74 %
Leverage
ratio (1):
Sun Bancorp, Inc. 9.21 % 9.29 % 11.81 %
Sun National Bank 8.77 % 8.88 % 8.80 %
Average equity to
average assets 10.17 % 10.25 % 12.21 %
Allowance for loan
losses to total
gross loans 1.70 % 1.62 % 1.44 %
Non-performing
assets to total
gross loans and
real estate owned 3.46 % 2.70 % 2.34 %
Allowance for loan
losses to
non-performing
loans 54.58 % 69.82 % 73.76 %
Other data:
Net charge-offs (14,486) (2,040) (1,903)
Non-performing
assets:
Non-accrual loans $ 80,333 $ 55,801 $ 50,481
Loans past due 90
days and accruing 4,067 7,675 2,945
Real estate owned,
net 9,667 10,620 10,834
------------------ ----- ------ ------
Total
non-performing
assets $ 94,067 $ 74,096 $ 64,260
=============== ======= ======= =======
2008 2008
Q4 Q3
-- --
Balance sheet at quarter end:
Loans:
Commercial and industrial $2,234,202 $2,164,523
Home equity 274,360 271,197
Second mortgage 84,388 85,734
Residential real estate 67,473 61,845
Other 79,402 82,840
----- ------ ------
Total gross loans 2,739,825 2,666,139
Allowance for loan losses (37,309) (34,120)
------------------------- ------- -------
Net loans 2,702,516 2,632,019
Goodwill 127,894 127,894
Intangible assets, net 18,769 19,947
Total assets 3,622,126 3,425,379
Total deposits 2,896,364 2,873,378
Federal funds purchased 71,500 -
Securities sold under agreements
to repurchase - customers 20,327 38,359
Advances from FHLBNY 42,081 19,551
Securities sold under agreements
to repurchase - FHLBNY 15,000 15,000
Obligations under capital lease 5,189 5,207
Junior subordinated debentures 92,786 92,786
Total shareholders' equity 358,508 357,282
Quarterly average balance sheet:
Loans:
Commercial and industrial $2,195,218 $2,146,204
Home equity 275,791 268,178
Second mortgage 85,530 84,404
Residential real estate 62,481 57,471
Other 81,426 84,116
----- ------ ------
Total gross loans 2,700,446 2,640,373
Securities and other
interest-earning assets 476,305 461,276
Total interest-earning assets 3,176,751 3,101,649
Total assets 3,483,145 3,422,764
Non-interest-bearing demand
deposits 407,151 435,249
Total deposits 2,916,153 2,837,147
Total interest-bearing
liabilities 2,679,673 2,600,310
Total shareholders' equity 361,513 361,895
Capital and credit quality
measures:
Total capital (to
risk-weighted assets) (1):
Sun Bancorp, Inc. 11.37 % 11.67 %
Sun National Bank 10.84 % 11.02 %
Tier 1 capital (to
risk-weighted assets) (1):
Sun Bancorp, Inc. 10.17 % 10.51 %
Sun National Bank 9.64 % 9.86 %
Leverage ratio (1):
Sun Bancorp, Inc. 9.58 % 9.56 %
Sun National Bank 9.10 % 8.97 %
Average equity to average assets 10.38 % 10.57 %
Allowance for loan losses to
total gross loans 1.36 % 1.28 %
Non-performing assets to total
gross loans and real estate
owned 1.78 % 1.87 %
Allowance for loan losses to
non-performing loans 79.69 % 71.80 %
Other data:
Net charge-offs (4,428) (1,093)
Non-performing assets:
Non-accrual loans $ 42,233 $ 45,940
Loans past due 90 days and
accruing 4,587 1,583
Real estate owned, net 1,962 2,381
---------------------- ----- -----
Total non-performing assets $ 48,782 $ 49,904
=========================== ======= =======
(1) September 30, 2009 capital ratios are estimated, subject to
regulatory filings.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands, except share and per share data)
2009 2009 2009
Q3 Q2 Q1
-- -- --
Profitability for the
quarter:
Tax-equivalent interest
income $ 38,413 $ 38,276 $ 37,894
Interest expense 11,426 14,017 15,600
Tax-equivalent net
interest income 26,987 24,259 22,294
Tax-equivalent adjustment 521 475 455
Provision for loan losses 16,237 6,950 4,000
Non-interest income
excluding net gain on
sale of branches and net
impairment losses on
available for sale
securities 6,404 6,290 5,599
Net gain on sale of
branches - - -
Net impairment losses on
available for sale
securities (1,928) (4,558) (278)
Non-interest expense
excluding amortization of
intangible assets 25,690 26,472 22,640
Amortization of intangible
assets 1,177 1,178 1,177
(Loss) income before
income taxes (12,162) (9,084) (657)
Income tax (benefit)
expense (5,620) (4,450) (1,042)
Net (loss) income (6,542) (4,634) 385
Net (loss) income
available to common
shareholders $ (6,542) $ (8,780) $ (820)
==================== ======= ======= =====
Financial ratios:
Return on average assets (1) (0.73) % (0.51) % 0.04%
Return on average equity (1) (7.16) % (5.01) % 0.35%
Return on average tangible
equity (1),(2) (11.81) % (8.23) % 0.52%
Net interest margin (1) 3.36 % 3.01 % 2.74%
Efficiency ratio 86.83 % 108.36 % 87.69%
Efficiency ratio,
excluding non-operating
income and non-operating
expense 81.74 % 91.94 % 86.80%
Per share data (3):
(Loss) earnings per common
share:
Basic $ (0.28) $ (0.38) $ (0.04)
Diluted $ (0.28) $ (0.38) $ (0.04)
Book value $ 15.63 $ 15.59 $ 15.72
Tangible book value $ 9.46 $ 9.35 $ 9.41
Average basic shares (3) 23,162,992 23,103,975 23,043,056
Average diluted shares (3) 23,162,992 23,103,975 23,043,056
Operating non-interest
income:
Service charges on deposit
accounts $ 3,150 $ 3,096 $ 3,044
Other service charges 85 79 82
Gain on sale of loans 711 693 345
Gain on derivative
instruments - 85 127
Investment products income 894 756 522
BOLI income 575 561 513
Other income 989 1,020 966
------------ --- ----- ---
Total operating
non-interest income 6,404 6,290 5,599
-------------------- ----- ----- -----
Non-operating income (4):
Net gain on sale of
branches - - -
Net impairment losses on
available for sale
securities recognized in
earnings (1,928) (4,558) (278)
---------------------------------- ------ ------ ----
Total non-operating income (1,928) (4,558) (278)
-------------------------- ------ ------ ----
Total non-interest income $ 4,476 $ 1,732 $ 5,321
========================= ====== ====== ======
Operating non-interest
expense:
Salaries and employee
benefits $ 14,154 $ 13,216 $ 11,963
Occupancy expense 2,689 2,782 3,135
Equipment expense 1,619 1,685 1,538
Data processing expense 980 1,052 1,010
Amortization of intangible
assets 1,177 1,178 1,177
Insurance expense 1,519 3,330 1,443
Professional fees 595 507 378
Advertising expense 251 871 545
Real estate owned expense
(income), net 854 93 180
Other expenses 3,029 2,936 2,448
-------------- ----- ----- -----
Total operating
non-interest expense 26,867 27,650 23,817
--------------------- ------ ------ ------
Total non-interest expense $ 26,867 $ 27,650 $ 23,817
========================== ======= ======= =======
2008 2008
Q4 Q3
-- --
Profitability for the quarter:
Tax-equivalent interest income $43,574 $43,426
Interest expense 17,661 18,017
Tax-equivalent net interest income 25,913 25,409
Tax-equivalent adjustment 441 447
Provision for loan losses 7,617 3,723
Non-interest income excluding net gain
on sale of branches and net impairment
losses on available for sale
securities 6,119 7,046
Net gain on sale of branches 11,454 -
Net impairment losses on available for
sale securities (7,497) -
Non-interest expense excluding
amortization of intangible assets 21,534 21,873
Amortization of intangible assets 1,178 1,177
(Loss) income before income taxes 5,219 5,235
Income tax (benefit) expense 966 1,106
Net (loss) income 4,253 4,129
Net (loss) income available to common
shareholders $ 4,253 $ 4,129
===================================== ====== ======
Financial ratios:
Return on average assets (1) 0.49 % 0.48 %
Return on average equity (1) 4.71 % 4.56 %
Return on average tangible equity (1),(2) 7.94 % 7.74 %
Net interest margin (1) 3.26 % 3.28 %
Efficiency ratio 63.89 % 72.01 %
Efficiency ratio, excluding
non-operating income and non-operating
expense 71.89 % 72.01 %
Per share data (3):
(Loss) earnings per common share:
Basic $ 0.18 $ 0.18
Diluted $ 0.18 $ 0.17
Book value $ 15.57 $ 15.18
Tangible book value $ 9.20 $ 8.90
Average basic shares (3) 23,323,693 23,512,826
Average diluted shares (3) 23,410,606 24,084,540
Operating non-interest income:
Service charges on deposit accounts $ 3,263 $ 3,701
Other service charges 82 82
Gain on sale of loans 204 286
Gain on derivative instruments 411 491
Investment products income 688 728
BOLI income 661 778
Other income 810 980
------------ --- ---
Total operating non-interest income 6,119 7,046
----------------------------------- ----- -----
Non-operating income (4):
Net gain on sale of branches 11,454 -
Net impairment losses on available for
sale securities recognized in earnings (7,497) -
--------------------------------------- ------ ---
Total non-operating income 3,957 -
-------------------------- ----- ---
Total non-interest income $10,076 $ 7,046
========================= ======= ======
Operating non-interest expense:
Salaries and employee benefits $10,643 $12,277
Occupancy expense 2,919 2,912
Equipment expense 1,609 1,522
Data processing expense 1,120 1,154
Amortization of intangible assets 1,178 1,177
Insurance expense 901 745
Professional fees 745 542
Advertising expense 849 336
Real estate owned expense (income), net (116) 13
Other expenses 2,864 2,372
-------------- ----- -----
Total operating non-interest expense 22,712 23,050
------------------------------------ ------ ------
Total non-interest expense $22,712 $23,050
========================== ======= =======
(1) Amounts are annualized.
(2) Return on average tangible equity is computed by dividing annualized
net income for the period by average tangible equity. Average
tangible equity equals average equity less average identifiable
intangible assets and goodwill.
(3) Data is adjusted for a 5% stock dividend issued in May 2009.
(4) Amount consists of items which the Company believes are not a
result of normal operations.
SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30, 2009
------------------
Average Income Yield/
Balance Expense Cost
------- ------- ----
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $2,247,234 $26,590 4.73 %
Home equity 263,494 3,248 4.93
Second mortgage 72,830 1,182 6.49
Residential real estate 76,626 1,099 5.74
Other 70,790 1,180 6.67
------ -----
Total loans receivable 2,730,974 33,299 4.88
Investment securities (3) 439,661 5,091 4.63
Interest-earning bank balances 46,613 23 0.20
Federal funds sold - - -
--- ---
Total interest-earning assets 3,217,248 38,413 4.78
--------- ------
Cash and due from banks 46,724
Bank properties and equipment,
net 52,058
Goodwill and intangible assets,
net 143,868
Other assets 133,139
-------
Total non-interest-earning
assets 375,789
-------
Total assets $3,593,037
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $1,112,999 2,658 0.96 %
Savings deposits 299,590 693 0.93
Time deposits 1,057,214 6,446 2.44
--------- -----
Total interest-bearing deposit
accounts 2,469,803 9,797 1.59
--------- -----
Short-term borrowings:
Federal funds purchased 42,836 36 0.34
Securities sold under
agreements to repurchase -
customers 18,823 12 0.26
Long-term borrowings:
FHLBNY advances (4) 30,607 361 4.72
Obligations under capital lease 8,371 139 6.64
Junior subordinated debentures 92,786 1,081 4.66
------ -----
Total borrowings 193,423 1,629 3.37
------- -----
Total interest-bearing
liabilities 2,663,226 11,426 1.72
--------- ------
Non-interest-bearing demand
deposits 476,478
Other liabilities 87,893
------
Total non-interest bearing
liabilities 564,371
-------
Total liabilities 3,227,597
Shareholders' equity 365,440
-------
Total liabilities and
shareholders' equity $3,593,037
==========
Net interest income $26,987
=======
Interest rate spread (5) 3.06 %
====
Net interest margin (6) 3.36 %
====
Ratio of average
interest-earning assets to
average interest-bearing
liabilities 120.80 %
======
For the Three Months Ended
September, 2008
---------------
Average Income/ Yield/
Balance Expense Cost
------- ------- ----
Interest-earning assets:
Loans receivable
(1),(2):
Commercial and industrial $2,146,204 $30,243 5.64 %
Home equity 268,178 3,800 5.67
Second mortgage 84,404 1,384 6.56
Residential real estate 57,471 911 6.34
Other 84,116 1,481 7.04
------ -----
Total loans receivable 2,640,373 37,819 5.73
Investment securities
(3) 422,897 5,423 5.13
Interest-earning bank balances 9,418 47 2.00
Federal funds sold 28,961 137 1.89
------ ---
Total interest-earning assets 3,101,649 43,426 5.60
--------- ------
Cash and due from banks 57,463
Bank properties and equipment,
net 48,204
Goodwill and intangible assets,
net 148,577
Other assets 66,871
------
Total non-interest-earning
assets 321,115
-------
Total assets $3,422,764
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $ 927,312 4,180 1.80 %
Savings deposits 378,699 1,652 1.74
Time deposits 1,095,887 10,073 3.68
--------- ------
Total interest-bearing deposit
accounts 2,401,898 15,905 2.65
--------- ------
Short-term borrowings:
Federal funds purchased 17,766 102 2.30
Securities sold under
agreements to repurchase -
customers 35,426 104 1.17
Long-term borrowings:
FHLBNY advances (4) 47,221 452 3.83
Obligations under capital lease 5,213 95 7.29
Junior subordinated debentures 92,786 1,359 5.86
------ -----
Total borrowings 198,412 2,112 4.26
------- -----
Total interest-bearing
liabilities 2,600,310 18,017 2.77
--------- ------
Non-interest-bearing demand
deposits 435,249
Other liabilities 25,310
------
Total non-interest bearing
liabilities 460,559
-------
Total liabilities 3,060,869
Shareholders' equity 361,895
-------
Total liabilities and
shareholders' equity $3,422,764
==========
Net interest income $25,409
=======
Interest rate spread (5) 2.83 %
====
Net interest margin (6) 3.28 %
====
Ratio of average
interest-earning assets to
average interest-bearing
liabilities 119.28 %
======
(1) Average balances include non-accrual loans.
(2) Loan fees are included in interest income and the amount is not
material for this analysis.
(3) Interest earned on non-taxable investment securities is shown on
a tax equivalent basis assuming a 35% marginal federal tax rate for
all periods. The fully taxable equivalent adjustment for three months
ended September 30, 2009 and 2008 was $521,000 and $447,000,
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, 2009
------------------
Average Income/ Yield/
Balance Expense Cost
------- ------- ----
Interest-earning assets:
Loans receivable
(1),(2):
Commercial and industrial $2,237,732 $77,774 4.63 %
Home equity 266,878 10,080 5.04
Second mortgage 76,851 3,715 6.45
Residential real estate 74,456 3,264 5.85
Other 75,051 3,654 6.49
------ -----
Total loans receivable 2,730,968 98,487 4.81
Investment securities
(3) 450,572 16,015 4.74
Interest-earning bank balances 50,799 81 0.21
Federal funds sold 125 - -
--- ---
Total interest-earning assets 3,232,464 114,583 4.73
--------- -------
Cash and due from banks 48,203
Bank properties and equipment,
net 49,637
Goodwill and intangible assets,
net 145,028
Other assets 140,904
-------
Total non-interest-earning
assets 383,772
-------
Total assets $3,616,236
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $1,038,932 7,969 1.02 %
Savings deposits 297,404 2,264 1.02
Time deposits 1,180,923 25,899 2.92
--------- ------
Total interest-bearing deposit
accounts 2,517,259 36,132 1.91
--------- ------
Short-term borrowings:
Federal funds purchased 21,154 61 0.38
Securities sold under
agreements to repurchase -
customer 17,151 32 0.25
Long-term borrowings:
FHLBNY advances (4) 32,805 1,090 4.43
Obligations under capital lease 6,271 328 6.97
Junior subordinated debentures 92,786 3,400 4.89
------ -----
Total borrowings 170,167 4,911 3.85
------- -----
Total interest-bearing
liabilities 2,687,426 41,043 2.04
--------- ------
Non-interest-bearing demand
deposits 435,474
Other liabilities 100,069
-------
Total non-interest-bearing
liabilities 535,543
-------
Total liabilities 3,222,969
Shareholders' equity 393,267
-------
Total liabilities and
shareholders' equity $3,616,236
==========
Net interest income $73,540
=======
Interest rate spread (5) 2.69 %
====
Net interest margin (6) 3.03 %
====
Ratio of average
interest-earning assets to
average interest-bearing
liabilities 120.28 %
======
For the Nine Months Ended
September 30, 2008
------------------
Average Income/ Yield/
Balance Expense Cost
------- ------- ----
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial $2,094,470 $93,089 5.93 %
Home equity 267,169 11,880 5.93
Second mortgage 82,615 4,037 6.52
Residential real estate 53,287 2,547 6.37
Other 85,633 4,551 7.09
------ -----
Total loans receivable 2,583,174 116,104 5.99
Investment securities (3) 434,928 16,290 4.99
Interest-earning bank balances 9,811 184 2.50
Federal funds sold 15,760 234 1.98
------ ---
Total interest-earning assets 3,043,673 132,812 5.82
--------- -------
Cash and due from banks 57,580
Bank properties and equipment,
net 48,156
Goodwill and intangible assets,
net 149,744
Other assets 73,481
------
Total non-interest-earning
assets 328,961
-------
Total assets $3,372,634
==========
Interest-bearing liabilities:
Interest-bearing deposit
accounts:
Interest-bearing demand
deposits $828,107 10,547 1.70 %
Savings deposits 420,997 6,323 2.00
Time deposits 1,088,507 33,305 4.08
--------- ------
Total interest-bearing deposit
accounts 2,337,611 50,175 2.86
--------- ------
Short-term borrowings:
Federal funds purchased 21,244 404 2.54
Securities sold under
agreements to repurchase -
customer 36,650 445 1.62
Long-term borrowings:
FHLBNY advances (4) 56,522 1,745 4.12
Obligations under capital lease 5,230 286 7.29
Junior subordinated debentures 92,899 4,257 6.11
------ -----
Total borrowings 212,545 7,137 4.48
------- -----
Total interest-bearing
liabilities 2,550,156 57,312 3.00
--------- ------
Non-interest-bearing demand
deposits 427,505
Other liabilities 29,613
------
Total non-interest-bearing
liabilities 457,118
-------
Total liabilities 3,007,274
Shareholders' equity 365,360
-------
Total liabilities and
shareholders' equity $3,372,634
==========
Net interest income $75,500
=======
Interest rate spread (5) 2.82 %
====
Net interest margin (6) 3.31 %
====
Ratio of average
interest-earning assets to
average interest-bearing
liabilities 119.35 %
======
(1) Average balances include non-accrual loans.
(2) Loan fees are included in interest income and the amount is not
material for this analysis.
(3) Interest earned on non-taxable investment securities is shown on
a tax equivalent basis assuming a 35% marginal federal tax rate for
all periods. The fully taxable equivalent adjustment for nine months
ended September 30, 2009 and 2008 was $1.5 million and $1.3 million,
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.
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