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Sun Bancorp, Inc. Reports First Quarter 2014 Results

Apr 23, 2014

 

VINELAND, N.J. /PRNewswire/ --

 

First Quarter Highlights

  • Announced expected hiring of Thomas O'Brien as CEO, subject to regulatory non-objection
  • Continued progress on expense control as non-interest expense declined by $4.6 million sequentially to $27.9 million
  • Interest bearing cash averaged $220.1 million or 7.2% of average assets
  • Tier 1 Leverage Ratio increased to 9.4% and the total risk based ratio increased to 14.9%

 

Sun Bancorp, Inc. (NASDAQ: SNBC) (the "Company") reported today a net loss available to common shareholders of $1.9 million, or a loss of $0.02 per diluted share, for the quarter ended March 31, 2014, compared to a net loss of $8.2 million, or a loss of $0.09 per diluted share, and net income of $2.5 million, or $0.03 per diluted share, for the fourth quarter of 2013 and the first quarter of 2013, respectively.

 

The following are key items and events that occurred during the first quarter of 2014:

  • No provision for loan loss was recorded in the first quarter of 2014 compared to provision expense of $2.1 million in the fourth quarter of 2013. The allowance for loan losses equaled $33.8 million at March 31, 2014, a decrease of $1.8 million from December 31, 2013. The allowance for loan losses equaled 1.62% of gross loans held-for-investment and 90.2% of non-performing loans at March 31, 2014 as compared to 1.66% and 93.6%, respectively, at December 31, 2013.
  • Occupancy expense totaled $4.3 million, an increase of $860 thousand from the prior quarter, as winter weather related expenses totaled $1.0 million in the quarter ended March 31, 2014.
  • Professional fees totaled $1.5 million in the first quarter of 2014 compared to $4.9 million in the prior quarter.
  • Net interest margin was 3.07% in the first quarter of 2014 compared to 2.99% in the fourth quarter of 2013.

 

"We made good progress in the first quarter on expense reduction efforts, executing on our regulatory remediation efforts and enhancing the capital ratios of the Bank," stated Sid Brown, Chairman, interim President and CEO. "We are disappointed to report a loss but believe that we are taking the necessary steps to get the Bank back on the right path.  We are all looking forward to working with Tom O'Brien on returning the Bank to sustained profitability. Tom O'Brien started working on April 2nd as a consultant to the Board of Directors and is expected to be appointed as CEO, subject to regulatory non-objection to his assumption of the positions of President and CEO."

 

Discussion of Results:

 

Balance Sheet

  • Total assets were $3.04 billion at March 31, 2014, as compared to $3.09 billion at December 31, 2013.
  • Cash and cash equivalents were $282.1 million at March 31, 2014, as compared to $267.8 million at December 31, 2013. The increase of $14.3 million in the first quarter of 2014 as compared to the prior quarter was primarily due to declining loan balances, including those held-for-sale, partially offset by a decrease in deposits.
  • Gross loans held-for-investment were $2.08 billion at March 31, 2014, as compared to $2.14 billion at December 31, 2013, a decline of $53.6 million which was primarily due to loan paydowns.
  • Deposits were $2.57 billion at March 31, 2014, as compared to $2.62 billion at December 31, 2013.  The decrease of $48.1 million in the first quarter of 2014 as compared to the prior quarter was primarily due to decreases in public funds deposits.

 

Net Interest Income and Margin

  • Net interest income decreased $543 thousand from the linked quarter to $21.4 million for the three months ended March 31, 2014. The net interest margin increased eight basis points to 3.07% for the three months ended March 31, 2014 from 2.99% for the linked quarter, and decreased nine basis points as compared to the first quarter of 2013. The average yield on interest-earning assets increased seven basis points to 3.54% for the three months ended March 31, 2014 from 3.47% for the three months ended December 31, 2013. The decrease between the quarter ended March 31, 2014 and the comparable prior year period is primarily due to a decline of $184.1 million in average commercial loans and an increase of $40.9 million in average interest earning bank balances. The increase from the linked quarter is due primarily to a decrease of $122.3 million in average interest bearing cash balances.

 

Non-Interest Income

  • Non-interest income was $4.9 million for the quarter ended March 31, 2014, as compared to $4.7 million for the quarter ended December 31, 2013 and $10.9 million for the comparable prior year quarter. The increase from the linked quarter was primarily attributable to a decrease of $672 thousand in negative derivative credit valuation adjustments from the prior quarter partially offset by a decrease in net mortgage banking revenue of $365 thousand. The decrease in the negative derivative credit valuation adjustments from the prior quarter was primarily due to swap termination fees of $1.0 million recorded in the fourth quarter of 2013, compared to no swap termination fees recorded in the first quarter of 2014. Mortgage banking revenue, net, decreased from $1.0 million for the quarter ended December 31, 2013 to $635 thousand for the quarter ended March 31, 2014, which was due to lower production volume in a higher interest rate environment.

 

Non-Interest Expense

  • Non-interest expense was $27.9 million in the first quarter of 2014, a decrease of $4.6 million compared to the linked quarter and a decrease of $3.4 million from the comparable prior year quarter.  In comparison to the linked quarter, decreases in professional fees, other real estate owned, advertising, commission expense, and salaries and employee benefits of $3.4 million, $385 thousand, $317 thousand, $201 thousand, and $186 thousand, respectively, were partially offset by an increase of $860 thousand in occupancy expense.  Professional fees declined as the Company reduced its reliance on regulatory compliance consulting services.   Commission expense has decreased due to reduced mortgage production volumes.  Occupancy expense for the first quarter includes $1.0 million of snow removal expenses.

 

Asset Quality

  • During the first quarter of 2014, there was no provision expense recorded, as compared to provision expense of $2.1 million in the linked quarter and $171 thousand in the comparable prior year quarter. The allowance for loan losses was $33.8 million, or 1.62% of gross loans held-for-investment, at March 31, 2014, as compared to $35.5 million, or 1.66% of gross loans held-for-investment at December 31, 2013. Net charge-offs were $1.8 million in the first quarter of 2014, as compared to net charge-offs in the linked quarter of $15.5 million and net recoveries in the comparable prior year quarter of $1.1 million.
  • Total non-performing assets were $40.2 million, or 1.91% of total gross loans held-for-investment, loans held-for-sale and real estate owned at March 31, 2014, as compared to $40.5 million, or 1.87%, at December 31, 2013. Non-performing loans decreased $531 thousand to $37.4 million at March 31, 2014 from $38.0 million at December 31, 2013.

 

Capital

  • Shareholders' equity totaled $248.9 million at March 31, 2014 compared to $245.3 million at December 31, 2013. The Company's tangible equity to tangible assets ratio was 7.01% at March 31, 2014, as compared to 6.77% at December 31, 2013.  At March 31, 2014, the Company's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 14.87%, 12.75%, and 9.40%, respectively.  At March 31, 2014, Sun National Bank's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 14.08%, 12.83%, and 9.45%, respectively.

 

The Company will hold its regularly scheduled conference call on Thursday April 24, 2014, at 11:00 a.m. (ET).  Participants may listen to the live webcast through the Company's website at www.sunnationalbank.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 Company's website for two weeks following the call.

 

Sun Bancorp, Inc. (NASDAQ: SNBC) is a $3.04 billion asset bank holding company with its executive offices located in Mt. Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a full service commercial bank serving customers through 50-plus locations in 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 reducing expenses, executing on our regulatory remediation efforts, enhancing our capital ratios and achieving sustained profitability in the future.  Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that we will further reduce expenses, successfully execute on our regulatory remediation efforts, further enhance our capital ratios or achieve sustained profitability in the future. We caution that such statements are subject to a number of uncertainties, including 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, 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 March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013, and March 31, 2013 were $166 thousand, $167 thousand, $167 thousand, $175 thousand, and $212 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 March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013, and March 31, 2013 were $38.7 million, $39.0 million, $39.4 million, $40.0 million, and $40.5 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 March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013, and March 31, 2013.

 

For Three Months Ended:

March 31,
2014

 

December 31,
2013

 

September 30,
2013

 

June 30,
2013

 

March 31,
2013

                   

Net interest income

$

21,392

 

$

21,935

 

$

22,980

 

$

21,776

 

$

23,078

Effect of tax exempt income 

 

166

   

167

   

167

   

175

   

212

Net interest income, tax equivalent basis

$

21,558

 

$

22,102

 

$

23,147

 

$

21,951

 

$

23,290

Tangible book value per common share

The following reconciles shareholders' equity to tangible equity by reducing shareholders' equity by the intangible asset balance at March 31, 2014, December, 31, 2013, September 30, 2013, June 30, 2013, and March 31, 2013.

 

March 31,
2014

 

December 31,
2013

 

September 30,
2013

 

June 30,
2013

 

March 31,
2013

                   

Tangible book value per common share:

                 

   Shareholders' equity

$

248,898

 

$

245,337

 

$

257,140

 

$

261,664

 

$

264,341

  Less: Intangible assets

 

38,709

   

38,993

   

39,448

   

39,988

   

40,529

Tangible equity

$

210,189

 

$

206,344

 

$

217,692

 

$

221,676

 

$

223,812

                             

  Common stock

 

88,709

   

88,711

   

88,618

   

88,572

   

88,403

  Less: Treasury stock

 

1,943

   

1,997

   

2,068

   

2,107

   

2,107

Total outstanding shares

 

86,766

   

86,714

   

86,550

   

86,465

   

86,296

                             

Tangible book value per common share:

$

2.42

 

$

2.38

 

$

2.52

 

$

2.56

 

$

2.59

 

 

 

SUN BANCORP, INC. AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS (Unaudited)

(Dollars in thousands, except share and per share amounts)

 

For the Three Months Ended

 

March 31,

 

December 31,

 

2014

 

2013

 

2013

Profitability for the period:

         

    Net interest income

$

21,392

 

$

23,078

 

$

21,935

 

    Provision for loan losses

 

-

   

171

   

2,135

 

    Non-interest income

 

4,949

   

10,882

   

4,742

 

    Non-interest expense

 

27,888

   

31,336

   

32,457

 

   (Loss) income before income taxes

 

(1,547)

   

2,453

   

(7,915)

 

    Income tax expense

 

359

   

-

   

297

 

    Net (loss) income available to common shareholders

$

(1,906)

 

$

2,453

 

$

(8,212)

 
                   

Financial ratios:

                 

    Return on average assets(1) 

 

(0.25)

%

 

0.31

%

 

(1.02)

%

    Return on average equity(1)

 

(3.04)

%

 

3.73

%

 

(12.79)

%

    Return on average tangible equity(1),(2)

 

(3.59)

%

 

4.42

%

 

(15.10)

%

    Net interest margin(1)

 

3.07

%

 

3.16

%

 

2.99

%

    Efficiency ratio

 

105.87

%

 

92.27

%

 

121.67

%

    (Loss) earnings per common share:

                 

        Basic

$

(0.02)

 

$

0.03

 

$

(0.09)

 

        Diluted 

$

(0.02)

 

$

0.03

 

$

(0.09)

 
                   

    Average equity to average assets

 

8.23

%

 

8.20

%

 

8.01

%

 

March 31,

 

December 31,

 

2014

 

2013

 

2013

At period-end:

     

    Total assets

$

3,038,467

 

$

3,227,146

 

$

3,087,553

 

    Total deposits

 

2,573,445

   

2,723,337

   

2,621,571

 

    Loans receivable, net of allowance for loan losses

 

2,050,312

   

2,204,436

   

2,102,167

 

    Loans held-for-sale

 

16,048

   

41,469

   

20,662

 

    Investments

 

456,724

   

335,844

   

457,797

 

    Borrowings

 

68,645

   

71,344

   

68,765

 

    Junior subordinated debentures

 

92,786

   

92,786

   

92,786

 

    Shareholders' equity

 

248,898

   

264,341

   

245,337

 
                   

Credit quality and capital ratios:

                 

    Allowance for loan losses to gross loans held-for- investment

 

1.62

%

 

2.09

%

 

1.66

%

   Non-performing loans held-for-investment to gross loans held-for-investment

 

1.80

%

 

3.28

%

 

1.78

%

    Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned

 

1.91

%

 

3.57

%

 

1.87

%

    Allowance for loan losses to non-performing loans held-for-investment

 

90.18

%

 

63.87

%

 

93.57

%

                   

Total capital (to risk-weighted assets) (3):

                 

        Sun Bancorp, Inc.

 

14.87

%

 

14.21

%

 

14.41

%

        Sun National Bank

 

14.08

%

 

13.50

%

 

13.65

%

Tier 1 capital (to risk-weighted assets) (3):

                 

        Sun Bancorp, Inc.

 

12.75

%

 

12.32

%

 

12.34

%

        Sun National Bank

 

12.83

%

 

12.25

%

 

12.40

%

Leverage ratio:

                 

        Sun Bancorp, Inc.

 

9.40

%

 

9.40

%

 

8.99

%

        Sun National Bank

 

9.45

%

 

9.33

%

 

9.02

%

                   

    Book value per common share

$

2.87

 

$

3.06

 

$

2.83

 

    Tangible book value per common share

$

2.42

 

$

2.59

 

$

2.38

 

(1) Amounts for the three months ended are annualized.

(2) Return on average tangible equity is computed by dividing annualized net income for the period by average tangible equity. Average tangible equity equals average equity less average identifiable intangible assets and goodwill.

(3) March 31, 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)

 

March 31, 2014

 

December 31, 2013

 

ASSETS

       

Cash and due from banks

$

49,850

 

$

38,075

 

Interest-earning bank balances

 

232,245

   

229,687

 

Cash and cash equivalents

 

282,095

   

267,762

 

  Restricted cash

 

26,000

   

26,000

 

Investment securities available for sale (amortized cost of $442,681 and $452,023 at March 31, 2014 and December 31, 2013, respectively)

 

439,405

   

440,097

 

Investment securities held to maturity (estimated fair value of $664 and $692 at March 31, 2014 and December 31, 2013, respectively)

 

655

   

681

 

Loans receivable (net of allowance for loan losses of $33,768 and $35,537 at March 31, 2014 and December 31, 2013, respectively)

 

2,050,312

   

2,102,167

 

Loans held-for-sale, at fair value

 

16,048

   

20,662

 

Restricted equity investments, at cost

 

16,664

   

17,019

 

Bank properties and equipment, net

 

48,008

   

49,095

 

Real estate owned

 

2,728

   

2,503

 

Accrued interest receivable

 

6,889

   

7,112

 

Goodwill

 

38,188

   

38,188

 

Intangible assets, net

 

521

   

805

 

Deferred taxes, net

 

682

   

4,575

 

Bank owned life insurance (BOLI)

 

77,697

   

77,236

 

Other assets

 

32,575

   

33,651

 

Total assets

$

3,038,467

 

$

3,087,553

 
             

LIABILITIES AND SHAREHOLDERS' EQUITY

           

Liabilities:

           

Deposits

$

2,573,445

 

$

2,621,571

 

Securities sold under agreements to repurchase – customers

 

471

   

478

 

Advances from the Federal Home Loan Bank of New York (FHLBNY)

 

60,915

   

60,956

 

Obligations under capital lease

 

7,259

   

7,331

 

Junior subordinated debentures

 

92,786

   

92,786

 

Other liabilities

 

54,693

   

59,094

 

Total liabilities

 

2,789,569

   

2,842,216

 
             

Shareholders' equity:

           

Preferred stock, $1 par value, 1,000,000 shares authorized; none issued

 

-

   

-

 

Common stock, $1 par value, 200,000,000 shares authorized; 88,709,281 shares issued and 86,766,358 shares outstanding at March 31, 2014; 88,711,035 shares issued and 86,714,414 shares outstanding at December 31, 2012

 

88,709

   

88,711

 

Additional paid-in capital

 

506,101

   

506,719

 

Retained deficit

 

(319,860)

   

(317,954)

 

Accumulated other comprehensive loss

 

(1,938)

   

(7,055)

 

Deferred compensation plan trust

 

(502)

   

(522)

 

Treasury stock at cost, 1,942,923 shares at March 31, 2014; and 1,996,621 shares at December 31, 2013

 

(23,612)

   

(24,562)

 

Total shareholders' equity

 

248,898

   

245,337

 

Total liabilities and shareholders' equity

$

3,038,467

 

$

3,087,553

 

 

 

 

SUN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands, except per share amounts)

         
   

For the Three Months

Ended March 31,

   

2014

   

2013

INTEREST INCOME

         

Interest and fees on loans

$

21,849

 

$

24,899

Interest on taxable investment securities

 

2,250

   

1,544

Interest on non-taxable investment securities

 

309

   

394

Dividends on restricted equity investments

 

232

   

246

Total interest income

 

24,640

   

27,083

INTEREST EXPENSE

         

Interest on deposits

 

2,281

   

3,015

Interest on funds borrowed

 

436

   

443

Interest on junior subordinated debentures

 

531

   

547

Total interest expense

 

3,248

   

4,005

Net interest income

 

21,392

   

23,078

PROVISION FOR LOAN LOSSES

 

-

   

171

Net interest income after provision for loan losses

 

21,392

   

22,907

NON-INTEREST INCOME

         

Service charges on deposit accounts

 

2,151

   

2,229

Mortgage banking revenue, net

 

635

   

3,404

Gain on sale of investment securities

 

-

   

3,487

Investment products income

 

617

   

679

BOLI income

 

461

   

448

Derivative credit valuation adjustment

 

(38)

   

(504)

Other

 

1,123

   

1,139

Total non-interest income

 

4,949

   

10,882

NON-INTEREST EXPENSE

         

Salaries and employee benefits

 

12,884

   

14,292

Commission expense

 

897

   

2,041

Occupancy expense

 

4,266

   

3,576

Equipment expense

 

1,749

   

1,859

Amortization of intangible assets

 

284

   

921

Data processing expense

 

1,197

   

999

Professional fees

 

1,486

   

2,647

Insurance expenses

 

1,467

   

1,430

Advertising expense

 

586

   

553

Problem loan expense

 

632

   

799

Real estate owned expense, net

 

144

   

234

Office supplies expense

 

251

   

229

Other

 

2,045

   

1,756

Total non-interest expense

 

27,888

   

31,336

(LOSS) INCOME BEFORE INCOME TAXES

 

(1,547)

   

2,453

INCOME TAX EXPENSE

 

359

   

-

NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS

$

(1,906)

 

$

2,453

           

Basic (loss) earnings per share

$

(0.02)

 

$

0.03

Diluted (loss) earnings per share

$

(0.02)

 

$

0.03

Weighted average shares – basic

87,185,839

 

86,245,121

Weighted average shares - diluted

87,185,839

 

86,370,435

 

 

 

 

SUN BANCORP, INC. AND SUBSIDIARIES

 

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)

 

(Dollars in thousands)

 
 

2014

 

2013

 

2013

 

2013

 

2013

 
 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

 

Balance sheet at quarter end: 

                   

Cash and cash equivalents

$

282,095

 

$

267,762

 

$

427,583

 

$

416,239

 

$

285,660

 

Restricted cash

 

26,000

   

26,000

   

26,000

   

26,000

   

26,000

 

Investment securities

 

456,724

   

457,797

   

425,029

   

361,149

   

335,844

 

Loans held-for-investment: 

                             

        Commercial and industrial

 

1,519,993

   

1,587,566

   

1,636,856

   

1,676,133

   

1,737,079

 

        Home equity 

 

184,936

   

188,478

   

192,135

   

195,938

   

200,084

 

        Second mortgage 

 

23,312

   

25,279

   

26,028

   

27,276

   

29,235

 

        Residential real estate 

 

326,945

   

305,552

   

281,537

   

225,147

   

248,875

 

        Other 

 

28,894

   

30,829

   

32,984

   

34,298

   

36,287

 

            Total gross loans held-for-investment

 

2,084,080

   

2,137,704

   

2,169,540

   

2,158,792

   

2,251,560

 

Allowance for loan losses 

 

(33,768)

   

(35,537)

   

(48,854)

   

(48,007)

   

(47,124)

 

            Net loans held-for-investment

 

2,050,312

   

2,102,167

   

2,120,686

   

2,110,785

   

2,204,436

 

   Loans held-for-sale

 

16,048

   

20,662

   

18,707

   

69,417

   

41,469

 

    Goodwill 

 

38,188

   

38,188

   

38,188

   

38,188

   

38,188

 

    Intangible assets

 

521

   

805

   

1,260

   

1,800

   

2,341

 

    Total assets 

 

3,038,467

   

3,087,553

   

3,236,321

   

3,205,921

   

3,227,146

 

    Total deposits

 

2,573,445

   

2,621,571

   

2,752,693

   

2,722,038

   

2,723,337

 

    Securities sold under agreements to repurchase - customers

 

471

   

478

   

554

   

562

   

2,726

 

    Advances from FHLBNY

 

60,915

   

60,956

   

60,997

   

61,037

   

61,077

 

    Obligations under capital lease

 

7,259

   

7,331

   

7,402

   

7,472

   

7,541

 

    Junior subordinated debentures

 

92,786

   

92,786

   

92,786

   

92,786

   

92,786

 

    Total shareholders' equity

 

248,898

   

245,337

   

257,140

   

261,664

   

264,341

 

Quarterly average balance sheet: 

                             

    Loans(1)

                             

        Commercial and industrial 

$

1,560,442

 

$

1,621,222

 

$

1,671,302

 

$

1,719,278

 

$

1,744,553

 

        Home equity

 

187,052

   

190,394

   

194,622

   

197,237

   

204,311

 

        Second mortgage 

 

24,863

   

26,142

   

27,041

   

28,679

   

30,347

 

        Residential real estate

 

331,433

   

312,977

   

299,667

   

307,248

   

330,916

 

        Other

 

25,014

   

26,134

   

27,723

   

28,929

   

30,410

 

            Total gross loans 

 

2,128,804

   

2,176,869

   

2,220,355

   

2,281,371

   

2,340,537

 

    Securities and other interest-earning assets 

 

677,850

   

782,200

   

763,575

   

680,659

   

607,284

 

    Total interest-earning assets 

 

2,806,654

   

2,959,069

   

2,983,930

   

2,962,030

   

2,947,821

 

    Total assets 

 

3,049,321

   

3,205,900

   

3,264,884

   

3,222,053

   

3,206,536

 

    Non-interest-bearing demand deposits 

 

559,606

   

585,530

   

549,684

   

531,210

   

506,600

 

    Total deposits 

 

2,584,588

   

2,718,905

   

2,746,820

   

2,722,646

   

2,703,039

 

    Total interest-bearing liabilities 

 

2,186,394

   

2,295,072

   

2,358,923

   

2,355,081

   

2,360,883

 

    Total shareholders' equity 

 

250,946

   

256,783

   

260,701

   

263,108

   

263,070

 

Capital and credit quality measures:

                             

Total capital (to risk-weighted assets) (2):

                             

        Sun Bancorp, Inc.

 

14.87

%

 

14.41

%

 

14.72

%

 

14.80

%

 

14.21

%

        Sun National Bank

 

14.08

%

 

13.65

%

 

13.96

%

 

14.05

%

 

13.50

%

    Tier 1 capital (to risk-weighted assets) (2):

                             

        Sun Bancorp, Inc.

 

12.75

%

 

12.34

%

 

12.76

%

 

12.91

%

 

12.32

%

        Sun National Bank

 

12.83

%

 

12.40

%

 

12.70

%

 

12.79

%

 

12.25

%

    Leverage ratio:

                             

        Sun Bancorp, Inc.

 

9.40

%

 

8.99

%

 

9.13

%

 

9.43

%

 

9.40

%

        Sun National Bank

 

9.45

%

 

9.02

%

 

9.09

%

 

9.33

%

 

9.33

%

                               

    Average equity to average assets

 

8.23

%

 

8.01

%

 

7.99

%

 

8.17

%

 

8.20

%

    Allowance for loan losses to total gross loans held-for-investment 

 

1.62

%

 

1.66

%

 

 

2.25

%

 

 

2.22

%

 

 

2.09

%

   Non-performing loans held-for-investment to gross loans held-for-investment

 

1.80

%

 

1.78

%

 

2.55

%

 

3.32

%

 

3.28

%

    Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned

 

1.91

%

 

1.87

%

 

2.76

%

 

3.51

%

 

3.57

%

   

 Allowance for loan losses to non-performing loans held-for-investment

 

 

90.18

 

%

 

 

93.57

 

%

 

 

88.19

 

%

 

 

66.93

 

%

 

 

63.87

 

%

                               

Other data:

                             

Net (charge-offs) recoveries

 

(1,768)

   

(15,452)

   

123

   

2,766

   

1,080

 

Non-performing assets:

                             

           Non-accrual loans

$

29,387

 

$

29,811

 

$

44,976

 

$

54,031

 

$

57,151

 

           Troubled debt restructurings, non-accrual

 

8,017

   

8,166

   

10,419

   

17,693

   

16,632

 

           Loans past due 90 days and accruing

 

42

   

-

   

-

   

-

   

-

 

           Real estate owned, net 

 

2,728

   

2,503

   

5,059

   

6,743

   

8,472

 

                Total non-performing assets

$

40,174

 

$

40,480

   

60,454

   

78,467

 

$

82,255

 

(1)      Average balances include non-accrual loans and loans held-for-sale.

(2)      March 31, 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

 

2013

 

2013

 

2013

 

2013

 
 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

 

Profitability for the quarter:

                   

Tax-equivalent interest income

$

24,806

 

$

25,667

 

$

26,955

 

$

25,886

 

$

27,295

 

Interest expense

 

3,248

   

3,565

   

3,808

   

3,935

   

4,005

 

Tax-equivalent net interest income

 

21,558

   

22,102

   

23,147

   

21,951

   

23,290

 

Tax-equivalent adjustment

 

166

   

167

   

167

   

175

   

212

 

Provision for loan losses

 

-

   

2,135

   

724

   

(1,883)

   

171

 

Non-interest income

 

4,949

   

4,742

   

5,799

   

10,258

   

10,882

 

Non-interest expense excluding amortization of intangible assets

 

27,604

   

32,002

   

32,377

   

32,698

   

30,415

 

Amortization of intangible assets

 

284

   

455

   

540

   

541

   

921

 

(Loss) income before income taxes

 

(1,547)

   

(7,915)

   

(4,862)

   

678

   

2,453

 

Income tax expense

 

359

   

297

   

-

   

-

   

-

 

Net (loss) income

 

(1,906)

   

(8,212)

   

(4,862)

   

678

   

2,453

 

Net (loss) income available to common shareholders

$

 

 

(1,906)

 

$

 

 

(8,212)

 

$

 

 

(4,862)

 

$

 

 

678

 

$

 

 

2,453

 

Financial ratios:

                             

Return on average assets (1)

 

(0.25)

%

 

(1.02)

%

 

(0.60)

%

 

0.08

%

 

0.31

%

Return on average equity (1)

 

(3.04)

%

 

(12.79)

%

 

(7.46)

%

 

1.03

%

 

3.73

%

Return on average tangible equity (1),(2)

 

(3.59)

%

 

(15.10)

%

 

(8.80)

%

 

1.22

%

 

4.42

%

Net interest margin (1)

 

3.07

%

 

2.99

%

 

3.10

%

 

2.96

%

 

3.16

%

Efficiency ratio

 

105.87

%

 

121.67

%

 

114.38

%

 

103.77

%

 

92.27

%

Per share data:

                             

(Loss) income per common share:

                             

Basic

$

(0.02)

 

$

(0.09)

 

$

(0.06)

 

$

0.01

 

$

0.03

 

Diluted

$

(0.02)

 

$

(0.09)

 

$

(0.06)

 

$

0.01

 

$

0.03

 

Book value

$

2.84

 

$

2.83

 

$

2.97

 

$

3.03

 

$

3.06

 

Tangible book value

$

2.42

 

$

2.38

 

$

2.52

 

$

2.56

 

$

2.59

 

Average basic shares

87,185,839

 

86,583,363

 

86,499,587

 

86,323,099

 

86,245,121

 

Average diluted shares

87,185,839

 

86,583,363

 

86,499,587

 

86,356,796

 

86,370,435

 

Non-interest income:

                             

Service charges on deposit accounts

$

2,151

 

$

2,263

 

$

2,314

 

$

2,250

 

$

2,229

 

Mortgage banking revenue, net

 

635

   

1,000

   

1,593

   

5,601

   

3,404

 

Net gain on sale of investment securities

 

-

   

-

   

2

         

3,487

 

Investment products income

 

617

   

599

   

678

   

728

   

679

 

BOLI income

 

461

   

466

   

482

   

486

   

448

 

Derivative credit valuation adjustment

 

(38)

   

(710)

   

(380)

   

6

   

(504)

 

Other income

 

1,123

   

1,124

   

1,110

   

1,187

   

1,139

 

        Total non-interest income

$

4,949

 

$

4,742

 

$

5,799

 

$

10,258

 

$

10,882

 

Non-interest expense:

                             

  Salaries and employee benefits

$

12,884

 

$

13,070

 

$

12,656

 

$

13,019

 

$

14,292

 

   Commission expense

 

897

   

1,098

   

2,001

   

2,556

   

2,041

 

    Occupancy expense

 

4,266

   

3,406

   

3,456

   

3,081

   

3,576

 

    Equipment expense

 

1,749

   

1,871

   

1,796

   

1,830

   

1,859

 

    Amortization of intangible assets

 

284

   

455

   

540

   

541

   

921

 

    Data processing expense

 

1,197

   

1,223

   

995

   

1,027

   

999

 

    Professional fees

 

1,486

   

4,891

   

5,947

   

4,761

   

2,647

 

    Insurance expense

 

1,467

   

1,498

   

1,496

   

1,542

   

1,430

 

    Advertising expense

 

586

   

903

   

676

   

698

   

553

 

    Problem loan costs

 

632

   

769

   

816

   

1,023

   

799

 

    Real estate owned expense, net

 

144

   

529

   

252

   

1,255

   

234

 

    Office supplies expense

 

251

   

245

   

192

   

191

   

229

 

    Other expense

 

2,045

   

2,499

   

2,094

   

1,715

   

1,756

 

       Total non-interest expense

$

27,888

 

$

32,457

 

$

32,917

 

$

33,239

 

$

31,336

 

(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.

 

 

SUN BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS (Unaudited)

(Dollars in thousands)

     
 

 For the Three Months Ended March 31,

 
 

2014

 

2013

 
 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/ 

 
 

Balance

 

Expense

 

Cost

 

Balance

 

Expense

 

Cost  

 

Interest-earning assets:

                         

Loans receivable (1),(2):

                         

Commercial and industrial

$

1,560,442

 

$

16,349

 

4.19

%

$

1,744,553

   

18,959

 

4.35

%

Home equity

 

187,052

   

1,762

 

3.77

   

204,311

   

1,906

 

3.73

 

Second mortgage

 

24,863

   

357

 

5.74

   

30,347

   

428

 

5.64

 

Residential real estate

 

331,433

   

2,958

 

3.57

   

330,916

   

3,071

 

3.71

 

Other

 

25,014

   

423

 

6.76

   

30,410

   

535

 

7.04

 

Total loans receivable

 

2,128,804

   

21,849

 

4.11

   

2,340,537

   

24,899

 

4.26

 

Investment securities(3)

 

457,737

   

2,818

 

2.46

   

428,024

   

2,285

 

2.14

 

Interest-earning bank balances

 

220,113

   

139

 

0.25

   

179,260

   

111

 

0.25

 

Total interest-earning assets

 

2,806,654

   

24,806

 

3.54

   

2,947,821

   

27,295

 

3.70

 

Non-interest earning assets:

                               

  Cash and due from banks

 

67,342

             

72,775

           

  Bank properties and equipment, net

 

48,605

             

50,363

           

  Goodwill and intangible assets, net

 

38,852

             

40,983

           

  Other assets

 

87,868

             

94,594

           

Total non-interest-earning assets

 

242,667

             

258,715

           

Total assets

$

3,049,321

           

$

3,206,536

           
                                 

Interest-bearing liabilities:

                               

Interest-bearing deposit accounts:

                               

Interest-bearing demand deposits

$

1,149,460

 

$

808

 

0.28

%

$

1,241,861

   

1,111

 

0.36

%

Savings deposits

 

267,305

   

180

 

0.27

   

265,391

   

215

 

0.32

 

Time deposits

 

608,217

   

1,293

 

0.85

   

689,187

   

1,689

 

0.98

 

Total interest-bearing deposit accounts

 

2,024,982

   

2,281

 

0.45

   

2,196,439

   

3,015

 

0.55

 

Short-term borrowings:

                               

Securities sold under agreements to repurchase - customers

 

404

   

-

 

-

   

2,926

   

1

 

0.14

 

Long-term borrowings:

                               

FHLBNY advances (4)

 

60,929

   

313

 

2.05

   

61,160

   

316

 

2.07

 

Obligations under capital lease

 

7,293

   

123

 

6.75

   

7,572

   

126

 

6.66

 

Junior subordinated debentures

 

92,786

   

531

 

2.29

   

92,786

   

547

 

2.36

 

Total borrowings

 

161,412

   

967

 

2.40

   

164,444

   

990

 

2.41

 

Total interest-bearing liabilities

 

2,186,394

   

3,248

 

0.59

   

2,360,883

   

4,005

 

0.68

 

Non-interest bearing liabilities:

                               

  Non-interest-bearing demand deposits

 

559,606

           

506,600

       

  Other liabilities

 

52,375

             

75,983

           

Total non-interest bearing liabilities

 

611,981

             

582,583

           

Total liabilities

 

2,798,375

             

2,943,466

           

Shareholders' equity 

 

250,946

             

263,070

           

Total liabilities and shareholders' equity

$

3,049,321

           

$

3,206,536

           
                                 

Net interest income

     

$

21,558

           

$

23,290

     

Interest rate spread (5)

           

2.95

%

           

3.02

%

Net interest margin (6)

           

3.07

%

           

3.16

%

Ratio of average interest-earning assets to average interest-bearing liabilities

           

128.37

%

           

124.86

%

   

(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 March 31, 2014 and 2013 were $166 thousand and $212 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

 
 

March 31, 2014

   

December 31, 2013

 
 

Average

 

Income/

 

Yield/

   

Average

 

Income/

 

Yield/

 
 

Balance

 

Expense

 

Cost

   

Balance

 

Expense

 

Cost

 

Interest-earning assets:

                         

Loans receivable (1),(2):

                         

Commercial and industrial

$

1,560,442

 

$

16,349

   

4.19

%

 

$

1,621,222

 

$

17,406

   

4.29

%

Home equity

 

187,052

   

1,762

   

3.77

     

190,394

   

1,853

   

3.89

 

Second mortgage

 

24,863

   

357

   

5.74

     

26,142

   

367

   

5.62

 

Residential real estate

 

331,433

   

2,958

   

3.57

     

312,977

   

2,671

   

3.41

 

Other

 

25,014

   

423

   

6.76

     

26,134

   

456

   

6.98

 

Total loans receivable

 

2,128,804

   

21,849

   

4.11

     

2,176,869

   

22,753

   

4.18

 

Investment securities (3)

 

457,737

   

2,818

   

2.46

     

439,788

   

2,693

   

2.45

 

Interest-earning bank balances

 

220,113

   

139

   

0.25

     

342,412

   

221

   

0.26

 

Total interest-earning assets

 

2,806,654

   

24,806

   

3.54

     

2,959,069

   

25,667

   

3.47

 

Non-interest earning assets:

                                     

  Cash and due from banks

 

67,342

                 

66,662

             

  Bank properties and equipment, net

 

48,605

                 

49,300

             

  Goodwill and intangible assets, net

 

38,852

                 

39,190

             

  Other assets

 

87,868

                 

91,679

             

Total non-interest-earning assets

 

242,667

                 

246,831

             

Total assets

$

3,049,321

               

$

3,205,900

             
                                       

Interest-bearing liabilities:

                                     

Interest-bearing deposit accounts:

                                     

Interest-bearing demand deposits

$

1,149,460

 

$

808

   

0.28

%

 

$

1,223,184

 

$

960

   

0.31

%

Savings deposits

 

267,305

   

180

   

0.27

     

268,196

   

195

   

0.29

 

Time deposits

 

608,217

   

1,293

   

0.85

     

641,995

   

1,421

   

0.89

 

Total interest-bearing deposit accounts

 

2,024,982

   

2,281

   

0.45

     

2,133,375

   

2,576

   

0.48

 

Short-term borrowings:

                                     

Fed Funds Purchased

 

-

   

-

   

-

     

54

   

-

   

-

 

Securities sold under agreements to repurchase - customers

 

404

   

-

   

-

     

512

   

-

   

-

 

Long-term borrowings:

                                     

FHLBNY advances (4)

 

60,929

   

313

   

2.05

     

60,981

   

320

   

2.10

 

Obligations under capital lease

 

7,293

   

123

   

6.75

     

7,364

   

124

   

6.74

 

Junior subordinated debentures

 

92,786

   

531

   

2.29

     

92,786

   

545

   

2.35

 

Total borrowings

 

161,412

   

967

   

2.40

     

161,697

   

989

   

2.45

 

Total interest-bearing liabilities

 

2,186,394

   

3,248

   

0.59

     

2,295,072

   

3,565

   

0.62

 

Non-interest bearing liabilities:

                                     

  Non-interest-bearing demand deposits

 

559,606

                 

585,530

             

  Other liabilities

 

52,375

                 

68,515

             

Total non-interest bearing liabilities

 

611,981

                 

654,045

             

Total liabilities

 

2,798,375

                 

2,949,117

             

Shareholders' equity 

 

250,946

                 

256,783

             

Total liabilities and shareholders' equity

$

3,049,321

               

$

3,205,900

             
                                       

Net interest income

     

$

21,558

               

$

22,102

       

Interest rate spread (5)

             

2.95

%

               

2.85

%

Net interest margin (6)

             

3.07

%

               

2.99

%

Ratio of average interest-earning assets to average interest-bearing liabilities

             

128.37

%

               

128.93

%

   

(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 March 31, 2014 and December 31, 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.

 
                                               

 

SOURCE Sun Bancorp, Inc.




Media Contact

Mike Dinneen
SVP, Director of Marketing
350 Fellowship Rd.
Suite 101
Mount Laurel, NJ 08054
mdinneen@sunnb.com

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