Exhibit 99
News Release
For Immediate Release
Contact: Dan Chila, EVP, Chief Financial Officer (856) 691-7700
Sun Bancorp, Inc. Reports Earnings for the First Quarter 2007
Our mission is uncompromising…
…to be the Premier Community Bank in every community we serve
VINELAND, NJ, April 19, 2007 - Sun Bancorp, Inc. (NASDAQ: SNBC) today reported net income of $4.7 million, or $.22 per share, for the quarter ended March 31, 2007, compared to net income of $4.2 million, or $.20 per share, for the first quarter 2006. Net income for the first quarter 2007 includes a net charge of approximately $874,000 (pre-tax), or $.02 per share. The net charge was a result of severance and other related expenses of approximately $2.3 million (pre-tax), or $.07 per share, offset by a net gain realized from the sale of three branches during the quarter of $1.4 million (pre-tax), or $.05 per share.
“We are pleased with our results for the quarter. Excluding the net charge for the quarter of $.02 per share, earnings were in line with expectations,” said Sidney R. Brown, acting president and chief executive officer of Sun Bancorp, Inc. “Our business momentum continues to be favorable as the Company realized good sequential growth for both loans and deposits for the quarter. This, combined with the developments during the first quarter, will lead to improved net income throughout the remaining quarters. During the quarter, we completed the previously announced sale of three branch offices and continue to accelerate the implementation of permanent savings and process improvements throughout the organization. We are focusing on every aspect of our business, as our Board and management team remain committed to our goal of transforming Sun National Bank into a high performing dominant bank within our footprint.”
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Sun Bancorp 1Q 2007 - page two
The following is an overview of the key financial highlights for the quarter:
| · | Total assets of $3.325 billion at March 31, 2007, compared to $3.324 billion at December 31, 2006 and $3.284 billion at March 31, 2006. During the quarter, in conjunction with the sale of branches, the company sold loans of approximately $19.0 million and deposits of approximately $40.0 million. |
| · | Total loans before allowance for loan losses were $2.435 billion at March 31, 2007, an increase of $219.9 million, or 9.9%, over total loans at March 31, 2006, and an increase of $49.3 million, or 2.1%, over December 31, 2006. Linked quarter loan growth normalized for branch sales approximated 2.9%, or 11.6% annualized. |
| · | Credit quality trends remain stable. Total non-performing assets of $15.3 million at March 31, 2007, or .63% of total loans and real estate owned, compared to $15.2 million, or .64%, at December 31, 2006. |
| · | Total deposits were $2.694 billion at March 31, 2007, an increase of $91.3 million, or 3.5%, over deposits at March 31, 2006, and an increase of $26.3 million, or 1.0%, over December 31, 2006. Linked quarter deposit growth normalized for branch sales approximated 2.5%, or 10.0% annualized. |
| · | Net interest income (tax-equivalent basis) for the first quarter of $24.7 million compares to $24.6 million for the comparable prior year period and $24.8 million for the linked fourth quarter 2006. Net interest margin for the quarter of 3.34% compares to 3.40% for the comparable prior year period and 3.37% for the linked fourth quarter 2006. The margin for the quarter is at forecast and continues to reflect the impact of the increased costs of interest-bearing deposits attributable to the Bank’s promotional deposit pricing strategy in support of the retail transformation initiative. |
| · | Total operating non-interest income for the quarter of $5.6 million increased $1.2 million, or 26.2%, over the comparable prior year period and increased 4.3% over the linked fourth quarter 2006. The primary increase year-over-year was attributable to increases in service charges on deposit accounts of $1.0 million, or 47.3%. |
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Sun Bancorp 1Q 2007 - page three
| · | Total operating non-interest expenses for the quarter of $21.3 million decreased $1.0 million, or 4.6%, over the comparable prior year period. Total operating non-interest expenses are essentially flat over the linked fourth quarter 2006. The Company continues to focus on its profitability enhancement initiatives with particular emphasis on expense savings. The efficiency ratio for the quarter, excluding the gain on sale of branches of $1.4 million and the severance related charges of $2.3 million for the quarter, was 71.07%, compared to 77.24% for the comparable prior year period, and 70.78% for the linked fourth quarter 2006. |
The Company will hold its regular quarterly conference call on Friday, April 20, 2007 at 10 a.m. (ET). The call will be Webcast live via the Sun Bancorp Web site.
Participants may call 1-800-391-2548 and give the verbal password: vi57608. The conference call also will be Web cast live through the Sun Bancorp Web site at www.sunnb.com. Participants are advised to call in or log on 10 minutes ahead of the scheduled start of the call. An Internet-based replay will be available at the Web site for 48 hours following the call.
Sun Bancorp, Inc. is a multi-state bank holding company headquartered in Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving customers through more than 70 branch locations in Southern and Central New Jersey and New Castle County, Delaware. The Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the Federal Deposit Insurance Corporation (FDIC). For more information about Sun National Bank and Sun Bancorp, Inc., visit www.sunnb.com.
The foregoing material contains forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
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SUN BANCORP, INC. AND SUBSIDIARIES |
FINANCIAL HIGHLIGHTS (unaudited) |
(Dollars in thousands, except per share data) | |
| | | For the Three Months Ended | |
| | | March 31, | | December 31, | |
| | | 2007 | | 2006 | | 2006 | |
| Profitability for the period: | | | | | | | |
| Net interest income | | $ | 24,333 | | $ | 24,421 | | $ | 24,545 | |
| Provision for loan losses | | | 750 | | | 625 | | | 990 | |
| Non-interest income | | | 7,017 | | | 4,396 | | | 5,012 | |
| Non-interest expense | | | 23,571 | | | 22,273 | | | 21,889 | |
| Income before income taxes | | | 7,029 | | | 5,919 | | | 6,678 | |
| Net income | | $ | 4,685 | | $ | 4,173 | | $ | 4,454 | |
| | | | | | | | | | | |
| Financial ratios: | | | | | | | | | | |
Return on average assets(1) | | | 0.57 | % | | 0.52 | % | | 0.54 | % |
Return on average equity(1) | | | 5.44 | % | | 5.34 | % | | 5.24 | % |
Return on average tangible equity(1),(2) | | | 9.93 | % | | 10.38 | % | | 9.78 | % |
Net interest margin(1) | | | 3.34 | % | | 3.40 | % | | 3.37 | % |
| Efficiency ratio | | | 75.19 | % | | 77.29 | % | | 74.06 | % |
Efficiency ratio, excluding non-operating income and non-operating expense(3) | | | 71.07 | % | | 77.24 | % | | 70.78 | % |
| | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | |
| Basic | | $ | 0.23 | | $ | 0.21 | | $ | 0.22 | |
| Diluted | | $ | 0.22 | | $ | 0.20 | | $ | 0.21 | |
| | | | | | | | | | | |
| Average equity to average assets | | | 10.44 | % | | 9.69 | % | | 10.34 | % |
| | | March 31, | | December 31, | |
| | | 2007 | | 2006 | | 2006 | |
| At period-end: | | | | | | | | | | |
| Total assets | | $ | 3,325,189 | | $ | 3,284,248 | | $ | 3,324,055 | |
| Total deposits | | | 2,694,304 | | | 2,603,040 | | | 2,667,997 | |
| Loans receivable, net of allowance for loan losses | | | 2,408,499 | | | 2,190,182 | | | 2,359,616 | |
| Investments | | | 480,721 | | | 656,456 | | | 505,090 | |
| Borrowings | | | 149,799 | | | 236,985 | | | 160,622 | |
| Junior subordinated debentures | | | 106,758 | | | 106,700 | | | 106,742 | |
| Shareholders’ equity | | | 348,595 | | | 321,355 | | | 342,227 | |
| | | | | | | | | | | |
| Credit quality and capital ratios: | | | | | | | | | | |
| Allowance for loan losses to total gross loans | | | 1.07 | % | | 1.10 | % | | 1.08 | % |
| Non-performing assets to total gross loans and real estate owned | | | 0.63 | % | | 0.59 | % | | 0.64 | % |
| Allowance for loan losses to non-performing loans | | | 177.14 | % | | 214.49 | % | | 175.50 | % |
| | | | | | | | | | | |
Total capital (to risk-weighted assets)(4): | | | | | | | | | | |
| Sun Bancorp, Inc. | | | 11.98 | % | | 11.54 | % | | 11.89 | % |
| Sun National Bank | | | 10.63 | % | | 10.40 | % | | 10.57 | % |
Tier 1 capital (to risk-weighted assets)(4): | | | | | | | | | | |
| Sun Bancorp, Inc. | | | 11.00 | % | | 10.56 | % | | 10.91 | % |
| Sun National Bank | | | 9.65 | % | | 9.43 | % | | 9.59 | % |
Leverage ratio(4): | | | | | | | | | | |
| Sun Bancorp, Inc. | | | 9.57 | % | | 8.91 | % | | 9.40 | % |
| Sun National Bank | | | 8.40 | % | | 8.00 | % | | 8.28 | % |
| | | | | | | | | | | |
| Book value | | $ | 16.97 | | $ | 15.98 | | $ | 16.69 | |
| Tangible book value | | $ | 9.43 | | $ | 8.00 | | $ | 9.05 | |
| (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) Efficiency ratio, excluding non-operating income and non-operating expenses is computed by dividing non-interest expense for the period by the summation of net interest income and non-interest income. Non-interest expense excludes $2.3 million and $240,000 of severance related expense for the three months ended March 31, 2007 and December 31, 2006, respectively, and $495,000 of branch rationalization charges for the three months ended December 31, 2006. Non-interest income excludes $1.4 million and $(330,000) as a result of branch rationalization for the three months ended March 31, 2006 and December 31, 2007, respectively. |
| (4) March 31, 2007 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) | | | | | |
| | | March 31, | | December 31, | |
| | | 2007 | | 2006 | |
ASSETS | | | | | |
| Cash and due from banks | | $ | 75,280 | | $ | 74,991 | |
| Interest-earning bank balances | | | 5,618 | | | 48,066 | |
| Federal funds sold | | | 57,151 | | | 47,043 | |
| Cash and cash equivalents | | | 138,049 | | | 170,100 | |
| Investment securities available for sale (amortized cost - $444,278 and $467,975 at March 31, 2007 and December 31, 2006, respectively) | | | 439,888 | | | 461,920 | |
| Investment securities held to maturity (estimated fair value - $22,643 and $24,846 at March 31, 2007 and December 31, 2006, respectively) | | | 23,238 | | | 25,441 | |
| Loans receivable (net of allowance for loan losses - $26,027 and $25,658 at March 31, 2007 and December 31, 2006, respectively) | | | 2,408,499 | | | 2,359,616 | |
| Restricted equity investments | | | 17,595 | | | 17,729 | |
| Bank properties and equipment, net | | | 42,152 | | | 42,292 | |
| Real estate owned, net | | | 600 | | | 600 | |
| Accrued interest receivable | | | 18,111 | | | 17,419 | |
| Goodwill | | | 127,936 | | | 128,117 | |
| Intangible assets, net | | | 27,011 | | | 28,570 | |
| Deferred taxes, net | | | 3,635 | | | 3,939 | |
| Bank owned life insurance | | | 64,639 | | | 57,370 | |
| Other assets | | | 13,836 | | | 10,942 | |
| Total assets | | $ | 3,325,189 | | $ | 3,324,055 | |
| | | | | | | | |
LIABILITIES & SHAREHOLDERS’ EQUITY | | | | | | | |
| LIABILITIES | | | | | | | |
| Deposits | | $ | 2,694,304 | | $ | 2,667,997 | |
| Advances from the Federal Home Loan Bank (FHLB) | | | 100,481 | | | 103,560 | |
| Federal funds purchased | | | 1,500 | | | - | |
| Securities sold under agreements to repurchase - customers | | | 42,511 | | | 51,740 | |
| Obligation under capital lease | | | 5,307 | | | 5,322 | |
| Junior subordinated debentures | | | 106,758 | | | 106,742 | |
| Other liabilities | | | 25,733 | | | 46,467 | |
| Total liabilities | | | 2,976,594 | | | 2,981,828 | |
| | | | | | | | |
| SHAREHOLDERS’ EQUITY | | | | | | | |
| Preferred stock, $1 par value, 1,000,000 shares authorized, none issued | | | - | | | - | |
| Common stock, $1 par value, 50,000,000 shares authorized, 20,544,129 and 20,507,549 issued at March 31, 2007 and December 31, 2006, respectively | | | 20,544 | | | 20,508 | |
| Additional paid-in capital | | | 305,427 | | | 304,857 | |
| Retained earnings | | | 25,479 | | | 20,794 | |
| Accumulated other comprehensive loss | | | (2,855 | ) | | (3,932 | ) |
| Total shareholders’ equity | | | 348,595 | | | 342,227 | |
| Total liabilities and shareholders’ equity | | $ | 3,325,189 | | $ | 3,324,055 | |
SUN BANCORP, INC. AND SUBSIDIARIES | |
CONSOLIDATED STATEMENTS OF INCOME (unaudited) | |
(Dollars in thousands, except per share data) | | | | | |
| | | For the Three Months | |
| | | Ended March 31, | |
| | | 2007 | | 2006 | |
INTEREST INCOME | | | | | |
| Interest and fees on loans | | $ | 43,528 | | $ | 36,595 | |
| Interest on taxable investment securities | | | 4,117 | | | 5,577 | |
| Interest on non-taxable investment securities | | | 658 | | | 256 | |
| Dividends on restricted equity investments | | | 266 | | | 314 | |
| Interest on federal funds sold | | | 522 | | | 280 | |
| Total interest income | | | 49,091 | | | 43,022 | |
INTEREST EXPENSE | | | | | | | |
| Interest on deposits | | | 20,834 | | | 13,647 | |
| Interest on borrowed funds | | | 1,771 | | | 3,044 | |
| Interest on junior subordinated debentures | | | 2,153 | | | 1,910 | |
| Total interest expense | | | 24,758 | | | 18,601 | |
| Net interest income | | | 24,333 | | | 24,421 | |
PROVISION FOR LOAN LOSSES | | | 750 | | | 625 | |
| Net interest income after provision for loan losses | | | 23,583 | | | 23,796 | |
NON-INTEREST INCOME | | | | | | | |
| Service charges on deposit accounts | | | 3,129 | | | 2,124 | |
| Other service charges | | | 72 | | | 78 | |
| Net gain on sale of branches | | | 1,443 | | | - | |
| Net gain on sale of loans | | | 508 | | | 284 | |
| Net loss on sale of investment securities | | | - | | | (20 | ) |
| Net gain on derivative instruments | | | 234 | | | 366 | |
| Other | | | 1,631 | | | 1,564 | |
| Total non-interest income | | | 7,017 | | | 4,396 | |
NON-INTEREST EXPENSE | | | | | | | |
| Salaries and employee benefits | | | 12,589 | | | 11,477 | |
| Occupancy expense | | | 3,012 | | | 2,944 | |
| Equipment expense | | | 1,951 | | | 1,927 | |
| Data processing expense | | | 1,008 | | | 1,059 | |
| Advertising expense | | | 473 | | | 423 | |
| Amortization of intangible assets | | | 1,182 | | | 1,188 | |
| Real estate owned expense, net | | | 6 | | | (27 | ) |
| Other | | | 3,350 | | | 3,282 | |
| Total non-interest expense | | | 23,571 | | | 22,273 | |
INCOME BEFORE INCOME TAXES | | | 7,029 | | | 5,919 | |
INCOME TAXES | | | 2,344 | | | 1,746 | |
NET INCOME | | $ | 4,685 | | $ | 4,173 | |
| | | | | | | | |
Basic earnings per share | | $ | 0.23 | | $ | 0.21 | |
Diluted earnings per share | | $ | 0.22 | | $ | 0.20 | |
SUN BANCORP, INC. AND SUBSIDIARIES | |
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited) | |
(Dollars in thousands) | |
| | 2007 | | 2006 | | 2006 | | 2006 | | 2006 | |
| | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
| Balance sheet at quarter end: | | | | | | | | | | |
| Loans: | | | | | | | | | | |
| Commercial and industrial | $ | 1,992,523 | | $ | 1,945,135 | | $ | 1,927,964 | | $ | 1,898,976 | | $ | 1,846,580 | |
| Home equity | | 234,982 | | | 232,321 | | | 222,473 | | | 206,642 | | | 183,363 | |
| Second mortgage | | 76,449 | | | 77,337 | | | 78,251 | | | 77,802 | | | 72,344 | |
| Residential real estate | | 38,798 | | | 38,418 | | | 33,460 | | | 27,509 | | | 28,846 | |
| Other | | 91,774 | | | 92,063 | | | 88,896 | | | 84,347 | | | 83,497 | |
| Total gross loans | | 2,434,526 | | | 2,385,274 | | | 2,351,044 | | | 2,295,276 | | | 2,214,630 | |
| Allowance for loan losses | | (26,027 | ) | | (25,658 | ) | | (25,785 | ) | | (24,680 | ) | | (24,448 | ) |
| Net loans | | 2,408,499 | | | 2,359,616 | | | 2,325,259 | | | 2,270,596 | | | 2,190,182 | |
| Goodwill | | 127,936 | | | 128,117 | | | 128,351 | | | 128,352 | | | 128,311 | |
| Intangible assets, net | | 27,011 | | | 28,570 | | | 29,762 | | | 30,955 | | | 32,148 | |
| Total assets | | 3,325,189 | | | 3,324,055 | | | 3,262,894 | | | 3,210,597 | | | 3,284,248 | |
| Total deposits | | 2,694,304 | | | 2,667,997 | | | 2,636,954 | | | 2,586,034 | | | 2,603,040 | |
| Advances from the Federal Home Loan Bank (FHLB) | | 100,481 | | | 103,560 | | | 108,889 | | | 114,163 | | | 119,382 | |
| Federal funds purchased | | 1,500 | | | - | | | - | | | - | | | - | |
| Securities sold under agreements to repurchase - FHLB | | - | | | - | | | - | | | 15,000 | | | 70,000 | |
| Securities sold under agreements to repurchase - customers | | 42,511 | | | 51,740 | | | 51,423 | | | 39,864 | | | 42,236 | |
| Obligation under capital lease | | 5,307 | | | 5,322 | | | 5,337 | | | 5,352 | | | 5,367 | |
| Junior subordinated debentures | | 106,758 | | | 106,742 | | | 106,726 | | | 106,710 | | | 106,700 | |
| Total shareholders’ equity | | 348,595 | | | 342,227 | | | 335,849 | | | 327,669 | | | 321,355 | |
| Quarterly average balance sheet: | | | | | | | | | | | | | | | |
| Loans: | | | | | | | | | | | | | | | |
| Commercial and industrial | $ | 1,976,223 | | $ | 1,937,580 | | $ | 1,902,279 | | $ | 1,868,587 | | $ | 1,811,832 | |
| Home equity | | 233,837 | | | 229,002 | | | 213,888 | | | 194,103 | | | 170,523 | |
| Second mortgage | | 76,167 | | | 77,593 | | | 77,500 | | | 75,059 | | | 66,426 | |
| Residential real estate | | 37,709 | | | 35,323 | | | 27,443 | | | 28,784 | | | 29,472 | |
| Other | | 92,705 | | | 90,358 | | | 87,071 | | | 86,047 | | | 82,450 | |
| Total gross loans | | 2,416,641 | | | 2,369,856 | | | 2,308,181 | | | 2,252,580 | | | 2,160,703 | |
| Securities and other interest-earning assets | | 540,473 | | | 578,983 | | | 570,366 | | | 657,636 | | | 731,744 | |
| Total interest-earning assets | | 2,957,114 | | | 2,948,839 | | | 2,878,547 | | | 2,910,216 | | | 2,892,447 | |
| Total assets | | 3,301,412 | | | 3,288,123 | | | 3,216,807 | | | 3,250,206 | | | 3,225,820 | |
| Non-interest-bearing demand deposits | | 458,201 | | | 480,339 | | | 498,416 | | | 503,081 | | | 496,249 | |
| Total deposits | | 2,664,668 | | | 2,648,713 | | | 2,580,973 | | | 2,599,596 | | | 2,533,158 | |
| Total interest-bearing liabilities | | 2,465,176 | | | 2,445,320 | | | 2,370,114 | | | 2,407,521 | | | 2,399,663 | |
| Total shareholders' equity | | 344,717 | | | 339,839 | | | 331,282 | | | 325,346 | | | 312,428 | |
| | | | | | | | | | | | | | | | |
| Capital and credit quality measures: | | | | | | | | | | | | | | | |
Total Capital (to Risk-Weighted Assets)(1): | | | | | | | | | | | | | | | |
| Sun Bancorp, Inc. | | 11.98 | % | | 11.89 | % | | 11.87 | % | | 11.59 | % | | 11.54 | % |
| Sun National Bank | | 10.63 | % | | 10.57 | % | | 10.59 | % | | 10.35 | % | | 10.40 | % |
Tier I Capital (to Risk-Weighted Assets)(1): | | | | | | | | | | | | | | | |
| Sun Bancorp, Inc. | | 11.00 | % | | 10.91 | % | | 10.87 | % | | 10.63 | % | | 10.56 | % |
| Sun National Bank | | 9.65 | % | | 9.59 | % | | 9.58 | % | | 9.38 | % | | 9.43 | % |
Leverage Ratio(1): | | | | | | | | | | | | | | | |
| Sun Bancorp, Inc. | | 9.57 | % | | 9.40 | % | | 9.41 | % | | 9.10 | % | | 8.91 | % |
| Sun National Bank | | 8.40 | % | | 8.28 | % | | 8.31 | % | | 8.04 | % | | 8.00 | % |
| | | | | | | | | | | | | | | | |
| Average equity to average assets | | 10.44 | % | | 10.34 | % | | 10.30 | % | | 10.01 | % | | 9.69 | % |
| Allowance for loan losses to total gross loans | | 1.07 | % | | 1.08 | % | | 1.10 | % | | 1.08 | % | | 1.10 | % |
| Non-performing assets to total gross loans and real estate owned | | 0.63 | % | | 0.64 | % | | 0.63 | % | | 0.54 | % | | 0.59 | % |
| Allowance for loan losses to non-performing loans | | 177.14 | % | | 175.50 | % | | 182.37 | % | | 210.08 | % | | 214.49 | % |
| | | | | | | | | | | | | | | | |
| Other data: | | | | | | | | | | | | | | | |
| Net (charge-offs) recoveries | $ | (381 | ) | $ | (1,117 | ) | $ | (212 | ) | $ | (643 | ) | $ | 101 | |
| Non-performing assets: | | | | | | | | | | | | | | | |
| Non-accrual loans | $ | 14,147 | | $ | 14,322 | | $ | 14,073 | | $ | 11,447 | | $ | 11,049 | |
| Loans past due 90 days and accruing | | 546 | | | 298 | | | 66 | | | 301 | | | 349 | |
| Real estate owned, net | | 600 | | | 600 | | | 600 | | | 669 | | | 1,600 | |
| Total non-performing assets | $ | 15,293 | | $ | 15,220 | | $ | 14,739 | | $ | 12,417 | | $ | 12,998 | |
| (1) March 31, 2007 capital ratios are estimated, subject to regulatory filings. |
SUN BANCORP, INC. AND SUBSIDIARIES | |
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited) | |
(Dollars in thousands, except per share data) | |
| | 2007 | | 2006 | | 2006 | | 2006 | | 2006 | |
| | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
| Profitability for the quarter: | | | | | | | | | | |
| Tax-equivalent interest income | $ | 49,441 | | $ | 48,807 | | $ | 47,069 | | $ | 45,747 | | $ | 43,159 | |
| Interest expense | | 24,758 | | | 23,991 | | | 21,829 | | | 20,451 | | | 18,601 | |
| Tax-equivalent net interest income | | 24,683 | | | 24,816 | | | 25,240 | | | 25,296 | | | 24,558 | |
| Tax-equivalent adjustment | | 350 | | | 271 | | | 241 | | | 183 | | | 137 | |
| Provision for loan losses | | 750 | | | 990 | | | 1,317 | | | 875 | | | 625 | |
| Non-interest income, excluding net loss on sale of investment securities, net gain on sale of branches and net loss on sale or disposal of assets | | 5,574 | | | 5,343 | | | 5,268 | | | 5,070 | | | 4,416 | |
| Net loss on sale of investment securities | | - | | | (1 | ) | | - | | | - | | | (20 | ) |
| Net gain on sale of branches | | 1,443 | | | - | | | - | | | - | | | - | |
| Net loss on sale or disposal of assets | | - | | | (330 | ) | | - | | | - | | | - | |
Non-interest expense, excluding amortization of intangible assets | 22,389 | | | 20,696 | | | 20,397 | | | 22,448 | | | 21,085 | |
| Amortization of intangible assets | | 1,182 | | | 1,193 | | | 1,193 | | | 1,193 | | | 1,188 | |
| Income before income taxes | | 7,029 | | | 6,678 | | | 7,360 | | | 5,667 | | | 5,919 | |
| Income tax expense | | 2,344 | | | 2,224 | | | 2,503 | | | 1,877 | | | 1,746 | |
| Net income | $ | 4,685 | | $ | 4,454 | | $ | 4,857 | | $ | 3,790 | | $ | 4,173 | |
| Financial ratios: | | | | | | | | | | | | | | | |
Return on average assets(1) | | 0.57 | % | | 0.54 | % | | 0.60 | % | | 0.47 | % | | 0.52 | % |
Return on average equity(1) | | 5.44 | % | | 5.24 | % | | 5.86 | % | | 4.66 | % | | 5.34 | % |
Return on average tangible equity(1),(2) | | 9.93 | % | | 9.78 | % | | 11.27 | % | | 9.17 | % | | 10.38 | % |
Net interest margin(1) | | 3.34 | % | | 3.37 | % | | 3.51 | % | | 3.48 | % | | 3.40 | % |
| Efficiency ratio | | 75.19 | % | | 74.06 | % | | 71.33 | % | | 78.33 | % | | 77.29 | % |
| Efficiency ratio, excluding non-operating income and non-operating expense | | 71.07 | % | | 70.78 | % | | 71.00 | % | | 77.00 | % | | 77.24 | % |
| Per share date: | | | | | | | | | | | | | | | |
Earnings per common share(3): | | | | | | | | | | | | | | | |
| Basic | $ | 0.23 | | $ | 0.22 | | $ | 0.24 | | $ | 0.19 | | $ | 0.21 | |
| Diluted | $ | 0.22 | | $ | 0.21 | | $ | 0.23 | | $ | 0.18 | | $ | 0.20 | |
| Book value | $ | 16.97 | | $ | 16.69 | | $ | 16.42 | | $ | 16.06 | | $ | 15.98 | |
| Tangible book value | $ | 9.43 | | $ | 9.05 | | $ | 8.69 | | $ | 8.25 | | $ | 8.00 | |
| Average basic shares | 20,521,821 | | 20,480,475 | | 20,431,220 | | 20,361,974 | | 19,783,965 | |
| Average diluted shares | 21,520,563 | | 21,525,940 | | 21,382,752 | | 21,308,941 | | 21,012,311 | |
| Operating non-interest income: | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | $ | 3,129 | | $ | 3,183 | | $ | 3,188 | | $ | 2,622 | | $ | 2,124 | |
| Other service charges | | 72 | | | 73 | | | 80 | | | 80 | | | 78 | |
| Net gain on sale of loans | | 508 | | | 463 | | | 220 | | | 160 | | | 284 | |
| Net gain on derivative instruments | | 234 | | | 200 | | | 154 | | | 458 | | | 366 | |
| Other | | 1,631 | | | 1,424 | | | 1,626 | | | 1,750 | | | 1,564 | |
| Total operating non-interest income | | 5,574 | | | 5,343 | | | 5,268 | | | 5,070 | | | 4,416 | |
Non-operating income(4): | | | | | | | | | | | | | | | |
| Net loss on sale of investment securities | | - | | | (1 | ) | | - | | | - | | | (20 | ) |
| Net gain on sale of branches | | 1,443 | | | - | | | - | | | - | | | - | |
| Net loss on sale or disposal of assets | | - | | | (330 | ) | | - | | | - | | | - | |
| Total non-operating income | | 1,443 | | | (331 | ) | | - | | | - | | | (20 | ) |
| Total non-interest income | $ | 7,017 | | $ | 5,012 | | $ | 5,268 | | $ | 5,070 | | $ | 4,396 | |
| Operating non-interest expense: | | | | | | | | | | | | | | | |
| Salaries and employee benefits | $ | 10,626 | | $ | 10,602 | | $ | 10,550 | | $ | 11,710 | | $ | 11,477 | |
| Occupancy expense | | 3,012 | | | 2,876 | | | 2,982 | | | 2,849 | | | 2,944 | |
| Equipment expense | | 1,951 | | | 1,960 | | | 1,945 | | | 2,084 | | | 1,927 | |
| Data processing expense | | 1,008 | | | 895 | | | 1,226 | | | 1,103 | | | 1,059 | |
| Advertising expense | | 473 | | | 407 | | | 303 | | | 550 | | | 423 | |
| Amortization of intangible assets | | 1,182 | | | 1,193 | | | 1,193 | | | 1,193 | | | 1,188 | |
| Real estate owned, net | | 6 | | | 12 | | | 86 | | | 167 | | | (27 | ) |
| Other expenses | | 2,996 | | | 3,209 | | | 3,205 | | | 3,585 | | | 3,282 | |
| Total operating non-interest expense | | 21,254 | | | 21,154 | | | 21,490 | | | 23,241 | | | 22,273 | |
Non-operating expense(4): | | | | | | | | | | | | | | | |
| Lease buy-out expenses and other branch rationalization charges | | - | | | 495 | | | - | | | - | | | - | |
| Severance and other related expenses | | 2,317 | | | 240 | | | 100 | | | 400 | | | - | |
| Total non-operating expense | | 2,317 | | | 735 | | | 100 | | | 400 | | | - | |
| Total non-interest expense | $ | 23,571 | | $ | 21,889 | | $ | 21,590 | | $ | 23,641 | | $ | 22,273 | |
| (1) 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 assets and goodwill. | |
| (3) Earnings per share is computed by dividing net income by weighted average number of shares of common stock outstanding. | |
| (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 March 31, 2007 | | For the Three Months Ended March 31, 2006 | |
| | | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | |
| | | Balance | | Expense | | Cost | | Balance | | Expense | | Cost | |
| Interest-earning assets: | | | | | | | | | | | | | |
Loans receivable(1),(2): | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 1,976,223 | | $ | 35,921 | | | 7.27 | % | $ | 1,811,832 | | $ | 30,594 | | | 6.75 | % |
| Home equity | | | 233,837 | | | 3,825 | | | 6.54 | | | 170,523 | | | 2,743 | | | 6.43 | |
| Second mortgage | | | 76,167 | | | 1,190 | | | 6.25 | | | 66,426 | | | 998 | | | 6.01 | |
| Residential real estate | | | 37,709 | | | 757 | | | 8.03 | | | 29,472 | | | 623 | | | 8.45 | |
| Other | | | 92,705 | | | 1,835 | | | 7.92 | | | 82,450 | | | 1,637 | | | 7.94 | |
| Total loans receivable | | | 2,416,641 | | | 43,528 | | | 7.20 | | | 2,160,703 | | | 36,595 | | | 6.77 | |
Investment securities(3) | | | 482,240 | | | 5,155 | | | 4.28 | | | 693,637 | | | 6,139 | | | 3.54 | |
| Interest-bearing deposit with banks | | | 18,363 | | | 236 | | | 5.14 | | | 12,372 | | | 145 | | | 4.69 | |
| Federal funds sold | | | 39,870 | | | 522 | | | 5.24 | | | 25,735 | | | 280 | | | 4.35 | |
| Total interest-earning assets | | | 2,957,114 | | | 49,441 | | | 6.69 | | | 2,892,447 | | | 43,159 | | | 5.97 | |
| Cash and due from banks | | | 72,646 | | | | | | | | | 80,098 | | | | | | | |
| Bank properties and equipment | | | 42,402 | | | | | | | | | 43,308 | | | | | | | |
| Goodwill and intangible assets, net | | | 155,910 | | | | | | | | | 151,678 | | | | | | | |
| Other assets | | | 73,340 | | | | | | | | | 58,289 | | | | | | | |
| Total non-interest-earning assets | | | 344,298 | | | | | | | | | 333,373 | | | | | | | |
| Total assets | | $ | 3,301,412 | | | | | | | | $ | 3,225,820 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposit accounts: | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 761,056 | | $ | 5,935 | | | 3.12 | % | $ | 882,548 | | $ | 5,344 | | | 2.42 | % |
| Savings deposits | | | 439,772 | | | 3,093 | | | 2.81 | | | 372,757 | | | 1,366 | | | 1.47 | |
| Time deposits | | | 1,005,639 | | | 11,806 | | | 4.70 | | | 781,604 | | | 6,937 | | | 3.55 | |
| Total interest-bearing deposit accounts | | | 2,206,467 | | | 20,834 | | | 3.78 | | | 2,036,909 | | | 13,647 | | | 2.68 | |
| Borrowed money: | | | | | | | | | | | | | | | | | | | |
| Federal funds purchased | | | 33 | | | - | | | - | | | 4,483 | | | 53 | | | 4.73 | |
| Securities sold under agreements to repurchase - customers | | | 45,328 | | | 528 | | | 4.66 | | | 42,219 | | | 405 | | | 3.84 | |
| FHLB advances | | | 101,288 | | | 1,146 | | | 4.53 | | | 207,901 | | | 2,357 | | | 4.53 | |
| Junior subordinated debentures | | | 106,748 | | | 2,153 | | | 8.07 | | | 102,752 | | | 1,910 | | | 7.44 | |
| Obligation under capital lease | | | 5,312 | | | 97 | | | 7.30 | | | 5,399 | | | 229 | | | 7.27 | |
| Total borrowings | | | 258,709 | | | 3,924 | | | 6.07 | | | 362,754 | | | 4,954 | | | 5.46 | |
| Total interest-bearing liabilities | | | 2,465,176 | | | 24,758 | | | 4.02 | | | 2,399,663 | | | 18,601 | | | 3.10 | |
| Non-interest-bearing demand deposits | | | 458,201 | | | | | | | | | 496,249 | | | | | | | |
| Other liabilities | | | 33,318 | | | | | | | | | 17,480 | | | | | | | |
| Total non-interest-bearing liabilities | | | 491,519 | | | | | | | | | 513,729 | | | | | | | |
| Total liabilities | | | 2,956,695 | | | | | | | | | 2,913,392 | | | | | | | |
| Shareholders’ equity | | | 344,717 | | | | | | | | | 312,428 | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 3,301,412 | | | | | | | | $ | 3,225,820 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Net interest income | | | | | $ | 24,683 | | | | | | | | $ | 24,558 | | | | |
Interest rate spread(4) | | | | | | | | | 2.67 | % | | | | | | | | 2.87 | % |
Net interest margin(5) | | | | | | | | | 3.34 | % | | | | | | | | 3.40 | % |
| Ratio of average interest-earning assets to average interest-bearing liabilities | | | | | | | | | 119.96 | % | | | | | | | | 120.54 | % |
| |
| (1) Average balances include non-accrual loans. |
| (2) Loan fees are included in interest income and the amount is not material for this analysis. |
| (3) Interest earned on non-taxable investment securities is shown on a tax equivalent basis assuming a 35% marginal federal tax rate for all periods. |
| (4) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. |
| (5) Net interest margin represents net interest income as a percentage of average interest-earning assets. |
