Sun Bancorp (SNBC) 8-K Results of Operations and Financial Condition

News Release

For Immediate Release

Contact:  Dan Chila, EVP, Chief Financial Officer (856) 691-7700

Sun Bancorp Reports Six-Month Net Income Up 20.5%:

             Second Quarter Net Income Advances 29.6%

Our mission is uncompromising…

          …to be the Premier Community Bank in every community we serve

VINELAND, NJ, July 16, 2007 – Sun Bancorp, Inc. (NASDAQ: SNBC) today reported net income of $4.9 million, or $.22 per share, up 29.6% for the quarter ended June 30, 2007, compared to net income of $3.8 million, or $.17 per share, for the second quarter 2006. The current quarter includes net charges of approximately $751,000 (pre-tax), or $.02 per share. The charges represent approximately $541,000 of write-off of unamortized issuance costs of redeemed Sun Trust III trust preferred securities, an early extinguishment of debt charge of $124,000 for an FHLB borrowing prepayment and $86,000 of severance related expenses.  The prior year comparable quarter included severance related expenses of $400,000 (pre-tax), or $.01 per share.

For the six months ended June 30, 2007, the Company reported net income of $9.6 million, or $.42 per share, compared to $8.0 million, or $.36 per share, in the prior period – an increase of 20.5%. Net income for the first half of 2007 includes net charges of approximately $1.6 million (pre-tax), or $.05 per share. The charges were a result of $2.4 million of severance related expenses, the $541,000 write-off of unamortized issuance costs of redeemed Sun Trust III trust preferred securities, and an early extinguishment of debt charge of $124,000 for an FHLB borrowing prepayment, offset by a net gain of $1.4 million realized in the first quarter from the sale of branches. The prior year comparable period included severance related expenses of $400,000 (pre-tax), or $.01 per share.

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Sun Bancorp 2Q 2007 – page two

“We made encouraging progress during the recent quarter and first half. The margin held up well, net income improved, non-interest income growth was quite favorable, and we managed expenses down,” said Sidney R. Brown, acting president and chief executive officer of Sun Bancorp, Inc. “Loan production was consistent and the pipeline remained strong throughout the period, although prepayments primarily on real estate-related loans had an impact. Deposit growth continues to be steady. We are still targeting a lower efficiency ratio as we move into the second half of the year.”

The following is an overview of the key financial highlights for the quarter:

·   Total assets were $3.325 billion at June 30, 2007, compared to $3.212 billion at June 30, 2006 and $3.327 billion at March 31, 2007.

·   Total loans before allowance for loan losses were $2.447 billion at June 30, 2007, an increase of $152.0 million, or 6.6%, over total loans at June 30, 2006. Linked quarter loan growth normalized for prepayments of about $43.0 million during the quarter approximated 3.1%.

·   Credit quality trends remain stable. Total non-performing assets of $16.5 million at June 30, 2007, or .67%, of total loans and real estate owned, compares to $15.3 million, or .63%, at March 31, 2007, and $15.2 million, or .64%, at December 31, 2006.

·   Total deposits were $2.726 billion at June 30, 2007, an increase of $139.7 million, or 5.4%, over deposits at June 30, 2006, and an increase of $31.4 million, or 1.2%, over the linked first quarter.

·   Net interest income (tax-equivalent basis) of $23.9 million for the quarter compares to $25.3 million for the comparable prior year period and $24.7 million for the linked first quarter. The net interest margin reported of 3.19% for the quarter and 3.26% for the six months ended June 30, 2007 are normalized at 3.26% and 3.30% respectively, to reflect the $541,000 write-off of unamortized issuance costs of redeemed trust preferred securities. Normalized net interest margin for the quarter of 3.26% compares to 3.48% for the comparable prior year period and 3.34% for the linked quarter. The margin decrease continues to reflect the increased costs of interest-bearing deposits attributable to the Company’s deposit pricing strategy in support of the retail transformation initiative which began in the third quarter 2006.

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Sun Bancorp 2Q 2007 – page three

·   Total operating non-interest income for the quarter of $6.3 million increased $1.2 million, or 24.2%, over the comparable prior year period and increased 12.9% over the linked quarter. The primary increase year-over-year was attributable to increases in service charges on deposit accounts of $930,000, or 35.5%. The linked quarter increase reflects an increase of $423,000, or 13.5%, in service charges on deposit accounts and an increase in net gain on derivative instruments of $291,000.

·   Total operating non-interest expenses for the quarter of $21.8 million decreased $1.4 million, or 6.2%, over the comparable prior year period and increased $554,000, or 2.6%, over the linked quarter. The linked quarter increase in operating non-interest expenses primarily represents increased FDIC insurance expense and professional fees. The Company continues to focus on its profitability enhancement initiatives with particular emphasis on expense savings. The efficiency ratio, excluding non-operating income and non-operating expenses, was 71.77% compared to 77.00% for the comparable prior year period, and 71.07% for the linked first quarter of 2007.

The Company will hold its regular quarterly conference call on Tuesday, July 17, 2007 at 1:30 p.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: vi53385. 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						For the Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Profitability for the period:
Net interest income	$	23,550		$	25,113		$	47,883		$	49,534
Provision for loan losses		950			875			1,700			1,500
Non-interest income		6,305			5,070			13,322			9,466
Non-interest expense		22,018			23,641			45,589			45,914
Income before income taxes		6,887			5,667			13,916			11,586
Net income	$	4,912		$	3,790		$	9,597		$	7,963
Financial ratios:
Return on average assets (1)		0.59	%		0.47	%		0.58	%		0.49	%
Return on average equity (1)		5.56	%		4.66	%		5.50	%		4.99	%
Return on average tangible equity (1),(2)		9.88	%		9.17	%		9.90	%		9.77	%
Net interest margin (1)		3.19	%		3.48	%		3.26	%		3.44	%
Efficiency ratio		73.75	%		78.33	%		74.49	%		77.82	%
Efficiency ratio, excluding non-operating income and non-operating expense (3)		71.77	%		77.00	%		71.42	%		77.12	%
Earnings per common share (4):
Basic	$	0.23		$	0.18		$	0.44		$	0.38
Diluted	$	0.22		$	0.17		$	0.42		$	0.36
Average equity to average assets		10.57	%		10.01	%		10.51	%		9.85	%

	June 30,						December 31,
	2007			2006			2006
At period-end:
Total assets	$	3,324,633		$	3,212,134		$	3,325,563
Total deposits		2,725,747			2,586,034			2,667,997
Loans receivable, net of allowance for loan losses		2,421,182			2,270,596			2,339,584
Investments		501,694			548,726			525,122
Borrowings		115,932			174,379			160,622
Junior subordinated debentures		97,941			108,250			108,250
Shareholders’ equity		355,758			327,669			342,227
Credit quality and capital ratios:
Allowance for loan losses to gross loans		1.07	%		1.08	%		1.08	%
Non-performing assets to gross loans and real estate owned		0.67	%		0.54	%		0.64	%
Allowance for loan losses to non-performing loans		169.98	%		210.08	%		175.50	%
Total capital (to risk-weighted assets) (5)
Sun Bancorp, Inc.		11.71	%		11.59	%		11.89	%
Sun National Bank		10.66	%		10.35	%		10.57	%
Tier 1 capital (to risk-weighted assets) (5)
Sun Bancorp, Inc.		10.75	%		10.63	%		10.91	%
Sun National Bank		9.70	%		9.38	%		9.59	%
Leverage ratio (5)
Sun Bancorp, Inc.		9.46	%		9.10	%		9.40	%
Sun National Bank		8.54	%		8.04	%		8.28	%
Book value	$	16.21		$	15.29		$	15.89
Tangible book value	$	9.21		$	7.86		$	8.62

(1) Amounts for the three and six 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.  Net interest income for the three and six months ended June 30, 2007 excludes a write-off of $541,000 of unamortized costs on redeemed trust preferred securities.   Non-interest expense for the three and six months ended June 30, 2007 excludes $86,000 and $2.4 million, respectively, of severance related expenses as compared to $400,000 for the same periods in 2006.  In addition, non-interest expense for the three and six months ended June 30, 2007 excludes $124,000 as a result of early extinguishment of FHLB borrowing. Non-interest income for the three and six months ended June 30, 2007 excludes a net gain of $1.4 million from the sale of branches.

(4) Data is adjusted for a 5% stock dividend declared in April 2007.

(5) June 30, 2007 capital ratios are estimated, subject to regulatory filings.

4

SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
(Dollars in thousands, except par value)
	June 30,			December 31,
	2007			2006
ASSETS
Cash and due from banks	$	80,862		$	74,991
Interest-earning bank balances		3,555			48,066
Federal funds sold		15,950			47,043
Cash and cash equivalents		100,367			170,100
Investment securities available for sale (amortized cost - $470,770 and $488,007 at June 30, 2007 and December 31, 2006, respectively)		463,883			481,952
Investment securities held to maturity (estimated fair value - $20,940 and $24,846 at June 30, 2007 and December 31, 2006, respectively)		21,562			25,441
Loans receivable (net of allowance for loan losses - $26,079 and $25,658 at June 30, 2007 and December 31, 2006, respectively)		2,421,182			2,339,584
Restricted equity investments		16,249			17,729
Bank properties and equipment, net		43,574			42,292
Real estate owned, net		1,165			600
Accrued interest receivable		18,026			17,419
Goodwill		127,936			128,117
Intangible assets, net		25,833			28,570
Deferred taxes, net		4,592			3,939
Bank owned life insurance		65,122			57,370
Other assets		15,142			12,450
Total assets	$	3,324,633		$	3,325,563
LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits	$	2,725,747		$	2,667,997
Advances from the Federal Home Loan Bank (FHLB)		66,029			103,560
Securities sold under agreements to repurchase - customers		44,612			51,740
Obligation under capital lease		5,291			5,322
Junior subordinated debentures		97,941			108,250
Other liabilities		29,255			46,467
Total liabilities		2,968,875			2,983,336
SHAREHOLDERS’ EQUITY
Preferred stock, $1 par value, 1,000,000 shares authorized, none issued		-			-
Common stock, $1 par value, 50,000,000 shares authorized, 21,942,691 and 20,507,549 issued at June 30, 2007 and December 31, 2006, respectively		21,943			20,508
Additional paid-in capital		327,709			304,857
Retained earnings		10,583			20,794
Accumulated other comprehensive loss		(4,477	)		(3,932	)
Total shareholders’ equity		355,758			342,227
Total liabilities and shareholders’ equity	$	3,324,633		$	3,325,563

5

SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
	For the Three Months					For the Six Months
	Ended June 30,					Ended June 30,
	2007			2006		2007			2006
INTEREST INCOME
Interest and fees on loans	$	43,403		$	39,714	$	86,514		$	76,309
Interest on taxable investment securities		4,500			5,015		9,034			10,592
Interest on non-taxable investment securities		733			341		1,391			597
Dividends on restricted equity investments		281			262		547			576
Interest on federal funds sold		741			232		1,263			512
Total interest income		49,658			45,564		98,749			88,586
INTEREST EXPENSE
Interest on deposits		22,077			15,964		42,911			29,611
Interest on borrowed funds		1,558			2,377		3,329			5,421
Interest on junior subordinated debentures		2,473			2,110		4,626			4,020
Total interest expense		26,108			20,451		50,866			39,052
Net interest income		23,550			25,113		47,883			49,534
PROVISION FOR LOAN LOSSES		950			875		1,700			1,500
Net interest income after provision for loan losses		22,600			24,238		46,183			48,034
NON-INTEREST INCOME
Service charges on deposit accounts		3,552			2,622		6,681			4,746
Other service charges		75			80		147			158
Net gain on sale of branches		-			-		1,443			-
Net gain on sale of bank property & equipment		12			-		12			-
Net loss on sale of investment securities		(2	)		-		(2	)		(20	)
Net gain on sale of loans		447			160		955			444
Net gain on derivative instruments		525			458		759			824
Other		1,696			1,750		3,327			3,314
Total non-interest income		6,305			5,070		13,322			9,466
NON-INTEREST EXPENSE
Salaries and employee benefits		11,023			12,110		23,612			23,587
Occupancy expense		2,717			2,849		5,729			5,793
Equipment expense		1,829			2,084		3,780			4,011
Amortization of intangible expenses		1,178			1,193		2,360			2,381
Data processing expense		1,100			1,103		2,108			2,162
Advertising expense		509			550		982			973
Other		3,662			3,752		7,018			7,007
Total non-interest expense		22,018			23,641		45,589			45,914
INCOME BEFORE INCOME TAXES		6,887			5,667		13,916			11,586
INCOME TAXES		1,975			1,877		4,319			3,623
NET INCOME	$	4,912		$	3,790	$	9,597		$	7,963
Basic earnings per share	$	0.23		$	0.18	$	0.44		$	0.38
Diluted earnings per share	$	0.22		$	0.17	$	0.42		$	0.36

6

SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands)
	2007			2007			2006			2006			2006
	Q2			Q1			Q4			Q3			Q2
Balance sheet at quarter end:
Loans:
Commercial and industrial	$	1,985,584		$	1,972,491		$	1,925,103		$	1,927,964		$	1,898,976
Home equity		245,283			234,982			232,321			222,473			206,642
Second mortgage		79,120			76,449			77,337			78,251			77,802
Residential real estate		47,101			38,798			38,418			33,460			27,509
Other		90,173			91,774			92,063			88,896			84,347
Total gross loans		2,447,261			2,414,494			2,365,242			2,351,044			2,295,276
Allowance for loan losses		(26,079	)		(26,027	)		(25,658	)		(25,785	)		(24,680	)
Net loans		2,421,182			2,388,467			2,339,584			2,325,259			2,270,596
Goodwill		127,936			127,936			128,117			128,351			128,352
Intangible assets, net		25,833			27,011			28,570			29,762			30,955
Total assets		3,324,633			3,326,681			3,325,563			3,264,417			3,212,134
Total deposits		2,725,747			2,694,304			2,667,997			2,636,954			2,586,034
Advances from the Federal Home Loan Bank (FHLB)		66,029			100,481			103,560			108,889			114,163
Federal funds purchased		-			1,500			-			-			-
Securities sold under agreements to repurchase – FHLB		-			-			-			-			15,000
Securities sold under agreements to repurchase – customers		44,612			42,511			51,740			51,423			39,864
Obligation under capital lease		5,291			5,307			5,322			5,337			5,352
Junior subordinated debentures		97,941			108,250			108,250			108,250			108,250
Total shareholders’ equity		355,758			348,595			342,227			335,849			327,669
Quarterly average balance sheet:
Loans:
Commercial and industrial	$	1,978,175		$	1,956,190		$	1,937,580		$	1,902,279		$	1,868,587
Home equity		240,150			233,837			229,002			213,888			194,103
Second mortgage		77,442			76,167			77,593			77,500			75,059
Residential real estate		39,193			37,710			35,323			27,443			28,784
Other		91,578			92,705			90,358			87,071			86,047
Total gross loans		2,426,538			2,396,609			2,369,856			2,308,181			2,252,580
Securities and other interest-earning assets		577,669			560,574			578,983			570,366			657,636
Total interest-earning assets		3,004,207			2,957,183			2,948,839			2,878,547			2,910,216
Total assets		3,341,506			3,302,913			3,288,123			3,216,807			3,250,206
Non-interest-bearing demand deposits		458,851			458,201			480,339			498,416			503,081
Total deposits		2,724,554			2,664,668			2,648,713			2,580,973			2,599,596
Total interest-bearing liabilities		2,501,896			2,466,678			2,445,320			2,370,114			2,407,521
Total shareholders' equity		353,280			344,717			339,839			331,282			325,346
Capital and credit quality measures:
Total Capital (to Risk-Weighted Assets)(1):
Sun Bancorp, Inc.		11.71	%		11.98	%		11.89	%		11.87	%		11.59	%
Sun National Bank		10.66	%		10.63	%		10.57	%		10.59	%		10.35	%
Tier I Capital (to Risk-Weighted Assets)(1):
Sun Bancorp, Inc.		10.75	%		11.00	%		10.91	%		10.87	%		10.63	%
Sun National Bank		9.70	%		9.65	%		9.59	%		9.58	%		9.38	%
Leverage Ratio(1):
Sun Bancorp, Inc.		9.46	%		9.57	%		9.40	%		9.41	%		9.10	%
Sun National Bank		8.54	%		8.40	%		8.28	%		8.31	%		8.04	%
Average equity to average assets		10.57	%		10.44	%		10.34	%		10.30	%		10.01	%
Allowance for loan losses to total gross loans		1.07	%		1.08	%		1.08	%		1.10	%		1.08	%
Non-performing assets to total gross loans and real estate owned		0.67	%		0.63	%		0.64	%		0.63	%		0.54	%
Allowance for loan losses to non-performing loans		169.98	%		177.14	%		175.50	%		182.37	%		210.08	%
Other data:
Net charge-offs	$	(898	)	$	(381	)	$	(1,117	)	$	(212	)	$	(643	)
Non-performing assets:
Non-accrual loans	$	14,505		$	14,147		$	14,322		$	14,073		$	11,447
Loans past due 90 days and accruing		837			546			298			66			301
Real estate owned, net		1,165			600			600			600			669
Total non-performing assets	$	16,507		$	15,293		$	15,220		$	14,739		$	12,417
(1) June 30, 2007 capital ratios are estimated, subject to regulatory filings.

7

SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands, except per share data)
	2007			2007			2006			2006			2006
	Q2			Q1			Q4			Q3			Q2
Profitability for the quarter:
Tax-equivalent interest income	$	50,049		$	49,441		$	48,807		$	47,069		$	45,747
Interest expense		26,108			24,758			23,991			21,829			20,451
Tax-equivalent net interest income		23,941			24,683			24,816			25,240			25,296
Tax-equivalent adjustment		391			350			271			241			183
Provision for loan losses		950			750			990			1,317			875
Non-interest income, excluding net loss on sale of investment securities, net gain on sale of branches and net gain (loss) on sale or disposal of bank property and equipment		6,295			5,574			5,343			5,268			5,070
Net loss on sale of investment securities		(2	)		-			(1	)		-			-
Net gain on sale of branches		-			1,443			-			-			-
Net gain (loss) on sale or disposal of bank property & equipment		12			-			(330	)		-			-
Non-interest expense, excluding amortization of intangible assets		20,840			22,389			20,696			20,397			22,448
Amortization of intangible assets		1,178			1,182			1,193			1,193			1,193
Income before income taxes		6,887			7,029			6,678			7,360			5,667
Income tax expense		1,975			2,344			2,224			2,503			1,877
Net income	$	4,912		$	4,685		$	4,454		$	4,857		$	3,790
Financial ratios:
Return on average assets(1)		0.59	%		0.57	%		0.54	%		0.60	%		0.47	%
Return on average equity(1)		5.56	%		5.44	%		5.24	%		5.86	%		4.66	%
Return on average tangible equity(1),(2)		9.88	%		9.93	%		9.78	%		11.27	%		9.17	%
Net interest margin(1)		3.19	%		3.34	%		3.37	%		3.51	%		3.48	%
Efficiency ratio		73.75	%		75.19	%		74.06	%		71.33	%		78.33	%
Efficiency ratio, excluding non-operating income and non-operating expense		71.77	%		71.07	%		70.78	%		71.00	%		77.00	%
Per share date:
Earnings per common share(3):
Basic	$	0.23		$	0.22		$	0.21		$	0.23		$	0.18
Diluted	$	0.22		$	0.21		$	0.20		$	0.22		$	0.17
Book value	$	16.21		$	16.16		$	15.89		$	15.64		$	15.29
Tangible book value	$	9.21		$	8.98		$	8.62		$	8.27		$	7.86
Average basic shares	21,738,367			21,547,912			21,504,499			21,452,781			21,380,072
Average diluted shares	22,670,769			22,596,591			22,602,237			22,468,503			22,374,387
Operating non-interest income:
Service charges on deposit accounts	$	3,552		$	3,129		$	3,183		$	3,188		$	2,622
Other service charges		75			72			73			80			80
Net gain on sale of loans		447			508			463			220			160
Net gain on derivative instruments		525			234			200			154			458
Other		1,696			1,631			1,424			1,626			1,750
Total operating non-interest income		6,295			5,574			5,343			5,268			5,070
Non-operating income(4):
Net loss on sale of investment securities		(2	)		-			(1	)		-			-
Net gain on sale of branches		-			1,443			-			-			-
Net gain (loss) on sale or disposal of bank property & equipment		12			-			(330	)		-			-
Total non-operating income		10			1,443			(331	)		-			-
Total non-interest income	$	6,305		$	7,017		$	5,012		$	5,268		$	5,070
Operating non-interest expense:
Salaries and employee benefits	$	10,937		$	10,626		$	10,602		$	10,550		$	11,710
Occupancy expense		2,717			3,012			2,876			2,982			2,849
Equipment expense		1,829			1,951			1,960			1,945			2,084
Amortization of intangible assets		1,178			1,182			1,193			1,193			1,193
Data processing expense		1,100			1,008			895			1,226			1,103
Advertising expense		509			473			407			303			550
Other expenses		3,538			3,002			3,221			3,291			3,752
Total operating non-interest expense		21,808			21,254			21,154			21,490			23,241
Non-operating expense(4):
Lease buy-out expenses and other branch rationalization charges		-			-			495			-			-
Severance and other related expenses		86			2,317			240			100			400
Early extinguishment of borrowings		124			-			-			-			-
Total non-operating expense		210			2,317			735			100			400
Total non-interest expense	$	22,018		$	23,571		$	21,889		$	21,590		$	23,641
(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.

8

SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS(unaudited)
(Dollars in thousands)
	For the Three Months Ended June 30, 2007							For the Three Months Ended June 30, 2006
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable(1),(2):
Commercial and industrial	$	1,978,175	$	35,648		7.21	%	$	1,868,587	$	33,000		7.06	%
Home equity		240,150		3,945		6.57			194,103		3,176		6.54
Second mortgage		77,442		1,238		6.39			75,059		1,168		6.22
Residential real estate		39,193		747		7.62			28,784		588		8.17
Other		91,578		1,825		7.97			86,047		1,782		8.28
Total loans receivable		2,426,538		43,403		7.15			2,252,580		39,714		7.05
Investment securities(3)		505,315		5,764		4.56			627,863		5,672		3.61
Interest-earning deposits with banks		16,457		141		3.43			10,970		129		4.70
Federal funds sold		55,897		741		5.30			18,803		232		4.94
Total interest-earning assets		3,004,207		50,049		6.66			2,910,216		45,747		6.29
Cash and due from banks		71,814							79,224
Bank properties and equipment		42,958							43,610
Goodwill and intangible assets, net		154,494							160,002
Other assets		68,033							57,154
Total non-interest-earning assets		337,299							339,990
Total assets	$	3,341,506						$	3,250,206
Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	741,568		5,873		3.17	%	$	863,264		5,891		2.73	%
Savings deposits		467,455		3,508		3.00			343,974		1,284		1.49
Time deposits		1,056,680		12,696		4.81			889,277		8,789		3.95
Total interest-bearing deposit accounts		2,265,703		22,077		3.90			2,096,515		15,964		3.05
Borrowed money:
Federal funds purchased		863		13		6.03			7,967		109		5.47
Securities sold under agreements to repurchase – customers		43,011		498		4.63			39,671		422		4.25
FHLB advances		86,136		950		4.41			149,761		1,748		4.67
Junior subordinated debentures		100,887		2,473		9.81			108,250		2,110		7.80
Obligation under capital lease		5,296		97		7.33			5,357		98		7.32
Total borrowings		236,193		4,031		6.83			311,006		4,487		5.77
Total interest-bearing liabilities		2,501,896		26,108		4.17			2,407,521		20,451		3.40
Non-interest-bearing demand deposits		458,851							503,081
Other liabilities		27,479							14,258
Total non-interest-bearing liabilities		486,330							517,339
Total liabilities		2,988,226							2,924,860
Shareholders’ equity		353,280							325,346
Total liabilities and shareholders’ equity	$	3,341,506						$	3,250,206
Net interest income			$	23,941						$	25,296
Interest rate spread(4)						2.49	%						2.89	%
Net interest margin(5)						3.19	%						3.48	%
Ratio of average interest-earning assets to average interest-bearing liabilities						120.08	%						120.88	%
(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.

9

SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (unaudited)
(Dollars in thousands)
	For the Six Months Ended June 30, 2007							For the Six Months Ended June 30, 2006
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable(1),(2):
Commercial and industrial	$	1,967,243	$	71,152		7.23	%	$	1,840,366	$	63,594		6.91	%
Home equity		237,011		7,770		6.56			182,378		5,919		6.49
Second mortgage		76,808		2,428		6.32			70,766		2,167		6.12
Residential real estate		38,456		1,504		7.82			29,126		1,210		8.31
Other		92,138		3,660		7.94			84,259		3,419		8.12
Total loans receivable		2,411,656		86,514		7.17			2,206,895		76,309		6.92
Investment securities(3)		503,836		11,336		4.50			660,568		11,811		3.58
Interest-earning deposits with banks		17,405		377		4.33			11,667		274		4.70
Federal funds sold		47,928		1,263		5.27			22,250		512		4.60
Total interest-earning assets		2,980,825		99,490		6.68			2,901,380		88,906		6.13
Cash and due from banks		72,228							79,659
Bank properties and equipment		42,681							43,460
Goodwill and intangible assets, net		155,198							155,863
Other assets		71,384							57,718
Total non-interest-earning assets		341,491							336,700
Total assets	$	3,322,316						$	3,238,080
Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	751,258		11,808		3.14	%	$	872,853		11,236		2.57	%
Savings deposits		453,690		6,601		2.91			358,286		2,650		1.48
Time deposits		1,031,301		24,502		4.75			835,738		15,725		3.76
Total interest-bearing deposit accounts		2,236,249		42,911		3.84			2,066,877		29,611		2.87
Borrowed money:
Federal funds purchased		450		13		5.78			6,235		162		5.20
Securities sold under agreements to repurchase – customers		44,163		1,026		4.65			40,938		828		4.05
FHLB advances		93,670		2,096		4.48			178,670		4,104		4.59
Junior subordinated debentures		104,548		4,626		8.85			105,516		4,020		7.62
Obligation under capital lease		5,304		194		7.32			5,378		327		7.30
Total borrowings		248,135		7,955		6.41			336,737		9,441		5.61
Total interest-bearing liabilities		2,484,384		50,866		4.09			2,403,614		39,052		3.25
Non-interest-bearing demand deposits		458,528							499,684
Other liabilities		30,382							15,860
Total non-interest-bearing liabilities		488,910							515,544
Total liabilities		2,973,294							2,919,158
Shareholders’ equity		349,022							318,922
Total liabilities and shareholders’ equity	$	3,322,316						$	3,238,080
Net interest income			$	48,624						$	49,854
Interest rate spread(4)						2.59	%						2.88	%
Net interest margin(5)						3.26	%						3.44	%
Ratio of average interest-earning assets to average interest-bearing liabilities						119.98	%						120.71	%
(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.

10