Sun Bancorp 8K , Inc. Reports Second Quarter 2009 Results | SNBC 20 Jul 09

News Release

For Immediate Release

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

Sun Bancorp, Inc. Reports Second Quarter 2009 Results

VINELAND, NJ – July 20, 2009 – Sun Bancorp, Inc. (NASDAQ: SNBC) reported today a net loss available to common shareholders of $8.8 million, or $0.38 net loss per diluted share, for the second quarter ended June 30, 2009, compared to net income of $2.3 million, or $0.10 per diluted share, for the second quarter of 2008.

For the six months ended June 30, 2009, the Company reported a net loss available to common shareholders of $9.6 million, or $0.42 net loss per diluted share, compared to net income of $6.5 million, or $0.27 per diluted share, in the prior year period.

The second quarter results include the following one-time items:

On April 8, 2009, the Company completed the repurchase of all 89,310 shares of preferred stock issued under the U.S. Treasury’s Capital Purchase Program (“CPP”) of the Troubled Assets Relief Program (“TARP”). As a result of the repayment, the Company recognized a $4.0 million acceleration of the accretion of original issuance discount (“OID”) and deferred issuance costs, in addition to the second quarter preferred dividend earned through the date of repurchase of $87,000, for a combined $4.1 million, or $0.18 per diluted share, charge to earnings available to common shareholders for the second quarter. The impact upon net income for the six months ended June 30, 2009 of the preferred dividends and accretion of the OID and deferred issuance costs was $5.4 million, or $0.23 per diluted share.

On May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment based upon each insured depository institution’s assets minus Tier 1 capital as of June 30, 2009. The Company recognized a charge of approximately $1.6 million, or $0.04 per diluted share, in the second quarter for this special assessment. The special assessment is payable on September 30, 2009.

The Company recognized a pre-tax impairment charge during the quarter of $4.6 million, or $0.12 per diluted share, due to further deterioration of underlying collateral on a pooled trust preferred security. This security, which had an original cost basis of $7.0 million, had been previously written down $515,000 in accordance with the Financial Accounting Standards Board Staff Position on the recognition and presentation of other-than-temporary impairments, which the Company previously adopted in the first quarter of 2009.

Selected core operating highlights reflecting favorable performance in the second quarter include:

Second quarter net interest income of $24.3 million (tax-equivalent basis) compared favorably to $22.3 million for the linked first quarter 2009. The second quarter net interest margin increased to 3.01% compared to 2.74% for the linked first quarter 2009. Net interest income for the second quarter a year ago was $25.0 million and the net interest margin was 3.30%.

·	The average cost of interest-bearing deposits for the second quarter of 1.95% decreased 24 basis points over the linked first quarter 2009. The yield on average loans of 4.83% for the second quarter increased 11 basis points over the linked first quarter 2009.

·	Total non-performing assets remained relatively low compared to industry trends at $74.1 million, or 2.70% of total loans and real estate owned, at June 30, 2009, compared to $64.3 million, or 2.34%, at March 31, 2009, and $34.1 million, or 1.29%, at June 30, 2008.

“The combined costs of completing our TARP repayment, funding the FDIC’s special deposit insurance assessment, and the further write down of the trust preferred security in our investment portfolio accounted for about $10.3 million pre-tax, or $0.34 per diluted share, and essentially offset income that we did produce,” said Thomas X. Geisel, president and chief executive officer.

“This unprecedented operating environment and the effects of the one-time charges we encountered can’t obscure the fact that our credit quality, in terms of our level of non-performers as a percentage of total loans, remains favorable compared to industry trends.”

“Furthermore, we have created positive momentum gathering and pricing core deposits, and originating and renewing loans across the portfolios, with an intense focus on profitability, as evidenced by the improvement in our linked-quarter net interest margin,” Geisel said.

Other key financial highlights include:

·	Total assets were $3.561 billion at June 30, 2009, compared to $3.425 billion at June 30, 2008 and $3.636 billion at March 31, 2009.

Total loans before allowance for loan losses were $2.734 billion at June 30, 2009, an increase of $96.6 million, or 3.7%, over total loans at June 30, 2008. Total loans on a linked quarter basis are essentially level. Commercial loans on average were essentially level on a linked quarter basis, residential mortgages increased on average 7.0% and home equity loans decreased on average 1.9%.

The loan loss provision for the quarter of $6.95 million, or 0.25% of average loans outstanding, compares to $6.5 million, or 0.25% of average loans outstanding, for the comparable prior year period and $4.0 million, or 0.15% of average loans outstanding, for the linked first quarter 2009. The allowance for loan losses to total loans was 1.62% at June 30, 2009 compared to 1.19% at June 30, 2008 and 1.44% at March 31, 2009. Total non-performing assets were $74.1 million at June 30, 2009, or 2.70% of total loans and real estate owned, compared to $34.1 million, or 1.29%, at June 30, 2008 and $64.3 million, or 2.34%, at March 31, 2009. The allowance for loan losses to non-performing loans was 69.82% at June 30, 2009, compared to 97.30% at June 30, 2008 and 73.76% at March 31, 2009. Net charge-offs for the quarter of $2.0 million, or 0.07% of average loans outstanding, compared to $2.9 million, or 0.11% of average loans outstanding, for the comparable prior year quarter and $1.9 million, or 0.07% of average loans outstanding, for the linked first quarter 2009.

Total deposits were $2.876 billion at June 30, 2009, an increase of $93.3 million, or 3.4%, over total deposits at June 30, 2008 and a decrease of $54.6 million, or 1.9%, over the linked first quarter 2009. The decrease over the linked quarter is primarily from certificates of deposits as the Company aggressively lowered deposit interest rates while managing overall funding and liquidity. The average cost of interest-bearing deposits for the quarter of 1.95% decreased 24 basis points over the linked first quarter 2009.

Net interest income (tax-equivalent basis) of $24.3 million for the quarter compares to $25.0 million for the comparable prior year period and $22.3 million for the linked first quarter 2009. The net interest margin for the quarter increased to 3.01% compared to 2.74% for the linked first quarter 2009 and 3.30% for the comparable prior year period. The margin increase over the linked first quarter 2009 of 27 basis points reflects the Company’s focus on margin improvement initiatives on both sides of the balance sheet. The interest rate spread over the linked first quarter increased 35 basis points, with a yield increase of 10 basis points on interest-earnings assets offset by a decrease in the cost of interest-bearing liabilities of 25 basis points. Average interest-earning assets for the quarter of $3.2 billion decreased by 1.0% over the linked first quarter 2009. The decreasing margin trend through the linked first quarter 2009 was primarily attributable to the reduction in market interest rates, which caused interest-earning assets to re-price downward faster than interest-bearing liabilities. Additionally, as we have previously noted, the yield on total loans has been negatively impacted as approximately 50% of the total loan portfolio is variable rate indexed to LIBOR or prime rate.

Total operating non-interest income for the quarter of $6.3 million, which excludes the impairment charge of $4.6 million, decreased $1.5 million, or 19.4%, over the comparable prior year period and increased $691,000, or 12.3%, over the linked first quarter 2009. The decrease over the prior year period was primarily attributable to a decrease in gain on derivative instruments of $952,000 due to a planned decline in transaction volume, a reduction in service charges on deposit accounts, such as NSF and overdraft fees, of $465,000, and a decrease in bank owned life insurance (BOLI) income of $211,000 due to lower yields earned on the separate account policy. These decreases were offset with an increase in gain on sale of loans of $282,000, primarily related to mortgages sold in the secondary market. The increase over the linked first quarter 2009 was primarily due to an increase in gain on sale of mortgage loans of $348,000 as a result of an increase in refinancing volume, an increase in investment products income of $234,000, and an increase in service charges on deposit accounts of $52,000.

Total operating non-interest expense for the quarter of $27.7 million increased $4.7 million, or 20.7%, over the comparable prior year period and increased $3.8 million, or 16.1%, over the linked first quarter 2009. The increase over the prior year period was primarily attributable to an increase in FDIC insurance of $2.4 million, which includes the $1.6 million special assessment, and $770,000 as a result of an increase in assessment rates, additional coverage under the Temporary Liquidity Guarantee Program (“TLGP”) and an overall increase in assessable deposits. Salaries and benefits increased $933,000 primarily due to the addition of several key management and business line staff and increases in commissions and healthcare costs. In addition, cost of real estate owned increased $627,000 which was primarily due to the recognition of a $558,000 net gain on the sale of three properties during the second quarter of 2008 and advertising expense increased $387,000 due to the recent “Switch to Sun” campaign. The increase over the linked first quarter 2009 was also primarily attributable to an increase in FDIC insurance of $1.7 million, which includes the special assessment of $1.6 million. In addition, salaries and benefits increased $1.3 million due to the addition of several key management and business line staff and an increase in healthcare costs, advertising expense increased $326,000 due to the recent “Switch to Sun” campaign, and problem loan costs increased $297,000.

·	The income tax benefit is a result of the pre-tax loss in combination with the relatively large levels of tax-free income earned on tax-exempt securities and BOLI policies.

·	The Company’s ratio of tangible equity to tangible assets was 6.33% at June 30, 2009 compared to 6.45% at June 30, 2008 and 6.11% and March 31, 2009.

The Company will hold its regularly scheduled conference call on Tuesday, July 21, 2009, at 11:30 a.m. (ET). Participants may listen to the live Web cast through the Sun Bancorp Web site at www.sunnb.com. Participants are advised to log on 10 minutes ahead of the scheduled start of the call. An Internet-based replay will be available at the Web site for two weeks following the call.

Sun Bancorp, Inc. is a $3.6 billion asset bank holding company headquartered in Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving customers through 70 locations in New Jersey. The Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the 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.

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,
	2009			2008			2009			2008
Profitability for the period:
Net interest income	$	23,784		$	24,564		$	45,623		$	49,227
Provision for loan losses		6,950			6,527			10,950			8,660
Non-interest income		1,732			7,802			7,053			15,177
Non-interest expense		27,650			22,913			51,467			46,878
(Loss) income before income taxes		(9,084	)		2,926			(9,741	)		8,866
Net (loss) income		(4,634	)		2,329			(4,249	)		6,512
Net (loss) income available to common shareholders	$	(8,780	)	$	2,329		$	(9,600	)	$	6,512

Financial ratios:
Return on average assets (1)		(0.51)	%		0.28	%		(0.23)	%		0.39	%
Return on average equity (1)		(5.01)	%		2.53	%		(2.09)	%		3.55	%
Return on average tangible equity (1),(2)		(8.23)	%		4.27	%		(3.25)	%		6.01	%
Net interest margin (1)		3.01	%		3.30	%		2.87	%		3.32	%
Efficiency ratio		108.36	%		70.79	%		97.70	%		72.79	%
Efficiency ratio, excluding non-operating income and non-operating expense (3)		91.94	%		70.79	%		89.49	%		72.52	%

Earnings per common share (4):
Basic	$	(0.38	)	$	0.10		$	(0.42	)	$	0.27
Diluted	$	(0.38	)	$	0.10		$	(0.42	)	$	0.27

Average equity to average assets		10.25	%		10.92	%		11.23	%		10.97	%

	June 30,					December 31,
	2009		2008			2008
At period-end:
Total assets	$	3,561,110		$	3,424,968		$	3,622,126
Total deposits		2,875,502			2,782,180			2,896,364
Loans receivable, net of allowance for loan losses		2,689,656			2,605,864			2,702,516
Investments		431,231			419,087			453,584
Borrowings		144,086			164,750			154,097
Junior subordinated debentures		92,786			92,786			92,786
Shareholders’ equity		360,660			360,268			358,508

Credit quality and capital ratios:
Allowance for loan losses to gross loans		1.62	%		1.19	%		1.36	%
Non-performing assets to gross loans and real estate owned		2.70	%		1.29	%		1.78	%
Allowance for loan losses to non-performing loans		69.82	%		97.30	%		79.69	%

Total capital (to risk-weighted assets) (5):
Sun Bancorp, Inc.		11.52	%		11.50	%		11.37	%
Sun National Bank		11.06	%		10.83	%		10.84	%
Tier 1 capital (to risk-weighted assets) (5):
Sun Bancorp, Inc.		10.27	%		10.42	%		10.17	%
Sun National Bank		9.81	%		9.75	%		9.64	%
Leverage ratio (5):
Sun Bancorp, Inc.		9.29	%		9.57	%		9.58	%
Sun National Bank		8.87	%		8.97	%		9.10	%

Book value (4)	$	15.59		$	15.25		$	15.57
Tangible book value (4)	$	9.35		$	8.94		$	9.20

(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 expense, is computed by dividing non-interest expense for the period by the summation of net interest income and non-interest income. Non-interest income for the three and six months ended June 30, 2009 exclude a net impairment loss on available for sale securities of $4.6 million and $4.8 million, respectively. Non-interest income for the six months ended June 30, 2008 excludes a gain on the mandatory redemption of Visa stock of $207,000 . Non-interest expense for the six months ended June 30, 2008 excludes a $250,000 executive sign-on incentive and $72,000 in lease buyout charges.

(4) Data is adjusted for a 5% stock dividend issued in May 2009.

(5) June 30, 2009 capital ratios are estimated, subject to regulatory filings.

SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
(Dollars in thousands, except par value)
	June 30,			December 31,
	2009			2008
ASSETS
Cash and due from banks	$	53,020		$	31,237
Interest-earning bank balances		2,846			26,784
Federal funds sold		-			412
Cash and cash equivalents		55,866			58,433
Investment securities available for sale (amortized cost - $418,700 and $444,628 at June 30, 2009 and December 31, 2008, respectively)		406,082			423,513
Investment securities held to maturity (estimated fair value - $9,646 and $13,601 at June 30, 2009 and December 31, 2008, respectively)		9,639			13,765
Loans receivable (net of allowance for loan losses - $44,316 and $37,309 at June 30, 2009 and December 31, 2008, respectively)		2,689,656			2,702,516
Restricted equity investments		15,510			16,306
Bank properties and equipment, net		52,502			48,642
Real estate owned, net		10,620			1,962
Accrued interest receivable		11,269			12,254
Goodwill		127,894			127,894
Intangible assets, net		16,414			18,769
Deferred taxes, net		16,476			16,707
Bank owned life insurance (BOLI)		76,578			75,504
Other assets		72,604			105,861
Total assets	$	3,561,110		$	3,622,126

LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits	$	2,875,502		$	2,896,364
Federal funds purchased		87,500			71,500
Securities sold under agreements to repurchase - customers		17,398			20,327
Advances from the Federal Home Loan Bank of New York (FHLBNY)		15,805			42,081
Securities sold under agreements to repurchase - FHLBNY		15,000			15,000
Obligation under capital lease		8,383			5,189
Junior subordinated debentures		92,786			92,786
Other liabilities		88,076			120,371
Total liabilities		3,200,450			3,263,618

SHAREHOLDERS' EQUITY
Preferred stock, $1 par value, 1,089,310 shares authorized; none issued		-			-
Common stock, $1 par value, 50,000,000 shares authorized; 25,250,583 shares issued and 23,140,520 shares outstanding at June 30, 2009; 24,037,431 shares issued and 21,930,708 shares outstanding at December 31, 2008		25,251			24,037
Additional paid-in capital		361,095			351,430
Retained earnings		8,285			22,580
Accumulated other comprehensive loss		(7,788	)		(13,377	)
Deferred compensation plan trust		(21	)		-
Treasury stock at cost, 2,106,723 shares at June 30, 2009 and December 31, 2008		(26,162	)		(26,162	)
Total shareholders' equity		360,660			358,508
Total liabilities and shareholders' equity	$	3,561,110		$	3,622,126

SUN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share and per share amounts)
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2009			2008			2009			2008
INTEREST INCOME
Interest and fees on loans	$	32,996		$	37,890		$	65,188		$	78,285
Interest on taxable investment securities		3,706			3,807			7,936			7,990
Interest on non-taxable investment securities		882			843			1,726			1,604
Dividends on restricted equity investments		217			277			390			546
Interest on federal funds sold		-			66			-			97
Total interest income		37,801			42,883			75,240			88,522
INTEREST EXPENSE
Interest on deposits		12,405			15,957			26,335			34,270
Interest on funds borrowed		479			1,008			963			2,127
Interest on junior subordinated debentures		1,133			1,354			2,319			2,898
Total interest expense		14,017			18,319			29,617			39,295
Net interest income		23,784			24,564			45,623			49,227
PROVISION FOR LOAN LOSSES		6,950			6,527			10,950			8,660
Net Interest income after provision for loan losses		16,834			18,037			34,673			40,567
NON-INTEREST INCOME
Service charges on deposit accounts		3,096			3,561			6,140			6,954
Other service charges		79			75			161			153
Gain on sale of loans		693			411			1,038			835
Gain on derivative instruments		85			1,037			212			1,676
Investment products income		756			848			1,278			1,625
BOLI income		561			772			1,074			1,578
Net impairment losses on available for sale securities		(4,558	)		-			(4,836	)		-
Other		1,020			1,098			1,986			2,356
Total non-interest income		1,732			7,802			7,053			15,177
NON-INTEREST EXPENSE
Salaries and employee benefits		13,216			12,283			25,179			24,703
Occupancy expense		2,782			2,810			5,917			5,852
Equipment expense		1,685			1,666			3,223			3,290
Data processing expense		1,052			1,065			2,062			2,185
Amortization of intangible assets		1,178			1,178			2,355			2,355
Insurance expense		3,330			728			4,773			1,397
Professional fees		507			483			885			1,048
Advertising expense		871			484			1,416			1,183
Real estate owned expense, net		93			(534	)		273			(525	)
Other		2,936			2,750			5,384			5,390
Total non-interest expense		27,650			22,913			51,467			46,878
(LOSS) INCOME BEFORE INCOME TAXES		(9,084	)		2,926			(9,741	)		8,866
INCOME TAX (BENEFIT) EXPENSE		(4,450	)		597			(5,492	)		2,354
NET (LOSS) INCOME		(4,634	)		2,329			(4,249	)		6,512
Preferred stock dividend and discount accretion		4,146			-			5,351			-
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	(8,780	)	$	2,239		$	(9,600	)	$	6,512

Basic earnings per share (2)	$	(0.38	)	$	0.10		$	(0.42	)	$	0.27
Diluted earnings per share (2)	$	(0.38	)	$	0.10		$	(0.42	)	$	0.27
Weighted average shares – basic (2)	23,103,975			23,830,980			23,073,683			23,878,272
Weighted average shares – diluted (2)	23,138,215			24,371,330			23,095,433			24,481,106
(1) Total impairment losses on available for sale securities for the three and six months ended were $256,000 and $1,449,000, respectively, with a portion of the losses transferred from other comprehensive income, before taxes, of $4,302,000 and $3,387,000, respectively. (2) Data is adjusted for a 5% stock dividend issued in May 2009.

SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands)
	2009			2009			2008			2008			2008
	Q2			Q1			Q4			Q3			Q2
Balance sheet at quarter end:
Loans:
Commercial and industrial	$	2,240,368		$	2,243,698		$	2,234,202		$	2,164,523		$	2,146,163
Home equity		265,407			268,122			274,360			271,197			264,354
Second mortgage		73,856			78,589			84,388			85,734			83,720
Residential real estate		79,627			69,971			67,473			61,845			56,334
Other		74,714			77,638			79,402			82,840			86,783
Total gross loans		2,733,972			2,738,018			2,739,825			2,666,139			2,637,354
Allowance for loan losses		(44,316	)		(39,406	)		(37,309	)		(34,120	)		(31,490	)
Net loans		2,689,656			2,698,612			2,702,516			2,632,019			2,605,864
Goodwill		127,894			127,894			127,894			127,894			127,894
Intangible assets, net		16,414			17,592			18,769			19,947			21,124
Total assets		3,561,110			3,635,697			3,622,126			3,425,379			3,424,968
Total deposits		2,875,502			2,930,084			2,896,364			2,873,378			2,782,180
Federal funds purchased		87,500			-			71,500			-			29,500
Securities sold under agreements to repurchase - customers		17,398			14,170			20,327			38,359			36,149
Advances from FHLBNY		15,805			16,096			42,081			19,551			38,877
Securities sold under agreements to repurchase - FHLBNY		15,000			15,000			15,000			15,000			55,000
Obligation under capital lease		8,383			5,171			5,189			5,207			5,224
Junior subordinated debentures		92,786			92,786			92,786			92,786			92,786
Total shareholders' equity		360,660			447,984			358,508			357,282			360,268
Quarterly average balance sheet:
Loans:
Commercial and industrial	$	2,236,745		$	2,229,016		$	2,195,218		$	2,146,204		$	2,099,090
Home equity		268,276			268,921			275,791			268,178			265,481
Second mortgage		75,967			81,854			85,530			84,404			82,604
Residential real estate		75,812			70,868			62,481			57,471			52,332
Other		75,133			79,324			81,426			84,116			86,198
Total gross loans		2,731,933			2,729,983			2,700,446			2,640,373			2,585,705
Securities and other interest-earning assets		491,348			527,318			476,305			461,276			450,888
Total interest-earning assets		3,223,281			3,257,301			3,176,751			3,101,649			3,036,593
Total assets		3,611,679			3,644,558			3,483,145			3,422,764			3,368,523
Non-interest-bearing demand deposits		431,836			397,237			407,151			435,249			430,568
Total deposits		2,975,358			2,936,452			2,916,153			2,837,147			2,755,778
Total interest-bearing liabilities		2,705,069			2,694,326			2,679,673			2,600,310			2,539,882
Total shareholders' equity		370,196			445,040			361,513			361,895			367,824

Capital and credit quality measures:
Total capital (to risk-weighted assets) (1):
Sun Bancorp, Inc.		11.52	%		14.32	%		11.37	%		11.67	%		11.50	%
Sun National Bank		11.06	%		10.99	%		10.84	%		11.02	%		10.83	%
Tier 1 capital (to risk-weighted assets) (1):
Sun Bancorp, Inc.		10.27	%		13.07	%		10.17	%		10.51	%		10.42	%
Sun National Bank		9.81	%		9.74	%		9.64	%		9.86	%		9.75	%
Leverage ratio (1):
Sun Bancorp, Inc.		9.29	%		11.81	%		9.58	%		9.56	%		9.57	%
Sun National Bank		8.87	%		8.80	%		9.10	%		8.97	%		8.97	%

Average equity to average assets		10.25	%		12.21	%		10.38	%		10.57	%		10.92	%
Allowance for loan losses to total gross loans		1.62	%		1.44	%		1.36	%		1.28	%		1.19	%
Non-performing assets to total gross loans and real estate owned		2.70	%		2.34	%		1.78	%		1.87	%		1.29	%
Allowance for loan losses to non-performing loans		69.82	%		73.76	%		79.69	%		71.80	%		97.30	%

Other data:
Net charge-offs		(2,040	)		(1,903	)		(4,428	)		(1,093	)		(2,941	)
Non-performing assets:
Non-accrual loans	$	55,801		$	50,481		$	42,233		$	45,940		$	31,323
Loans past due 90 days and accruing		7,675			2,945			4,587			1,583			1,042
Real estate owned, net		10,620			10,834			1,962			2,381			1,714
Total non-performing assets	$	74,096		$	64,260		$	48,782		$	49,904		$	34,079
(1) June 30, 2009 capital ratios are estimated, subject to regulatory filings.


SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands, except share and per share data)
	2009			2009			2008			2008			2008
	Q2			Q1			Q4			Q3			Q2
Profitability for the quarter:
Tax-equivalent interest income	$	38,276		$	37,894		$	43,574		$	43,426		$	43,337
Interest expense		14,017			15,600			17,661			18,017			18,319
Tax-equivalent net interest income		24,259			22,294			25,913			25,409			25,018
Tax-equivalent adjustment		475			455			441			447			454
Provision for loan losses		6,950			4,000			7,617			3,723			6,527
Non-interest income excluding net gain on sale of branches and net impairment losses on available for sale securities		6,290			5,599			6,119			7,046			7,802
Net gain on sale of branches		-			-			11,454			-			-
Net impairment losses on available for sale securities		(4,558	)		(278	)		(7,497	)		-			-
Non-interest expense excluding amortization of intangible assets		26,472			22,640			21,534			21,873			21,735
Amortization of intangible assets		1,178			1,177			1,178			1,177			1,178
(Loss) income before income taxes		(9,084	)		(657	)		5,219			5,235			2,926
Income tax (benefit) expense		(4,450	)		(1,042	)		966			1,106			597
Net (loss) income		(4,634	)		385			4,253			4,129			2,329
Net (loss) income available to common shareholders	$	(8,780	)	$	(820	)	$	4,253		$	4,129		$	2,329
Financial ratios:
Return on average assets (1)		(0.51)	%		0.04	%		0.49	%		0.48	%		0.28	%
Return on average equity (1)		(5.01)	%		0.35	%		4.71	%		4.56	%		2.53	%
Return on average tangible equity (1),(2)		(8.23)	%		0.52	%		7.94	%		7.74	%		4.27	%
Net interest margin (1)		3.01	%		2.74	%		3.26	%		3.28	%		3.30	%
Efficiency ratio		108.36	%		87.69	%		63.89	%		72.01	%		70.79	%
Efficiency ratio, excluding non-operating incmoe and non-operating expense		91.94	%		86.80	%		71.89	%		72.01	%		70.79	%
Per share data (3):
(Loss) earnings per common share:
Basic	$	(0.38	)	$	(0.04	)	$	0.18		$	0.18		$	0.10
Diluted	$	(0.38	)	$	(0.04	)	$	0.18		$	0.17		$	0.10
Book value	$	15.59		$	15.72		$	15.57		$	15.18		$	15.25
Tangible book value	$	9.35		$	9.41		$	9.20		$	8.90		$	8.94
Average basic shares (3)	23,103,975			23,043,056			23,323,693			23,512,826			23,830,980
Average diluted shares (3)	23,138,215			23,051,383			23,410,606			24,084,540			24,371,330
Operating non-interest income:
Service charges on deposit accounts	$	3,096		$	3,044		$	3,263		$	3,701		$	3,561
Other service charges		79			82			82			82			75
Gain on sale of loans		693			345			204			286			411
Gain on derivative instruments		85			127			411			491			1,037
Investment products income		756			522			688			728			848
BOLI income		561			513			661			778			772
Other income		1,020			966			810			980			1,098
Total operating non-interest income		6,290			5,599			6,119			7,046			7,802
Non-operating income (4):
Net gain on sale of branches		-			-			11,454			-			-
Net impairment losses on available for sale securities recognized in earnings		(4,558	)		(278	)		(7,497	)		-			-
Total non-operating income		(4,558	)		(278	)		3,957			-			-
Total non-interest income	$	1,732		$	5,321		$	10,076		$	7,046		$	7,802
Operating non-interest expense:
Salaries and employee benefits	$	13,216		$	11,963		$	10,643		$	12,277		$	12,283
Occupancy expense		2,782			3,135			2,919			2,912			2,810
Equipment expense		1,685			1,538			1,609			1,522			1,666
Data processing expense		1,052			1,010			1,120			1,154			1,065
Amortization of intangible assets		1,178			1,177			1,178			1,177			1,178
Insurance expense		3,330			1,443			901			745			728
Professional fees		507			378			745			542			483
Advertising expense		871			545			849			336			484
Real estate owned expense (income), net		93			180			(116	)		13			(534	)
Other expenses		2,936			2,448			2,864			2,372			2,750
Total operating non-interest expense		27,650			23,817			22,712			23,050			22,913
Total non-interest expense	$	27,650		$	23,817		$	22,712		$	23,050		$	22,913
(1) Amounts are annualized.
(2) Return on average tangible equity is computed by dividing annualized net income for the period by average tangible equity. Average tangible equity equals average equity less average identifiable intangible assets and goodwill.
(3) Data is adjusted for a 5% stock dividend issued in May 2009.
(4) Amount consists of items which the Company believes are not a result of normal operations.

SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (unaudited)
(Dollars in thousands)
	For the Three Months Ended June 30, 2009							For the Three Months Ended June, 2008
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial	$	2,236,745	$	26,107		4.67	%	$	2,099,090	$	30,340		5.78	%
Home equity		268,276		3,332		4.97			265,481		3,925		5.91
Second mortgage		75,967		1,226		6.46			82,604		1,335		6.46
Residential real estate		75,812		1,095		5.78			52,332		818		6.25
Other		75,133		1,236		6.58			86,198		1,472		6.83
Total loans receivable		2,731,933		32,996		4.83			2,585,705		37,890		5.86
Investment securities (3)		445,456		5,258		4.72			426,652		5,331		5.00
Interest-earning bank balances		45,892		22		0.19			9,929		50		2.01
Federal funds sold		-		-		-			14,307		66		1.85
Total interest-earning assets		3,223,281		38,276		4.75			3,036,593		43,337		5.71
Cash and due from banks		48,777							58,723
Bank properties and equipment, net		48,343							48,371
Goodwill and intangible assets, net		145,033							149,746
Other assets		146,245							75,090
Total non-interest-earning assets		388,398							331,930
Total assets	$	3,611,679						$	3,368,523

Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	1,019,000		2,565		1.01	%	$	801,486		3,047		1.52	%
Savings deposits		295,010		725		0.98			422,807		1,866		1.77
Time deposits		1,229,512		9,115		2.97			1,100,917		11,044		4.01
Total interest-bearing deposit accounts		2,543,522		12,405		1.95			2,325,210		15,957		2.75
Borrowed money:
Federal funds purchased		16,632		20		0.48			28,256		172		2.43
Securities sold under agreements to repurchase - customers		15,996		10		0.25			35,839		108		1.21
FHLBNY advances (4)		30,903		355		4.60			52,561		633		4.82
Obligation under capital lease		5,230		94		7.19			92,786		1,354		5.84
Junior subordinated debentures		92,786		1,133		4.88			5,230		95		7.27
Total borrowings		161,547		1,612		3.99			214,672		2,362		4.40
Total interest-bearing liabilities		2,705,069		14,017		2.07			2,539,882		18,319		2.89
Non-interest-bearing demand deposits		431,836							430,568
Other liabilities		104,578							30,249
Total non-interest bearing liabilities		536,414							460,817
Total liabilities		3,241,483							3,000,699
Shareholders' equity		370,196							367,824
Total liabilities and shareholders' equity	$	3,611,679						$	3,368,523

Net interest income			$	24,259						$	25,018
Interest rate spread (5)						2.68	%						2.82	%
Net interest margin (6)						3.01	%						3.30	%
Ratio of average interest-earning assets to average interest-bearing liabilities						119.16	%						119.56	%

(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) 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 Six Months Ended June 30, 2009							For the Six Months Ended June 30, 2008
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial	$	2,232,902	$	51,184		4.58	%	$	2,068,319	$	62,846		6.08	%
Home equity		268,597		6,832		5.09			266,659		8,080		6.06
Second mortgage		78,894		2,533		6.42			81,711		2,653		6.49
Residential real estate		73,354		2,165		5.90			51,172		1,636		6.39
Other		77,217		2,474		6.41			86,400		3,070		7.11
Total loans receivable		2,730,964		65,188		4.77			2,554,261		78,285		6.13
Investment securities (3)		456,118		10,924		4.79			441,009		10,867		4.93
Interest-earning bank balances		52,927		58		0.22			10,009		137		2.74
Federal funds sold		189		-		-			9,087		97		2.13
Total interest-earning assets		3,240,198		76,170		4.70			3,014,366		89,386		5.93
Cash and due from banks		48,955							57,639
Bank properties and equipment, net		48,806							48,132
Goodwill and intangible assets, net		145,618							150,335
Other assets		144,851							76,821
Total non-interest-earning assets		387,830							332,927
Total assets	$	3,628,028						$	3,347,293

Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	1,001,284		5,311		1.06	%	$	777,959		6,367		1.64	%
Savings deposits		296,293		1,571		1.06			442,378		4,671		2.11
Time deposits		1,243,804		19,453		3.13			1,084,777		23,232		4.28
Total interest-bearing deposit accounts		2,541,381		26,335		2.07			2,305,114		34,270		2.97
Borrowed money:
Federal funds purchased		10,133		25		0.49			23,001		302		2.63
Securities sold under agreements to repurchase - customer		16,302		20		0.25			37,269		341		1.83
FHLBNY advances (4)		33,922		729		4.30			61,224		1,293		4.22
Obligations under capital lease		5,204		189		7.26			92,956		2,898		6.24
Junior subordinated debentures		92,786		2,319		5.00			5,239		191		7.29
Total borrowings		158,347		3,282		4.15			219,689		5,025		4.57
Total interest-bearing liabilities		2,699,728		29,617		2.19			2,524,803		39,295		3.11
Non-interest-bearing demand deposits		414,632							423,590
Other liabilities		106,257							31,788
Total non-interest-bearing liabilities		520,889							455,378
Total liabilities		3,220,617							2,980,181
Shareholders' equity		407,411							367,112
Total liabilities and shareholders' equity	$	3,628,028						$	3,347,293

Net interest income			$	46,553						$	50,091
Interest rate spread (5)						2.51	%						2.82	%
Net interest margin (6)						2.87	%						3.32	%
Ratio of average interest-earning assets to average interest-bearing liabilities						120.02	%						119.39	%

(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) 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 (SNBC) Inactive 8-KSun Bancorp, Inc. Reports Second Quarter 2009 Results