Sun Bancorp (SNBC) 8-K Sun Bancorp, Inc. Reports First Quarter 2010 Results

Exhibit 99

News Release

For Immediate Release

Contact:  Thomas X. Geisel, President & CEO, (856) 691-7700

Sun Bancorp, Inc. Reports First Quarter 2010 Results

VINELAND, NJ – April 27, 2010 – Sun Bancorp, Inc. (NASDAQ: SNBC) reported today a net loss available to common shareholders of $762,000, or $0.03 loss per diluted share, for the first quarter ended March 31, 2010, compared to a net loss available to common shareholders of $820,000, or $0.04 loss per diluted share, for the first quarter ended March 31, 2009.  The net loss available to common shareholders for the first quarter 2009 included the impact of the Company’s participation in the Troubled Asset Relief Program (“TARP”) Capital Purchase Program (“CPP”), including $1.2 million for preferred stock dividends an d accretion of the original issuance discount on preferred stock.

“First quarter results continue to mirror the challenging economic environment in which we operate," said Thomas X. Geisel, President & Chief Executive Officer.  "While credit costs remain elevated they were generally in line with our expectations. Credit quality was essentially stable with the exception of one new addition to our non-performing assets. Our provision for loan losses totaled $9.6 million for the first quarter, which increased our allowance for loan losses to 2.35% of total loans as compared to 2.21% at the end of 2009. We continue to closely monitor areas of weakness and take expedient and appropriate action as necessary. Loan demand was moderate in the first quarter as companies continue to plan guardedly, the commercial real estate market adjusts and consumers remain cautious. Our non-time, core deposit volumes continue to be an area of strength and grew 3.00% on a linked quarter basis. Our net interest margin of 3.56% was down slightly from the fourth quarter from lower loan and securities yields, but still reflects a marked improvement from 2.74% a year ago. Our efforts to diversify the core revenue streams continue to show progress, especially in the healthcare, asset-based lending and Sun Home Loans areas."

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

·   Total assets were $3.53 billion at March 31, 2010, as compared to $3.58 billion at December 31, 2009 and $3.64 billion at March 31, 2009.  

·   Total loans before allowance for loan losses were $2.70 billion at March 31, 2010, as compared to $2.72 billion at December 31, 2009 and $2.74 billion at March 31, 2009.  Commercial loans, on average, were essentially level on a linked fourth quarter 2009 basis, while residential mortgages and home equity loans decreased on average 3.4% and 1.3%, respectively.    

·   The provision for loan losses was $9.6 million for the first quarter 2010, increasing the allowance for loan losses to 2.35% of outstanding loans at March 31, 2010, as compared to the allowance for loan losses to outstanding loans of 2.21% at December 31, 2009 and 1.44% at March 31, 2009.  The provision for loan losses for the first quarter was 0.35% of average loans, as compared to 0.72% of average loans for the linked quarter and 0.15% of average loans for the comparable prior year quarter.  Net charge-offs during the first quarter were $6.3 million, or 0.23% of average loans, as compared to $5.6 million, or 0.21% of average loans for the linked quarter and $1.9 million, or 0.07% of average loans outstanding, for the comparable prior year quarter.

·   Total non-performing assets were $89.8 million at March 31, 2010, or 3.32% of total loans and real estate owned, as compared to $105.4 million at December 31, 2009, or 3.86% of total loans and real estate owned, and $64.3 million, or 2.34%, at March 31, 2009.  The allowance for loan losses to non-performing loans was 73.53% at March 31, 2010, as compared to 62.56% at December 31, 2009 and 73.76% at March 31, 2009.    

·   Total deposits of $2.92 billion at March 31, 2010 were essentially level to December 31, 2009 and March 31, 2009.  Average deposits increased $33.2 million over the linked quarter as average interest-bearing demand deposits increased 7.3%, or $85.4 million, offset by a decrease in average certificates of deposit of $15.3 million, or 1.6%.  

·   Federal funds purchased were $25.0 million at March 31, 2010, as compared to $89.0 million at December 31, 2009.  There were no federal funds purchased at March 31, 2009.  

·   The first quarter net interest margin was 3.56%, as compared to 3.64% for the linked quarter and 2.74% for the comparable prior year quarter.  The yield on average loans was 4.79%, as compared to 4.92% for the linked quarter and 4.72% for the comparable prior year quarter.  The cost of interest-bearing deposits of 1.23% for the first quarter decreased 14 basis points from 1.37% for the linked quarter and 96 basis points from the comparable prior year quarter.  The interest rate spread was 3.35%, as compared to the linked quarter of 3.41% and the same prior year quarter of 2.33%.  

·   Total operating non-interest income for the quarter of $5.7 million decreased $241,000, or 4.1%, over the linked fourth quarter 2009 and was essentially flat in relation to the comparable prior year period.  The decrease over the linked fourth quarter was primarily attributable to a decrease in service charges on deposit accounts, such as NSF and overdraft fees, of $206,000.   

·   Total operating non-interest expense for the quarter of $26.1 million increased $2.3 million, or 9.5%, over the comparable prior year period and $343,000, or 1.3%, over the linked fourth quarter 2009.  The increase over prior year was primarily the result of planned increases in salaries and benefits of $896,000 due to the addition of new business line staff and increases in sales commissions and stock compensation expense. In addition, occupancy expense increased $405,000 primarily related to snow removal costs and other expenses increased by $599,000 primarily attributable to problem loan costs of $610,000.  The increase over the linked fourth quarter 2009 was due to an increase in occupancy expense of $629,000 primarily related to snow removal costs and an increase in salaries and benefits of $419,000 mainly attributab le to an increase in payroll taxes.  These increases were partially offset by a decrease in advertising expense of $206,000 and a decrease in other expenses of $622,000, driven by a reduction in consulting fees of $197,000 and a lower off-balance sheet provision during the quarter of $211,000.  

·   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 6.34% at March 31, 2010, as compared to 6.24% at December 31, 2009 and 6.11% at March 31, 2009.  

·   The Company’s capital ratios continue to remain strong. At March 31, 2010 Sun National Bank’s total risk-based capital ratio is approximately 10.97% and the leverage capital ratio is approximately 8.75%.  

The Company will hold its regularly scheduled conference call on Wednesday, April 28, 2010, 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 $3.53 billion asset bank holding company headquartered in Vineland, New Jersey.  Its primary subsidiary is Sun National Bank, serving customers through 70 locations in New Jersey.  The Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC.  For more information about Sun National Bank and Sun Bancorp, Inc., visit www.sunnb.com.

The foregoing material contains forward-looking statements concerning the financial condition, results of operations and business of the Company.  We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements.  The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

SUN BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share amounts)
	For the Three Months Ended
	March 31,						December 31,
	2010			2009			2009
Profitability for the period:
Net interest income	$	27,623		$	21,839		$	28,068
Provision for loan losses		9,600			4,000			19,479
Non-interest income		5,651			5,321			5,541
Non-interest expense		26,076			23,817			25,733
Loss before income taxes		(2,402	)		(657	)		(11,603	)
Net (loss) income		(762	)		385			(6,340	)
Net loss available to common shareholders	$	(762	)	$	(820	)	$	(6,340	)
Financial ratios:
Return on average assets (1)		(0.09)	%		0.04	%		(0.71)	%
Return on average equity (1)		(0.85)	%		0.35	%		(6.96)	%
Return on average tangible equity (1),(2)		(1.39)	%		0.52	%		(11.44)	%
Net interest margin (1)		3.56	%		2.74	%		3.64	%
Efficiency ratio		78.37	%		87.69	%		76.57	%
Efficiency ratio, excluding non-operating income and non-operating expense (3)		78.37	%		86.80	%		75.77	%
Loss per common share:
Basic	$	(0.03	)	$	(0.04	)	$	(0.27	)
Diluted	$	(0.03	)	$	(0.04	)	$	(0.27	)
Average equity to average assets		10.14	%		12.21	%		10.15	%

	March 31,						December 31,
	2010			2009			2009
At period-end:
Total assets	$	3,531,998		$	3,635,697		$	3,578,905
Total deposits		2,924,815			2,930,084			2,909,268
Loans receivable, net of allowance for loan losses		2,634,276			2,698,612			2,657,694
Investments		430,104			435,841			457,192
Borrowings		78,943			50,437			146,193
Junior subordinated debentures		92,786			92,786			92,786
Shareholders' Equity		356,129			447,984			356,593
Credit quality and capital ratios:
Allowance for loan losses to gross loans		2.35	%		1.44	%		2.21	%
Non-performing assets to gross loans and real estate owned		3.32	%		2.34	%		3.86	%
Allowance for loan losses to non-performing loans		73.53	%		73.76	%		62.56	%
Total capital (to risk-weighted assets) (4):
Sun Bancorp, Inc.		11.47	%		14.32	%		11.38	%
Sun National Bank		10.97	%		10.99	%		10.87	%
Tier 1 capital (to risk-weighted assets) (4):
Sun Bancorp, Inc.		10.21	%		13.07	%		10.12	%
Sun National Bank		9.71	%		9.74	%		9.61	%
Leverage Ratio
Sun Bancorp, Inc.		9.21	%		11.81	%		9.08	%
Sun National Bank		8.75	%		8.80	%		8.58	%
Book value per common share	$	15.22		$	15.72		$	15.29
Tangble book value per common share	$	9.18		$	9.41		$	9.19

(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 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 months ended December 31, 2009 and March 31, 2009 excludes a net impairment loss on available for sale securities of $351,000 and $278,000, respectively.

(4) March 31, 2010 capital ratios are estimated, subject to regulatory filings.

SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands, except par value amounts)
	March 31, 2010			December 31, 2009
ASSETS
Cash and due from banks	$	43,585		$	53,857
Interest-earning bank balances		8,985			5,263
Cash and cash equivalents		52,570			59,120
Investment securities available for sale (amortized cost of $409,955 and $435,267 at March 31, 2010 and December 31, 2009, respectively)		409,080			434,738
Investment securities held to maturity (estimated fair value of $5,698 and $7,121 at March 31, 2010 and December 31, 2009, respectively)		5,531			6,955
Loans receivable (net of allowance for loan losses of $63,292 and $59,953 at March 31, 2010 and December 31, 2009, respectively)		2,634,276			2,657,694
Restricted equity investments		15,493			15,499
Bank properties and equipment, net		53,228			53,246
Real estate owned		3,688			9,527
Accrued interest receivable		11,466			12,235
Goodwill		127,894			127,894
Intangible assets, net		13,395			14,316
Deferred taxes, net		22,192			20,721
Bank owned life insurance (BOLI)		78,291			77,753
Other assets		104,894			89,207
Total assets	$	3,531,998		$	3,578,905
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	2,924,815		$	2,909,268
Federal funds purchased		25,000			89,000
Securities sold under agreements to repurchase – customers		15,767			18,677
Advances from the Federal Home Loan Bank of New York (FHLBNY)		14,916			15,215
Securities sold under agreements to repurchase – FHLBNY		15,000			15,000
Obligations under capital lease		8,260			8,301
Junior subordinated debentures		92,786			92,786
Other liabilities		79,325			74,065
Total liabilities		3,175,869			3,222,312
Shareholders’ equity:
Preferred stock, $1 par value, 1,000,000 shares authorized; none issued		-			-
Common stock, $1 par value, 50,000,000 shares authorized; 23,503,427 shares issued and 23,396,704 shares outstanding at March 31, 20010; 25,435,994 shares issued and 23,329,271 shares outstanding at December 31, 2009		25,503			25,436
Additional paid-in capital		362,648			362,189
Retained earnings		(5,359	)		(4,597	)
Accumulated other comprehensive loss		(377	)		(149	)
Deferred compensation plan trust		(124	)		(124	)
Treasury stock at cost, 2,106,723 shares at  March 31, 2010 and December 31, 2009		(26,162	)		(26,162	)
Total shareholders’ equity		356,129			356,593
Total liabilities and shareholders’ equity	$	3,531,998		$	3,578,905

SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)
	For the Three Months Ended March 31,
	2010				2009
INTEREST INCOME
Interest and fees on loans	$		32,386		$		32,192
Interest on taxable investment securities			3,189				4,230
Interest on non-taxable investment securities			1,005				844
Dividends on restricted equity investments			227				173
Total interest income			36,807				37,439
INTEREST EXPENSE
Interest on deposits			7,627				13,930
Interest on funds borrowed			549				484
Interest on junior subordinated debentures			1,008				1,186
Total interest expense			9,184				15,600
Net interest income			27,623				21,839
PROVISION FOR LOAN LOSSES			9,600				4,000
Net Interest income after provision for loan losses			18,023				17,839
NON-INTEREST INCOME
Service charges on deposit accounts			2,944				3,044
Other service charges			79				82
Gain on sale of loans			603				345
Gain on derivative instruments			-				127
Investment products income			603				522
BOLI income			538				513
Net impairment losses on available for sale securities:
Total impairment losses		-				(351	)
Portion of loss recognized in other comprehensive income (before taxes)		-				73
Net impairment losses recognized in earnings			-				(278	)
Other			884				966
Total non-interest income			5,651				5,321
NON-INTEREST EXPENSE
Salaries and employee benefits			12,859				11,963
Occupancy expense			3,540				3,135
Equipment expense			1,736				1,538
Data processing expense			1,086				1,010
Amortization of intangible assets			921				1,177
Insurance expense			1,507				1,443
Professional fees			584				378
Advertising expense			580				545
Real estate owned expense, net			216				180
Other			3,047				2,448
Total non-interest expense			26,076				23,817
LOSS BEFORE INCOME TAXES			(2,402	)			(657	)
INCOME TAX BENEFIT			(1,640	)			(1,042	)
NET (LOSS) INCOME			(762	)			385
Preferred stock dividends and discount accretion			-				1,205
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS	$		(762	)	$		(820	)
Basic loss per share	$		(0.03	)	$		(0.04	)
Diluted loss per share	$		(0.03	)	$		(0.04	)
Weighted average shares – basic	23,365,406				23,043,056
Weighted average shares – diluted	23,365,406				23,043,056

SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands)
	2010			2009			2009			2009			2009
	Q1			Q4			Q3			Q2			Q1
Balance sheet at quarter end:
Loans:
Commercial and industrial	$	2,238,967		$	2,249,365		$	2,234,616		$	2,240,368		$	2,243,698
Home equity		257,368			258,592			261,206			265,407			268,122
Second mortgage		65,857			68,592			71,578			73,856			78,589
Residential real estate		71,452			75,322			72,292			79,627			69,971
Other		63,924			65,776			70,072			74,714			77,638
Total gross loans		2,697,568			2,717,647			2,709,764			2,733,972			2,738,018
Allowance for loan losses		(63,292	)		(59,953	)		(46,067	)		(44,316	)		(39,406	)
Net loans		2,634,276			2,657,694			2,663,697			2,689,656			2,698,612
Goodwill		127,894			127,894			127,894			127,894			127,894
Intangible assets, net		13,395			14,316			15,237			16,414			17,592
Total assets		3,531,998			3,578,905			3,545,639			3,561,110			3,635,697
Total deposits		2,924,815			2,909,268			2,932,880			2,875,502			2,930,084
Federal funds purchased		25,000			89,000			6,000			87,500			-
Securities sold under agreements to repurchase - customers		15,767			18,677			21,018			17,398			14,170
Advances from FHLBNY		14,916			15,215			15,512			15,805			16,096
Securities sold under agreements to repurchase - FHLBNY		15,000			15,000			15,000			15,000			15,000
Obligations under capital lease		8,260			8,301			8,343			8,383			5,171
Junior subordinated debentures		92,786			92,786			92,786			92,786			92,786
Total shareholders' equity		356,129			356,593			362,457			360,660			447,984
Quarterly average balance sheet:
Loans:
Commercial and industrial	$	2,241,443		$	2,238,579		$	2,247,234		$	2,236,745		$	2,229,016
Home equity		258,359			260,382			263,494			268,276			268,921
Second mortgage		67,435			69,844			72,830			75,967			81,854
Residential real estate		73,333			75,890			76,626			75,812			70,868
Other		63,804			66,698			70,790			75,133			79,324
Total gross loans		2,704,374			2,711,393			2,730,974			2,731,933			2,729,983
Securities and other interest-earning assets		459,309			433,706			486,274			491,348			527,318
Total interest-earning assets		3,163,683			3,145,099			3,217,248			3,223,281			3,257,301
Total assets		3,554,244			3,590,339			3,593,037			3,611,679			3,644,558
Non-interest-bearing demand deposits		440,860			480,080			476,478			431,836			397,237
Total deposits		2,919,477			2,886,322			2,946,281			2,975,358			2,936,452
Total interest-bearing liabilities		2,672,746			2,652,540			2,663,226			2,705,069			2,694,326
Total shareholders' equity		360,475			364,530			365,440			370,196			445,040
Capital and credit quality measures:
Total capital (to risk-weighted assets)(1):
Sun Bancorp, Inc.		11.47	%		11.38	%		11.48	%		11.62	%		14.32	%
Sun National Bank		10.97	%		10.87	%		10.99	%		11.15	%		10.99	%
Tier 1 capital (to risk-weighted assets) (1):
Sun Bancorp, Inc.		10.21	%		10.12	%		10.23	%		10.37	%		13.07	%
Sun National Bank		9.71	%		9.61	%		9.74	%		9.90	%		9.74	%
Leverage ratio (1):
Sun Bancorp, Inc.		9.21	%		9.08	%		9.21	%		9.29	%		11.81	%
Sun National Bank		8.75	%		8.58	%		8.78	%		8.88	%		8.80	%
Average equity to average assets		10.14	%		10.15	%		10.17	%		10.25	%		12.21	%
Allowance for loan losses to total gross loans		2.35	%		2.21	%		1.70	%		1.62	%		1.44	%
Non-performing assets to total gross loans and real estate owned		3.32	%		3.86	%		3.46	%		2.70	%		2.34	%
Allowance for loan losses to non-performing loans		73.53	%		62.56	%		54.58	%		69.82	%		73.76	%
Other data:
Net charge-offs		(6,261	)		(5,593	)		(14,486	)		(2,040	)		(1,903	)
Non-performing assets:
Non-accrual loans	$	78,403		$	87,882		$	80,333		$	55,801		$	50,481
Loans past due 90 days and accruing		7,678			7,958			4,067			7,675			2,945
Real estate owned, net		3,688			9,527			9,667			10,620			10,834
Total non-performing assets		89,769			105,367			94,067			74,096			64,260
Troubled debt restructuring, performing		19,353			-			-			-			-
(1) March 31, 2010 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 amounts)
	2010			2009			2009			2009			2009
	Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	37,347		$	38,425		$	38,413		$	38,276		$	37,894
Interest expense		9,184			9,799			11,426			14,017			15,600
Tax-equivalent net interest income		28,163			28,626			26,987			24,259			22,294
Tax-equivalent adjustment		540			558			521			475			455
Provision for loan losses		9,600			19,479			16,237			6,950			4,000
Non-interest income excluding net impairment losses on available for sale securities		5,651			5,892			6,404			6,290			5,599
Net impairment losses on available for sale securities		-			(351	)		(1,928	)		(4,558	)		(278	)
Non-interest expense excluding amortization of intangible assets		25,155			24,812			25,690			26,472			22,640
Amortization of intangible assets		921			921			1,177			1,178			1,177
Loss before income taxes		(2,402	)		(11,603	)		(12,162	)		(9,084	)		(657	)
Income tax benefit		(1,640	)		(5,263	)		(5,620	)		(4,450	)		(1,042	)
Net (loss) income		(762	)		(6,340	)		(6,542	)		(4,634	)		385
Net loss available to common shareholders	$	(762	)	$	(6,340	)	$	(6,542	)	$	(8,780	)	$	(820	)
Financial ratios:
Return on average assets (1)		(0.09)	%		(0.71)	%		(0.73)	%		(0.51)	%		0.04	%
Return on average equity (1)		(0.85)	%		(6.96)	%		(7.16)	%		(5.01)	%		0.35	%
Return on average tangible equity (1),(2)		(1.39)	%		(11.44)	%		(11.81)	%		(8.23)	%		0.52	%
Net interest margin (1)		3.56	%		3.64	%		3.36	%		3.01	%		2.74	%
Efficiency ratio		78.37	%		76.57	%		86.83	%		108.36	%		87.69	%
Efficiency ratio, excluding non-operating income and non-operating expense		78.37	%		75.77	%		81.74	%		91.94	%		86.80	%
Per share data:
Loss per common share:
Basic	$	(0.03	)	$	(0.27	)	$	(0.28	)	$	(0.38	)	$	(0.04	)
Diluted	$	(0.03	)	$	(0.27	)	$	(0.28	)	$	(0.38	)	$	(0.04	)
Book value	$	15.22		$	15.29		$	15.63		$	15.59		$	15.72
Tangible book value	$	9.18		$	9.19		$	9.46		$	9.35		$	9.41
Average basic shares	23,365,406			23,223,463			23,162,992			23,103,975			23,043,056
Average diluted shares	23,365,406			22,223,463			23,162,992			23,103,975			23,043,056
Operating non-interest income:
Service charges on deposit accounts	$	2,944		$	3,150		$	3,150		$	3,096		$	3,044
Other service charges		79			85			85			79			82
Gain on sale of loans		603			603			711			693			345
Gain on derivative instruments		-			50			-			85			127
Investment products income		603			497			894			756			522
BOLI income		538			600			575			561			513
Other income		884			907			989			1,020			966
Total operating non-interest income		5,651			5,892			6,404			6,290			5,599
Non-operating income (3):
Net impairment losses on available for sale securities recognized in earnings		-			(351	)		(1,928	)		(4,558	)		(278	)
Total non-operating income		-			(351	)		(1,928	)		(4,558	)		(278	)
Total non-interest income	$	5,651		$	5,541		$	4,476		$	1,732		$	5,321
Operating non-interest expense:
Salaries and employee benefits	$	12,859		$	12,440		$	14,154		$	13,216		$	11,963
Occupancy expense		3,540			2,911			2,689			2,782			3,135
Equipment expense		1,736			1,732			1,619			1,685			1,538
Data processing expense		1,086			1,021			980			1,052			1,010
Amortization of intangible assets		921			921			1,177			1,178			1,177
Insurance expense		1,507			1,512			1,519			3,330			1,443
Professional fees		584			713			595			507			378
Advertising expense		580			786			251			871			545
Real estate owned expense, net		216			28			854			93			180
Other expenses		3,047			3,669			3,029			2,936			2,448
Total operating non-interest expense		26,076			25,733			26,867			27,650			23,817
Total non-interest expense	$	26,076		$	25,733		$	26,867		$	27,650		$	23,817
(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) 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
	2010							2009
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial	$	2,241,443	$	26,166		4.67	%	$	2,229,016	$	25,077		4.50	%
Home equity		258,359		3,032		4.69			268,921		3,500		5.21
Second mortgage		67,435		1,063		6.31			81,854		1,307		6.39
Residential real estate		73,333		1,019		5.56			70,868		1,070		6.04
Other		63,804		1,106		6.93			79,324		1,238		6.24
Total loans receivable		2,704,374		32,386		4.79			2,729,983		32,192		4.72
Investment securities (3)		449,691		4,957		4.41			466,898		5,666		4.85
Interest-earning bank balances		9,618		4		0.17			60,040		36		0.24
Federal funds sold		-		-		-			380		-		-
Total interest-earning assets		3,163,683		37,347		4.72			3,257,301		37,894		4.65
Cash and due from banks		45,194							49,135
Bank properties and equipment, net		53,081							48,471
Goodwill and intangible assets, net		141,859							146,210
Other assets		150,427							143,441
Total non-interest-earning assets		390,561							387,257
Total assets	$	3,554,244						$	3,644,558
Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	1,260,824		2,781		0.88	%	$	983,372		2,746		1.12	%
Savings deposits		301,302		651		0.86			297,590		846		1.14
Time deposits		916,491		4,195		1.83			1,258,253		10,338		3.29
Total interest-bearing deposit accounts		2,478,617		7,627		1.23			2,539,215		13,930		2.19
Short-term borrowings:
Federal funds purchased		47,556		63		0.53			3,561		5		0.56
Securities sold under agreements to repurchase - customers		15,487		5		0.13			16,610		10		0.24
Long-term borrowings:
FHLBNY advances (4)		30,019		343		4.57			36,976		374		4.05
Obligations under capital lease		8,281		138		6.67			5,178		95		7.34
Junior subordinated debentures		92,786		1,008		4.35			92,786		1,186		5.11
Total borrowings		194,129		1,557		3.21			155,111		1,670		4.31
Total interest-bearing liabilities		2,672,746		9,184		1.37			2,694,326		15,600		2.32
Non-interest-bearing demand deposits		440,860							397,237
Other liabilities		80,163							107,955
Total non-interest bearing liabilities		521,023							505,192
Total liabilities		3,193,769							3,199,518
Shareholders' equity		360,475							445,040
Total liabilities and shareholders' equity	$	3,554,244						$	3,644,558
Net interest income			$	28,163						$	22,294
Interest rate spread (5)						3.35	%						2.33	%
Net interest margin (6)						3.56	%						2.74	%
Ratio of average interest-earning assets to average interest-bearing liabilities						118.37	%						120.89	%
(1)  Average balances include non-accrual loans.
(2)  Loan fees are included in interest income and the amount is not material for this analysis.
(3)  Interest earned on non-taxable investment securities is shown on a tax equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustment for three months ended March 31, 2010 and 2009 was $540,000 and $455,000, respectively.
(4)  Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY.
(5)  Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(6)  Net interest margin represents net interest income as a percentage of average interest-earning assets.