For Immediate Release
Sun Bancorp, Inc. Announces 4Q 2014 Earnings
Contact: Mike Dinneen
Senior Vice President, Director of Marketing
(856) 552-5013
mdinneen@sunnb.com
MOUNT LAUREL, N.J. – January 26, 2015 –
| Fourth Quarter Highlights |
| · | Reported a net loss of $2.8 million for the quarter ended December 31, 2014 as compared to a net loss of $8.2 million for the quarter ended December 31, 2013 and a net loss of $29.8 million for the year ended December 31, 2014 as compared to a net loss of $9.9 million for the year ended December 31, 2013. |
| · | Significant progress in execution of strategic restructuring initiative. |
| · | Consolidated three branches and completed orderly exit of Sun Home Loans residential lending business and asset-based lending. |
| · | Non-interest expense fell 27% to $23.7 million for the fourth quarter of 2014 as compared to $32.5 million for the fourth quarter of 2013. |
| · | Fourth quarter expenses include a non-recurring charge of $2.3 million for leased office vacancy costs and a $0.8 million owned real estate write-down. |
| ·�� | $161 million decline in net loans held-for-investment in the quarter (10%) and $614 million reduction from December 31, 2013 (29%). |
| · | Average interest-earning cash balances grew 24% during the quarter to $504.5 million. |
| · | Non-performing assets/total assets fell six basis points from September 30, 2014 and 73 basis points from December 31, 2013 to 0.58% at December 31, 2014. |
| · | Renegotiated lease on a major office facility, reducing long-term contractual obligations by approximately $15 million. |
Sun Bancorp, Inc. (NASDAQ: SNBC) (the "Company"), the holding company for Sun National Bank (the “Bank”), reported today a net loss of $2.8 million, or a loss of $0.15 per diluted share, for the quarter ended December 31, 2014, compared to a net loss of $825 thousand, or a loss of $0.05 per diluted share, for the quarter ended September 30, 2014 and a net loss of $8.2 million, or a loss of $0.47 per diluted share, for the quarter ended December 31, 2013.
“During the fourth quarter, we brought several facets of our restructuring plans to completion, including the successful exit from our Sun Home Loans residential mortgage banking business and asset-based lending,” said President & CEO Thomas M. O’Brien. “In addition, we took further actions to rationalize our expense base and delivery platform, which included the consolidation of three branches, addressing our short and long-term occupancy needs and expenses. The year 2014 was one of fundamental transition for the Company. In the course of a few short months, we put enormous legacy costs behind us, successfully exited several higher risk business lines, restructured our geographic footprint, raised new equity capital, improved credit quality metrics to very strong measures and built a strong management as well as new lending teams. This list of accomplishments represents a very focused and aggressive commitment of time and energy by both Management and the Board of Directors. We would not have achieved such success in our restructuring efforts to date without that support.”
“We enter 2015 in much stronger financial condition and with the prospects for profitability finally in sight,” continued O’Brien. “Absent the lease vacancy charge of $2.3 million and the owned real estate write-down of $0.8 million, the hint of some modest profitability is evident. Nonetheless, much remains to be done and our energies remain focused on concluding the difficult chapter of the past few years. While we will continue to create further efficiencies in 2015, the primary focus will now turn to liquidity deployment and achieving sustained profitability.”
Discussion of Results:
Balance Sheet
The Bank has been reducing the size of its balance sheet over the past few quarters as it focuses internally on excess credit risk reduction and capital ratio improvement. During the quarter, total assets fell $101.9 million due primarily to the reduction in the commercial loan portfolio from principal repayments. Total assets were $2.72 billion at December 31, 2014, as compared to $2.82 billion at September 30, 2014 and $3.09 billion at December 31, 2013.
The Bank’s liquidity level remains high as cash and cash equivalents rose to $549.4 million at December 31, 2014, as compared to $504.4 million at September 30, 2014 and $267.8 million at December 31, 2013. The increase of $45.0 million in cash and cash equivalents in the fourth quarter of 2014 as compared to the prior quarter was due to commercial loan pay-downs, partially offset by a planned decrease in deposits.
Gross loans held-for-investment totaled $1.51 billion at December 31, 2014, as compared to $1.68 billion at September 30, 2014 and $2.14 billion at December 31, 2013. The significant decline in gross loans held-for-investment is due primarily to commercial loan pay-downs and limited loan originations. The decrease in loan originations is due to several factors, including a competitive environment, the Bank maintaining a very selective approach to new loan relationships, and the on-boarding of newly-hired lending teams.
Deposits were $2.09 billion at December 31, 2014, as compared to $2.17 billion at September 30, 2014 and $2.62 billion at December 31, 2013. The total quarterly cost of deposits fell by seven basis points to 0.31% in the current quarter as compared to the comparable prior year quarter due to planned run-off of higher yielding government and retail deposits.
The Company had $64.0 million in loans included in branch assets held-for-sale and $183.4 million in deposits held-for-sale at December 31, 2014 related to the pending sale of seven branch locations to Sturdy Savings Bank, which is scheduled to close in the first quarter of 2015. The Company expects to record a net gain of approximately $10 million on the sale of these locations primarily due to the premium on deposits.
“The Bank’s planned year-over-year reduction in both loan and deposit balances were a result of the accelerated exit of higher-risk, transactional loan relationships, and the re-pricing of certain non-strategic, higher rate deposit segments. We will continue to emphasize deep and profitable business relationships with our commercial and consumer clients while right-sizing our balance sheet to support that initiative,” said O’Brien.
Net Interest Income and Margin
The net interest margin declined 20 basis points to 2.67% for the three months ended December 31, 2014 from 2.87% in the linked third quarter as commercial loan balances continue to decline and the Company’s cash balances remain elevated. Average interest-earning cash balances increased by $98.7 million to $504.5 million for the three months ended December 31, 2014 as compared to $405.8 million in the linked third quarter. For the year ended December 31, 2014, the net interest margin declined 12 basis points to 2.92% from 3.04% for the year ended December 31, 2013. Average loans receivable declined by $343.7 million and average interest-earning cash balances increased $49.1 million from the year ended December 31, 2013 to the year ended December 31, 2014.
“The inevitable consequence of the major credit initiatives and balance sheet repositioning has been elevated liquidity positions,” said O’Brien. “The price of liquidity is significant in this low interest rate environment. While there appears to be some relief on rates coming in mid-2015, the opportunity to build a respectable level of profitability will predominately come from a continued focus on operating expenses as well as the sensible deployment of excess liquidity into appropriate earning assets. As we enter 2015, we will actively pursue initiatives to invest our excess liquidity into assets that can generate a better return while supporting the Bank’s objectives of prudent risk management, relationship-building, and improved margins.”
Non-Interest Income
Non-interest income was $4.1 million for the quarter ended December 31, 2014, as compared to $4.7 million for the quarters ended September 30, 2014 and December 31, 2013. The decrease from the linked quarter of $553 thousand was primarily attributable to a decline of $394 thousand in net mortgage banking revenue as the Company completed its orderly unwind of Sun Home Loans. There also were normal seasonal declines in service charges on deposits and investment products income. The decrease in non-interest income from the prior year quarter is primarily due to a decline in net mortgage banking revenue of $971 thousand from the fourth quarter of 2013 to $29 thousand for the fourth quarter of 2014 as the Company completed its orderly unwind of Sun Home Loans. This was partially offset by a decline in negative credit value adjustments of $666 thousand from the fourth quarter of 2014 compared to the fourth quarter of 2013. This change was due to swap termination charges recorded in the prior year quarter.
“Now that we have exited the residential lending business, our non-interest income sources will be primarily comprised of wealth management and deposit-related revenue,” said O’Brien.
Non-Interest Expense
Non-interest expense for the fourth quarter of 2014 was $23.7 million, a decrease of $427 thousand from the third quarter of 2014 and a decrease of $8.8 million from the fourth quarter of 2013. Salaries and benefits expense declined by $2.1 million from the third quarter of 2014 due primarily to the impact of the workforce reduction announced in the second quarter. Several other categories declined as the Company’s cost reduction measures continue to be implemented. These decreases were partially offset by an increase of $2.5 million in occupancy expense due primarily to a $2.3 million charge recorded in the fourth quarter of 2014 for the write-down of the value of excess leased office space. The current quarter also included a $768 thousand write down on one other real estate owned property based on an updated appraisal. Significant expense reductions from the fourth quarter of 2013 include a decrease of $3.9 million in salaries and benefits expense, $3.7 million in professional fees, $884 thousand in commission expense and $517 thousand in advertising expense.
“In the last two quarters, we have begun to see our historically-elevated expenses decrease. We expect to have a normalized non-interest expense beginning the third quarter of 2015, at which time we estimate our annualized expense rate to be between $75 and $80 million,” said O’Brien. The Company’s 2014 and 2013 non-interest expense was $109.4 million and $129.9 million, respectively.
In addition, the level of operating expenses for the fourth quarter in each of 2012 and 2013 has approximated $32 million while the expense level in the fourth quarter of 2014, excluding the non-recurring excess leased space charge of $2.3 million was $21.4 million, a reduction of $11.1 million, or 34%, from the comparable prior year quarter.
“We continue to aggressively consolidate both our back office and branch locations and will continue to seek opportunities to divest non-strategic branch locations as well as consolidate office space,” said O’Brien. “Our Strategic Plan contemplates further reduction of our branch network to between 30 and 35 locations, through a careful combination of consolidations and/or sales, which should produce further expense reductions. We have not entered into any agreements nor submitted any applications to our regulator with respect to any location at this time.”
In addition to recognizing excess leased space charges and the consolidation of three retail branch locations, in January 2015, the Bank successfully executed the term reduction of a long-term lease on a large back office facility, reducing its term by ten years and long-term lease obligations by approximately $15 million. (change)
Asset Quality
The Bank continued to reduce its non-performing loans held-for-investment in the fourth quarter as the balance declined by $3.0 million, or 21%, to $11.0 million at December 31, 2014 as compared to $14.1 million at September 30, 2014. Non-performing loans held-for-investment to total gross loans held-for-investment declined to 0.7% at December 31, 2014 compared to 0.8% at September 30, 2014 and 1.8% at December 31, 2013.
There was no provision expense recorded during the fourth quarter of 2014 or in the linked quarter as compared to $2.1 million in the fourth quarter of 2013, reflecting the Bank’s substantially-improved asset quality metrics. Net charge-offs were $3.3 million in the three months ended December 31, 2014 as compared to $1.9 million in the third quarter of 2014 and net charge-offs of $15.5 million in the fourth quarter of 2013. During the fourth quarter, the Bank transferred $4.3 million of problem consumer loans to held-for-sale, which resulted in a charge-off of $2.7 million. The allowance for loan losses was $23.2 million, or 1.54% of gross loans held-for-investment, at December 31, 2014, as compared to $26.5 million, or 1.58% of gross loans held-for-investment, at September 30, 2014 and $35.5 million, or 1.66% of gross loans held-for-investment, at December 31, 2013.
Capital
At December 31, 2014, the capital ratios of the Company and the Bank increased due to planned balance sheet runoff. At December 31, 2014, the Bank’s total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 17.3%, 16.1%, and 9.7%, respectively. At December 31, 2014, the Company’s total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 19.3%, 16.7%, and 10.1%, respectively. The Company’s tangible equity to tangible assets ratio was 7.7% at December 31, 2014, as compared to 7.5% at September 30, 2014 and 6.8% at December 31, 2013.
The Company will hold a conference call on Monday, January 26, 2015 at 11:00 AM (EST) to discuss results and answer questions from analysts and investors. Participants may listen to or participate in the Company’s earnings conference call via the following:
| · | Toll-free participant dial-in: 888-337-8169 |
| · | Conference ID: 6000271 |
Sun Bancorp, Inc. (NASDAQ: SNBC) is a $2.72 billion asset bank holding company headquartered in Mount Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a community bank serving customers throughout New Jersey. Sun National Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the Federal Deposit Insurance Corporation (FDIC). For more information about Sun National Bank and Sun Bancorp, Inc., visit www.sunnationalbank.com.
Cautionary Note Regarding Forward-Looking Statements
The foregoing material contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, concerning the financial condition, results of operations and business of the Company. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about events or results or otherwise are not statements of historical facts, including statements about the successful implementation of our comprehensive strategic restructuring plan to improve financial performance and capital, reduce costs, risk and operating complexity, and the timing of the completion of the transactions contemplated thereby, addressing the Company's long-standing obstacles to earnings, regulatory compliance and overall performance excellence, building a platform that can support meaningful revenue generation and growth and through which we can begin to deploy our excess cash balances into quality commercial loans, our preparations for future loan growth, our progress in building profitable deposit relationships with our commercial and consumer clients, anticipated reductions in non-interest expenses and the anticipated closing of the sale of certain branches in the first quarter of 2015. These statements may be identified by such words as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate” or similar words or variations of such terms. Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that our strategic restructuring plan will improve our financial performance, improve our future capital levels, reduce our costs, or reduce our risks or operating complexity; that our strategic restructuring plan will be completed as and in the timeframes anticipated; that we will adequately address long-standing obstacles to earnings, regulatory compliance and overall performance excellence; that we will build a platform that can support meaningful revenue generation and growth and through which we can deploy our excess cash balances into quality commercial loans; that our preparations for future loan growth will be successful; that we will continue to make progress in building profitable deposit relationships with our commercial and consumer clients; that we will experience anticipated reductions in non-interest expenses; or that the closing of the sale of certain branches in the first quarter of 2015 will be completed successfully. We caution that such statements are subject to a number of uncertainties. Factors that could cause actual results to differ from those expressed or implied by such forward-looking statements include, but are not limited to: (i) competition among providers of financial services; (ii) changes in laws and regulations, including without limitation changes in capital requirements under the federal prompt corrective action regulations; (iii) changes in business strategy or an inability to execute strategy due to the occurrence of unanticipated events; (iv) the failure to complete any or all of the transactions contemplated in the Company's comprehensive strategic restructuring plan on the terms currently contemplated; (v) failure to comply with the Bank’s agreement with the Office of the Comptroller of the Currency; (vi) the cost of compliance with the agreement; (vii) local, regional and national economic conditions and events and the impact they may have on the Company, the Bank and its customers; (viii) the ability to attract deposits and other sources of liquidity; (ix) changes in the financial performance and/or condition of the Bank's borrowers; (x) changes in the level of non-performing and classified assets and charge-offs; (xi) changes in estimates of future loan loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (xii) inflation, interest rate, securities market and monetary fluctuations; (xiii) changes in consumer spending, borrowing and saving habits; (xiv) the ability to increase market share and control expenses; (xv) volatility in the credit and equity markets and its effect on the general economy; (xvi) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; and (xvii) those detailed under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Form 10-K for the fiscal year ended December 31, 2013, the Company's Form 10-Q for the three months and periods ended September 30, 2014, June 30, 2014 and March 31, 2014, and in other filings made pursuant to the Securities Exchange Act of 1934, as amended. Therefore, readers should not place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Non-GAAP Financial Measures (Unaudited)
This news release references tangible book value per common share. Tangible book value per common share is a non-GAAP financial measure. Tangible book value per common share is a ratio of tangible equity, shareholder’s equity less intangible assets, to total outstanding common shares. Intangible assets at December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013 were $38.2 million, $38.2 million, $38.4 million, $38.7 million, and $39.0 million, respectively. Non-GAAP financial measures also include return on average tangible equity. Management believes that tangible book value per common share and return on average tangible equity are meaningful because they are two of the measures we use to assess capital adequacy.
Tangible book value per common share (dollars in thousands)
The following reconciles shareholders’ equity to tangible equity by reducing shareholders’ equity by the intangible asset balance at December, 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013.
| December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 2013 | ||||||||||
Tangible book value per common share: | ||||||||||||||
Shareholders’ equity | $ | 245,324 | $ | 247,047 | $ | 227,656 | $ | 248,898 | $ | 245,337 | ||||
Less: Intangible assets | 38,188 | 38,188 | 38,426 | 38,709 | 38,993 | |||||||||
Tangible equity | $ | 207,136 | $ | 208,859 | $ | 189,230 | $ | 210,189 | $ | 206,344 | ||||
Common stock | 18,898 | 18,885 | 17,752 | 17,742 | 17,742 | |||||||||
Less: Treasury stock | 277 | 300 | 319 | 389 | 399 | |||||||||
| Total outstanding shares | 18,621 | 18,585 | 17,433 | 17,353 | 17,343 | |||||||||
Tangible book value per common share: | $ | 11.12 | $ | 11.24 | $ | 10.85 | $ | 12.11 | $ | 11.90 | ||||
| SUN BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||
FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||||||||||||||||
| (Dollars in thousands, except share and per share amounts) | ||||||||||||||||||||||||||||
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||||||||||
| December 31, | December, | |||||||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Profitability for the period: | ||||||||||||||||||||||||||||
Net interest income | $ | 17,026 | $ | 21,935 | $ | 77,951 | $ | 89,765 | ||||||||||||||||||||
Provision for loan losses | - | 2,135 | 14,803 | 1,647 | ||||||||||||||||||||||||
Non-interest income | 4,142 | 4,742 | 17,763 | 31,680 | ||||||||||||||||||||||||
Non-interest expense | 23,705 | 32,457 | 109,402 | 129,944 | ||||||||||||||||||||||||
Loss before income taxes | (2,537 | ) | (7,915 | ) | (28,491 | ) | (9,647 | ) | ||||||||||||||||||||
Income tax benefit | 292 | 297 | 1,317 | 297 | ||||||||||||||||||||||||
Net loss available to common shareholders | $ | (2,829 | ) | $ | (8,212 | ) | $ | (29,808 | ) | $ | (9,944 | ) | ||||||||||||||||
Financial ratios: | ||||||||||||||||||||||||||||
Return on average assets(1) | (0.41) | % | (1.02) | % | (1.02) | % | (0.31) | % | ||||||||||||||||||||
Return on average equity(1) | (4.5) | % | (12.8) | % | (12.0) | % | (3.8) | % | ||||||||||||||||||||
Return on average tangible equity(1),(2) | (5.4) | % | (15.1) | % | (14.1) | % | (4.5) | % | ||||||||||||||||||||
Net interest margin(1) | 2.67 | % | 2.99 | % | 2.92 | % | 3.04 | % | ||||||||||||||||||||
Efficiency ratio | 112 | % | 122 | % | 114 | % | 107 | % | ||||||||||||||||||||
Loss per common share: | ||||||||||||||||||||||||||||
Basic(3) | $ | (0.15 | ) | $ | (0.47) | $ | (1.67 | ) | $ | (0.58 | ) | |||||||||||||||||
Diluted(3) | $ | (0.15 | ) | $ | (0.47) | $ | (1.67 | ) | $ | (0.58 | ) | |||||||||||||||||
Average equity to average assets | 8.95 | % | 8.17 | % | 8.52 | % | 8.09 | % | ||||||||||||||||||||
December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
At period-end: | ||||||||||||||||||||||||||||
Total assets | $ | 2,718,305 | $ | 3,087,553 | ||||||||||||||||||||||||
Total deposits | 2,093,609 | 2,621,571 | ||||||||||||||||||||||||||
Loans receivable, net of allowance for loan losses | 1,488,603 | 2,102,167 | ||||||||||||||||||||||||||
Loans held-for-sale | 4,083 | 20,662 | ||||||||||||||||||||||||||
| Branch assets held-for-sale | 69,064 | - | ||||||||||||||||||||||||||
| Branch deposits held-for-sale | 183,395 | - | ||||||||||||||||||||||||||
| Investments | 409,950 | 457,797 | ||||||||||||||||||||||||||
Borrowings | 68,978 | 68,765 | ||||||||||||||||||||||||||
| Junior subordinated debentures | 92,786 | 92,786 | ||||||||||||||||||||||||||
Shareholders’ equity | 245,324 | 245,337 | ||||||||||||||||||||||||||
Credit quality and capital ratios: | ||||||||||||||||||||||||||||
| Allowance for loan losses to gross loans held-for- investment | 1.54 | % | 1.66 | % | ||||||||||||||||||||||||
Non-performing loans held-for-investment to gross loans held-for-investment | 0.73 | % | 1.78 | % | ||||||||||||||||||||||||
Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned | 1.03 | % | 1.87 | % | ||||||||||||||||||||||||
Allowance for loan losses to non-performing loans held-for-investment | 210 | % | 94 | % | ||||||||||||||||||||||||
Total capital (to risk-weighted assets) (4): | ||||||||||||||||||||||||||||
Sun Bancorp, Inc. | 19.25 | % | 14.41 | % | ||||||||||||||||||||||||
Sun National Bank | 17.33 | % | 13.65 | % | ||||||||||||||||||||||||
Tier 1 capital (to risk-weighted assets) (4): | ||||||||||||||||||||||||||||
Sun Bancorp, Inc. | 16.73 | % | 12.34 | % | ||||||||||||||||||||||||
Sun National Bank | 16.08 | % | 12.40 | % | ||||||||||||||||||||||||
Leverage ratio: | ||||||||||||||||||||||||||||
Sun Bancorp, Inc. | 10.06 | % | 8.99 | % | ||||||||||||||||||||||||
Sun National Bank | 9.68 | % | 9.02 | % | ||||||||||||||||||||||||
Book value per common share | $ | 13.18 | $ | 14.15 | ||||||||||||||||||||||||
Tangible book value per common share | $ | 11.12 | $ | 11.90 | ||||||||||||||||||||||||
(1) Amounts for the three months ended are annualized. | ||||||||||||||||||||||||||||
(2) Return on average tangible equity, a non-GAAP measure, 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) Prior periods were retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014. (4) December 31, 2014 capital ratios are estimated, subject to regulatory filings. | ||||||||||||||||||||||||||||
| SUN BANCORP, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) | ||||||
| (Dollars in thousands, except par value amounts) | ||||||
| December 31, 2014 | December 31, 2013 | |||||
ASSETS | ||||||
Cash and due from banks | $ | 43,491 | $ | 38,075 | ||
Interest-earning bank balances | 505,885 | 229,687 | ||||
Cash and cash equivalents | 549,376 | 267,762 | ||||
Restricted cash | 13,000 | 26,000 | ||||
Investment securities available for sale (amortized cost of $394,733 and $452,023 at December 31, 2014 and December 31, 2013, respectively) | 394,500 | 440,097 | ||||
Investment securities held to maturity (estimated fair value of $501 and $692 at December 31, 2014 and December 31, 2013, respectively) | 489 | 681 | ||||
Loans receivable (net of allowance for loan losses of $23,246 and $35,537 at December 31, 2014 and December 31, 2013, respectively) | 1,488,603 | 2,102,167 | ||||
Loans held-for-sale, at lower of cost or market | 4,083 | - | ||||
Loans held-for-sale, at fair value | - | 20,662 | ||||
Branch assets held-for-sale | 69,064 | - | ||||
Restricted equity investments, at cost | 14,961 | 17,019 | ||||
Bank properties and equipment, net | 40,155 | 49,095 | ||||
Real estate owned | 522 | 2,503 | ||||
Accrued interest receivable | 5,397 | 7,112 | ||||
Goodwill | 38,188 | 38,188 | ||||
Intangible assets | - | 805 | ||||
| Deferred taxes, net | - | 4,575 | ||||
Bank owned life insurance (BOLI) | 79,132 | 77,236 | ||||
Other assets | 20,835 | 33,651 | ||||
Total assets | $ | 2,718,305 | $ | 3,087,553 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Liabilities: | ||||||
Deposits | $ | 2,093,609 | $ | 2,621,571 | ||
| Branch deposits held-for-sale | 183,395 | - | ||||
| Securities sold under agreements to repurchase – customers | 1,156 | 478 | ||||
Advances from the Federal Home Loan Bank of New York (FHLBNY) | 60,787 | 60,956 | ||||
| Obligations under capital lease | 7,035 | 7,331 | ||||
| Junior subordinated debentures | 92,786 | 92,786 | ||||
| Deferred taxes, net | 1,823 | - | ||||
Other liabilities | 32,390 | 59,094 | ||||
Total liabilities | 2,472,981 | 2,842,216 | ||||
Shareholders’ equity: | ||||||
Preferred stock, $1 par value, 1,000,000 shares authorized; none issued | - | - | ||||
Common stock, $5 par value, 40,000,000 shares authorized; 18,900,877 shares issued and 18,615,950 shares outstanding at December 31, 2014; 17,742,207 shares issued and 17,342,883 shares outstanding at December 31, 2013(1) | 94,508 | 88,711 | ||||
Additional paid-in capital | 514,071 | 506,719 | ||||
Retained deficit | (347,761 | ) | (317,954 | ) | ||
Accumulated other comprehensive loss | (138 | ) | (7,055) | |||
Deferred compensation plan trust | (599 | ) | (522 | ) | ||
Treasury stock at cost, 284,927 shares at December 31, 2014; and 399,324 shares at December 31, 2013(1) | (14,757 | ) | (24,562 | ) | ||
Total shareholders’ equity | 245,324 | 245,337 | ||||
Total liabilities and shareholders’ equity | $ | 2,718,305 | $ | 3,087,553 | ||
(1) Prior period share data was retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014
| SUN BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||
For the Three Months Ended December 31, | For the Year Ended December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
INTEREST INCOME | ||||||||||||||||
Interest and fees on loans | $ | 17,204 | $ | 22,752 | $ | 79,427 | $ | 96,172 | ||||||||
Interest on taxable investment securities | 2,132 | 2,219 | 8,715 | 6,668 | ||||||||||||
Interest on non-taxable investment securities | 309 | 310 | 1,232 | 1,338 | ||||||||||||
Dividends on restricted equity investments | 195 | 219 | 838 | 904 | ||||||||||||
Total interest income | 19,840 | 25,500 | 90,212 | 105,082 | ||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Interest on deposits | 1,832 | 2,576 | 8,358 | 11,349 | ||||||||||||
Interest on funds borrowed | 439 | 444 | 1,753 | 1,776 | ||||||||||||
Interest on junior subordinated debentures | 543 | 545 | 2,150 | 2,188 | ||||||||||||
Total interest expense | 2,814 | 3,565 | 12,261 | 15,313 | ||||||||||||
Net interest income | 17,026 | 21,935 | 77,951 | 89,769 | ||||||||||||
PROVISION FOR LOAN LOSSES | - | 2,135 | 14,803 | 1,147 | ||||||||||||
Net interest income after provision for loan losses | 17,026 | 19,800 | 63,148 | 88,622 | ||||||||||||
NON-INTEREST INCOME | ||||||||||||||||
Service charges on deposit accounts | 2,152 | 2,263 | 8,803 | 9,056 | ||||||||||||
Mortgage banking revenue, net | 29 | 1,000 | 1,219 | 11,598 | ||||||||||||
Gain on sale of investment securities | - | - | 50 | 3,489 | ||||||||||||
Investment products income | 480 | 599 | 2,447 | 2,684 | ||||||||||||
| BOLI income | 482 | 466 | 1,896 | 1,882 | ||||||||||||
Derivative credit valuation adjustment | (43 | ) | (710 | ) | (1,232 | ) | (1,588 | ) | ||||||||
| Other | 1,042 | 1,124 | 4,580 | 4,560 | ||||||||||||
Total non-interest income | 4,142 | 4,742 | 17,763 | 31,681 | ||||||||||||
| NON-INTEREST EXPENSE | ||||||||||||||||
Salaries and employee benefits | 9,198 | 13,070 | 49,339 | 53,037 | ||||||||||||
| Commission expense | 214 | 1,098 | 2,475 | 7,696 | ||||||||||||
Occupancy expense | 5,432 | 3,406 | 16,230 | 13,519 | ||||||||||||
Equipment expense | 1,487 | 1,871 | 7,287 | 7,356 | ||||||||||||
Amortization of intangible assets | - | 455 | 805 | 2,457 | ||||||||||||
Data processing expense | 1,202 | 1,223 | 4,979 | 4,244 | ||||||||||||
Professional fees | 1,225 | 4,891 | 6,487 | 18,246 | ||||||||||||
| Insurance expenses | 1,299 | 1,498 | 5,567 | 5,966 | ||||||||||||
Advertising expense | 386 | 903 | 2,062 | 2,830 | ||||||||||||
| Problem loan expense | 547 | 769 | 2,039 | 3,407 | ||||||||||||
Real estate owned expense, net | 807 | 529 | 1,724 | 2,270 | ||||||||||||
Office supplies expense | 221 | 245 | 974 | 857 | ||||||||||||
Other | 1,687 | 2,499 | 9,434 | 8,064 | ||||||||||||
| Total non-interest expense | 23,705 | 32,457 | 109,402 | 129,949 | ||||||||||||
LOSS BEFORE INCOME TAXES | (2,537 | ) | (7,915) | (28,491 | ) | (9,646 | ) | |||||||||
| INCOME TAX EXPENSE | 292 | 297 | 1,317 | 297 | ||||||||||||
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | $ | (2,829 | ) | $ | (8,212 | ) | $ | (29,808 | ) | $ | (9,943 | ) | ||||
Basic loss per share(1) | $ | (0.15 | ) | $ | (0.47 | ) | $ | (1.67 | ) | $ | (0.58 | ) | ||||
Diluted loss per share(1) | $ | (0.15 | ) | $ | (0.47 | ) | $ | (1.67 | ) | $ | (0.58 | ) | ||||
Weighted average shares – basic(1) | 18,589,717 | 17,316,673 | 17,830,018 | 17,283,162 | ||||||||||||
Weighted average shares - diluted(1) | 18,589,717 | 17,316,673 | 17,830,018 | 17,283,162 | ||||||||||||
(1) Prior periods were retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014
| SUN BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| 2014 | 2014 | 2014 | 2014 | 2013 | |||||||||||
| Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||||
Balance sheet at quarter end: | |||||||||||||||
Cash and cash equivalents | $ | 549,376 | $ | 504,353 | $ | 330,440 | $ | 282,095 | $ | 267,762 | |||||
Restricted cash | 13,000 | 13,000 | 26,000 | 26,000 | 26,000 | ||||||||||
Investment securities | 409,950 | 425,079 | 454,051 | 456,724 | 457,797 | ||||||||||
Loans held-for-investment: | |||||||||||||||
Commercial and industrial | 1,052,932 | 1,196,767 | 1,363,900 | 1,519,993 | 1,587,566 | ||||||||||
Home equity | 156,926 | 151,369 | 165,671 | 184,936 | 188,478 | ||||||||||
Second mortgage | 17,239 | 21,858 | 21,282 | 23,312 | 25,279 | ||||||||||
Residential real estate | 276,993 | 299,838 | 298,063 | 326,945 | 305,552 | ||||||||||
Other | 7,759 | 6,577 | 7,200 | 28,894 | 30,829 | ||||||||||
Total gross loans held-for-investment | 1,511,849 | 1,676,409 | 1,856,116 | 2,084,080 | 2,137,704 | ||||||||||
Allowance for loan losses | (23,246 | ) | (26,540 | ) | (28,392 | ) | (33,768 | ) | (35,537 | ) | |||||
Net loans held-for-investment | 1,488,603 | 1,649,869 | 1,827,724 | 2,050,312 | 2,102,167 | ||||||||||
Loans held-for-sale | 4,083 | 7,365 | 29,171 | 16,048 | 20,662 | ||||||||||
Branch assets held-for-sale | 69,064 | 31,408 | 34,058 | - | |||||||||||
| Goodwill | 38,188 | 38,188 | 38,188 | 38,188 | 38,188 | ||||||||||
Intangible assets | - | - | 238 | 521 | 805 | ||||||||||
| Total assets | 2,718,305 | 2,820,202 | 2,894,658 | 3,038,467 | 3,087,553 | ||||||||||
Total deposits | 2,093,609 | 2,170,627 | 2,272,765 | 2,573,445 | 2,621,571 | ||||||||||
Branch deposits held-for-sale | 183,395 | 192,068 | 160,769 | - | - | ||||||||||
Securities sold under agreements to repurchase - customers | 1,156 | 963 | 670 | 471 | 478 | ||||||||||
| Advances from FHLBNY | 60,787 | 60,830 | 60,873 | 60,915 | 60,956 | ||||||||||
| Obligations under capital lease | 7,035 | 7,111 | 7,191 | 7,259 | 7,331 | ||||||||||
Junior subordinated debentures | 92,786 | 92,786 | 92,786 | 92,786 | 92,786 | ||||||||||
| Total shareholders' equity | 245,324 | 247,047 | 227,656 | 248,898 | 245,337 | ||||||||||
Quarterly average balance sheet: | |||||||||||||||
Loans(1): | |||||||||||||||
Commercial and industrial | $ | 1,145,297 | $ | 1,292,705 | $ | 1,480,491 | $ | 1,560,442 | $ | 1,621,222 | |||||
| Home equity | 175,969 | 179,226 | 185,710 | 187,052 | 190,394 | ||||||||||
Second mortgage | 20,872 | 22,528 | 24,358 | 24,863 | 26,142 | ||||||||||
| Residential real estate | 301,326 | 322,751 | 338,028 | 331,433 | 312,977 | ||||||||||
Other | 3,391 | 3,755 | 23,196 | 25,014 | 26,134 | ||||||||||
| Total gross loans | 1,646,855 | 1,820,965 | 2,051,783 | 2,128,804 | 2,176,869 | ||||||||||
Securities and other interest-earning assets | 923,909 | 840,541 | 694,529 | 677,850 | 782,200 | ||||||||||
| Total interest-earning assets | 2,570,764 | 2,661,506 | 2,746,312 | 2,806,654 | 2,959,069 | ||||||||||
Total assets | 2,785,525 | 2,888,920 | 2,982,427 | 3,049,321 | 3,205,900 | ||||||||||
| Non-interest-bearing demand deposits | 608,396 | 612,775 | 573,290 | 559,606 | 585,530 | ||||||||||
Total deposits | 2,331,934 | 2,429,606 | 2,519,901 | 2,584,588 | 2,718,905 | ||||||||||
| Total interest-bearing liabilities | 1,885,250 | 1,978,480 | 2,108,103 | 2,186,394 | 2,295,072 | ||||||||||
Total shareholders' equity | 249,313 | 243,020 | 254,116 | 250,946 | 256,783 | ||||||||||
Capital and credit quality measures: | |||||||||||||||
Total capital (to risk-weighted assets) (2): | |||||||||||||||
Sun Bancorp, Inc. | 19.4 | % | 17.9 | % | 15.0 | % | 14.9 | % | 14.4 | % | |||||
Sun National Bank | 17.5 | % | 16.2 | % | 14.5 | % | 14.1 | % | 13.7 | % | |||||
Tier 1 capital (to risk-weighted assets) (2): | |||||||||||||||
Sun Bancorp, Inc. | 16.9 | % | 15.6 | % | 12.4 | % | 12.8 | % | 12.3 | % | |||||
Sun National Bank | 16.2 | % | 14.9 | % | 13.2 | % | 12.8 | % | 12.4 | % | |||||
Leverage ratio: | |||||||||||||||
Sun Bancorp, Inc. | 10.1 | % | 9.8 | % | 8.6 | % | 9.4 | % | 9.0 | % | |||||
Sun National Bank | 9.7 | % | 9.4 | % | 9.1 | % | 9.5 | % | 9.0 | % | |||||
Average equity to average assets | 9.0 | % | 8.4 | % | 8.5 | % | 8.2 | % | 8.0 | % | |||||
Allowance for loan losses to total gross loans held-for-investment | 1.54 | % | 1.58 | % | 1.50 | % | 1.62 | % | 1.66 | % | |||||
Non-performing loans held-for-investment to gross loans held-for-investment | 0.73 | % | 0.84 | % | 0.76 | % | 1.80 | % | 1.78 | % | |||||
| Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned | 1.03 | % | 1.07 | % | 1.02 | % | 1.91 | % | 1.9 | % | |||||
Allowance for loan losses to non-performing loans held-for-investment | 210 | % | 188 | % | 202 | % | 90 | % | 94 | % | |||||
Other data: | |||||||||||||||
| Net charge-offs | (3,294) | (1,852) | (20,179) | (1,768) | (15,452 | ) | |||||||||
Non-performing assets: | |||||||||||||||
| Non-accrual loans | $ | 10,729 | $ | 13,561 | $ | 13,470 | $ | 29,387 | $ | 29,811 | |||||
Non-accrual loans held-for-sale | 4,083 | 2,770 | 4,086 | - | - | ||||||||||
Troubled debt restructurings, non-accrual | 318 | 528 | 583 | 8,017 | 8,166 | ||||||||||
Troubled debt restructurings, held-for-sale | - | - | - | - | - | ||||||||||
Loans past due 90 days and accruing | - | - | - | 42 | - | ||||||||||
Real estate owned, net | 522 | 1,084 | 1,327 | 2,728 | 2,503 | ||||||||||
Total non-performing assets | $ | 15,652 | 17,943 | 19,466 | $ | 40,174 | $ | 40,480 | |||||||
(1) Average balances include non-accrual loans and loans held-for-sale. (2) December 31, 2014 capital ratios are estimated, subject to regulatory filings. | |||||||||||||||
| SUN BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) | |||||||||||||||
| (Dollars in thousands, except share and per share amounts) | |||||||||||||||
| 2014 | 2014 | 2014 | 2014 | 2013 | |||||||||||
| Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||||
Profitability for the quarter: | |||||||||||||||
Net interest income | $ | 17,026 | $ | 18,921 | $ | 20,612 | $ | 21,392 | $ | 21,935 | |||||
Provision for loan losses | - | - | 14,803 | - | 2,135 | ||||||||||
Non-interest income | 4,142 | 4,695 | 3,977 | 4,949 | 4,742 | ||||||||||
| Non-interest expense excluding amortization of intangible assets | 23,705 | 23,894 | 33,394 | 27,604 | 32,002 | ||||||||||
Amortization of intangible assets | - | 238 | 283 | 284 | 455 | ||||||||||
| Loss before income taxes | (2,537 | ) | (516 | ) | (23,891) | (1,547 | ) | (7,915 | ) | ||||||
| Income tax expense | 292 | 309 | 357 | 359 | 297 | ||||||||||
Net loss available to common shareholders | $ | (2,829 | ) | $ | (825 | ) | $ | (24,248) | $ | (1,906) | $ | (8,212 | ) | ||
| Financial ratios: | |||||||||||||||
Return on average assets (1) | (0.41) | % | (0.11) | % | (3.25) | % | (0.25) | % | (1.02) | % | |||||
Return on average equity (1) | (4.5) | % | (1.4) | % | (38.2) | % | (3.0) | % | (12.8) | % | |||||
Return on average tangible equity (1),(2) | (5.4) | % | (1.6) | % | (45.0) | % | (3.6) | % | (15.1) | % | |||||
Net interest margin (1) | 2.67 | % | 2.87 | % | 3.03 | % | 3.07 | % | 2.99 | % | |||||
Efficiency ratio | 112 | % | 95 | % | 137 | % | 106 | % | 122 | % | |||||
Per share data: | |||||||||||||||
Loss per common share: | |||||||||||||||
Basic(3) | $ | (0.15 | ) | $ | (0.05 | ) | $ | (1.39 | ) | $ | (0.11) | $ | (0.47 | ) | |
Diluted(3) | $ | (0.15 | ) | $ | (0.05 | ) | $ | (1.39 | ) | $ | (0.11) | $ | (0.47 | ) | |
Book value(3) | $ | 13.18 | $ | 13.29 | $ | 13.06 | $ | 14.34 | $ | 14.15 | |||||
Tangible book value(3) | $ | 11.12 | $ | 11.24 | $ | 10.85 | $ | 12.11 | $ | 11.90 | |||||
Average basic shares(3) | 18,589,717 | 17,949,643 | 17,417,829 | 17,348,169 | 17,316,673 | ||||||||||
Average diluted shares(3) | 18,589,717 | 17,949,643 | 17,417,829 | 17,348,169 | 17,316,673 | ||||||||||
Non-interest income: | |||||||||||||||
Service charges on deposit accounts | $ | 2,152 | $ | 2,285 | $ | 2,215 | $ | 2,151 | $ | 2,263 | |||||
| Mortgage banking revenue, net | 29 | 423 | 529 | 635 | 1,000 | ||||||||||
Net gain on sale of investment securities | - | - | 50 | - | - | ||||||||||
| Investment products income | 480 | 635 | 715 | 617 | 599 | ||||||||||
BOLI income | 482 | 484 | 469 | 461 | 466 | ||||||||||
| Derivative credit valuation adjustment | (43 | ) | 11 | (1,162 | ) | (38 | ) | (710 | ) | ||||||
Other income | 1,042 | 857 | 1,161 | 1,123 | 1,124 | ||||||||||
Total non-interest income | $ | 4,142 | $ | 4,695 | $ | 3,977 | $ | 4,949 | $ | 4,742 | |||||
Non-interest expense: | |||||||||||||||
Salaries and employee benefits | $ | 9,198 | $ | 11,265 | $ | 15,992 | $ | 12,884 | $ | 13,070 | |||||
Commission expense | 214 | 553 | 811 | 897 | 1,098 | ||||||||||
| Occupancy expense | 5,432 | 2,980 | 3,552 | 4,266 | 3,406 | ||||||||||
Equipment expense | 1,487 | 1,695 | 2,356 | 1,749 | 1,871 | ||||||||||
| Amortization of intangible assets | - | 238 | 283 | 284 | 455 | ||||||||||
Data processing expense | 1,202 | 1,299 | 1,281 | 1,197 | 1,223 | ||||||||||
| Professional fees | 1,225 | 1,423 | 2,353 | 1,486 | 4,891 | ||||||||||
Insurance expense | 1,299 | 1,443 | 1,358 | 1,467 | 1,498 | ||||||||||
| Advertising expense | 386 | 567 | 523 | 586 | 903 | ||||||||||
Problem loan costs | 547 | 294 | 566 | 632 | 769 | ||||||||||
| Real estate owned expense, net | 807 | 71 | 702 | 144 | 529 | ||||||||||
Office supplies expense | 221 | 217 | 285 | 251 | 245 | ||||||||||
| Other expense | 1,687 | 2,087 | 3,615 | 2,045 | 2,499 | ||||||||||
Total non-interest expense | $ | 23,705 | $ | 24,132 | $ | 33,677 | $ | 27,888 | $ | 32,457 | |||||
(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) Prior periods were retroactively adjusted for the impact of the 1-for-5 reverse stock split completed on August 11, 2014. | |||||||||||||||
| SUN BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||
AVERAGE BALANCE SHEETS (Unaudited) | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||
| For the Three Months Ended December 31, | ||||||||||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||||||||
| Balance | Expense | Cost | Balance | Expense | Cost | |||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||
Loans receivable (1),(2): | ||||||||||||||||||||||||||||||
Commercial and industrial | $ | 1,145,297 | $ | 12,600 | 4.40 | % | $ | 1,621,222 | $ | 17,406 | 4.29 | % | ||||||||||||||||||
Home equity | 175,969 | 1,778 | 4.04 | 190,394 | 1,853 | 3.89 | ||||||||||||||||||||||||
Second mortgage | 20,872 | 304 | 5.83 | 26,142 | 367 | 5.62 | ||||||||||||||||||||||||
Residential real estate | 301,326 | 2,471 | 3.28 | 312,977 | 2,671 | 3.41 | ||||||||||||||||||||||||
Other | 3,391 | 51 | 6.02 | 26,134 | 456 | 6.98 | ||||||||||||||||||||||||
Total loans receivable | 1,646,855 | 17,204 | 4.18 | 2,176,869 | 22,753 | 4.18 | ||||||||||||||||||||||||
Investment securities(3) | 419,391 | 2,479 | 2.36 | 439,788 | 2,693 | 2.45 | ||||||||||||||||||||||||
Interest-earning bank balances | 504,518 | 322 | 0.26 | 342,412 | 221 | 0.26 | ||||||||||||||||||||||||
Total interest-earning assets | 2,570,764 | 20,005 | 3.11 | 2,959,069 | 25,667 | 3.47 | ||||||||||||||||||||||||
Non-interest earning assets: | ||||||||||||||||||||||||||||||
Cash and due from banks | 50,655 | 66,662 | ||||||||||||||||||||||||||||
Bank properties and equipment, net | 44,802 | 49,300 | ||||||||||||||||||||||||||||
Goodwill and intangible assets, net | 38,188 | 39,190 | ||||||||||||||||||||||||||||
Other assets | 81,116 | 91,679 | ||||||||||||||||||||||||||||
Total non-interest-earning assets | 214,761 | 246,831 | ||||||||||||||||||||||||||||
Total assets | $ | 2,785,525 | $ | 3,205,900 | ||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||
Interest-bearing deposit accounts: | ||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 953,805 | $ | 565 | 0.24 | % | $ | 1,223,184 | $ | 960 | 0.31 | % | ||||||||||||||||||
Savings deposits | 246,876 | 151 | 0.24 | 268,196 | 195 | 0.29 | ||||||||||||||||||||||||
Time deposits | 522,857 | 1,116 | 0.85 | 641,995 | 1,421 | 0.89 | ||||||||||||||||||||||||
Total interest-bearing deposit accounts | 1,723,538 | 1,832 | 0.43 | 2,133,375 | 2,576 | 0.48 | ||||||||||||||||||||||||
Short-term borrowings: | ||||||||||||||||||||||||||||||
Fed Funds Purchased | - | - | - | 54 | - | - | ||||||||||||||||||||||||
Securities sold under agreements to repurchase - customers | 1,054 | - | - | 512 | - | - | ||||||||||||||||||||||||
Long-term borrowings: | ||||||||||||||||||||||||||||||
FHLBNY advances (4) | 60,802 | 317 | 2.09 | 60,981 | 320 | 2.10 | ||||||||||||||||||||||||
Obligations under capital lease | 7,070 | 122 | 6.90 | 7,364 | 124 | 6.74 | ||||||||||||||||||||||||
Junior subordinated debentures | 92,786 | 543 | 2.34 | 92,786 | 545 | 2.35 | ||||||||||||||||||||||||
Total borrowings | 161,712 | 982 | 2.43 | 161,697 | 989 | 2.45 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 1,885,250 | 2,814 | 0.60 | 2,295,072 | 3,565 | 0.62 | ||||||||||||||||||||||||
Non-interest bearing liabilities: | ||||||||||||||||||||||||||||||
| Non-interest-bearing demand deposits | 608,396 | 585,530 | ||||||||||||||||||||||||||||
Other liabilities | 42,563 | 68,515 | ||||||||||||||||||||||||||||
| Total non-interest bearing liabilities | 650,959 | 654,045 | ||||||||||||||||||||||||||||
Total liabilities | 2,536,209 | 2,949,117 | ||||||||||||||||||||||||||||
| Shareholders' equity | 249,313 | 256,783 | ||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,785,522 | $ | 3,205,900 | ||||||||||||||||||||||||||
Net interest income | $ | 17,191 | $ | 22,102 | ||||||||||||||||||||||||||
Interest rate spread (5) | 2.51 | % | 2.85 | % | ||||||||||||||||||||||||||
Net interest margin (6) | 2.67 | % | 2.99 | % | ||||||||||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 136 | % | 129 | % | ||||||||||||||||||||||||||
(1) Average balances include non-accrual loans and loans held-for-sale. | ||||||||||||||||||||||||||||||
(2) Loan fees are included in interest income and the amount is not material for this analysis. | ||||||||||||||||||||||||||||||
(3) Interest earned on non-taxable investment securities is shown on a tax-equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the three months ended December 31, 2014 and 2013 were $165 thousand and $166 thousand, respectively. | ||||||||||||||||||||||||||||||
(4) Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY. | ||||||||||||||||||||||||||||||
(5) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. | ||||||||||||||||||||||||||||||
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets. | ||||||||||||||||||||||||||||||
| SUN BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
AVERAGE BALANCE SHEETS (Unaudited) | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| For the Year Ended December 31, | |||||||||||||||||||||||
| 2014 | 2013 | ||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||
| Balance | Expense | Cost | Balance | Expense | Cost | ||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||
Loans receivable (1),(2): | |||||||||||||||||||||||
Commercial and industrial | $ | 1,368,385 | $ | 58,773 | 4.30 | % | $ | 1,688,702 | $ | 74,191 | 4.39 | % | |||||||||||
Home equity | 181,951 | 7,066 | 3.88 | 196,597 | 7,563 | 3.85 | |||||||||||||||||
Second mortgage | 23,142 | 1,300 | 5.62 | 28,038 | 1,611 | 5.75 | |||||||||||||||||
Residential real estate | 323,301 | 11,352 | 3.51 | 312,617 | 10,846 | 3.47 | |||||||||||||||||
Other | 13,752 | 935 | 6.80 | 28,285 | 1,961 | 6.93 | |||||||||||||||||
Total loans receivable | 1,910,531 | 79,426 | 4.16 | 2,254,239 | 96,172 | 4.27 | |||||||||||||||||
Investment securities (3) | 440,710 | 10,582 | 2.40 | 413,861 | 8,884 | 2.15 | |||||||||||||||||
Interest-earning bank balances | 344,326 | 866 | 0.25 | 295,199 | 746 | 0.25 | |||||||||||||||||
Total interest-earning assets | 2,695,567 | 90,874 | 3.37 | 2,963,299 | 105,802 | 3.57 | |||||||||||||||||
Non-interest earning assets: | |||||||||||||||||||||||
| Cash and due from banks | 60,589 | 70,673 | |||||||||||||||||||||
Bank properties and equipment, net | 46,777 | 49,357 | |||||||||||||||||||||
| Goodwill and intangible assets, net | 38,470 | 40,031 | |||||||||||||||||||||
Other assets | 84,320 | 101,593 | |||||||||||||||||||||
| Total non-interest-earning assets | 230,156 | 261,654 | |||||||||||||||||||||
Total assets | $ | 2,925,723 | $ | 3,224,953 | |||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||
Interest-bearing deposit accounts: | |||||||||||||||||||||||
Interest-bearing demand deposits | $ | 1,052,717 | $ | 2,869 | 0.27 | % | $ | 1,243,074 | $ | 4,228 | 0.34 | % | |||||||||||
Savings deposits | 258,808 | 672 | 0.26 | 268,414 | 843 | 0.31 | |||||||||||||||||
Time deposits | 565,472 | 4,817 | 0.85 | 667,984 | 6,278 | 0.94 | |||||||||||||||||
Total interest-bearing deposit accounts | 1,876,997 | 8,358 | 0.45 | 2,179,472 | 11,349 | 0.52 | |||||||||||||||||
Short-term borrowings: | |||||||||||||||||||||||
Federal funds purchased | - | - | - | 14 | - | - | |||||||||||||||||
Securities sold under agreements to repurchase - customers | 735 | 1 | 0.14 | 1,565 | 2 | 0.13 | |||||||||||||||||
Long-term borrowings: | |||||||||||||||||||||||
FHLBNY advances (4) | 60,865 | 1,264 | 2.08 | 61,050 | 1,275 | 2.09 | |||||||||||||||||
Obligations under capital lease | 7,181 | 489 | 6.81 | 7,468 | 499 | 6.68 | |||||||||||||||||
Junior subordinated debentures | 92,786 | 2,150 | 2.32 | 92,786 | 2,188 | 2.36 | |||||||||||||||||
Total borrowings | 161,567 | 3,904 | 2.42 | 162,883 | 3,964 | 2.43 | |||||||||||||||||
Total interest-bearing liabilities | 2,038,564 | 12,262 | 0.60 | 2,342,341 | 15,313 | 0.65 | |||||||||||||||||
| Non-interest bearing liabilities: | |||||||||||||||||||||||
| Non-interest-bearing demand deposits | 588,717 | 543,490 | |||||||||||||||||||||
Other liabilities | 49,114 | 78,209 | |||||||||||||||||||||
| Total non-interest bearing liabilities | 637,831 | 621,699 | |||||||||||||||||||||
Total liabilities | 2,676,395 | 2,964,054 | |||||||||||||||||||||
| Shareholders' equity | 249,327 | 260,899 | |||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,925,722 | $ | 3,224,953 | |||||||||||||||||||
Net interest income | $ | 78,612 | $ | 90,489 | |||||||||||||||||||
Interest rate spread (5) | 2.77 | % | 2.92 | % | |||||||||||||||||||
Net interest margin (6) | 2.92 | % | 3.05 | % | |||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 132 | % | 127 | % | |||||||||||||||||||
(1) Average balances include non-accrual loans and loans held-for-sale. | |||||||||||||||||||||||
(2) Loan fees are included in interest income and the amount is not material for this analysis. | |||||||||||||||||||||||
(3) Interest earned on non-taxable investment securities is shown on a tax-equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the year ended December 31, 2014 and 2013 were $661 thousand and $720 thousand, respectively. | |||||||||||||||||||||||
(4) Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY. | |||||||||||||||||||||||
(5) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. | |||||||||||||||||||||||
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets. | |||||||||||||||||||||||
| SUN BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
AVERAGE BALANCE SHEETS (Unaudited) | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||||
| December 31, 2014 | September 30, 2014 | ||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||
| Balance | Expense | Cost | Balance | Expense | Cost | ||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||
Loans receivable (1),(2): | |||||||||||||||||||||||
Commercial and industrial | $ | 1,145,297 | $ | 12,600 | 4.40 | % | $ | 1,292,705 | $ | 14,438 | 4.47 | % | |||||||||||
Home equity | 175,969 | 1,778 | 4.04 | 179,226 | 1,749 | 3.90 | |||||||||||||||||
Second mortgage | 20,872 | 304 | 5.83 | 22,528 | 313 | 5.56 | |||||||||||||||||
Residential real estate | 301,326 | 2,471 | 3.28 | 322,751 | 2,737 | 3.39 | |||||||||||||||||
Other | 3,391 | 51 | 6.02 | 3,755 | 70 | 7.46 | |||||||||||||||||
Total loans receivable | 1,646,855 | 17,204 | 4.18 | 1,820,965 | 19,307 | 4.24 | |||||||||||||||||
Investment securities(3) | 419,391 | 2,479 | 2.36 | 434,721 | 2,562 | 2.36 | |||||||||||||||||
Interest-earning bank balances | 504,518 | 322 | 0.26 | 405,820 | 252 | 0.25 | |||||||||||||||||
Total interest-earning assets | 2,570,764 | 20,005 | 3.11 | 2,661,506 | 22,121 | 3.32 | |||||||||||||||||
Non-interest earning assets: | |||||||||||||||||||||||
| Cash and due from banks | 50,655 | 57,380 | |||||||||||||||||||||
Bank properties and equipment, net | 44,802 | 46,162 | |||||||||||||||||||||
| Goodwill and intangible assets, net | 38,188 | 38,281 | |||||||||||||||||||||
Other assets | 81,116 | 85,591 | |||||||||||||||||||||
| Total non-interest-earning assets | 214,761 | 227,414 | |||||||||||||||||||||
Total assets | $ | 2,785,525 | $ | 2,888,920 | |||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||
Interest-bearing deposit accounts: | |||||||||||||||||||||||
Interest-bearing demand deposits | $ | 953,805 | $ | 565 | 0.24 | % | $ | 1,010,830 | $ | 707 | 0.28 | % | |||||||||||
Savings deposits | 246,876 | 151 | 0.24 | 256,909 | 164 | 0.26 | |||||||||||||||||
Time deposits | 522,857 | 1,116 | 0.85 | 549,092 | 1,186 | 0.86 | |||||||||||||||||
Total interest-bearing deposit accounts | 1,723,538 | 1,832 | 0.43 | 1,816,831 | 2,057 | 0.45 | |||||||||||||||||
Short-term borrowings: | |||||||||||||||||||||||
Federal funds purchased | - | - | - | - | - | - | |||||||||||||||||
Securities sold under agreements to repurchase - customers | 1,054 | - | - | 875 | - | - | |||||||||||||||||
Long-term borrowings: | |||||||||||||||||||||||
FHLBNY advances (4) | 60,802 | 317 | 2.09 | 60,845 | 318 | 2.09 | |||||||||||||||||
Obligations under capital lease | 7,070 | 122 | 6.90 | 7,143 | 117 | 6.55 | |||||||||||||||||
Junior subordinated debentures | 92,786 | 543 | 2.34 | 92,786 | 542 | 2.34 | |||||||||||||||||
Total borrowings | 161,712 | 982 | 2.43 | 161,649 | 977 | 2.42 | |||||||||||||||||
Total interest-bearing liabilities | 1,885,250 | 2,814 | 0.60 | 1,978,480 | 3,034 | 0.61 | |||||||||||||||||
Non-interest bearing liabilities: | |||||||||||||||||||||||
| Non-interest-bearing demand deposits | 608,396 | 612,775 | |||||||||||||||||||||
Other liabilities | 42,563 | 54,645 | |||||||||||||||||||||
| Total non-interest bearing liabilities | 650,959 | 667,420 | |||||||||||||||||||||
Total liabilities | 2,536,209 | 2,645,900 | |||||||||||||||||||||
| Shareholders' equity | 249,313 | 243,020 | |||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,785,522 | $ | 2,888,920 | |||||||||||||||||||
Net interest income | $ | 17,191 | $ | 19,087 | |||||||||||||||||||
Interest rate spread (5) | 2.51 | % | 2.71 | % | |||||||||||||||||||
Net interest margin (6) | 2.67 | % | 2.87 | % | |||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 136 | % | 135 | % | |||||||||||||||||||
(1) Average balances include non-accrual loans and loans held-for-sale. | |||||||||||||||||||||||
(2) Loan fees are included in interest income and the amount is not material for this analysis. | |||||||||||||||||||||||
(3) Interest earned on non-taxable investment securities is shown on a tax-equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the three months ended December 31, 2014 and September 30, 2014 were $165 thousand and $166 thousand, respectively. | |||||||||||||||||||||||
(4) Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY. | |||||||||||||||||||||||
(5) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. | |||||||||||||||||||||||
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets. | |||||||||||||||||||||||
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