Filed by Sun Bancorp, Inc.
Pursuant to Rule 425 of the
Securities Act of 1933 and deemed filed
Pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Companies:
Sun Bancorp, Inc.(Commission File No. 000-20957)
Community Bancorp of New Jersey (Commission File No. 000-26587)
Sun Bancorp, Inc.
Acquisition of
Community Bancorp of New Jersey
February 17, 2004
"Executing on Our Plan to be the Premier Community Bank
in Every Community we Serve"
Forward-Looking Information
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During the course of this presentation, management may make projections and
forward-looking statements regarding events or the future financial performance
of Sun Bancorp. We wish to caution you that these forward-looking statements
involve certain risks and uncertainties, including a variety of factors that may
cause Sun Bancorp's actual results to differ materially from the anticipated
results expressed in these forward-looking statements. Investors are cautioned
not to place undue reliance on these forward-looking statements and are advised
to review the risk factors that may affect Sun Bancorp's operating results in
documents filed by Sun Bancorp with the Securities and Exchange Commission,
including the Quarterly Report on Form 10-Q, the Annual report on Form 10-K and
other required filings. Sun Bancorp assumes no duty to update the
forward-looking statements made in this presentation.
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Transaction Summary
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Fixed Exchange Ratio: 0.830 shares of SNBC for each share
of CBNJ
Structure: 100% Stock
Purchase Price Per CBNJ Share(1): $22.35
Aggregate Purchase Price(1): $83.2 million
Cash Dividend: Special one-time cash dividend of
$0.75 to CBNJ shareholders
(approx. $2.5 million in aggregate)
Treatment of Options: Rolled into SNBC equivalent options
Walk-away: Double Trigger (15% absolute decline
and 17.5% relative to an index group)
Termination Fee: $3.25 million
Due Diligence: Completed
Board Representation: 3 Board Seats
(1) Prices as of February 13, 2004.
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Transaction Summary
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New Jersey Commercial
Bank Transactions(1)
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SNBC/CBNJ High Median Low
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Multiple of Tangible Book: 316% 374% 294% 258%
Multiple of LTM EPS: 33.4x 31.9x 23.5x 17.9x
Multiple of Relative EPS(2): 1.2x 2.1x 1.6x 1.3x
Percentage of Deposits: 23.2% 36.5% 29.3% 18.8%
Core Deposit Premium(3): 17.7% 25.5% 23.5% 15.3%
Premium to Current Market(4): 9.3% 68.5% 36.8% 5.2%
(1) Based on commercial bank transactions in New Jersey since January 1, 2003.
(2) Multiple of Relative EPS is calculated by dividing the deal multiple of LTM
EPS by the acquirer's trading multiple of LTM EPS.
(3) Assumes non- core deposits are approximately 10% of total deposits.
(4) Prices as of February 13, 2004.
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Overview of CBNJ
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o Valuable franchise in one of the most affluent and densely populated
residential and business markets in United States
o Established in 1997 to meet the needs of Monmouth County community that
were underserved after consolidations
o Has grown profitably to over $400 million in assets in 6 years of operation
o 8th largest deposit share in Monmouth County with 8 branches in prime
locations
o Superior asset quality and liquid balance sheet
SNBC CBNJ Combined
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Assets: $2,600 $428 $3,028
Net Loans: 1,364 199 1,563
Deposits: 2,111 326 2,437
Common Equity: 186 24 210
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As of December 31, 2003 ($ in millions); combined numbers do not reflect
purchase accounting adjustments.
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Strategically Attractive
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o Consistent with SNBC's goal to become the dominant community bank in the
strong and growing south-central NJ market
o Enhances SNBC's ability to originate loans in Monmouth County, the most
rapidly growing business lending area in our market
o Significantly increases SNBC's brand and business share in Monmouth County
and bridges a gap in our footprint between Monmouth, Middlesex and Mercer
Counties
o Augments SNBC's branch rationalization strategy by re-deploying capital to
improve profitability and growth
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Financially Compelling
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o Immediately accretive to GAAP EPS in 2004, approximately $0.08 accretive in
2005
o Capital will remain at well capitalized levels
o Tangible book value will be restored to its current level within one year
of closing
o Readily achievable cost savings with 2 branch and back office consolidation
opportunities; we estimate $3 million pre-tax in 2005 or approximately 27%
of the target's projected non-interest expense and 3.5% of combined
non-interest expense
o Core deposit intangibles equal to 3% of CBNJ core deposits, amortized over
10 years straight line
o We assumed no incremental share repurchases, leverage of capital or revenue
enhancements
o Anticipated closing date in the 3rd quarter of 2004
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Branch Rationalization
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o Concurrently, we are accelerating our planned 2004-2005 branch
rationalization program into 2004
o Consolidation of 14 under-performing branches this year
o We expect to complete the branch restructurings by December 2004 and to
incur a pre-tax restructuring charge of approximately $2.3 million, or
$0.11 per share after taxes
o Going forward, we anticipate the branch consolidations/sales to be
accretive by $0.10 per share annually
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Branch Rationalization
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Total Avg. Deposits
No. of Deposits /Branch
Branches ($ Millions) ($ Millions)
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Dec. 31, 2000 70 $1,428 $20.4
Dec. 31, 2001 (+3 / -1) 72 1,573 21.9
Dec. 31, 2002 (+2 / -1) 73 1,703 23.3
Dec. 31, 2003 (+8(1) / -5) 76 2,111 27.8
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- - Consolidation/Sale of Branches(2) -14 -108 7.7
+ Acquisition of CBNJ +8 +326 40.8
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Pro Forma 70 2,329 33.3
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(1) Eight branches were acquired from New York Community Bancorp in December
2003
(2) Total deposits and average deposits per branch represent anticipated
run-off as a result of consolidations and closings
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Overview of Management
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o SNBC and CBNJ share a common goal to utilize management's and the Board's
market knowledge to grow the business
o SNBC will add 3 existing CBNJ directors to the combined company's Board of
Directors
o A Monmouth County Advisory Board will serve to promote SNBC's business in
the community
o SNBC is proud to have CBNJ's experienced officers join its team with
greater capabilities at the combined company
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Attractive Demographics of Monmouth County
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Monmouth Monmouth
Rank out of Rank out of
Monmouth SNBC's 13 NJ's 21
County NJ Counties Counties
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Total Deposits $12.7 billion #2 #6
Small Businesses 54,712 #1 #3
2003 SBA Loan Approvals 203 #3 #4
SNBC's New Jersey
Market Avg. State Avg.
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Proj. Population Growth (2010) 10.52% 7.51% 5.55%
Median Household Income $71,562 $56,668 $61,179
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Pro Forma Franchise Locations
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[GRAPHIC OMITTED]
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Pro Forma Deposit Market Share
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o SNBC becomes the largest community focused commercial bank in Monmouth
County behind 4 super-regional banks and 3 savings institutions
Deposits Market
Rank Institution Branches ($000) Share(%)
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1 Bank of America Corp. 64 2,192,926 17.26
2 Wachovia Corp. 50 1,966,604 15.48
3 Sovereign Bancorp Inc. 30 1,758,184 13.84
4 PNC Financial Services Group 29 935,735 7.37
5 Investors Bancorp MHC 9 917,954 7.23
6 Commerce Bancorp Inc. 19 885,657 6.97
7 Hudson City Bancorp Inc. (MHC) 4 580,912 4.57
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8 Sun Bancorp Pro Forma 10 412,985 3.25
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8 Community Bancorp of NJ 8 344,385 2.71
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9 Provident Financial Services 12 335,396 2.64
10 Shrewsbury Bancorp 11 325,308 2.56
11 Independence Comm. Bank Corp. 2 303,196 2.39
12 MSB Mutual Holding Company 4 295,252 2.32
13 Bank of New York Co. 7 276,268 2.17
14 Monmouth Community Bancorp 6 188,380 1.48
15 Freehold S&LA 2 165,815 1.31
16 Allaire Community Bank 5 138,412 1.09
17 Columbia Savings Bank M.H.C. 3 132,054 1.04
18 Two River Community Bank 6 127,604 1.00
19 North Fork Bancorp. 8 125,833 0.99
20 Amboy Bancorporation 6 115,891 0.91
21 Washington Mutual Inc. 3 105,394 0.83
22 First Washington FinancialCorp 4 91,559 0.72
23 OceanFirst Financial Corp. 2 88,976 0.70
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24 Sun Bancorp Inc. 5 88,193 0.69
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Source: SNL Financial (as of June 2003)
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Loan and Deposit Composition
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[GRAPHIC OMITTED]
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Strong Asset Quality
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At or for the year ended December 31, 2003
SNBC CBNJ
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Non-Performing Assets / Total Assets 1.00% 0.00%
Non-Performing Assets / Gross Loans 1.88% 0.00%
Reserves / Gross Loans 1.27% 1.30%
Net Charges-Offs / Average Loans 0.26% 0.00%
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Conclusion
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"Our Mission Is To Be The Premier Community Bank in Every Community We Serve"
o Immediately accretive to GAAP EPS
o Accelerates the transformation of SNBC's branch network to directly benefit
the bottom line
o Bolsters our ability to originate commercial, small business and SBA loans
in one of SNBC's best markets
o Similar corporate culture and philosophy ensures continuity of service to
existing customers and generation of new business without interruption
o A low risk, strategically important acquisition and the most important step
to date towards our goal to become the premier bank in central and southern
New Jersey
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Sun and Community will jointly file proxy materials with the Securities and
Exchange Commission ("SEC") which will set forth the complete details of the
merger. WE URGE INVESTORS TO CAREFULLY READ THE PROXY MATERIALS WHEN FILED WITH
THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able
to obtain a copy of the proxy materials free of charge at the SEC's web site at
www.sec.gov.
The materials may also be obtained for free by directing a written request to
Sun Bancorp, Inc. 226 Landis Avenue, Vineland, New Jersey 08360, Attention:
Secretary, and to Community Bancorp of New Jersey, 3535 Route 9 North, Freehold,
New Jersey 07728 Attention: Secretary. INVESTORS SHOULD READ THE PROXY MATERIALS
BEFORE MAKING A DECISION REGARDING THE MERGER.
Sun and Community, and their directors and executive officers, may be deemed to
be "participants" in Sun's and Community's solicitation of proxies in connection
with the proposed merger. Information regarding the Sun's participants,
including their holdings of Sun stock, is contained in Sun's annual meeting
proxy materials filed with the SEC on April 17, 2003. Information regarding the
Community's participants, including their holdings of Community stock, is
contained in Community's annual meeting proxy materials filed with the SEC on
March 28, 2003.
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