U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE) FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _________TO_________
Commission File No. 333-30182
SUN BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
United States 58-2466380
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
4367 RIVERWOOD DRIVE
MURRELLS INLET, SC 29576-1359
(Address of principal executive offices, including zip code)
(843) 357-7007
(Registrant's telephone number, including area code)
________________________________________________
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES NO X
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
715,000 SHARES OF COMMON STOCK, NO STATED PAR VALUE ON MAY 10, 2002
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PAGE 1 OF 14
EXHIBIT INDEX ON PAGE 2
SUN BANCSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
INDEX
PART I. FINANCIAL RESULTS Page No.
- -------------------------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - March 31, 2002 and December 31, 2001 . . . . . . . . 3
Condensed Consolidated Statement of Income - Three months ended March 31, 2002 and 2001. . . 4
Condensed Consolidated Statement of Shareholders' Equity and Comprehensive Income-
Three months ended March 31, 2002 and 2001 . . . . . . . . . . . . . . . . . . . . . . . . 5
Condensed Consolidated Statement of Cash Flows - Three months ended March 31, 2002 and 2001. 6
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis or Plan of Operation. . . . . . . . . . . . . . . . . . 8-12
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SUN BANCSHARES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2002 2001
------------ --------------
ASSETS: (Unaudited)
Cash and cash equivalents:
Cash and due from banks $ 1,196,661 $ 1,025,008
Federal funds sold 2,173,000 1,304,000
------------ --------------
Total cash and cash equivalents 3,369,661 2,329,008
------------ --------------
Investment securities:
Securities available-for-sale 4,412,747 4,384,229
Nonmarketable equity securities 195,000 195,000
------------ --------------
Total investment securities 4,607,747 4,579,229
------------ --------------
Loans receivable: 19,044,224 16,238,315
Less allowance for loan losses (212,787) (164,787)
------------ --------------
Loans, net 18,831,437 16,073,528
Premises, furniture and equipment, net 1,672,713 1,661,354
Accrued interest receivable 126,488 122,234
Other assets 646,798 583,689
------------ --------------
Total assets $29,254,844 $ 25,349,042
============ ==============
LIABILITIES:
Deposits:
Noninterest-bearing transaction accounts $ 4,212,734 $ 4,210,483
Interest-bearing transaction accounts 944,537 878,031
Savings 5,372,208 4,038,849
Time deposits $100,000 and over 5,753,298 4,911,008
Other time deposits 7,413,570 5,161,743
------------ --------------
Total deposits 23,696,347 19,200,114
------------ --------------
Securities sold under agreement to repurchase - 500,000
Accrued interest payable 241,696 188,144
Other liabilities 33,714 18,501
------------ --------------
Total liabilities 23,971,757 19,906,759
------------ --------------
SHAREHOLDERS' EQUITY:
Preferred stock, par value not stated; 2,000,000 shares
authorized and unissued - -
Common stock, par value not stated; 10,000,000 shares authorized;
715,000 issued and outstanding at March 31, 2002 and December 31, 2001 6,779,216 6,779,216
Retained earnings (deficit) (1,491,811) (1,350,396)
Accumulated other comprehensive income (4,318) 13,463
------------ --------------
Total shareholders' equity 5,283,087 5,442,283
------------ --------------
Total liabilities and shareholders' equity $29,254,844 $ 25,349,042
============ ==============
See notes to condensed consolidated financial statements.
3
SUN BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
----------------------
2002 2001
---------- ----------
INTEREST INCOME:
Loans, including fees $ 338,800 $ 63,600
Investment securities:
Taxable 46,768 15,893
Nonmarketable equity securities 5,850 -
Federal funds sold 4,565 80,921
---------- ----------
Total 395,983 160,414
---------- ----------
INTEREST EXPENSE:
Time deposits $100,000 and over 64,498 9,393
Other deposits 89,773 28,078
Other interest expense 2,445 -
---------- ----------
Total 156,716 37,471
---------- ----------
NET INTEREST INCOME 239,267 122,943
Provision for loan losses 48,000 35,000
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 191,267 87,943
---------- ----------
OTHER OPERATING INCOME:
Service charges on deposit accounts 25,711 2,031
Residential mortgage origination fees 9,633 7,588
Gain on sale of available-for-sale securities 1,406 -
Other income 11,014 1,521
---------- ----------
Total 47,764 11,140
---------- ----------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 227,564 164,106
Occupancy expense 69,048 71,091
Furniture and equipment expense 25,778 15,960
Other operating expenses 134,099 114,241
---------- ----------
Total 456,489 365,398
---------- ----------
LOSS BEFORE INCOME TAXES (217,458) (266,315)
Income tax benefit (76,043) (99,647)
---------- ----------
NET LOSS $(141,415) $(166,668)
========== ==========
EARNINGS (LOSSES) PER SHARE
Average shares outstanding 715,000 715,000
Basic earnings (losses) per share $ (0.20) $ (0.23)
Diluted earnings (losses) per share $ (0.20) $ (0.23)
See notes to condensed consolidated financial statements.
4
SUN BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(UNAUDITED)
Accumulated
Common Stock Other
------------------------- Retained Comprehensive
Shares Amount Earnings Income Total
------------ ----------- ------------ --------------- -----------
BALANCE, DECEMBER 31, 2000 715,000 $6,779,216 $ (719,617) $ - $6,059,599
Net loss for the period (166,668) (166,668)
Other comprehensive income,
net of tax $203 347 347
-----------
Comprehensive income (166,321)
------------ ----------- ------------ --------------- -----------
BALANCE, MARCH 31, 2001 715,000 $6,779,216 $ (886,285) $ 347 $5,893,278
============ =========== ============ =============== ===========
BALANCE, DECEMBER 31, 2001 715,000 $6,779,216 $(1,350,396) $ 13,463 $5,442,283
Net loss for the period (141,415) (141,415)
Other comprehensive
income, net of tax $(10,443) (17,781) (17,781)
-----------
Comprehensive income (159,196)
------------ ----------- ------------ --------------- -----------
BALANCE, MARCH 31, 2002 715,000 $6,779,216 $ 1,491,811 $ (4,318) $5,253,087
============ =========== ============ =============== ===========
See notes to condensed consolidated financial statements.
5
SUN BANCSHARES, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
--------------------------
2002 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (141,415) $ (166,668)
Adjustments to reconcile net income to net cash (used) provided
by operating activities:
Depreciation and amortization 36,476 15,960
Provision for loan losses 48,000 35,000
Accretion and premium amortization 7,087 (295)
Deferred income tax benefit (76,043) (99,647)
Gain on sale of securities (1,406) -
Increase in interest receivable (4,254) (26,300)
Increase in interest payable 53,552 20,669
Decrease in other assets 23,377 16,029
Increase in other liabilities 15,213 12,875
------------ ------------
Net cash used by operating activities (39,413) (192,377)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available-for-sale (851,129) (2,579,858)
Proceeds from maturities of securities available-for-sale 287,300 774,448
Proceeds from sales of securities available-for-sale 501,406 -
Net increase in loans made to customers (2,805,909) (3,481,176)
Purchases of premises and equipment (47,835) (316,214)
------------ ------------
Net cash used by investing activities (2,916,167) (5,602,800)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, interest-bearing transaction
accounts and savings accounts 1,402,116 2,550,266
Net increase in certificates of deposit and other time deposits 3,094,117 1,290,114
Decrease in securities sold under agreement to repurchase (500,000) -
------------ ------------
Net cash provided by financing activities 3,996,233 3,840,380
------------ ------------
NET INCREASE (DECREASE) IN CASH 1,040,653 (1,954,797)
CASH, BEGINNING OF PERIOD 2,329,008 6,173,515
------------ ------------
CASH, END OF PERIOD $ 3,369,661 $ 4,218,718
============ ============
CASH PAID DURING THE PERIOD FOR:
Interest $ 103,164 $ 16,802
Taxes - -
See notes to condensed consolidated financial statements.
6
SUN BANCSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
- -----------------------------------
The accompanying financial statements have been prepared in accordance with the
requirements for interim financial statements and, accordingly, they are
condensed and omit disclosures which would substantially duplicate those
contained in the most recent annual report to shareholders. The financial
statements as of March 31, 2002 and for the interim period ended March 31, 2001
are unaudited and, in the opinion of management, include all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation. The financial information as of December 31, 2001 has been
derived from the audited financial statements as of that date. For further
information, refer to the financial statements and the notes included in Sun
Bancshares, Inc.'s 2001 Annual Report.
NOTE 2 - EARNINGS PER SHARE
- --------------------------------
Net income per share - basic is computed by dividing net income by the weighted
average number of common shares outstanding. Net income per share - diluted is
computed by dividing net income by the weighted average number of common shares
outstanding and dilutive common share equivalents using the treasury stock
method. Dilutive common share equivalents include common shares issuable upon
exercise of outstanding stock options. There were no dilutive common share
equivalents outstanding during the first three months of 2002 and 2001;
therefore basic earnings per share and diluted earnings per share were the same.
NOTE 3 - COMPREHENSIVE INCOME
- ---------------------------------
Comprehensive income includes net income and other comprehensive income, which
is defined as non-owner related transactions in equity. The following table
sets forth the amounts of other comprehensive income included in equity along
with the related tax effect for the three-month period ended March 31, 2002 and
2001:
Pre-tax (Expense) Net-of-tax
Amount Benefit Amount
--------- ---------- ------------
FOR THE THREE MONTHS ENDED MARCH 31, 2001:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ 550 $ (203) $ 347
Plus: reclassification adjustment for gains (losses)
realized in net income - - -
--------- ---------- ------------
Net unrealized gains (losses) on securities 550 (203) 347
--------- ---------- ------------
Other comprehensive income $ 550 $ (203) $ 347
========= ========== ============
FOR THE THREE MONTHS ENDED MARCH 31, 2002:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $(29,630) $ 10,963 $ (18,667)
Plus: reclassification adjustment for gains (losses)
realized in net income 1,406 (520) 886
--------- ---------- ------------
Net unrealized gains (losses) on securities (28,224) 10,443 (17,781)
--------- ---------- ------------
Other comprehensive income $(28,224) $ 10,443 $ (17,781)
========= ========== ============
Accumulated other comprehensive income consists solely of the unrealized gain on
securities available for sale, net of the deferred tax effects.
7
SUN BANCSHARES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
----------------------------------------------------------------
The following is a discussion of our financial condition as of March 31, 2002
compared to December 31, 2001, and the results of operations for the three
months ended March 31, 2002 compared to the three months ended March 31, 2001.
These comments should be read in conjunction with our condensed financial
statements and accompanying footnotes appearing in this report. This report
contains "forward-looking statements" relating to, without limitation, future
economic performance, plans and objectives of management for future operations,
and projections of revenues and other financial items that are based on the
beliefs of our management, as well as assumptions made by and information
currently available to our management. The words "expect," "estimate,"
"anticipate," and "believe," as well as similar expressions, are intended to
identify forward-looking statements. Our actual results may differ materially
from the results discussed in the forward-looking statements, and our operating
performance each quarter is subject to various risks and uncertainties that are
discussed in detail our filings with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
- -----------------------
NET INTEREST INCOME
- ---------------------
For the three months ended March 31, 2002, net interest income increased
$116,324 or 94.62%, over the same period in 2001. Interest income from loans,
including fees, for the three months ended March 31, 2002 was $338,800, an
increase of $275,200, or 432.70%, from the comparable period in 2001, as we
continued to establish a presence in our market areas. Interest expense for the
three months ended March 31, 2002 was $156,716 compared to $37,471 for the same
period in 2001. The net interest margin realized on earning assets was 4.23%
for the three months ended March 31, 2002, as compared to 5.36% for the same
period in 2001. The net interest spread increased from 2.31% for the three
months ended March 31, 2001 to 3.19% for the three months March 31, 2002.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
- --------------------------------------------
The provision for loan losses is the charge to operating earnings that we
believe is necessary to maintain the allowance for possible loan losses at an
adequate level. For the three months ended March 31, 2002, the provision
charged to expense was $48,000 as compared to the provision of $35,000 charged
to expense during the three months ended March 31, 2001. This is a result of
our efforts to adjust the allowance for loan losses to match the growth in the
loan portfolio. There are risks inherent in making all loans, including risks
with respect to the period of time over which loans may be repaid, risks
resulting from changes in economic and industry conditions, risks inherent in
dealing with individual borrowers, and, in the case of a collateralized loan,
risks resulting from uncertainties about the future value of the collateral. We
maintain an allowance for loan losses based on, among other things, historical
experience, an evaluation of economic conditions, and regular reviews of
delinquencies and loan portfolio quality. Our judgment about the adequacy of
the allowance is based upon a number of assumptions about future events, which
we believe to be reasonable, but which may not prove to be accurate. Thus,
there is a risk that charge-offs in future periods could exceed the allowance
for loan losses or that substantial additional increases in the allowance for
loan losses could be required. Additions to the allowance for loan losses would
result in a decrease of our net income and, possibly, our capital.
NONINTEREST INCOME
- -------------------
Noninterest income during the three months ended March 31, 2002 was $47,764, an
increase of $36,624, or 328.76%, from the comparable period in 2001. The
increase is primarily a result of an increase in service charges on deposit
accounts. Service charges on deposit accounts increased from $2,031 for the
three months ended March 31, 2001 to $25,711 for the three months ended March
31, 2002. This change is a result of an increase in deposit accounts over the
two periods. Deposits at March 31, 2001 were $5,779,723, compared to
$23,696,347 at March 31, 2002.
8
SUN BANCSHARES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
----------------------------------------------------------------
NONINTEREST EXPENSE
- --------------------
Total noninterest expense for the three months ended March 31, 2002 was
$456,489, 24.93% higher than the three months ended March 31, 2001. The primary
reason for the $91,091 increase in noninterest expense over the same period in
2001 was attributable to salaries and employee benefits, which increased
$63,458, or 38.67% over the same period in 2001. This increase was largely the
result of an increase in personnel in support functions for the Georgetown
office.
INCOME TAXES
- -------------
The income tax benefit for three months ended March 31, 2002 was $76,043 as
compared to $99,647 for the same period in 2001. The effective tax rate was
34.97% for the quarter ending March 31, 2002 and 37.42% for the quarter ending
March 31, 2001.
NET INCOME (LOSS)
- -------------------
The combination of the above factors resulted in a net loss for the three months
ended March 31, 2002 and for the three months ended March 31, 2001 of $141,415
and $166,668, respectively. Net loss before taxes for the two periods was
$217,458 and $266,315, respectively. The net loss before income taxes was
offset by income tax benefits of $76,043 and $99,647, respectively.
FINANCIAL CONDITION
- --------------------
ASSETS AND LIABILITIES
- ------------------------
During the first three months of 2002, total assets increased $3,905,802, or
15.41%, when compared to December 31, 2001. The primary source of growth in
assets during the first three months of 2002 was gross loans, which increased
$2,805,909, or 17.28% and federal funds sold, which increased $869,000, or
66.66%. Total deposits increased $4,496,233, or 23.42%, from the December 31,
2001 amount of $19,200,114. Within the deposit area, noninterest-bearing
deposits increased $2,251 or .05% to $4,212,734 at March 31, 2002. Time
deposits $100,000 and over increased $842,290 or 17.15% during the first three
months of 2002. Other time deposits also increased $2,251,827, or 43.63%,
during the first three months of 2002.
INVESTMENT SECURITIES
- ----------------------
Investment securities classified as available for sale totaled $4,607,747 at
March 31, 2002. This represents an increase of $28,518, or .07%, since December
31, 2001. All of our marketable investment securities were designated as
available-for-sale at March 31, 2002.
NONMARKETABLE EQUITY SECURITIES
- ---------------------------------
Nonmarketable equity securities include the cost of our investment in the stock
of the Federal Reserve Bank. The stock has no quoted market value and no ready
market exists. Investment in Federal Reserve Bank stock is required by law of
every national bank. At March 31, 2002 and December 31, 2001, our investment in
this stock totaled $195,000.
PREMISES AND EQUIPMENT
- ------------------------
Premises and equipment, net of depreciation totaled $1,672,713 at March 31,
2002. Since December 31, 2001, we made new additions of $47,835, which consist
primarily of costs associated with the new Murrells Inlet main office building
and related furniture and equipment. The new additions were offset by
depreciation expense of $36,476. As of March 31, 2002, we had committed to
spend approximately $1,370,000 to complete the construction of the main office,
which should be completed in the fourth quarter of 2002.
9
SUN BANCSHARES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
----------------------------------------------------------------
LOANS
- -----
We experienced steady growth during the first three months of 2002, especially
in the loan area. Net loans increased $2,757,909, or 17.16%, during the period.
As shown below, the main component of growth in the loan portfolio was
commercial and industrial which increased $2,480,340, or 28.63%, from December
31, 2001. Balances within the major loans receivable categories as of March 31,
2002 and December 31, 2001 are as follows:
March 31, December 31,
2002 2001
----------- -------------
Real estate:
Construction $ 717,608 $ 996,432
Mortgage - residential 5,113,468 4,700,606
Commercial and industrial 11,143,717 8,663,377
Consumer and other 2,069,431 1,877,900
----------- -------------
$19,044,224 $ 16,238,315
=========== =============
RISK ELEMENTS IN THE LOAN PORTFOLIO
- ----------------------------------------
There were no risk elements identified in our loan portfolio as of March 31,
2002.
Activity in the Allowance for Loan Losses is as follows:
March 31,
-------------------------
2002 2001
------------ -----------
Balance, January 1, $ 164,787 $ 15,000
Provision for loan losses for the period 48,000 35,000
Net loans (charged-off) recovered for the period - -
------------ -----------
Balance, end of period $ 212,787 $ 50,000
============ ===========
Gross loans outstanding, end of period $19,044,224 $4,386,323
============ ===========
Allowance for loan losses to loans outstanding 1.12% 1.14%
DEPOSITS
- --------
At March 31, 2002, total deposits increased by $4,496,233, or 23.42%, from
December 31, 2001. The largest increase was in other time deposits which
increased $2,251,827, or 43.63%, from December 31, 2001 to March 31, 2002.
Expressed as a percentage, total interest bearing deposits increased 29.98% and
noninterest-bearing deposits increased .05%.
Balances within the major deposit categories as of March 31, 2002 and December
31, 2001 were as follows:
March 31, December 31,
2002 2001
----------- -------------
Noninterest-bearing demand deposits $ 4,212,734 $ 4,210,483
Interest-bearing demand deposits 944,537 878,031
Savings deposits 5,372,208 4,038,849
Time deposits $100,000 and over 5,753,298 4,911,008
Other time deposits 7,413,570 5,161,743
----------- -------------
$23,696,347 $ 19,200,114
=========== =============
10
SUN BANCSHARES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
----------------------------------------------------------------
LIQUIDITY
- ---------
We meet our liquidity needs through scheduled maturities of loans and
investments on the asset side and through pricing policies on the liability side
for interest-bearing deposit accounts. The level of liquidity is measured by
the loan-to-total borrowed funds ratio which was at 80.37% at March 31, 2002 and
84.57% at December 31, 2001.
Securities available-for-sale, which totaled $4,412,747 at March 31, 2002, serve
as a ready source of liquidity. We also have lines of credit available with
correspondent banks to purchase federal funds for periods from one to seven
days. At March 31, 2002, unused lines of credit totaled $1,500,000.
CAPITAL RESOURCES
- ------------------
Total shareholders' equity decreased from $5,442,283 at December 31, 2001 to
$5,283,087 at March 31, 2002. The decrease is primarily due to the net loss for
the period of $141,415.
The Federal Reserve Board and bank regulatory agencies require bank holding
companies and financial institutions to maintain capital at adequate levels
based on a percentage of assets and off-balance sheet exposures, adjusted for
risk-weights ranging from 0% to 100%. Under the risk-based standard, capital is
classified into two tiers. Tier 1 capital consists of common shareholders'
equity, excluding the unrealized gain (loss) on available-for-sale securities,
minus certain intangible assets. Tier 2 capital consists of the general reserve
for loan losses subject to certain limitations. An institutions' qualifying
capital base for purposes of its risk-based capital ratio consists of the sum of
its Tier 1 and Tier 2 capital. The regulatory minimum requirements are 4% for
Tier 1 and 8% for total risk-based capital.
Banks and bank holding companies are also required to maintain a capital at a
minimum level based on total assets, which is known as the leverage ratio. The
minimum requirement for the leverage ratio is 3%, but all but the highest rated
institutions are required to maintain ratios 100 to 200 basis point above the
minimum. Both the Company and the Bank exceeded their minimum regulatory
capital ratios as of March 31, 2002.
The following table summarizes our risk-based capital at March 31, 2002:
Shareholders' equity $ 5,287,405
Less: intangibles -
------------
Tier 1 capital 5,287,405
Plus: allowance for loan losses (1) 212,787
------------
Total capital $ 5,500,192
============
Risk-weighted assets $20,634,105
============
Risk-based capital ratios
Tier 1 capital (to risk-weighted assets) 25.62%
Total capital (to risk-weighted assets) 26.66%
Tier 1 (to total average assets) 20.23%
<FN>
(1) limited to 1.25% of risk-weighted assets
11
SUN BANCSHARES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
----------------------------------------------------------------
REGULATORY MATTERS
- -------------------
From time to time, various bills are introduced in the United States Congress
with respect to the regulation of financial institutions. Certain of these
proposals, if adopted, could significantly change the regulation of banks and
the financial services industry. We cannot predict whether any of these
proposals will be adopted or, if adopted, how these proposals would affect us.
12
SUN BANCSHARES, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ----------------------------
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
- ---------------------------------------------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- --------------------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ---------------------------------------------------------------------
Not applicable.
NOTE 5. OTHER INFORMATION
- ----------------------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------------
(a) Exhibits
The following documents are filed as part of this report:
10.11 Agreement between Sun Bancshares, Inc and Chancel Construction
Group, Inc. dated March 21, 2002 for the construction of the
SunBank's main office building.
Reports on Form 8-K
- ----------------------
(b) Reports on Form 8-K - None
13
SUN BANCSHARES, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
By: /s/ THOMAS BOUCHETTE
-------------------------------------
Thomas Bouchette
President & Chief Executive Officer
Date: May 13, 2002 By: /s/ RANDY L. CARMON
-------------------------------------
Randy L. Carmon
Chief Financial Officer
14