-- Total assets of $3.329 billion at December 31, 2006, compared to
$3.264 billion at September 30, 2006, and $3.108 billion at December 31,
2005. On January 19, 2006, the Company acquired assets of approximately
$164 million and recorded purchase adjustments of approximately $23 million
from the acquisition of Advantage Bank.
-- Total loans before allowance for loan losses grew 16.4% over the prior
year to $2.386 billion at December 31, 2006. Excluding approximately $125
million in loans acquired in the Advantage acquisition, loans were up 10.3%
over this same period. On a linked quarter basis, loans increased 3.0%
normalized for approximately $35 million in prepayments.
-- Total non-performing assets were $15.2 million at December 31, 2006,
or .64% of total loans and real estate owned, compared to $11.6 million, or
.56% of total loans and real estate owned, at December 31, 2005. On a
linked quarter basis, total non-performing assets increased $481,000. The
allowance for loan losses to total loans is 1.08% at December 31, 2006,
compared to 1.10% at September 30, 2006 and December 31, 2005.
-- The investment portfolio at December 31, 2006, of $505.1 million,
decreased $224.0 million, or 30.7%, over December 31, 2005. As has been our
strategy, portfolio liquidity has continued to supplement deposit funding
for loan growth. For 2007, the average investment portfolio is expected to
be maintained at approximate current levels.
-- Total deposits grew 8.0% over the prior year to $2.668 billion at
December 31, 2006. Excluding approximately $149 million in deposits
acquired in the Advantage acquisition, deposits increased 1.9% over this
same period. On a linked quarter basis, deposits increased $31.5 million
or 1.2%.
-- Net interest income (tax-equivalent basis) for the fourth quarter of
$24.8 million is flat to the comparable prior year end period and decreased
$424,000 over the linked quarter. Net interest margin for the quarter of
3.37% decreased, as forecasted, over the linked third quarter margin of
3.51%. The margin decline for the quarter was attributable primarily to a
29 basis points increase in costs of interest-bearing deposits attributable
to the Bank's promotional deposit pricing in support of the retail
transformation initiative.
-- Total operating non-interest income for the quarter of $5.3 million
increased $850,000, or 18.9%, over the comparable prior year period and
increased 1.4% over the linked third quarter. Total operating non-interest
income for the year 2006 of $20.1 million increased $2.6 million, or 15.0%,
over 2005. The primary increase year-over-year was attributable to
increases in service charges on deposit accounts of $2.2 million, or 24.1%.
-- Total operating non-interest expenses for the quarter of $21.2 million
decreased $574,000, or 2.6%, over the comparable prior year period.
Current quarter expenses relating to the 2006 Advantage acquisition
amounted to $673,000. Total operating non-interest expenses decreased
$336,000, or 1.6%, over the linked third quarter. The Company continues to
focus on its previously announced profitability enhancement initiatives
with emphasis on expense savings. The efficiency ratio for the quarter
excluding charges in non-interest income of $330,000 and in non-interest
expenses of $735,000 related to branch rationalization and severance
expenses for the quarter was 70.78%, compared to 74.45% for the comparable
prior year period and 71.00% for the linked third quarter.
The Company will hold its regular quarterly conference call scheduled for
Tuesday, January 23, 2007 at 11:30 a.m. (ET). The call will be Webcast live
via the Sun Bancorp Web site.
Participants may call 1-800-391-2548 and give the verbal password: vi27275.
The conference call also will be Web cast live through the Sun Bancorp Web
site at www.sunnb.com. Participants are advised to call in or log on 10
minutes ahead of the scheduled start of the call. An Internet-based replay
will be available at the Web site for 48 hours following the call.
Sun Bancorp, Inc. is a multi-state bank holding company headquartered in
Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving
customers through 80 branch locations in Southern and Central New Jersey,
Philadelphia, PA, and New Castle County, DE. The Bank is an Equal Housing
Lender and its deposits are insured up to the legal maximum by the Federal
Deposit Insurance Corporation (FDIC). For more information about Sun
National Bank and Sun Bancorp, Inc., visit www.sunnb.com.
The foregoing material contains forward-looking statements concerning the
financial condition, results of operations and business of the Company. We
caution that such statements are subject to a number of uncertainties and
actual results could differ materially, and, therefore, readers should not
place undue reliance on any forward-looking statements. The Company does
not undertake, and specifically disclaims, any obligation to publicly
release the results of any revisions that may be made to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
SUN BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
For the Three For the Years
Months Ended Ended
December 31, December 31,
------------------ ------------------
2006 2005 2006 2005
-------- -------- -------- --------
Profitability for the period:
Net interest income $ 24,545 $ 24,692 $ 99,078 $ 97,515
Provision for loan losses 990 520 3,807 2,310
Non-interest income 5,012 4,399 19,746 18,288
Non-interest expense 21,889 21,728 89,393 84,660
Income before income taxes 6,678 6,843 25,624 28,833
Net income $ 4,454 $ 4,584 $ 17,274 $ 19,521
======== ======== ======== ========
Financial ratios:
Return on average assets(1) 0.54% 0.59% 0.53% 0.63%
Return on average equity(1) 5.24% 6.25% 5.28% 6.76%
Return on average tangible
equity(1),(2) 9.78% 11.60% 10.15% 12.82%
Net interest margin(1) 3.37% 3.54% 3.44% 3.50%
Efficiency ratio 74.06% 74.69% 75.23% 73.11%
Efficiency ratio, excluding
non-operating income and
non-operating expense(3) 70.78% 74.45% 73.97% 73.63%
Earnings per common share(4):
Basic $ 0.22 $ 0.24 $ 0.85 $ 1.02
Diluted $ 0.21 $ 0.23 $ 0.81 $ 0.96
Average equity to average
assets 10.34% 9.46% 10.09% 9.27%
December 31,
------------------------
2006 2005
----------- -----------
At period-end:
Total assets $ 3,328,238 $ 3,107,889
Total deposits 2,668,479 2,471,648
Loans receivable, net of
allowance for loan losses 2,360,098 2,027,753
Investments 505,090 729,066
Borrowings 160,622 248,967
Junior subordinated
debentures 108,250 77,322
Shareholders’ equity 342,227 295,653
Credit quality and capital
ratios:
Allowance for loan losses to
total gross loans 1.08% 1.10%
Non-performing assets to
total gross loans and real
estate owned 0.64% 0.56%
Allowance for loan losses to
non-performing loans 175.50% 221.86%
Total Capital (to
Risk-Weighted Assets)(5):
Sun Bancorp, Inc. 11.74% 11.11%
Sun National Bank 10.62% 10.50%
Tier 1 Capital (to
Risk-Weighted Assets)(5):
Sun Bancorp, Inc. 10.77% 10.14%
Sun National Bank 9.63% 9.53%
Leverage Ratio(5):
Sun Bancorp, Inc. 9.40% 8.20%
Sun National Bank 8.26% 7.70%
Book value(4) $ 16.69 $ 15.50
Tangible book value(4) $ 9.05 $ 8.43
(1) Amounts for the three months ended are annualized.
(2) Return on average tangible equity is computed by dividing annualized
net income for the period by average tangible equity. Average tangible
equity equals average equity less average identifiable intangible
assets and goodwill.
(3) Efficiency ratio, excluding non-operating income and non-operating
expenses is computed by dividing non-interest expense for the period
by the summation of net interest income and non-interest income.
Non-interest expense and non-interest income exclude charges related
to severance expense and branch rationalization.
(4) Data is adjusted for a 5% stock dividend declared in April 2006.
(5) December 31, 2006 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)
December 31,
------------------------
2006 2005
------------ ------------
ASSETS
Cash and due from banks $ 74,991 $ 74,387
Interest-bearing bank balances 48,066 2,707
Federal funds sold 47,043 8,368
----------- -----------
Cash and cash equivalents 170,100 85,462
Investment securities available for sale
(amortized cost - $467,975 and $688,073 at
December 31, 2006 and 2005, respectively) 461,920 676,630
Investment securities held to maturity
(estimated fair value - $24,846 and $31,734 at
December 31, 2006 and 2005, respectively) 25,441 32,445
Loans receivable (net of allowance for loan
losses - $25,658 and $22,463 at December 31,
2006 and 2005, respectively) 2,360,098 2,027,753
Restricted equity investments 17,729 19,991
Bank properties and equipment, net 42,292 42,110
Real estate owned, net 600 1,449
Accrued interest receivable 17,419 15,148
Goodwill 128,117 104,891
Intangible assets, net 28,570 29,939
Deferred taxes, net 3,939 6,761
Bank owned life insurance 57,370 55,627
Other assets 14,643 9,683
----------- -----------
TOTAL ASSETS $ 3,328,238 $ 3,107,889
=========== ===========
LIABILITIES
Deposits $ 2,668,479 $ 2,471,648
Advance from the Federal Home Loan Bank (FHLB) 103,560 124,546
Securities sold under agreements to repurchase
– FHLB - 60,000
Securities sold under agreements to repurchase
– customers 51,740 59,021
Obligation under capital lease 5,322 5,400
Junior subordinated debentures 108,250 77,322
Other liabilities 48,660 14,299
----------- -----------
Total liabilities 2,986,011 2,812,236
----------- -----------
SHAREHOLDERS’ EQUITY
Preferred stock, $1 par value, 1,000,000 shares
authorized, none issued - -
Common stock, $1 par value, 50,000,000 shares
authorized, 20,507,549 and 18,168,530 issued
at December 31, 2006 and 2005, respectively 20,508 18,169
Additional paid-in capital 304,856 264,152
Retained earnings 20,795 20,757
Accumulated other comprehensive loss (3,932) (7,425)
----------- -----------
Total shareholders' equity 342,227 295,653
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,328,238 $ 3,107,889
=========== ===========
SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
For the Three Months For the Years
Ended December 31, Ended December 31,
------------------------- -------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
INTEREST INCOME:
Interest and fees on
loans $ 42,991 $ 33,420 $ 160,876 $ 125,156
Interest on taxable
investment securities 4,252 6,144 19,195 24,689
Interest on
non-taxable
investment securities 517 239 1,564 1,378
Dividends on
restricted equity
investments 282 212 1,143 834
Interest on federal
funds sold 494 320 1,172 1,172
------------ ------------ ------------ ------------
Total interest income 48,536 40,335 183,950 153,229
------------ ------------ ------------ ------------
INTEREST EXPENSE:
Interest on deposits 19,802 12,029 66,892 41,427
Interest on borrowed
funds 1,997 2,154 9,571 9,122
Interest on junior
subordinated
debentures 2,192 1,460 8,409 5,165
------------ ------------ ------------ ------------
Total interest
expense 23,991 15,643 84,872 55,714
------------ ------------ ------------ ------------
Net interest income 24,545 24,692 99,078 97,515
PROVISION FOR LOAN
LOSSES 990 520 3,807 2,310
------------ ------------ ------------ ------------
Net interest income
after provision for
loan losses 23,555 24,172 95,271 95,205
------------ ------------ ------------ ------------
NON-INTEREST INCOME:
Service charges on
deposit accounts 3,183 2,174 11,117 8,957
Other service charges 73 76 311 279
(Loss) gain on sale or
disposal of fixed
assets (330) (58) (330) 42
Gain on sale of loans 463 241 1,127 989
(Loss) gain on sale of
investment securities (1) (36) (21) 773
Gain on derivative
instruments 200 406 1,178 1,462
Other 1,424 1,596 6,364 5,786
------------ ------------ ------------ ------------
Total non-interest
income 5,012 4,399 19,746 18,288
------------ ------------ ------------ ------------
NON-INTEREST EXPENSE:
Salaries and employee
benefits 10,842 10,823 45,079 42,627
Occupancy expense 3,361 2,895 12,136 11,380
Equipment expense 1,970 1,942 7,926 7,762
Data processing
expense 895 1,063 4,283 4,119
Advertising expense 407 429 1,683 1,631
Amortization of
intangible assets 1,193 1,118 4,767 4,499
Real estate owned
expense, net 12 28 238 (48)
Other 3,209 3,430 13,281 12,690
------------ ------------ ------------ ------------
Total non-interest
expense 21,889 21,728 89,393 84,660
------------ ------------ ------------ ------------
INCOME BEFORE INCOME
TAXES 6,678 6,843 25,624 28,833
INCOME TAXES 2,224 2,259 8,350 9,312
------------ ------------ ------------ ------------
NET INCOME $ 4,454 $ 4,584 $ 17,274 $ 19,521
============ ============ ============ ============
Basic earnings per
share(1) $ 0.22 $ 0.24 $ 0.85 $ 1.02
Diluted earnings per
share(1) $ 0.21 $ 0.23 $ 0.81 $ 0.96
(1) Data is adjusted for a 5% stock dividend declared in April 2006.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands)
2006 2006 2006
Q4 Q3 Q2
----------- ----------- -----------
Balance sheet at quarter end:
Loans:
Commercial and industrial $ 1,945,135 $ 1,927,964 $ 1,898,976
Home equity 232,557 222,473 206,642
Second mortgage 77,418 78,251 77,802
Residential real estate 38,900 33,460 27,509
Installment 91,746 88,896 84,347
----------- ----------- -----------
Total gross loans 2,385,756 2,351,044 2,295,276
Allowance for loan losses (25,658) (25,785) (24,680)
----------- ----------- -----------
Net loans 2,360,098 2,325,259 2,270,596
Goodwill 128,117 128,351 128,352
Intangible assets, net 28,570 29,762 30,955
Total assets 3,328,238 3,264,417 3,212,134
Total deposits 2,668,479 2,636,954 2,586,034
Advances from the Federal Home Loan
Bank (FHLB) 103,560 108,889 114,163
Securities sold under agreements to
repurchase - FHLB - - 15,000
Securities sold under agreements to
repurchase - customers 51,740 51,423 39,864
Obligation under capital lease 5,322 5,337 5,352
Junior subordinated debentures 108,250 108,250 108,250
Total shareholders' equity 342,227 335,849 327,669
Quarterly average balance sheet:
Loans:
Commercial and industrial $ 1,937,580 $ 1,902,279 $ 1,868,587
Home equity 229,002 213,888 194,103
Second mortgage 77,593 77,500 75,059
Residential real estate 35,323 27,443 28,784
Installment 90,358 87,071 86,047
----------- ----------- -----------
Total gross loans 2,369,856 2,308,181 2,252,580
Securities and other
interest-earning assets 578,983 570,366 657,636
Total interest-earning assets 2,948,839 2,878,547 2,910,216
Total assets 3,288,123 3,216,807 3,250,206
Non-interest-bearing demand
deposits 480,339 498,416 503,081
Total deposits 2,648,713 2,580,973 2,599,596
Total interest-bearing
liabilities 2,445,320 2,370,114 2,407,521
Total shareholders' equity 339,839 331,282 325,346
Capital and credit quality measures:
Total Capital (to Risk-Weighted
Assets)(1):
Sun Bancorp, Inc. 11.74% 11.87% 11.59%
Sun National Bank 10.62% 10.59% 10.35%
Tier I Capital (to Risk-Weighted
Assets)(1):
Sun Bancorp, Inc. 10.77% 10.87% 10.63%
Sun National Bank 9.63% 9.58% 9.38%
Leverage Ratio(1):
Sun Bancorp, Inc. 9.40% 9.41% 9.10%
Sun National Bank 8.26% 8.31% 8.04%
Average equity to average
assets 10.34% 10.30% 10.01%
Allowance for loan losses to
total gross loans 1.08% 1.10% 1.08%
Non-performing assets to total
gross loans and real estate
owned 0.64% 0.63% 0.54%
Allowance for loan losses to
non-performing loans 175.50% 182.37% 210.08%
Other data:
Net (charge-offs) recoveries $ (1,117) $ (212) $ (643)
=========== =========== ===========
Non-performing assets:
Non-accrual loans $ 14,322 $ 14,073 $ 11,447
Loans past due 90 days and
accruing 298 66 301
Real estate owned, net 600 600 669
----------- ----------- -----------
Total non-performing assets $ 15,220 $ 14,739 $ 12,417
=========== =========== ===========
2006 2005
Q1 Q4
----------- -----------
Balance sheet at quarter end:
Loans:
Commercial and industrial $ 1,846,580 $ 1,732,202
Home equity 183,363 155,561
Second mortgage 72,344 53,881
Residential real estate 28,846 30,162
Installment 83,497 78,410
----------- -----------
Total gross loans 2,214,630 2,050,216
Allowance for loan losses (24,448) (22,463)
----------- -----------
Net loans 2,190,182 2,027,753
Goodwill 128,311 104,891
Intangible assets, net 32,148 29,939
Total assets 3,285,798 3,107,889
Total deposits 2,603,040 2,471,648
Advances from the Federal Home Loan
Bank (FHLB) 119,382 124,546
Securities sold under agreements to
repurchase - FHLB 70,000 60,000
Securities sold under agreements to
repurchase - customers 42,236 59,021
Obligation under capital lease 5,367 5,400
Junior subordinated debentures 108,250 77,322
Total shareholders' equity 321,355 295,653
Quarterly average balance sheet:
Loans:
Commercial and industrial $ 1,811,832 $ 1,680,757
Home equity 170,523 144,681
Second mortgage 66,426 46,780
Residential real estate 29,472 29,359
Installment 82,450 77,562
----------- -----------
Total gross loans 2,160,703 1,979,139
Securities and other
interest-earning assets 731,744 825,608
Total interest-earning assets 2,892,447 2,804,747
Total assets 3,225,820 3,102,491
Non-interest-bearing demand
deposits 496,249 514,783
Total deposits 2,533,158 2,510,918
Total interest-bearing
liabilities 2,399,663 2,281,802
Total shareholders' equity 312,428 293,575
Capital and credit quality measures:
Total Capital (to Risk-Weighted
Assets)(1):
Sun Bancorp, Inc. 11.54% 11.11%
Sun National Bank 10.40% 10.50%
Tier I Capital (to Risk-Weighted
Assets)(1):
Sun Bancorp, Inc. 10.56% 10.14%
Sun National Bank 9.43% 9.53%
Leverage Ratio(1):
Sun Bancorp, Inc. 8.91% 8.20%
Sun National Bank 8.00% 7.70%
Average equity to average
assets 9.69% 9.46%
Allowance for loan losses to
total gross loans 1.10% 1.10%
Non-performing assets to total
gross loans and real estate
owned 0.59% 0.56%
Allowance for loan losses to
non-performing loans 214.49% 221.86%
Other data:
Net (charge-offs) recoveries $ 101 $ (367)
=========== ===========
Non-performing assets:
Non-accrual loans $ 11,049 $ 9,957
Loans past due 90 days and
accruing 349 168
Real estate owned, net 1,600 1,449
----------- -----------
Total non-performing assets $ 12,998 $ 11,574
=========== ===========
(1) December 31, 2006 Capital ratios are estimated, subject to
regulatory filings.
SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (unaudited)
(Dollars in thousands, except per share data)
2006 2006 2006
Q4 Q3 Q2
----------- ----------- ------------
Profitability for the quarter:
Tax-equivalent interest income $ 48,807 $ 47,069 $ 45,747
Interest expense 23,991 21,829 20,451
Tax-equivalent net interest
income 24,816 25,240 25,296
Tax-equivalent adjustment 271 241 183
Provision for loan losses 990 1,317 875
Non-interest income, excluding loss
on sale of investment securities
and loss on sale or disposal of
fixed assets 5,343 5,268 5,070
Loss on sale of investment
securities (1) - -
Loss on sale or disposal of fixed
assets (330) - -
Non-interest expense, excluding
amortization of intangible assets 20,696 20,397 22,448
Amortization of intangible assets 1,193 1,193 1,193
Income before income taxes 6,678 7,360 5,667
Income tax expense 2,224 2,503 1,877
Net income $ 4,454 $ 4,857 $ 3,790
=========== =========== ============
Financial ratios:
Return on average assets(1) 0.54% 0.60% 0.47%
Return on average equity(1) 5.24% 5.86% 4.66%
Return on average tangible
equity(1),(2) 9.78% 11.27% 9.17%
Net interest margin(1) 3.37% 3.51% 3.48%
Efficiency ratio 74.06% 71.33% 78.33%
Efficiency ratio, excluding
non-operating income and
non-operating expense 70.78% 71.00% 77.00%
Per share date(3):
Earnings per common share(4):
Basic $ 0.22 $ 0.24 $ 0.19
Diluted $ 0.21 $ 0.23 $ 0.18
Book value $ 16.69 $ 16.42 $ 16.06
Tangible book value $ 9.05 $ 8.69 $ 8.25
Average basic shares 20,480,475 20,431,220 20,361,974
Average diluted shares 21,525,940 21,382,752 21,308,941
Operating non-interest income:
Service charges on deposit
accounts $ 3,183 $ 3,188 $ 2,622
Other service charges 73 80 80
Gain on sale of loans 463 220 160
Gain on derivative intruments 200 154 458
Other 1,424 1,626 1,750
----------- ----------- ------------
Total operating non-interest
income 5,343 5,268 5,070
----------- ----------- ------------
Non-operating income:
Loss on sale of investment
securities (1) - -
Loss on sale or disposal of fixed
assets (330) - -
----------- ----------- ------------
Total non-operating income (331) - -
----------- ----------- ------------
Total non-interest income $ 5,012 $ 5,268 $ 5,070
=========== =========== ============
Operating non-interest expense:
Salaries and employee benefits $ 10,602 $ 10,550 $ 11,710
Occupancy expense 2,876 2,982 2,849
Equipment expense 1,960 1,945 2,084
Data processing expense 895 1,226 1,103
Advertising expense 407 303 550
Amortization of intangible assets 1,193 1,193 1,193
Real estate owned, net 12 86 167
Other expenses 3,209 3,205 3,585
----------- ----------- ------------
Total operating non-interest
expense 21,154 21,490 23,241
----------- ----------- ------------
Non-operating expense:
Lease buy-out charges and other
expenses related to branch
rationalization 495 - -
Severance expense 240 100 400
----------- ----------- ------------
Total non-operating expense 735 100 400
----------- ----------- ------------
Total non-interest expense $ 21,889 $ 21,590 $ 23,641
=========== =========== ============
2006 2005
Q1 Q4
----------- -----------
Profitability for the quarter:
Tax-equivalent interest income $ 43,159 $ 40,457
Interest expense 18,601 15,643
Tax-equivalent net interest
income 24,558 24,814
Tax-equivalent adjustment 137 122
Provision for loan losses 625 520
Non-interest income, excluding loss
on sale of investment securities
and loss on sale or disposal of
fixed assets 4,416 4,493
Loss on sale of investment
securities (20) (36)
Loss on sale or disposal of fixed
assets - (58)
Non-interest expense, excluding
amortization of intangible assets 21,085 20,610
Amortization of intangible assets 1,188 1,118
Income before income taxes 5,919 6,843
Income tax expense 1,746 2,259
Net income $ 4,173 $ 4,584
=========== ===========
Financial ratios:
Return on average assets(1) 0.52% 0.59%
Return on average equity(1) 5.34% 6.25%
Return on average tangible
equity(1),(2) 10.38% 11.60%
Net interest margin(1) 3.40% 3.54%
Efficiency ratio 77.29% 74.69%
Efficiency ratio, excluding
non-operating income and
non-operating expense 77.24% 74.45%
Per share date(3):
Earnings per common share(4):
Basic $ 0.21 $ 0.24
Diluted $ 0.20 $ 0.23
Book value $ 15.98 $ 15.50
Tangible book value $ 8.00 $ 8.43
Average basic shares 19,783,965 19,014,830
Average diluted shares 21,012,311 20,197,797
Operating non-interest income:
Service charges on deposit
accounts $ 2,124 $ 2,174
Other service charges 78 76
Gain on sale of loans 284 241
Gain on derivative instruments 366 406
Other 1,564 1,596
----------- -----------
Total operating non-interest
income 4,416 4,493
----------- -----------
Non-operating income:
Loss on sale of investment
securities (20) (36)
Loss on sale or disposal of fixed
assets - (58)
----------- -----------
Total non-operating income (20) (94)
----------- -----------
Total non-interest income $ 4,396 $ 4,399
=========== ===========
Operating non-interest expense:
Salaries and employee benefits $ 11,477 $ 10,823
Occupancy expense 2,944 2,895
Equipment expense 1,927 1,942
Data processing expense 1,059 1,063
Advertising expense 423 429
Amortization of intangible assets 1,188 1,118
Real estate owned, net (27) 28
Other expenses 3,282 3,430
----------- -----------
Total operating non-interest
expense 22,273 21,728
----------- -----------
Non-operating expense:
Lease buy-out charges and other
expenses related to branch
rationalization - -
Severance expense - -
----------- -----------
Total non-operating expense - -
----------- -----------
Total non-interest expense $ 22,273 $ 21,728
=========== ===========
(1) Annualized
(2) Return on average tangible equity is computed by dividing annualized
net income for the period by average tangible equity. Average
tangible equity equals average equity less average identifiable
intangible assets and goodwill.
(3) Data is adjusted for a 5% stock dividend declared in April 2006.
(4) Earnings per share is computed by dividing net income by weighted
average number of shares of common stock outstanding.
SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET (unaudited)
(Dollars in thousands)
At or For the At or For the
Three Months Ended Three Months Ended
December 31, 2006 December 31, 2005
------------------------ -------------------------
Interest Average Interest Average
Average Earned Yield Average Earned Yield
Balance /Paid /Cost Balance /Paid /Cost
---------- ------ ------ ---------- ------ -------
Interest-earning assets:
Loans receivable(1),(2):
Commercial and
industrial $1,937,580 $35,379 7.30% $1,680,757 $28,271 6.73%
Home equity 229,002 3,823 6.68 144,681 2,317 6.41
Second mortgage 77,593 1,238 6.38 46,780 731 6.25
Residential real
estate 35,323 687 7.78 29,359 617 8.41
Other 90,358 1,864 8.25 77,562 1,484 7.65
---------- ------- ---------- -------
Total loans
receivable 2,369,856 42,991 7.26 1,979,139 33,420 6.75
Investment
securities(3) 514,588 4,997 3.88 786,702 6,654 3.38
Interest-bearing
deposit with banks 26,924 325 4.83 6,780 63 3.72
Federal funds sold 37,471 494 5.27 32,126 320 3.98
---------- ------- ---------- -------
Total interest-
earning assets 2,948,839 48,807 6.62 2,804,747 40,457 5.77
---------- ------- ---------- -------
Cash and due from banks 79,150 71,344
Bank properties and
equipment 42,457 37,144
Goodwill and intangible
assets 157,707 135,535
Other assets 59,970 53,721
---------- ----------
Total non-interest-
earning assets 339,284 297,744
---------- ----------
Total assets $3,288,123 $3,102,491
========== ==========
Interest-bearing liabilities:
Interest-bearing
deposit accounts:
Interest-bearing
demand deposits $ 810,677 6,372 3.14% $ 918,700 5,181 2.26%
Savings deposits 394,878 2,419 2.45 399,095 1,318 1.32
Time deposits 962,819 11,011 4.57 678,340 5,530 3.26
---------- ------- ---------- -------
Total interest-
bearing deposit
accounts 2,168,374 19,802 3.65 1,996,135 12,029 2.41
---------- ------- ---------- -------
Borrowed money:
Federal funds
purchased 152 2 5.26 2,359 29 4.92
Securities sold
under agreements to
repurchase -
customers 55,757 642 4.61 77,680 654 3.37
FHLB advances 107,460 1,255 4.67 128,247 1,471 4.59
Junior subordinated
debentures 108,250 2,192 8.10 77,322 1,460 7.55
Obligation under
capital lease 5,327 98 7.36 59 - -
---------- ------- ---------- -------
Total borrowings 276,946 4,189 6.05 285,667 3,614 5.06
---------- ------- ---------- -------
Total interest-
bearing
liabilities 2,445,320 23,991 3.92 2,281,802 15,643 2.74
---------- ------- ---------- -------
Non-interest-bearing
demand deposits 480,339 514,783
Other liabilities 22,625 12,331
---------- ----------
Non-interest-
bearing
liabilities 502,964 527,114
---------- ----------
Total liabilities 2,948,284 2,808,916
Shareholders’ equity 339,839 293,575
---------- ----------
Total liabilities
and shareholders’
equity $3,288,123 $3,102,491
========== ==========
Net interest income $24,816 $24,814
======= =======
Interest rate spread(4) 2.70% 3.03%
====== ======
Net interest margin(5) 3.37% 3.54%
====== ======
Ratio of average
interest-earning assets
to average interest-
bearing liabilities 120.59% 122.92%
====== ======
(1) Average balances include non-accrual loans.
(2) Loan fees are included in interest income and the amount is not
material for this analysis.
(3) Interest earned on non-taxable investment securities is shown on a tax
equivalent basis assuming a 35% marginal federal tax rate for all
periods.
(4) Interest rate spread represents the difference between the average
yield on interest-earning assets and the average cost of interest-
bearing liabilities.
(5) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET (unaudited)
(Dollars in thousands)
At or For the Year Ended At or For the Year Ended
December 31, 2006 December 31, 2005
------------------------- --------------------------
Interest Average Interest Average
Average Earned Yield Average Earned Yield
Balance /Paid /Cost Balance /Paid /Cost
---------- ------- ------ ---------- -------- ------
Interest-earning assets:
Loans receivable(1),(2):
Commercial and
industrial $1,880,475 $133,312 7.09% $1,659,713 $106,915 6.44%
Home equity 202,072 13,326 6.59 134,375 7,617 5.67
Second mortgage 74,184 4,642 6.26 47,670 2,979 6.25
Residential real
estate 30,264 2,460 8.13 27,572 2,215 8.03
Other 86,505 7,136 8.25 72,938 5,430 7.44
---------- -------- ---------- --------
Total loans
receivable 2,273,500 160,876 7.08 1,942,268 125,156 6.44
Investment
securities(3) 595,474 22,032 3.70 824,755 27,412 3.32
Interest-bearing
deposit with banks 14,676 702 4.78 6,833 195 2.85
Federal funds sold 23,938 1,172 4.90 34,888 1,172 3.36
---------- -------- ---------- --------
Total interest-
earning assets 2,907,588 184,782 6.36 2,808,744 153,935 5.48
---------- -------- ---------- --------
Cash and due from
banks 80,241 79,713
Bank properties and
equipment 43,099 37,186
Goodwill and
intangible assets 157,082 136,552
Other assets 57,321 53,091
---------- ----------
Total non-interest-
earning assets 337,743 306,542
---------- ----------
Total assets $3,245,331 $3,115,286
========== ==========
Interest-bearing liabilities:
Interest-bearing
deposit accounts:
Interest-bearing
demand deposits $ 841,288 23,587 2.80% $ 874,577 16,099 1.84%
Savings deposits 365,932 6,687 1.83 423,747 4,986 1.18
Time deposits 889,192 36,618 4.12 684,892 20,342 2.97
---------- -------- ---------- --------
Total interest-
bearing deposit
accounts 2,096,412 66,892 3.19 1,983,216 41,427 2.09
---------- -------- ---------- --------
Borrowed money:
Federal funds
purchased 4,277 231 5.40 3,619 118 3.26
Securities sold
under agreements
to repurchase -
customers 45,726 1,985 4.34 76,894 2,008 2.61
FHLB advances 147,017 6,833 4.65 167,830 6,996 4.17
Junior
subordinated
debentures 106,894 8,409 7.87 77,534 5,165 6.66
Obligation under
capital lease 5,356 522 7.31 15 - -
---------- -------- ---------- --------
Total borrowings 309,270 17,980 5.81 325,892 14,287 4.38
---------- -------- ---------- --------
Total interest-
bearing
liabilities 2,405,682 84,872 3.53 2,309,108 55,714 2.41
---------- -------- ---------- --------
Non-interest-bearing
demand deposits 494,488 503,197
Other liabilities 17,851 14,134
---------- ----------
Non-interest-
bearing
liabilities 512,339 517,331
---------- ----------
Total
liabilities 2,918,021 2,826,439
Shareholders’ equity 327,310 288,847
---------- ----------
Total liabilities
and shareholders’
equity $3,245,331 $3,115,286
========== ==========
Net interest income $ 99,910 $ 98,221
======== ========
Interest rate
spread(4) 2.83% 3.07%
====== ======
Net interest margin(5) 3.44% 3.50%
====== ======
Ratio of average
interest-earning
assets to average
interest-bearing
liabilities 120.86% 121.64%
====== ======
(1) Average balances include non-accrual loans.
(2) Loan fees are included in interest income and the amount is not
material for this analysis.
(3) Interest earned on non-taxable investment securities is shown on a tax
equivalent basis assuming a 35% marginal federal tax rate for all
periods.
(4) Interest rate spread represents the difference between the average
yield on interest-earning assets and the average cost of interest-
bearing liabilities.
(5) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
Contact Information: Contact: Dan Chila EVP, Chief Financial Officer (856) 691-7700