SOURCE: Sun Bancorp, Inc.

January 22, 2007 17:30 ET

Sun Bancorp Net Income Reflects Branch Consolidations, Charges to Improve Operating Efficiency; Dansbury to Become COO, Replace CEO Bracken on an Interim Basis; Widely Regarded Industry Expert

Anat Bird Named Director

Our Mission Is Uncompromising... to Be the Premier Community Bank in Every Community We Serve

VINELAND, NJ -- (MARKET WIRE) -- January 22, 2007 -- Sun Bancorp, Inc. (NASDAQ: SNBC) today reported net income of $4.5 million, or $.21 per share, for the quarter ended December 31, 2006, compared to net income of $4.6 million, or $.23 per share, for the fourth quarter of 2005. Net income for the fourth quarter 2006 includes pre-tax charges of approximately $1.1 million ($.03 per share) related to two branch consolidations and severance expense.

Net income for the year ended December 31, 2006 was $17.3 million, or $.81 per share, compared to net income of $19.5 million, or $.96 per share, for the prior year. The full-year results included approximately $1.6 million (pre-tax) in branch rationalization and severance related charges. These charges, net of tax, amounted to $.05 per share.

The Board of Directors of Sun Bancorp has requested the resignation of President and Chief Executive Officer Thomas A. Bracken and is now working to mutually resolve the agreement under which he will separate from the company. In the interim, A. Bruce Dansbury, executive vice president and chief credit officer, has been appointed chief operating officer and will serve until a replacement for Bracken is named. The Company's Board of Directors will conduct a nationwide search for a new chief executive officer beginning immediately. In explaining the reasons why the Board of Directors asked Mr. Bracken to submit his resignation, Sidney R. Brown, vice chairman, treasurer and secretary of the Company, stated, "Tom Bracken will be leaving the Company after six years of leadership in a turnaround situation. We all agree that Sun Bancorp is a far better company and a much stronger competitor in New Jersey today than it was when Tom first became our CEO. The ultimate goal of the Company that is shared by our Board and stockholders is for Sun to become a high-performing community banking company. While much progress has been made toward this goal under Tom's leadership, we would like to have been further along in reaching this goal than we are currently. Clearly, we are moving in the right direction, but we want to accelerate this process and we believe at this time that a leadership change may help accomplish this goal. We plan immediately to begin a nationwide search for a new CEO who can take our Company to this next level. Until such time, Bruce Dansbury will be our interim chief operating officer and will head up the Company on a day-to-day basis as we begin the process of identifying and selecting a new CEO."

"Excluding the $1.1 million severance and branch consolidation charges in the fourth quarter of 2006, our net income increased 12.3% over the fourth quarter of 2005. This reflects good underlying momentum that we have been working to build for three quarters now," said Dansbury. "We have implemented permanent savings and process improvements throughout 2006, a time in which the entire banking industry faced many difficult operating challenges."

"As we execute on our goal to transform Sun National Bank into a high performing dominant bank within our footprint, we do so with a strong commercial banking team that has produced loan growth of 16.4% during 2006, or 10.3% adjusted for loans acquired in the January 2006 Advantage acquisition. Under the leadership of Jeff Hawkins, an evolving new retail banking team is working within an integrated sales-driven system that we expect will eventually achieve a level of success that rivals our commercial banking business," said Dansbury.

Citing key factors driving results during the fourth quarter, Dansbury said that the Company continues to experience good sequential loan growth, and positive deposit growth for the quarter, although at higher costs, which was anticipated in support of the retail initiative. Operating non-interest income and operating non-interest expense are both trending favorably over the linked third quarter. Overall credit quality trends remain stable. The Company has been and remains very prudent in its credit underwriting standards in this highly competitive banking environment, according to Dansbury.

The Board of Sun Bancorp has appointed Anat M. Bird to fill the board seat vacated as a result of the previously announced resignation of Howard Schoor in mid-December. Ms. Bird is a renowned banking expert and CEO of SCB Forums. She facilitates over 45 meetings of bank executives across all bank disciplines and also serves on several other bank boards. Ms. Bird was engaged by Sun Bancorp in June to develop a program to build a cohesive, bank-specific sales culture and process, which is aimed at producing a sustainable competitive advantage for Sun's retail network. Her effort was completed during the third quarter.

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

--  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