SYS-CON MEDIA Authors: Gilad Parann-Nissany, Kevin Benedict, Unitiv Blog, Mark R. Hinkle, Glenn Rossman

News Feed Item

Sun Bancorp, Inc. Reports Fourth Quarter 2013 Results

VINELAND, N.J., Jan. 22, 2014 /PRNewswire/ --

Fourth Quarter Highlights

  • Significant reduction in problem loans:
    • Classified Loans declined 41% from the prior quarter to $102.4 million
    • Non-Performing Loans declined 31% to $38.0 million during the quarter and declined 60% or $57.6 million for the year
  • The ratio of non-performing loans/Loans held-for-investment decreased to 1.78%; down from 2.55% in the prior quarter and 3.64% in the fourth quarter of 2012
  • Sale of $34.8 million of classified commercial loans to third-party investors resulting in a net loss of $6.9 million inclusive of swap termination costs and broker fees
  • Tier 1 Leverage Ratio ends year at 9.0% with the total risk based ratio at 14.4%

Sun Bancorp, Inc. (NASDAQ: SNBC) (the "Company") reported today a net loss available to common shareholders of $8.4 million, or a loss of $0.10 per diluted share, for the quarter ended December 31, 2013, compared to a loss of $4.9 million, or a loss of $0.06 per diluted share, and a loss of $25.0 million, or a loss of $0.29 per diluted share, for the third quarter of 2013 and the fourth quarter of 2012, respectively.

The following are key items and events that occurred during the fourth quarter of 2013:

  • Significant asset quality improvement achieved resulting from the sale of $34.8 million of classified loans, $20.6 million of payoffs in the classified loan category and upgrades of $20.0 million from classified to pass rated.
  • Quarterly provision expense of $2.6 million as compared to $724 thousand in the third quarter of 2013. The allowance for loan losses equaled $35.5 million at December 31, 2013, a decrease of $13.3 million from September 30, 2013. The allowance for loan losses equaled 1.66% of gross loans held-for-investment and 93.5% of non-performing loans at December 31, 2013 as compared to 2.25% and 88.2%, respectively, at September 30, 2013 and 2.02% and 55.3%, respectively, at December 31, 2012.
  • Professional fees totaled $4.9 million in the fourth quarter and $18.2 million for 2013
  • Net interest margin was 2.99% and average interest-bearing cash was $342 million

"While we are disappointed with our profitability, we are pleased with what we believe has been significant progress in reducing our problem loans and improving our foundation for future growth," said Sidney Brown. "We enter 2014 with a renewed focus on improving profitability through prudent growth in revenue, significant reduction in professional fees and an improvement in operational efficiency," added Thomas Brugger.

Discussion of Results:

Balance Sheet

  • Total assets were $3.09 billion at December 31, 2013, as compared to $3.24 billion at September 30, 2013 and $3.22 billion at December 31, 2012. 
  • Cash and cash equivalents were $293.8 million at December 31, 2013, as compared to $453.6 million at September 30, 2013 and $169.6 million at December 31, 2012. The decrease of $159.8 million in the fourth quarter of 2013 as compared to the prior quarter was primarily due to declines in deposits of $131.1 million and a net increase of $32.8 million in investment securities. The decline in deposits was driven by planned deposit run off in government deposits and a seasonal decline in commercial deposits. Total deposits at December 31, 2013 were $2.62 billion.
  • Investment securities available for sale were $440.1 million as of December 31, 2013 compared to $407.2 million at September 30, 2013 and $443.2 million at December 31, 2012. The increase of $32.9 million in the fourth quarter of 2013 from the prior quarter was due to the purchase of $54.5 million of asset backed and mortgage backed securities, offset by paydowns.
  • Gross loans held-for-investment were $2.14 billion at December 31, 2013, as compared to $2.17 billion at September 30, 2013 and $2.28 billion at December 31, 2012. Since December 31, 2012, gross loans held-for-investment decreased $138.9 million, primarily due to paydowns and sales of commercial loans and the sale of jumbo residential mortgages.

Net Interest Income and Margin

  • Net interest income decreased $1.0 million from the linked quarter to $21.9 million for the three months ended December 31, 2013. The net interest margin decreased 11 basis points to 2.99% for the three months ended December 31, 2013 from 3.10% for the linked quarter, and decreased 31 basis points as compared to the fourth quarter of 2012. The average yield on interest-earning assets decreased 14 basis points to 3.47% at December 31, 2013 from 3.61% at September 30, 2013. This decrease was due to a decrease in commercial loan yields of 31 basis points as compared to the linked quarter resulting from a prior quarter interest recovery of $1.2 million. Excluding this item, the margin in the third quarter of 2013 would have been 2.90%. The margin variance between the quarter ended December 31, 2013 and the comparable prior year period is primarily due to a decrease of $167.1 million in average commercial loans and an increase of $303.8 million in average interest-earning bank balances.

Non-Interest Income

  • Non-interest income was $4.7 million for the quarter ended December 31, 2013, as compared to $5.8 million for the quarter ended September 30, 2013 and $6.7 million for the comparable prior year quarter. The decrease from the linked quarter was primarily attributable to a decrease in net mortgage banking revenue of $593 thousand and an increase of $330 thousand in negative derivative credit valuation adjustments from the prior quarter. The decline in mortgage banking revenue continues to be due to lower production volume in a higher interest rate environment. The negative credit valuation adjustment of $710 thousand in the fourth quarter of 2013 was primarily due to swap termination fees of $869 thousand recorded on three commercial relationships that were sold during the quarter.

Non-Interest Expense

  • Non-interest expense was $32.5 million in the fourth quarter of 2013, a decrease of $460 thousand compared to the linked quarter and an increase of $960 thousand over the comparable prior year quarter. In comparison to the linked quarter, decreases in professional fees and commission expense of $1.1 million and $903 thousand, respectively, were partially offset by increases of $414 thousand in salaries and employee benefits, other expense of $405 thousand, real estate owned expense of $277 thousand and advertising expense of $227 thousand. Professional fees declined as a result of a decreasing need for regulatory compliance consulting services.  Commission expense has decreased due to reduced mortgage production volumes.  Salaries and benefits expense has increased from the prior quarter due to $585 thousand of severance costs recorded in the fourth quarter. Other expense for the current quarter includes $551 thousand of broker fees associated with commercial loan sales. Professional fees increased by $3.5 million from the same prior year quarter due to regulatory compliance and mortgage risk related consulting services and platform enhancements performed in 2013. This increase was partially offset by decreases in commission expense, real estate owned expense, net and amortization of intangible assets of $1.4 million, $479 thousand and $466 thousand, respectively, compared to the fourth quarter in 2012.

Asset Quality

  • During the fourth quarter of 2013, provision expense of $2.6 million was recorded, as compared to $724 thousand in the linked quarter and $24.2 million in the comparable prior year quarter. The allowance for loan losses was $35.5 million at December 31, 2013, or 1.66% of gross loans held-for-investment, as compared to 2.25% at September 30, 2013 and 2.02% at December 31, 2012. Net charge-offs were $16.0 million in the fourth quarter of 2013, as compared to net recoveries in the linked quarter of $123 thousand and net charge-offs in the prior year quarter of $26.7 million. Net charge-offs in the fourth quarter of 2013 included $10.2 million related to the sale of $34.8 million of classified commercial real estate loans and $5.0 million  related to the charge-off of specific reserves on two legacy non-performing loans.
  • Total non-performing assets were $40.5 million, or 1.87% of total gross loans held-for-investment, loans held-for-sale and real estate owned at December 31, 2013, as compared to $60.5 million, or 2.76%, and $103.1 million, or 4.29%, respectively, at September 30, 2013 and December 31, 2012. Non-performing loans decreased $17.4 million over the linked quarter to $38.0 million at December 31, 2013 from $55.4 million at September 30, 2013 and decreased $57.6 million from $95.6 million at December 31, 2012. The decrease from the linked quarter was due to the aforementioned loan sales which included $23.2 million of non-performing commercial real estate loans and charge-offs recorded of $5.0 million on two legacy non-performing commercial loans. Offsetting these declines were downgrades of $13.9 million to non-performing status. For the year, successful workout resolution has resulted in the payoff of ten non-performing commercial loans totaling $40.5 million.

Capital

  • Shareholders' equity totaled $245.1 million at December 31, 2013 compared to $257.1 million at September 30, 2013 and $262.6 million at December 31, 2012. The Company's tangible equity to tangible assets ratio was 6.76% at December 31, 2013, as compared to 6.81% at September 30, 2013 and 6.95% at December 31, 2012.  At December 31, 2013, the Company's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 14.40%, 12.34%, and 8.98%, respectively.  At December 31, 2013, Sun National Bank's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 13.64%, 12.39%, and 9.01%, respectively. 

The Company will hold its regularly scheduled conference call on Thursday January 23, 2014, at 11:00 a.m. (ET).  Participants may listen to the live webcast through the Company's website at www.sunnationalbank.com. Participants are advised to log on 10 minutes ahead of the scheduled start of the call.  An Internet-based replay will be available at the Company's website for two weeks following the call.

Sun Bancorp, Inc. (NASDAQ: SNBC) is a $3.09 billion asset bank holding company headquartered in Vineland, New Jersey, with its executive offices located in Mt. Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a full service commercial bank serving customers through 50-plus locations in New Jersey. Sun National Bank has been named one of Forbes Magazine's "Most Trustworthy Companies" for five years running.  Sun National Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the Federal Deposit Insurance Corporation (FDIC). For more information about Sun National Bank and Sun Bancorp, Inc., visit www.sunnationalbank.com.  

Cautionary Note Regarding Forward-Looking Statements

The foregoing material contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, concerning the financial condition, results of operations and business of the Company.  Forward-looking statements are statements that include projections, predictions, expectations or beliefs about events or results or otherwise are not statements of historical facts, including statements about reducing problem loans, improving our foundation for future growth, significantly reducing professional fees, improving our profitability through revenue growth and improving operational efficiency..  Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that we will further reduce problem loans, achieve desired future growth, reduce professional fees, improve our profitability, increase revenues or improve our operational efficiency. We caution that such statements are subject to a number of uncertainties, including those detailed under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Form 10-K for the fiscal year ended December 31, 2012, its Form 10-Qs for the quarters ended March 31, 2013, June 30, 2013, and September 30, 2013 and in other filings made pursuant to the Securities Exchange Act of 1934, as amended.  Therefore, readers should not place undue reliance on any forward-looking statements.  The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.  

 


Non-GAAP Financial Measures (Unaudited)


This news release references tax-equivalent interest income. Tax-equivalent interest income is a non-GAAP financial measure. Tax-equivalent interest income assumes a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the three months ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012 were $167 thousand, $167 thousand, $175 thousand, $212 thousand, and $212 thousand, respectively. The fully taxable equivalent adjustments for the year ended December 31, 2013 and December 31, 2012 were $720 thousand and $870 thousand, respectively. This release also references tangible book value per common share. Tangible book value per common share is a non-GAAP financial measure. Tangible book value per common share is a ratio of tangible equity, shareholder's equity less intangible assets, to outstanding common shares. Intangible assets at December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012 were $39.0 million, $39.4 million, $40.0 million, $40.5 million, and $41.5 million, respectively.


Tax-equivalent interest income


The following reconciles net interest income to net interest income on a fully taxable equivalent basis using a 35% tax rate for the three months ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012 and the year ended December 31, 2013 and December 31, 2012.


 

For Three Months Ended:

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012











Net interest income

$

21,935


$

22,980


$

21,776


$

23,078


$

23,981

Effect of tax exempt income 


167



167



175



212



212

Net interest income, tax equivalent basis

$

22,102


$

23,147


$

21,951


$

23,290


$

24,193




For the Year Ended:


December 31,



2013


2012




Net interest income


$

89,769



97,848

Effect of tax exempt income



720



870

Net interest income, tax equivalent basis


$

90,489



98,718


Tangible book value per common share


The following reconciles shareholders' equity to tangible equity by reducing shareholders' equity by the intangible asset balance at December, 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012.



December 31, 2013


September 30, 2013


June 30, 2013


March 31, 2013


December 31, 2012

Tangible book value per common share:










      Shareholders' equity

$

245,134


$

257,139


$

261,664


$

264,339


$

262,596

      Less: Intangible assets


38,993



39,448



39,988



40,529



41,450

Tangible equity

$

206,141


$

217,692


$

221,676


$

223,811


$

221,147
















      Common stock


88,711



88,618



88,572



88,403



88,301

      Less: Treasury stock


1,997



2,068



2,107



2,107



2,107

Total outstanding shares


86,714



86,550



86,465



86,296



86,194
















Tangible book value per common share:

$

2.38


$

2.52


$

2.56


$

2.59


$

2.57

 

 

 


 

SUN BANCORP, INC. AND SUBSIDIARIES



FINANCIAL HIGHLIGHTS (Unaudited)



(Dollars in thousands, except share and per share amounts)




For the Three Months Ended


For the Year Ended




December 31,


December,





2013


2012


2013


2012



Profitability for the period:











    Net interest income


$

21,935


$

23,981


$

89,769


$

97,848



    Provision for loan losses



2,635



24,154



1,647



57,215



    Non-interest income



4,742



6,816



31,681



29,450



    Non-interest expense



32,457



31,597



129,949



120,608



    Loss before income taxes



(8,415)



(24,954)



(10,146)



(50,525)



    Income tax benefit



-



-



-



(34)



    Net loss available to common shareholders


$

(8,415)


$

(24,954)


$

(10,146)


$

(50,491)


















Financial ratios:















    Return on average assets(1) 



(1.05)

%


(3.13)

%


(0.31)

%


(1.60)

%


    Return on average equity(1)



(13.11)

%


(34.70)

%


(3.89)

%


(17.19)

%


    Return on average tangible equity(1),(2)



(15.47)

%


(40.61)

%


(4.59)

%


(20.17)

%


    Net interest margin(1)



2.99

%


3.30

%


3.05

%


3.43

%


    Efficiency ratio



121.67

%


102.60

%


107.00

%


94.21

%


    Loss per common share:















        Basic


$

(0.10)


$

(0.29)


$

(0.12)


$

(0.59)



        Diluted 


$

(0.10)


$

(0.29)


$

(0.12)


$

(0.59)


















    Average equity to average assets



8.01

%


9.01

%


8.09

%


9.31

%




December 31,








2013

2012






At period-end:








    Total assets


$

3,087,350


$

3,224,031







    Total deposits



2,621,571



2,713,224







    Loans receivable, net of allowance for loan losses



2,101,754



2,230,287







    Loans held-for-sale



21,075



120,935







    Investments



457,797



461,980







    Borrowings



68,765



70,992







    Junior subordinated debentures



92,786



92,786







    Shareholders' equity



245,134



262,595




















Credit quality and capital ratios:













    Allowance for loan losses to gross loans held-for-

     investment



1.66

%


2.02

%






    Non-performing loans held-for-investment to gross loans

     held-for-investment



1.78

%


3.64

%






    Non-performing assets to gross loans

     held-for-investment, loans held-for-sale and real estate

     owned



1.87

%


4.29

%






    Allowance for loan losses to non-performing loans

     held-for-investment



93.52

%


55.33

%



















Total capital (to risk-weighted assets) (3):













        Sun Bancorp, Inc.



14.40

%


13.72

%






        Sun National Bank



13.64

%


13.02

%






Tier 1 capital (to risk-weighted assets) (3):













        Sun Bancorp, Inc.



12.34

%


11.82

%






        Sun National Bank



12.39

%


11.76

%






Leverage ratio:













        Sun Bancorp, Inc.



8.98

%


9.30

%






        Sun National Bank



9.01

%


9.24

%



















    Book value per common share


$

2.83


$

3.05







    Tangible book value per common share


$

2.38


$

2.57







(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) December 31, 2013 capital ratios are estimated, subject to regulatory filings.






























 

SUN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(Dollars in thousands, except par value amounts)


December 31,

2013


December 31,

2012


ASSETS





Cash and due from banks

$

64,075


$

77,564


Interest-earning bank balances


229,687



92,052


Cash and cash equivalents


293,762



169,616


Investment securities available for sale (amortized cost of $452,023 and

  $439,488 at December 31, 2013 and December 31, 2012, respectively)


440,097



443,182


Investment securities held to maturity (estimated fair value of $692 and $960 at

  December 31, 2013 and December 31, 2012, respectively)


681



912


Loans receivable (net of allowance for loan losses of $35,537 and $45,873 at

  December 31, 2013 and December 31, 2012, respectively)


2,101,754



2,230,287


Loans held-for-sale, at lower of cost or market


-



21,922


Loans held-for-sale, at fair value


21,075



99,013


Restricted equity investments, at cost


17,019



17,886


Bank properties and equipment, net


49,095



50,805


Real estate owned


2,503



7,473


Accrued interest receivable


6,612



8,054


Goodwill


38,188



38,188


Intangible assets


805



3,262


Deferred taxes, net


4,872



-


Bank owned life insurance (BOLI)


77,236



76,858


Other assets


33,651



56,573


Total assets

$

3,087,350


$

3,224,031









LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities:







Deposits

$

2,621,571


$

2,713,224


Securities sold under agreements to repurchase – customers


478



1,968


Advances from the Federal Home Loan Bank of New York (FHLBNY)


60,956



61,415


Obligations under capital lease


7,331



7,609


Junior subordinated debentures


92,786



92,786


Deferred taxes, net


-



1,509


Other liabilities


59,094



82,925


Total liabilities


2,842,216



2,961,436









Shareholders' equity:







Preferred stock, $1 par value, 1,000,000 shares authorized; none issued


-



-


Common stock, $1 par value, 200,000,000 shares authorized; 88,711,035 shares

  issued and 86,714,414 shares outstanding at December 31, 2013; 88,300,637

  shares issued and 86,193,914 shares outstanding at December 31, 2012


88,711



88,301


Additional paid-in capital


506,719



506,537


Retained deficit


(318,157)



(308,011)


Accumulated other comprehensive (loss) income


(7,055)



2,186


Deferred compensation plan trust


(522)



(256)


Treasury stock at cost, 1,996,621 shares at December 31, 2013; and 2,106,723

  shares at December 31, 2012


(24,562)



(26,162)


Total shareholders' equity


245,134



262,595


Total liabilities and shareholders' equity

$

3,087,350


$

3,224,031


 

 

SUN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands, except per share amounts)











For the Three Months

Ended December 31,




For the Year Ended December 31,




2013



2012




2013



2012


INTEREST INCOME














Interest and fees on loans

$

22,752


$

25,670



$

96,172


$

103,707


Interest on taxable investment securities


2,219



1,860




6,668



9,138


Interest on non-taxable investment securities


310



390




1,338



1,618


Dividends on restricted equity investments


219



235




904



970


Total interest income


25,500



28,155




105,082



115,433


INTEREST EXPENSE














Interest on deposits


2,576



3,143




11,349



13,553


Interest on funds borrowed


444



460




1,776



1,438


Interest on junior subordinated debentures


545



571




2,188



2,594


Total interest expense


3,565



4,174




15,313



17,585


Net interest income


21,935



23,981




89,769



97,848


PROVISION FOR LOAN LOSSES


2,635



24,154




1,647



57,215


Net interest income (loss) after provision for loan losses


19,300



(173)




88,122



40,633


NON-INTEREST INCOME














Service charges on deposit accounts


2,263



2,486




9,056



10,954


Mortgage banking revenue, net


1,000



3,812




11,598



10,551


(Loss) gain on sale of investment securities


-



(196)




3,489



234


Investment products income


599



606




2,684



2,296


BOLI income


466



488




1,882



1,986


Derivative credit valuation adjustment


(710)



(1,750)




(1,588)



(2,275)


Other


1,124



1,270




4,560



4,929


Total non-interest income


4,742



6,716




31,681



28,675


NON-INTEREST EXPENSE














Salaries and employee benefits


13,070



13,331




53,037



54,241


Commission expense


1,098



2,514




7,696



8,259


Occupancy expense


3,406



3,416




13,519



13,011


Equipment expense


1,871



2,005




7,356



7,399


Amortization of intangible assets


455



921




2,457



3,685


Data processing expense


1,223



1,138




4,244



4,384


Professional fees


4,891



1,389




18,246



3,459


Insurance expenses


1,498



1,506




5,966



5,824


Advertising expense


903



1,040




2,830



2,809


Problem loan expense


769



776




3,407



5,681


Real estate owned expense, net


529



1,008




2,270



2,358


Office supplies expense


245



298




857



1,247


Other


2,499



2,155




8,064



7,476


Total non-interest expense


32,457



31,497




129,949



119,833


LOSS BEFORE INCOME TAXES


(8,415)



(24,954)




(10,146)



(50,525)


INCOME TAX BENEFIT


-



-




-



(34)


NET LOSS AVAILABLE TO COMMON SHAREHOLDERS

$

(8,415)


$

(24,954)



$

(10,146)


$

(50,491)
















Basic loss per share

$

(0.10)


$

(0.29)



$

(0.12)


$

(0.59)


Diluted loss per share

$

(0.10)


$

(0.29)



$

(0.12)


$

(0.59)


Weighted average shares – basic

86,583,363


86,082,669



86,415,812


85,938,714


Weighted average shares - diluted

86,583,363


86,082,669



86,415,812


85,938,714



















 

 

SUN BANCORP, INC. AND SUBSIDIARIES


HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)


(Dollars in thousands)



2013


2013


2013


2013


2012



Q4


Q3


Q2


Q1


Q4


Balance sheet at quarter end: 











Cash and cash equivalents

$

293,762


$

453,583


$

442,239


$

311,660


$

169,616


Investment securities


457,797



425,029



361,149



335,844



461,980


Loans held-for-investment: 
















        Commercial and industrial


1,587,566



1,636,856



1,676,133



1,737,079



1,725,567


        Home equity 


188,478



192,135



195,938



200,084



207,720


        Second mortgage 


25,279



26,028



27,276



29,235



30,842


        Residential real estate 


305,179



281,537



225,147



248,875



273,413


        Other 


30,789



32,984



34,298



36,287



38,618


            Total gross loans held-for-investment


2,137,291



2,169,540



2,158,792



2,251,560



2,276,160


Allowance for loan losses 


(35,537)



(48,854)



(48,007)



(47,124)



(45,873)


            Net loans held-for-investment


2,101,754



2,120,686



2,110,785



2,204,436



2,230,287


   Loans held-for-sale


21,075



18,707



69,417



41,469



120,935


    Goodwill 


38,188



38,188



38,188



38,188



38,188


    Intangible assets


805



1,260



1,800



2,341



3,262


    Total assets 


3,087,350



3,236,321



3,205,921



3,227,146



3,224,031


    Total deposits


2,621,571



2,752,693



2,722,038



2,723,337



2,713,224


    Securities sold under agreements to

      repurchase - customers


478



554



562



2,726



1,968


    Advances from FHLBNY


60,956



60,997



61,037



61,077



61,415


    Obligations under capital lease


7,331



7,402



7,472



7,541



7,609


    Junior subordinated debentures


92,786



92,786



92,786



92,786



92,786


    Total shareholders' equity


245,134



257,140



261,664



264,341



262,596


Quarterly average balance sheet: 
















    Loans(1)
















        Commercial and industrial 

$

1,621,222


$

1,671,302


$

1,719,278


$

1,744,553


$

1,788,347


        Home equity


190,394



194,622



197,237



204,311



210,085


        Second mortgage 


26,142



27,041



28,679



30,347



32,442


        Residential real estate


312,977



299,667



307,248



330,916



319,427


        Other


26,134



27,723



28,929



30,410



32,444


            Total gross loans 


2,176,869



2,220,355



2,281,371



2,340,537



2,382,745


    Securities and other interest-earning assets 


782,200



763,575



680,659



607,284



545,781


    Total interest-earning assets 


2,959,069



2,983,930



2,962,030



2,947,821



2,928,526


    Total assets 


3,205,900



3,264,884



3,222,106



3,206,536



3,193,607


    Non-interest-bearing demand deposits 


585,530



549,684



531,210



506,600



511,813


    Total deposits 


2,718,905



2,746,820



2,722,651



2,703,039



2,660,405


    Total interest-bearing liabilities 


2,295,072



2,358,923



2,355,086



2,360,883



2,318,794


    Total shareholders' equity 


256,783



260,701



263,108



263,070



287,698


Capital and credit quality measures:
















Total capital (to risk-weighted assets) (2):
















        Sun Bancorp, Inc.


14.40

%


14.72

%


14.80

%


14.21

%


13.72

%

        Sun National Bank


13.64

%


13.96

%


14.05

%


13.50

%


13.02

%

    Tier 1 capital (to risk-weighted assets) (2):
















        Sun Bancorp, Inc.


12.34

%


12.76

%


12.91

%


12.32

%


11.82

%

        Sun National Bank


12.39

%


12.70

%


12.79

%


12.25

%


11.76

%

    Leverage ratio:
















        Sun Bancorp, Inc.


8.98

%


9.13

%


9.43

%


9.40

%


9.30

%

        Sun National Bank


9.01

%


9.09

%


9.33

%


9.33

%


9.24

%

















    Average equity to average assets


8.01

%


7.99

%


8.17

%


8.20

%


9.01

%

    Allowance for loan losses to total gross loans

      held-for-investment 


1.66

%


2.25

%


2.22

%


2.09

%


2.02

%

    Non-performing loans held-for-investment to

      gross loans held-for-investment


1.78

%


2.55

%


3.32

%


3.28

%


3.64

%

    Non-performing assets to gross loans

      held-for-investment, loans held-for-sale and

      real estate owned


1.87

%


2.76

%


3.51

%


3.57

%


4.29

%

    Allowance for loan losses to non-performing

      loans held-for-investment


93.52

%


88.19

%


66.93

%


63.87

%


55.33

%

















Other data:
















Net (charge-offs) recoveries


(15,952)



123



2,766



1,080



(26,690)


Non-performing assets:
















           Non-accrual loans

$

29,811


$

44,979


$

54,031


$

57,143


$

64,660


           Non-accrual loans held-for-sale


-



-



-



-



10,224


           Troubled debt restructurings, non-accrual


8,166



10,416



17,693



16,640



18,244


           Troubled debt restructurings, held-for-sale


-



-



-



-



2,499


           Loans past due 90 days and accruing


-



-



-



-



-


           Real estate owned, net 


2,503



5,059



6,743



8,472



7,473


                Total non-performing assets

$

40,480



60,454



78,467


$

82,255


$

103,100


(1)      Average balances include non-accrual loans and loans held-for-sale.

(2)      December 31, 2013 capital ratios are estimated, subject to regulatory filings.


 


 

SUN BANCORP, INC. AND SUBSIDIARIES


HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)


(Dollars in thousands, except share and per share amounts)



2013


2013


2013


2013


2012



Q4


Q3


Q2


Q1


Q4


Profitability for the quarter:











Tax-equivalent interest income

$

25,667


$

26,955


$

25,888


$

27,295


$

28,367


Interest expense


3,565



3,808



3,937



4,005



4,174


Tax-equivalent net interest income


22,102



23,147



21,951



23,290



24,193


Tax-equivalent adjustment


167



167



175



212



212


Provision for loan losses


2,635



724



(1,883)



171



24,154


Non-interest income


4,742



5,799



10,211



10,882



6,716


Non-interest expense excluding

  amortization of intangible assets


32,002



32,377



32,651



30,415



30,576


Amortization of intangible assets


455



540



541



921



921


(Loss) income before income taxes


(8,415)



(4,862)



678



2,453



(24,954)


Net (loss) income


(8,415)



(4,862)



678



2,453



(24,954)


Net (loss) income available to common

  shareholders

$

(8,415)


$

(4,862)


$

678


$

2,453


$

(24,954)


Financial ratios:
















Return on average assets (1)


(1.05)

%


(0.60)

%


0.08

%


0.31

%


(3.13)

%

Return on average equity (1)


(13.11)

%


(7.46)

%


1.03

%


3.73

%


(34.70)

%

Return on average tangible equity (1),(2)


(15.47)

%


(8.80)

%


1.22

%


4.42

%


(40.61)

%

Net interest margin (1)


2.99

%


3.10

%


2.96

%


3.16

%


3.30

%

Efficiency ratio


121.67

%


114.38

%


103.77

%


92.27

%


102.60

%

Per share data:
















(Loss) income per common share:
















Basic

$

(0.10)


$

(0.06)


$

0.01


$

0.03


$

(0.29)


Diluted

$

(0.10)


$

(0.06)


$

0.01


$

0.03


$

(0.29)


Book value

$

2.83


$

2.97


$

3.03


$

3.06


$

3.05


Tangible book value

$

2.38


$

2.52


$

2.56


$

2.59


$

2.57


Average basic shares

86,583,363


86,499,587


86,323,099


86,245,121


86,082,669


Average diluted shares

86,583,363


86,499,587


86,356,796


86,370,435


86,082,669


Non-interest income:
















Service charges on deposit accounts

$

2,263


$

2,314


$

2,250


$

2,229


$

2,486


Mortgage banking revenue, net


1,000



1,593



5,601



3,404



3,812


Net gain (loss) on sale of investment

  securities


-



2



(47)



3,487



(196)


Investment products income


599



678



728



679



606


BOLI income


466



482



486



448



488


Derivative credit valuation adjustment


(710)



(380)



6



(504)



(1,750)


Other income


1,124



1,110



1,187



1,139



1,270


        Total non-interest income

$

4,742


$

5,799


$

10,211


$

10,882


$

6,716


Non-interest expense:
















Salaries and employee benefits

$

13,070


$

12,656


$

13,019


$

14,292


$

13,331


    Commission expense


1,098



2,001



2,556



2,041



2,514


    Occupancy expense


3,406



3,456



3,081



3,576



3,416


    Equipment expense


1,871



1,796



1,830



1,859



2,005


    Amortization of intangible assets


455



540



541



921



921


    Data processing expense


1,223



995



1,027



999



1,138


    Professional fees


4,891



5,947



4,761



2,647



1,389


    Insurance expense


1,498



1,496



1,542



1,430



1,506


    Advertising expense


903



676



698



553



1,040


    Problem loan costs


769



816



1,023



799



776


    Real estate owned expense, net


529



252



1,255



234



1,008


    Office supplies expense


245



192



191



229



298


    Other expense


2,499



2,094



1,668



1,756



2,155


       Total non-interest expense

$

32,457


$

32,917


$

33,192


$

31,336


$

31,497


(1) Amounts are annualized.

(2) Return on average tangible equity is computed by dividing annualized net income for the period by average tangible equity. Average tangible equity

equals average equity less average identifiable intangible assets and goodwill.

 

 

SUN BANCORP, INC. AND SUBSIDIARIES



AVERAGE BALANCE SHEETS (Unaudited)


(Dollars in thousands)








 For the Three Months Ended December 31,




2013



2012




Average


Income/


Yield/



Average


Income/


Yield/




Balance


Expense


Cost



Balance


Expense


Cost



Interest-earning assets:















Loans receivable (1),(2):















Commercial and industrial

$

1,621,222


$

17,406



4.29

%


$

1,788,347


$

19,628



4.39

%


Home equity


190,394



1,853



3.89




210,085



2,055



3.91



Second mortgage


26,142



367



5.62




32,442



470



5.79



Residential real estate


312,977



2,671



3.41




319,427



2,959



3.71



Other


26,134



456



6.98




32,444



559



6.89



Total loans receivable


2,176,869



22,753



4.18




2,382,745



25,671



4.31



Investment securities(3)


439,788



2,693



2.45




507,158



2,672



2.11



Interest-earning bank balances


342,412



221



0.26




38,623



24



0.25



Total interest-earning assets


2,959,069



25,667



3.47




2,928,526



28,367



3.87



Non-interest earning assets:





















  Cash and due from banks


66,662










72,129









  Bank properties and equipment, net


49,300










51,515









  Goodwill and intangible assets, net


39,190










41,902









  Other assets


91,679










99,535









Total non-interest-earning assets


246,831










265,081









Total assets

$

3,205,900









$

3,193,607






























Interest-bearing liabilities:





















Interest-bearing deposit accounts:





















Interest-bearing demand deposits

$

1,223,184


$

960



0.31

%


$

1,224,254


$

1,178



0.38

%


Savings deposits


268,196



195



0.29




263,949



228



0.35



Time deposits


641,995



1,421



0.89




660,389



1,737



1.05



Total interest-bearing deposit

  accounts


2,133,375



2,575



0.48




2,148,592



3,143



0.59



Short-term borrowings:





















Fed Funds Purchased


54



-



-




-



-



-



Securities sold under agreements to

  repurchase - customers


512



-



-




3,250



1



0.12



Long-term borrowings:





















FHLBNY advances (4)


60,981



320



2.10




66,527



331



1.99



Obligations under capital lease


7,364



124



6.74




7,639



127



6.65



Junior subordinated debentures


92,786



545



2.35




92,786



571



2.46



Total borrowings


161,697



989



2.45




170,202



1,030



2.42



Total interest-bearing liabilities


2,295,072



3,565



0.62




2,318,794



4,173



0.72



Non-interest bearing liabilities:





















  Non-interest-bearing demand deposits


585,530










511,813








  Other liabilities


68,515










75,302









Total non-interest bearing liabilities


654,045










587,115









Total liabilities


2,949,117










2,905,909









Shareholders' equity 


256,783










287,698









Total liabilities and shareholders'

  equity

$

3,205,900









$

3,193,607






























Net interest income




$

22,102









$

24,194






Interest rate spread (5)








2.85

%









3.15

%


Net interest margin (6)








2.99

%









3.30

%


Ratio of average interest-earning assets to

  average interest-bearing liabilities








128.93

%









126.30

%





(1)  Average balances include non-accrual loans and loans held-for-sale.



(2)  Loan fees are included in interest income and the amount is not material for this analysis.



(3)  Interest earned on non-taxable investment securities is shown on a tax-equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the three months ended December 31, 2013 and 2012 were $167 thousand and $212 thousand, respectively.



(4)  Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY.



(5)  Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.



(6)  Net interest margin represents net interest income as a percentage of average interest-earning assets.


































                                                                                                                                                                                                                       

SUN BANCORP, INC. AND SUBSIDIARIES


AVERAGE BALANCE SHEETS (Unaudited)

(Dollars in thousands)







 For the Year Ended December 31,



2013



2012



Average


Income/


Yield/



Average


Income/


Yield/



Balance


Expense


Cost



Balance


Expense


Cost


Interest-earning assets:














Loans receivable (1),(2):














Commercial and industrial

$

1,688,702


$

74,191



4.39

%


$

1,814,626


$

82,165



4.53

%

Home equity


196,597



7,563



3.85




216,218



8,738



4.04


Second mortgage


28,038



1,611



5.75




37,021



2,128



5.75


Residential real estate


312,617



10,846



3.47




207,553



8,199



3.95


Other


28,285



1,961



6.93




35,636



2,477



6.95


Total loans receivable


2,254,239



96,172



4.27




2,311,054



103,707



4.49


Investment securities (3)


413,861



8,884



2.15




537,710



12,529



2.33


Interest-earning bank balances


295,199



746



0.25




28,646



68



0.24


Total interest-earning assets


2,963,299



105,802



3.57




2,877,410



116,304



4.04


Non-interest earning assets:




















  Cash and due from banks


70,673










73,000








  Bank properties and equipment, net


49,357










52,781








  Goodwill and intangible assets, net


40,031










43,280








  Other assets


101,593










108,299








Total non-interest-earning assets


261,654










277,360








Total assets

$

3,224,953









$

3,154,770




























Interest-bearing liabilities:




















Interest-bearing deposit accounts:




















Interest-bearing demand deposits

$

1,243,074


$

4,228



0.34

%


$

1,225,609


$

4,778



0.39

%

Savings deposits


268,414



843



0.31




263,307



900



0.34


Time deposits


667,984



6,278



0.94




643,822



7,876



1.22


Total interest-bearing deposit

  accounts


2,179,472



11,349



0.52




2,132,738



13,554



0.64


Short-term borrowings:




















Federal funds purchased


14



-



-




5,437



20



0.37


Securities sold under agreements to

  repurchase - customers


1,565



2



0.13




5,157



7



0.14


Long-term borrowings:




















FHLBNY advances (4)


61,050



1,275



2.09




37,038



898



2.42


Obligations under capital lease


7,468



499



6.68




7,737



513



6.63


Junior subordinated debentures


92,786



2,188



2.36




92,786



2,594



2.80


Total borrowings


162,883



3,964



2.43




148,155



4,032



2.72


Total interest-bearing liabilities


2,342,355



15,313



0.65




2,280,893



17,586



0.77


Non-interest bearing liabilities:




















  Non-interest-bearing demand deposits


543,490










499,435








  Other liabilities


78,209










80,777








Total non-interest bearing liabilities


621,699










580,212








Total liabilities


2,964,054










2,861,105








Shareholders' equity 


260,899










293,665








Total liabilities and shareholders'

  equity

$

3,224,953









$

3,154,770




























Net interest income




$

90,489









$

98,718





Interest rate spread (5)








2.92

%









3.27

%

Net interest margin (6)








3.05

%









3.43

%

Ratio of average interest-earning assets to

  average interest-bearing liabilities








126.51

%









126.15

%



(1)  Average balances include non-accrual loans and loans held-for-sale.


(2)  Loan fees are included in interest income and the amount is not material for this analysis.


(3)  Interest earned on non-taxable investment securities is shown on a tax-equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the year ended December 31, 2013 and 2012 were $720 thousand and $870 thousand, respectively.


(4)  Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY.


(5)  Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.


(6)  Net interest margin represents net interest income as a percentage of average interest-earning assets.


























 

 

SUN BANCORP, INC. AND SUBSIDIARIES


AVERAGE BALANCE SHEETS (Unaudited)

(Dollars in thousands)







 For the Three Months Ended



December 31, 2013



September 30, 2013



Average


Income/


Yield/



Average


Income/


Yield/



Balance


Expense


Cost



Balance


Expense


Cost


Interest-earning assets:














Loans receivable (1),(2):














Commercial and industrial

$

1,621,222


$

17,406



4.29

%


$

1,671,302


$

19,205



4.60

%

Home equity


190,394



1,853



3.89




194,622



1,892



3.89


Second mortgage


26,142



367



5.62




27,041



384



5.68


Residential real estate


312,977



2,671



3.41




299,667



2,620



3.50


Other


26,134



456



6.98




27,723



475



6.85


Total loans receivable


2,176,869



22,753



4.18




2,220,355



24,576



4.43


Investment securities(3)


439,788



2,693



2.45




414,189



2,157



2.08


Interest-earning bank balances


342,412



221



0.26




349,386



222



0.25


Total interest-earning assets


2,959,069



25,667



3.47




2,983,930



26,955



3.61


Non-interest earning assets:




















  Cash and due from banks


66,662










72,336








  Bank properties and equipment, net


49,300










48,590








  Goodwill and intangible assets, net


39,190










39,717








  Other assets


91,679










120,311








Total non-interest-earning assets


246,831










280,954








Total assets

$

3,205,900









$

3,264,884




























Interest-bearing liabilities:




















Interest-bearing deposit accounts:




















Interest-bearing demand deposits

$

1,223,184


$

960



0.31

%


$

1,263,160


$

1,064



0.34

%

Savings deposits


268,196



195



0.29




270,394



213



0.32


Time deposits


641,995



1,421



0.89




663,582



1,536



0.93


Total interest-bearing deposit

  accounts


2,133,375



2,575



0.48




2,197,136



2,813



0.51


Short-term borrowings:




















Federal funds purchased


54



-



-




-



-



-


Securities sold under agreements to

  repurchase - customers


512



-



-




555



-



-


Long-term borrowings:




















FHLBNY advances (4)


60,981



320



2.10




61,011



321



2.10


Obligations under capital lease


7,364



124



6.74




7,435



124



6.67


Junior subordinated debentures


92,786



545



2.35




92,786



550



2.37


Total borrowings


161,697



989



2.45




161,787



995



2.46


Total interest-bearing liabilities


2,295,072



3,565



0.62




2,358,923



3,808



0.65


Non-interest bearing liabilities:




















  Non-interest-bearing demand deposits


585,530










549,684








  Other liabilities


68,515










95,576








Total non-interest bearing liabilities


654,045










645,260








Total liabilities


2,949,117










3,004,183








Shareholders' equity 


256,783










260,701








Total liabilities and shareholders'

  equity

$

3,205,900









$

3,264,884




























Net interest income




$

22,102









$

23,147





Interest rate spread (5)








2.85

%









2.96

%

Net interest margin (6)








2.99

%









3.10

%

Ratio of average interest-earning assets to

  average interest-bearing liabilities








128.93

%









126.50

%



(1)  Average balances include non-accrual loans and loans held-for-sale.


(2)  Loan fees are included in interest income and the amount is not material for this analysis.


(3)  Interest earned on non-taxable investment securities is shown on a tax-equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the three months ended December 31, 2013 and September 30, 2013 were $167 thousand, respectively.


(4)  Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY.


(5)  Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.


(6)  Net interest margin represents net interest income as a percentage of average interest-earning assets.


























 

SOURCE Sun Bancorp, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.