VINELAND, N.J., Jan. 23, 2013 /PRNewswire/ -- Sun Bancorp, Inc. (NASDAQ: SNBC) reported today a net loss available to common shareholders of $25.0 million, or $0.29 per diluted share, for the quarter ended December 31, 2012, compared to a net loss available to common shareholders of $1.5 million, or $0.02 per diluted share, for the fourth quarter of 2011.
The following are key items and events that occurred during the fourth quarter of 2012:
-- As part of a continuing strategy to reduce balance sheet risk, the Company signed a definitive agreement on January 17, 2013 to sell $45.8 million of loans, having a book balance of $35.1 million, to a third-party investor for gross proceeds of $22.0 million. The transaction, which is expected to close in the first quarter of 2013, resulted in a net loss of $7.6 million after accounting for loan loss reserves, customer derivative termination costs and other expenses. As the formal approval to sell these loans occurred during 2012, the related loans were transferred to held-for-sale as of December 31, 2012 at fair value. In addition, the Company reached workout settlements with several troubled borrowers, resulting in a loss of $6.0 million. -- Provision expense totaled $24.2 million during the fourth quarter of 2012 as compared to $1.9 million in the third quarter of 2012 and $6.8 million in the fourth quarter of 2011. The allowance for loan losses equaled $46.5 million at quarter end, a decrease of $2.5 million from September 30, 2012, and an increase of $4.8 million from December 31, 2011. The allowance for loan losses equaled 2.04% of gross loans held-for-investment and 57.8% of non-performing loans held for investment as compared to 2.12% and 40.6% and 1.82% and 38.7%, respectively, at September 30, 2012 and December 31, 2011. -- Commercial loan production was $114 million during the fourth quarter versus $113 million in the linked quarter. The Company continues to maintain a disciplined underwriting and pricing strategy in this uncertain economic environment. -- The net interest margin equaled 3.30% for the fourth quarter of 2012 versus 3.41% in the linked quarter. The current quarter margin was negatively impacted by the maturity of legacy commercial loans as well as the overall low interest rate environment. -- Non-interest income decreased $2.8 million to $6.8 million during the fourth quarter of 2012 as compared to the linked quarter primarily due to an increase of $1.6 million in swap termination fees, of which $979 thousand was a result of liabilities assumed from the loan sale, and the remaining fees related to other problem loan workouts. Gains on the sale of mortgage loans declined by $510 thousand as the linked quarter included a $1.5 million positive mark-to-market adjustment from a fair value election on its loans held-for-sale, effective July 1, 2012. The Company's residential mortgage operations remain strong as $236 million in residential mortgage loans were closed and $149 million sold during the fourth quarter compared to $240 million and $120 million, respectively, in the linked quarter. The Company originated $665 million in 2012 versus $192 million in 2011. -- Total risk-based capital was 13.73% at December 31, 2012, well above 11.50%, the regulatory required level.
"This was an impactful quarter for Sun, culminating an impactful year of successful risk reduction and revenue growth strategies," said Thomas X. Geisel, Sun's President and Chief Executive Officer. "We were able to simultaneously strengthen our balance sheet by significantly reducing classified assets to near peer levels and at the same time demonstrate our competitive advantage with meaningful commercial and mortgage loan production. In 2013, we will continue with a laser like focus on how we deliver the bank to our customers and provide value towards their financial goal achievement."
Discussion of Results:
Balance Sheet
-- Total assets were $3.22 billion at December 31, 2012, as compared to $3.18 billion at September 30, 2012 and December 31, 2011. -- Gross loans held-for-investment were $2.27 billion at December 31, 2012, as compared to $2.31 billion at September 30, 2012 and $2.29 billion at December 31, 2011. This decrease is the result of the Company's aggressive problem loan workout strategies implemented in 2012. -- Deposits increased by $66.4 million from the linked quarter to $2.71 billion at December 31, 2012. The increase was due to an increase in short-term time deposits. -- Borrowings increased by $23.0 million from the linked quarter in order to fund the continued residential loan growth.
Net Interest Income and Margin
-- On a tax equivalent basis, net interest income decreased $355 thousand over the linked quarter to $24.2 million. The net interest margin decreased 11 basis points to 3.30% from 3.41% for the linked quarter, and 24 basis points as compared to the same quarter in 2011. The average yield on interest-earning assets decreased 12 basis points over the linked quarter from 3.99% to 3.87%. This decrease is due to a corresponding decline in loan yields and excess cash. The Company held $170 million of cash as of December 31, 2012. The commercial loan yields declined seven basis points due to lower rates on new originations combined with pay-offs of higher yielding legacy loans and residential real estate yields decreased 21 basis points due to significantly lower market rates. The margin variance from the prior year is due to the similar pressures in the current interest rate environment.
Non-Interest Income
-- Non-interest income was $6.8 million for the quarter ended December 31, 2012, a decrease of $2.8 million from $9.6 million for the linked quarter and $11 thousand above the comparable prior year quarter's level of $6.8 million. The decrease from the linked quarter was primarily attributable to an increase of $1.6 million in swap termination fees as a result of the Company's aggressive workout strategies. Gains on the sale of mortgage loans declined $510 thousand as the linked quarter included a $1.5 million positive mark-to-market adjustment from a fair value election on its loans held-for-sale, effective July 1, 2012. Excluding mark-to-market adjustments, normalized mortgage gains were $3.2 million in the fourth quarter of 2012 versus $2.7 million in the linked quarter. The Company also had a decrease of $424 thousand in deposit service charges from the linked quarter due to declining volumes.
Non-Interest Expense
-- The Company incurred $31.6 million of non-interest expense in the fourth quarter of 2012, an increase of $738 thousand over the linked quarter and an increase of $4.4 million from the comparable prior year quarter. Professional fees increased by $677 thousand over the linked quarter due to additional compliance related consulting costs. Advertising costs were $576 thousand higher than the linked quarter due to ongoing deposit promotions as well as the residential mortgage growth. Reserves for unused credit commitments also increased by $280 thousand in the fourth quarter of 2012 over the linked quarter. These increases were partially offset by a $1.4 million decline in problem loan costs as the Company has reached a more normalized run rate for problem assets. The increase in non-interest expense from the prior year period is due primarily to additional salaries and benefits expense associated with the mortgage origination expansion in 2012 as well as increased professional fees and advertising expenses.
Asset Quality
-- The provision for loan losses for the fourth quarter of 2012 was $24.2 million, as compared to $1.9 million in the linked quarter and $6.8 million in the comparable prior year quarter. The allowance for loan losses was $46.5 million at December 31, 2012, or 2.04% of gross loans held-for-investment, as compared to an allowance for loan losses to gross loans held-for-investment ratio of 1.82% at December 31, 2011 and 2.12% at September 30, 2012. Net charge-offs recorded in the current quarter were $26.7 million, of which $13.1 million related to the loans sale, or 1.12% of average loans, as compared to $4.2 million, or 0.18% of average loans for the linked quarter and $20.4 million, or 0.87% of average loans outstanding for the same quarter in the prior year. -- Total non-performing assets were $100.6 million, or 4.11% of total gross loans held-for-investment, loans held-for-sale and real estate owned at December 31, 2012, as compared to $126.4 million, or 5.32% and $112.7 million, or 4.86%, respectively, at September 30, 2012 and December 31, 2011. Non-performing loans decreased to $93.2 million at December 31, 2012 as compared to $120.8 million at September 30, 2012. The December 31, 2012 balance is inclusive of $12.7 million of commercial loans held-for-sale. This decrease is due to charge-downs from the aforementioned pending loan sale and problem loan workouts completed in the fourth quarter.
Capital
-- Stockholders' equity totaled $262.6 million at December 31, 2012 compared to $309.1 million at December 31, 2011. The Company's tangible equity to tangible assets ratio was 6.95% at December 31, 2012, as compared to 8.41% at December 31, 2011. At December 31, 2012, the Company's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 13.73%, 11.83%, and 9.30%, respectively. At December 31, 2012, Sun National Bank's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 13.04%, 11.78%, and 9.26%, respectively.
Impact of Hurricane Sandy
-- The Company incurred $4.6 million impact due to Hurricane Sandy. This is composed of $4.4 million of additional loan loss reserves and $222 thousand of repair costs for facilities. So far, we have not seen any material deterioration in our loan portfolio due to Sandy. We completed a thorough assessment and thought it would be prudent to add an additional reserve to capture the potential risk as a result of the storm.
The Company will hold its regularly scheduled conference call on Thursday, January 24, 2013, at 11:00 a.m. (ET). Participants may listen to the live web cast via the "Investor Relations" section of the Sun Bancorp, Inc. web site at www.sunnb.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 Web site for two weeks following the call.
Sun Bancorp, Inc. (Nasdaq: SNBC) is a $3.22 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 more than 60 locations in New Jersey. Sun National Bank has been named one of Forbes Magazine's "Most Trustworthy Companies" for five years running. 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 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 related to the Company's continuing strategy to strengthen its balance sheet. Actual results and trends could differ materially from those set forth in such statements. We caution that such statements are subject to a number of uncertainties, including those detailed in the Company's filings 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
This release references tax-equivalent interest income and non-operating income and expenses. 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, 2012 and 2011 were $210 thousand and $271 thousand, respectively. The fully taxable equivalent adjustments for the twelve months ended December 31, 2012 and 2011 were $870 thousand and $1.3 million, respectively. The fully taxable equivalent adjustment for the three months ended September 30, 2012 was $212 thousand. Non-operating income (loss) is also a non-GAAP financial measure. Non-operating income (loss) includes impairment losses recognized on available for sale securities included in earnings. There were no non-operating income (loss) items for the three months ended December 31, 2012, September 30, 2012, June 30, 2012, and December 31, 2011. Non-operating loss during the twelve months ended December 31, 2011 was $250 thousand.
((1)) NPL/Loans excludes loans held-for-sale.
SUN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) For the Three Months Ended For the Twelve Months Ended December 31, December 31, ------------ ------------ 2012 2011 2012 2011 ---- ---- ---- ---- Profitability for the period: Net interest income $23,981 $25,729 $97,848 $103,528 Provision for loan losses 24,154 6,826 57,215 74,266 Non-interest income 6,815 6,804 29,450 13,468 Non-interest expense 31,598 27,226 120,608 110,225 Loss before income taxes (24,956) (1,519) (50,525) (67,495) Net loss (24,956) (1,519) (50,491) (67,505) Net loss available to common shareholders $(24,956) $(1,519) $(50,491) $(67,505) ========================================= ======== ======= ======== ======== Financial ratios: Return on average assets(1) (3.13)% (0.19)% (1.60)% (2.05)% Return on average equity(1) (34.70)% (1.96)% (17.19)% (22.57)% Return on average tangible equity(1),(2) (40.61)% (2.29)% (20.17)% (26.77)% Net interest margin(1) 3.30% 3.54% 3.43% 3.50% Efficiency ratio 102.60% 83.69% 94.21% 94.21% Efficiency ratio, excluding non-operating income and non-operating expense(3) 91.55% 81.02% 89.87% 81.05% Loss per common share: Basic $(0.29) $(0.02) $(0.59) $(0.88) Diluted $(0.29) $(0.02) $(0.59) $(0.88) Average equity to average assets 9.01% 9.62% 9.31% 9.10% -------------------------------- ---- ---- ---- ---- December 31, ------------ 2012 2011 ---- ---- At period-end: Total assets $3,224,031 $3,183,926 Total deposits 2,713,224 2,667,977 Loans receivable, net of allowance for loan losses 2,228,217 2,249,455 Loans held-for-sale(4) 123,005 23,192 Investments 461,980 532,715 Borrowings 70,992 31,269 Junior subordinated debentures 92,786 92,786 Shareholders' equity 262,596 309,083 Credit quality and capital ratios: Allowance for loan losses to gross loans held-for- investment 2.04% 1.82% Non-performing loans held-for-investment to gross loans held-for-investment 3.53% 4.69% Non-performing assets to gross loans held-for- investment, loans held-for-sale and real estate owned 4.18% 4.86% Allowance for loan losses to non-performing loans held- for-investment 57.81% 38.69% Total capital (to risk-weighted assets): Sun Bancorp, Inc. 13.73% 15.22% Sun National Bank 13.04% 13.39% Tier 1 capital (to risk-weighted assets): Sun Bancorp, Inc. 11.83% 13.96% Sun National Bank 11.78% 12.13% Leverage ratio: Sun Bancorp, Inc. 9.30% 11.09% Sun National Bank 9.26% 9.64% Book value per common share $3.05 $3.61 Tangible book value per common share $2.57 $3.08 ------------------------------------ ----- -----
(1) Amounts for the three and twelve 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 expense, is computed by dividing non-interest expense for the period by the summation of net interest income and non-interest income. Non-interest income for the three months ended December 31, 2012 and December 31, 2011 excludes gain on sale of investment securities of $196 thousand and $(280) thousand, respectively and derivative credit adjustment of $1.8 million and $214 thousand, respectively. Non-interest expense for the three months ended December 31, 2012 excludes $701 thousand of loan sale related costs. Noninterest income for the twelve months ended December 31, 2012 and December 31, 2011 excludes gain on sale of investment securities of $234 thousand and $(1.6) million, respectively and derivative credit adjustment of $2.3 million and $8.7 million, respectively Non interest income for the twelve months ended December 31, 2011 excludes net impairment losses on available for sale securities of $250 thousand. . Non-interest expense for the twelve months ended December 31, 2012 and December 31, 2011 excludes $701 thousand and $2.3 million of loan sale related costs. (4) Loans held-for-sale includes $101.0 million of residential real estate loans and $22.0 million of commercial real estate loans measured at fair value at December 31, 2012. The December 31, 2011 balance includes $23.2 million of residential real estate loans measured at cost.
SUN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (Dollars in thousands, except par value amounts) December 31, December 31, 2011 2012 ---- ASSETS Cash and due from banks $77,564 $68,773 Interest-earning bank balances 92,052 51,049 ---------------- ------ ------ Cash and cash equivalents 169,616 119,822 Investment securities available for sale (amortized cost of $439,488 and $514,488 at December 31, 2012 and December 31, 2011, respectively) 443,182 515,545 Investment securities held to maturity (estimated fair value of $960 and $1,413 at December 31, 2012 and December 31, 2011, respectively) 912 1,344 Loans receivable (net of allowance for loan losses of $46,482 and $41,667 at December 31, 2012 and December 31, 2011, respectively) 2,228,217 2,249,455 Loans held-for- sale, at cost - 23,192 Loans held-for- sale, at fair value 123,005 - Restricted equity investments, at cost 17,886 15,826 Bank properties and equipment, net 50,805 54,756 Real estate owned 7,473 5,020 Accrued interest receivable 8,054 8,912 Goodwill 38,188 38,188 Intangible assets 3,262 6,947 Bank owned life insurance (BOLI) 76,858 74,871 Other assets 56,573 70,048 ------------ ------ ------ Total assets $3,224,031 $3,183,926 ============ ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits $2,713,224 $2,667,977 Securities sold under agreements to repurchase - customers 1,968 5,668 Advances from the Federal Home Loan Bank of New York (FHLBNY) 61,415 2,733 Securities sold under agreements to repurchase - FHLBNY - 15,000 Obligations under capital lease 7,609 7,868 Junior subordinated debentures 92,786 92,786 Deferred taxes, net 1,509 432 Other liabilities 82,924 82,379 ----------------- ------ ------ Total liabilities 2,961,435 2,874,843 ----------------- --------- --------- Shareholders' equity: Preferred stock, $1 par value, 1,000,000 shares authorized; none issued - - Common stock, $1 par value, 2012; 87,825,038 100,000,000 shares issued shares and 85,718,315 authorized; shares 88,290,735 outstanding at shares issued December 31, and 86,184,012 2011 shares outstanding at December 31, 88,301 87,825 Additional paid- in capital 506,537 504,508 Retained deficit (308,010) (257,520) Accumulated other comprehensive income 2,186 625 Deferred compensation plan trust (256) (193) Treasury stock at cost, 2,106,723 shares at December 31, 2012 and December 31, 2011 (26,162) (26,162) ----------------- ------- ------- Total shareholders' equity 262,596 309,083 -------------- ------- ------- Total liabilities and shareholders' equity $3,224,031 $3,183,926 ================= ========== ==========
SUN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except share and per share amounts) For the Three Months For the Twelve Months Ended December 31, Ended December 31, ------------------ ------------------ 2012 2011 2012 2011 ---- ---- ---- ---- INTEREST INCOME Interest and fees on loans $25,670 $27,678 $103,707 $112,793 Interest on taxable investment securities 1,860 2,421 9,138 10,507 Interest on non-taxable investment securities 390 503 1,618 2,487 Dividends on restricted equity investments 235 214 970 893 ------------------------------------------ --- --- --- --- Total interest income 28,155 30,816 115,433 126,680 --------------------- ------ ------ ------- ------- INTEREST EXPENSE Interest on deposits 3,143 4,041 13,553 18,737 Interest on funds borrowed 460 351 1,438 1,418 Interest on junior subordinated debentures 571 695 2,594 2,997 ------------------------------------------ --- --- ----- ----- Total interest expense 4,174 5,087 17,585 23,152 ---------------------- ----- ----- ------ ------ Net interest income 23,981 25,729 97,848 103,528 PROVISION FOR LOAN LOSSES 24,154 6,826 57,215 74,266 ------------------------- ------ ----- ------ ------ Net Interest (loss) income after provision for loan losses (173) 18,903 40,633 29,262 ---------------------------------------------- ---- ------ ------ ------ NON-INTEREST INCOME Service charges on deposit accounts 2,414 2,799 10,660 10,889 Other service charges 72 71 294 330 Gain on sale of loans 3,694 906 10,479 3,247 Impairment losses on available for sale securities - - - (250) Gain (loss) on sale of investment securities (196) 447 234 1,855 Investment products income 606 453 2,296 2,913 BOLI income 488 1,309 1,986 2,964 Derivative credit valuation adjustment (1,750) (214) (2,275) (12,538) Other 1,487 1,033 5,776 4,058 ----- ----- ----- ----- ----- Total non-interest income 6,815 6,804 29,450 13,468 ------------------------- ----- ----- ------ ------ NON-INTEREST EXPENSE Salaries and employee benefits 15,845 13,011 62,500 52,501 Occupancy expense 3,416 3,643 13,011 13,373 Equipment expense 2,005 1,858 7,399 7,342 Amortization of intangible assets 921 921 3,685 3,685 Data processing expense 1,138 1,118 4,384 4,352 Professional fees 1,389 525 3,459 3,563 Insurance expenses 1,506 1,433 5,824 6,186 Advertising expense 1,040 664 2,809 2,946 Problem loan expense 776 1,866 5,681 8,342 Real estate owned expense, net 1,008 108 2,358 1,186 Office supplies expense 298 323 1,247 1,307 Other 2,256 1,756 8,251 5,442 ----- ----- ----- ----- ----- Total non-interest expense 31,598 27,226 120,608 110,225 -------------------------- ------ ------ ------- ------- LOSS BEFORE INCOME TAXES (24,956) (1,519) (50,525) (67,495) INCOME TAX (BENEFIT) EXPENSE - - (34) 10 ---------------------------- --- --- --- --- NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $(24,956) $(1,519) $(50,491) $(67,505) ========================================= ======== ======= ======== ======== Basic loss per share $(0.29) $(0.02) $(0.59) $(0.88) -------------------- ------ ------ ------ ------ Diluted loss per share $(0.29) $(0.02) $(0.59) $(0.88) ====================== ====== ====== ====== ====== Weighted average shares - basic 86,082,669 85,587,878 85,937,110 76,653,990 =============================== ========== ========== ========== ========== Weighted average shares - diluted 86,082,669 85,587,878 85,937,110 76,653,990 ================================= ========== ========== ========== ==========
SUN BANCORP, INC. AND SUBSIDIARIES HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (Dollars in thousands) 2012 2012 2012 2012 2011 Q4 Q3 Q2 Q1 Q4 --- --- --- --- --- Balance sheet at quarter end: Cash and cash equivalents $169,616 $83,854 $115,891 $87,553 $119,822 Investment securities 461,980 527,034 549,849 576,457 532,715 Loans held-for-investment: Commercial and industrial 1,726,073 1,802,060 1,794,830 1,820,054 1,878,026 Home equity 207,814 212,911 217,768 219,926 224,517 Second mortgage 30,842 32,610 36,429 38,815 41,470 Residential real estate 271,385 224,346 153,373 109,807 100,438 Other 38,585 39,069 42,486 36,952 46,671 ----- ------ ------ ------ ------ ------ Total gross loans held-for-investment 2,274,699 2,310,996 2,244,886 2,225,554 2,291,122 Allowance for loan losses (46,482) (49,016) (51,394) (52,127) (41,667) ------------------------- ------- ------- ------- ------- ------- Net loans held-for-investment 2,228,217 2,261,980 2,193,492 2,173,427 2,249,455 Loans held-for-sale 123,005 60,676 24,672 25,034 23,192 Goodwill 38,188 38,188 38,188 38,188 38,188 Intangible assets 3,262 4,183 5,104 6,025 6,947 Total assets 3,224,031 3,180,263 3,133,487 3,113,269 3,183,926 Total deposits 2,713,224 2,646,807 2,608,034 2,631,652 2,667,977 Federal funds purchased - 30,000 - - - Securities sold under agreements to repurchase - customers 1,968 3,587 5,454 5,870 5,668 Advances from FHLBNY 61,415 16,749 22,080 2,408 2,733 Securities sold under agreements to repurchase - FHLBNY - 20,000 15,000 15,000 15,000 Obligations under capital lease 7,609 7,675 7,740 7,805 7,868 Junior subordinated debentures 92,786 92,786 92,786 92,786 92,786 Total shareholders' equity 262,596 287,480 284,768 283,163 309,083 -------------------------- ------- ------- ------- ------- ------- Quarterly average balance sheet: Loans(1): Commercial and industrial $1,788,347 $1,805,623 $1,815,704 $1,849,216 $1,910,635 Home equity 210,085 215,542 218,910 220,411 226,345 Second mortgage 32,442 35,816 38,545 41,346 44,600 Residential real estate 319,427 230,259 155,479 123,567 111,514 Other 32,444 33,658 34,765 41,733 46,248 ----- ------ ------ ------ ------ ------ Total gross loans 2,382,745 2,320,898 2,263,403 2,276,273 2,339,342 Securities and other interest-earning assets 545,781 555,846 583,788 580,349 602,485 Total interest-earning assets 2,928,526 2,876,744 2,847,191 2,856,622 2,941,827 Total assets 3,193,607 3,153,668 3,116,627 3,154,762 3,229,699 Non-interest-bearing demand deposits 511,813 504,936 493,707 487,088 536,558 Total deposits 2,660,405 2,642,048 2,604,083 2,621,736 2,706,772 Total interest-bearing liabilities 2,318,794 2,279,177 2,259,370 2,265,830 2,294,786 Total shareholders' equity 287,698 289,129 285,667 312,281 310,786 -------------------------- ------- ------- ------- ------- ------- Capital and credit quality measures: Total capital (to risk-weighted assets) (2): Sun Bancorp, Inc. 13.73% 14.58% 14.61% 14.49% 15.22% Sun National Bank 13.04% 13.88% 13.90% 13.77% 13.39% Tier 1 capital (to risk-weighted assets) (2): Sun Bancorp, Inc. 11.83% 13.00% 13.00% 12.86% 13.96% Sun National Bank 11.78% 12.62% 12.64% 12.51% 12.13% Leverage ratio: Sun Bancorp, Inc. 9.30% 10.44% 10.45% 10.21% 11.09% Sun National Bank 9.26% 10.11% 10.15% 9.93% 9.64% Average equity to average assets 9.01% 9.17% 9.17% 9.91% 9.62% Allowance for loan losses to total gross loans held-for- investment 2.04% 2.12% 2.29% 2.34% 1.82% Non-performing loans held-for-investment to gross loans held-for-investment 3.53% 5.23% 4.63% 5.15% 4.69% Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned 4.18% 5.32% 4.84% 5.27% 4.86% Allowance for loan losses to non-performing loans held-for- investment 57.81% 40.56% 49.44% 45.52% 38.69% Other data: Net charge-offs (26,690) (4,246) (1,243) (20,223) (20,386) Non-performing assets: Non-accrual loans $60,528 $95,383 $79,696 $87,847 $89,656 Non-accrual loans held-for-sale 10,240 - - - - Troubled debt restructurings, non-accrual 18,244 25,454 24,256 26,674 17,875 Troubled debt restructurings, held-for-sale 2,499 - - - - Loans past due 90 days and accruing 1,638 - - 74 154 Real estate owned, net 7,473 5,513 6,116 4,165 5,020 ---------------------- ----- ----- ----- ----- ----- Total non-performing assets 100,622 126,350 110,068 118,760 112,705 =========================== ======= ======= ======= ======= ======= (1) Average balances include non-performing loans and loans held-for-sale (2) December 31, 2012 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) 2012 2012 2012 2012 2011 Q4 Q3 Q2 Q1 Q4 --- --- --- --- --- Profitability for the quarter: Tax-equivalent interest income $28,367 $28,681 $29,619 $29,641 $31,087 Interest expense 4,174 4,135 4,519 4,758 5,087 Tax-equivalent net interest income 24,191 24,546 25,098 24,883 26,000 Tax-equivalent adjustment 212 212 217 233 271 Provision for loan losses 24,154 1,868 510 30,683 6,826 Non-interest income excluding net impairment losses on available for sale securities 6,815 9,588 7,527 5,519 6,804 Non-interest expense excluding amortization of intangible assets 30,677 29,938 29,666 26,643 26,305 Amortization of intangible assets 921 922 921 921 921 (Loss) income before income taxes (24,956) 1,194 1,313 (28,078) (1,519) Income tax benefit (34) - - - Net (loss) income (24,956) 1,228 1,313 (28,078) (1,519) Net (loss) income available to common shareholders $ $ $ $ $ (24,956) 1,228 1,313 (28,078) (1,519) === ======= ===== ===== ======= ====== Financial ratios: Return on average assets (1) (3.13)% 0.16% 0.17% (3.56)% (0.19)% Return on average equity (1) (34.70)% 1.70% 1.84% (35.97)% (1.96)% Return on average tangible equity (1),(2) (40.61)% 1.99% 2.17% (41.97)% (2.29)% Net interest margin (1) 3.30% 3.41% 3.53% 3.48% 3.54% Efficiency ratio 102.60% 90.97% 94.38% 91.37% 83.69% Per share data: (Loss) income per common share: Basic $(0.29) $0.01 $0.02 $(0.34) $(0.02) Diluted $(0.29) $0.01 $0.02 $(0.34) $(0.02) Book value $3.05 $3.34 $3.31 $3.30 $3.61 Tangible book value $2.57 $2.85 $2.81 $2.78 $3.08 Average basic shares 86,082,669 86,001,929 85,884,671 85,776,858 85,587,878 Average diluted shares 86,082,669 86,047,655 85,916,421 85,776,858 85,587,878 Operating non-interest income: Service charges on deposit accounts $2,414 $2,848 $2,730 $2,668 $2,799 Other service charges 72 69 80 73 71 Gain on sale of loans 3,694 4,204 1,865 716 906 Net gain on sale of available for sale securities (196) - 430 - 280 Investment products income 606 510 748 432 453 BOLI income 488 489 492 516 1,309 Derivative credit valuation adjustment (1,750) (198) (13) (314) (214) Other income 1,487 1,666 1,195 1,428 1,200 ------------ ----- ----- ----- ----- ----- Total non-interest income $6,815 $9,588 $7,527 $5,519 $6,804 ========================= ====== ====== ====== ====== ====== Operating non-interest expense: Salaries and employee benefits $15,845 $16,128 $15,756 $14,771 $13,011 Occupancy expense 3,416 3,275 3,271 3,049 3,643 Equipment expense 2,005 1,866 1,763 1,765 1,858 Amortization of intangible assets 921 922 921 921 921 Data processing expense 1,138 1,084 1,106 1,056 1,118 Professional fees 1,389 713 833 524 525 Insurance expense 1,506 1,375 1,464 1,479 1,433 Advertising expense 1,040 464 1,008 297 664 Problem loan costs 776 2,154 1,274 1,477 1,866 Real estate owned expense, net 1,008 779 490 81 108 Office supplies expense 298 302 328 319 323 Other expense 2,256 1,798 2,373 1,825 1,756 ------------- ----- ----- ----- ----- ----- Total non-interest expense $31,598 $30,860 $30,587 $27,564 $27,226 ========================== ======= ======= ======= ======= =======
(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 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, --------------------------------------- 2012 2011 ---- ---- Average Income/ Yield/ Average Income/ Yield/ Balance Expense Cost Balance Expense Cost ------- ------- ---- ------- ------- ---- Interest-earning assets: Loans receivable (1),(2): Commercial and industrial $1,788,347 $19,628 4.39% $1,910,635 $22,542 4.72% Home equity 210,085 2,055 3.91 226,345 2,348 4.15 Second mortgage 32,442 470 5.79 44,600 656 5.88 Residential real estate 319,427 2,959 3.71 111,514 1,338 4.80 Other 32,444 559 6.89 46,248 794 6.87 ------ --- ------ --- Total loans receivable 2,382,745 25,671 4.31 2,339,342 27,678 4.73 Investment securities(3) 507,158 2,672 2.11 548,355 3,375 2.46 Interest-earning bank balances 38,623 24 0.25 54,130 34 0.25 ------ --- ------ --- Total interest-earning assets 2,928,526 28,367 3.87 2,941,827 31,087 4.23 --------- ------ --------- ------ Non-interest earning assets: Cash and due from banks 72,129 73,863 Bank properties and equipment, net 51,515 55,264 Goodwill and intangible assets, net 41,902 45,586 Other assets 99,535 113,159 ------ ------- Total non-interest-earning assets 265,081 287,872 ------- ------- Total assets $3,193,607 $3,229,699 ========== ========== Interest-bearing liabilities: Interest-bearing deposit accounts: Interest-bearing demand deposits $1,224,254 $1,178 0.38% $1,271,991 $1,435 0.45% Savings deposits 263,949 228 0.35 265,115 285 0.43 Time deposits 660,389 1,737 1.05 633,108 2,321 1.47 ------- ----- ------- ----- Total interest-bearing deposit accounts 2,148,592 3,143 0.59 2,170,214 4,041 0.74 --------- ----- --------- ----- Short-term borrowings: Securities sold under agreements to repurchase - customers 3,250 2 0.25 6,047 1 0.07 Long-term borrowings: FHLBNY advances (4) 66,527 332 2.00 17,842 219 4.91 Obligations under capital lease 7,639 127 6.65 7,897 131 6.64 Junior subordinated debentures 92,786 572 2.47 92,786 695 3.00 ------ --- ------ --- Total borrowings 170,202 1,033 2.43 124,572 1,046 3.36 ------- ----- ------- ----- Total interest-bearing liabilities 2,318,794 4,176 0.72 2,294,786 5,087 0.89 --------- ----- --------- ----- Non-interest bearing liabilities: Non-interest-bearing demand deposits 511,813 536,558 Other liabilities 75,302 87,569 ------ ------ Total non-interest bearing liabilities 587,115 624,127 ------- ------- Total liabilities 2,905,909 2,918,913 Shareholders' equity 287,698 310,786 ------- ------- Total liabilities and shareholders' equity $3,193,607 $3,229,699 ========== ========== Net interest income $24,191 $26,000 ======= ======= Interest rate spread (5) 3.15% 3.34% ==== ==== Net interest margin (6) 3.30% 3.54% ==== ==== Ratio of average interest-earning assets to average interest- bearing liabilities 126.30% 128.20% ====== ====== (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, 2012 and 2011 were $210 thousand and $271 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 Twelve Months Ended December 31, ---------------------------------------- 2012 2011 ---- ---- Average Income/ Yield/ Average Income/ Yield/ Balance Expense Cost Balance Expense Cost ------- ------- ---- ------- ------- ---- Interest-earning assets: Loans receivable (1),(2): Commercial and industrial $1,814,626 $82,165 4.53% $1,954,701 $92,107 4.71% Home equity 216,218 8,738 4.04 232,278 9,774 4.21 Second mortgage 37,021 2,128 5.75 48,998 2,863 5.84 Residential real estate 207,553 8,199 3.95 87,858 4,547 5.18 Other 35,636 2,477 6.95 51,041 3,502 6.86 ------ ----- ------ ----- Total loans receivable 2,311,054 103,707 4.49 2,374,876 112,793 4.75 Investment securities (3) 537,710 12,529 2.33 505,006 14,940 2.96 Interest-earning bank balances 28,646 68 0.24 117,830 288 0.24 ------ --- ------- --- Total interest-earning assets 2,877,410 116,304 4.04 2,997,712 128,021 4.27 --------- ------- --------- ------- Non-interest earning assets: Cash and due from banks 73,000 72,455 Bank properties and equipment, net 52,781 54,589 Goodwill and intangible assets, net 43,280 46,961 Other assets 108,299 114,158 ------- ------- Total non-interest-earning assets 277,360 288,163 ------- ------- Total assets $3,154,770 $3,285,875 ========== ========== Interest-bearing liabilities: Interest-bearing deposit accounts: Interest-bearing demand deposits $1,225,609 $4,778 0.39% $1,317,816 $7,024 0.53% Savings deposits 263,307 900 0.34 271,970 1,412 0.52 Time deposits 643,822 7,876 1.22 675,464 10,301 1.53 ------- ----- ------- ------ Total interest-bearing deposit accounts 2,132,738 13,554 0.64 2,265,250 18,737 0.83 --------- ------ --------- ------ Short-term borrowings: Federal funds purchased 5,437 20 0.37 - - - Securities sold under agreements to repurchase - customers 5,157 7 0.14 6,717 7 0.10 Long-term borrowings: FHLBNY advances (4) 37,038 898 2.42 18,316 884 4.83 Obligations under capital lease 7,737 513 6.63 7,988 527 6.60 Junior subordinated debentures 92,786 2,594 2.80 92,786 2,997 3.23 ------ ----- ------ ----- Total borrowings 148,155 4,032 2.72 125,807 4,415 3.51 ------- ----- ------- ----- Total interest-bearing liabilities 2,280,893 17,586 0.77 2,391,057 23,152 0.97 --------- ------ --------- ------ Non-interest bearing liabilities: Non-interest-bearing demand deposits 499,435 509,678 Other liabilities 80,777 86,013 ------ ------ Total non-interest bearing liabilities 580,212 595,691 ------- ------- Total liabilities 2,861,105 2,986,748 Shareholders' equity 293,665 299,127 ------- ------- Total liabilities and shareholders' equity $3,154,770 $3,285,875 ========== ========== Net interest income $98,718 $104,869 ======= ======== Interest rate spread (5) 3.27% 3.30% ==== ==== Net interest margin (6) 3.43% 3.50% ==== ==== Ratio of average interest-earning assets to average interest-bearing liabilities 126.15% 125.37% ====== ====== (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 twelve months ended December 31, 2012 and 2011 were $870 thousand and $1.3 million, 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, 2012 September 30, 2012 ----------------- ------------------ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Cost Balance Expense Cost ------- ------- ---- ------- ------- ---- Interest-earning assets: Loans receivable (1),(2): Commercial and industrial $1,788,347 $19,628 4.39% $1,805,623 $20,139 4.46% Home equity 210,085 2,055 3.91 215,542 2,141 3.97 Second mortgage 32,442 470 5.79 35,816 518 5.79 Residential real estate 319,427 2,959 3.71 230,259 2,257 3.92 Other 32,444 559 6.89 33,658 576 6.85 ------ --- ------ --- Total loans receivable 2,382,745 25,671 4.31 2,320,898 25,631 4.42 Investment securities (3) 507,158 2,672 2.11 534,842 3,038 2.27 Interest-earning bank balances 38,623 24 0.25 21,004 12 0.23 ------ --- ------ --- Total interest-earning assets 2,928,526 28,367 3.87 2,876,744 28,681 3.99 --------- ------ --------- ------ Non-interest earning assets: Cash and due from banks 72,129 75,627 Bank properties and equipment, net 51,515 52,127 Goodwill and intangible assets, net 41,902 42,826 Other assets 99,535 106,344 ------ ------- Total non-interest-earning assets 265,081 276,924 ------- ------- Total assets $3,193,607 $3,153,668 ========== ========== Interest-bearing liabilities: Interest-bearing deposit accounts: Interest-bearing demand deposits $1,224,254 $1,178 0.38% $1,218,338 $1,195 0.39% Savings deposits 263,949 228 0.35 264,112 225 0.34 Time deposits 660,389 1,737 1.05 654,662 1,859 1.14 ------- ----- ------- ----- Total interest-bearing deposit accounts 2,148,592 3,143 0.59 2,137,112 3,279 0.61 --------- ----- --------- ----- Short-term borrowings: Federal funds purchased - - - 6,467 4 0.25 FHLBNY advances - - - 20,000 22 0.44 Securities sold under agreements to repurchase - customers 3,250 2 0.25 4,925 2 0.16 Long-term borrowings: FHLBNY advances (4) 66,527 332 2.00 10,181 103 4.71 Obligations under capital lease 7,639 127 6.65 7,706 128 6.64 Junior subordinated debentures 92,786 572 2.47 92,786 597 2.57 ------ --- ------ --- Total borrowings 170,202 1,033 2.43 142,065 856 2.41 ------- ----- ------- --- Total interest-bearing liabilities 2,318,794 4,176 0.72 2,279,177 4,135 0.73 --------- ----- --------- ----- Non-interest bearing liabilities: Non-interest-bearing demand deposits 511,813 504,936 Other liabilities 75,302 80,426 ------ ------ Total non-interest bearing liabilities 587,115 585,362 ------- ------- Total liabilities 2,905,909 2,864,539 Shareholders' equity 287,698 289,129 ------- ------- Total liabilities and shareholders' equity $3,193,607 $3,153,668 ========== ========== Net interest income $24,191 $24,546 ======= ======= Interest rate spread (5) 3.15% 3.26% ==== ==== Net interest margin (6) 3.30% 3.41% ==== ==== Ratio of average interest-earning assets to average interest-bearing liabilities 126.30% 126.22% ====== ====== (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, 2012 and September 30, 2012 were $210 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.
SOURCE Sun Bancorp, Inc.