Sun Bancorp, Inc. Reports First Quarter 2013 Results
First Quarter Highlights
- Profitable quarter with net income of $2.5 million
- Non-performing loans drop another 11% in Q1 and 39% over the past two quarters
- Successful workout resolutions generate $1.0 million in net recoveries for the quarter
- Prepared for rising interest rates by selling $125 million of investments and $52 million of jumbo fixed rate mortgages
- Solid capital ratios after risk reduction efforts with total risk based capital ratio of 14.2% and Tier 1 leverage ratio of 9.4%
- Tangible book value increases to $2.59 per share
VINELAND, N.J., April 24, 2013 /PRNewswire/ -- Sun Bancorp, Inc. (NASDAQ: SNBC) reported today net income available to common shareholders of $2.5 million, or $0.03 per diluted share, for the first quarter ended March 31, 2013, compared to a net loss available to common shareholders of $28.1 million, or a loss of $0.33 per diluted share, for the first quarter of 2012.
The following are key items and events that occurred during the first quarter of 2013:
- The Company successfully closed a previously reported sale of $43.1 million of primarily distressed legacy commercial real estate loans with a book balance of $33.6 million to a third party investor in February 2013 for proceeds of $20.9 million.
- Provision expense totaled $171 thousand as compared to $24.2 million in the fourth quarter of 2012. The allowance for loan losses equaled $47.1 million at quarter end, an increase of $1.3 million from December 31, 2012. The allowance for loan losses equaled 2.09% of gross loans held-for-investment and 63.9% of non-performing loans held for investment as compared to 2.02% and 55.3%, respectively, at December 31, 2012 and 2.34% and 45.5%, respectively, at March 31, 2012.
- Non-interest income increased $4.1 million to $10.9 million as compared to the linked quarter primarily due to gains on the sale of available for sale securities of $3.5 million.
- In March 2013, the Company sold a pool of $51.5 million of jumbo residential mortgage loans at a gain of $856 thousand.
- The net interest margin equaled 3.16% versus 3.30% in the linked quarter. This decrease was driven by a decline in commercial loan yields as well as an increase of approximately $141 million in average interest-bearing bank balances resulting from the jumbo mortgage sale and the sale of available-for-sale investment securities in the first quarter.
- Total risk-based capital equaled 14.2% at March 31, 2013, an increase of 50 basis points from 13.7% at December 31, 2012.
"We continue to make methodical progress in executing on our strategy to reduce the risk in the balance sheet and grow our commercial and consumer businesses," stated Thomas X. Geisel, Sun's President and Chief Executive Officer. "We were pleased to regain profitability during the quarter and to further reduce risk in our loan portfolio, thereby strengthening our foundation for the future. We will continue to prioritize these efforts and enhance the profitability of the Bank as the year progresses."
Discussion of Results:
Balance Sheet
- Total assets were $3.23 billion at March 31, 2013, as compared to $3.22 billion at December 31, 2012 and $3.11 billion at March 31, 2012.
- Cash and cash equivalents increased $142.0 million to $311.7 million as compared to the linked quarter, primarily due to the increase in interest earning bank balances due primarily to the aforementioned jumbo mortgage sale and sales of available-for-sale investment securities. Investments available-for-sale decreased $117.1 million from $443.2 million at December 31, 2012 to $326.1 million at March 31, 2013 due primarily to the sale of $124.8 million of securities, of which $94.6 million are pending settlement at March 31, 2013.
- Gross loans held-for-investment were $2.25 billion at March 31, 2013, as compared to $2.27 billion at December 31, 2012 and $2.23 billion at March 31, 2012. Compared to the linked quarter, loans held-for-investment decreased by $24.6 million due primarily to large pay downs of problem loans of $17.2 million and charge-offs of $3.5 million in the first quarter.
- Loans held-for-sale decreased $79.5 million from the linked quarter to $41.5 million at March 31, 2013. This was due to the closing of the commercial loan sale as well as a net decrease of $57.5 million in the residential mortgage loan held-for-sale portfolio.
Net Interest Income and Margin
- On a tax equivalent basis, net interest income decreased $901 thousand over the linked quarter to $23.3 million at March 31, 2013. The net interest margin decreased 14 basis points to 3.16% from 3.30% for the linked quarter, and decreased 32 basis points as compared to the same quarter in 2012. The average yield on interest-earning assets decreased 17 basis points over the linked quarter from 3.87% to 3.70%. This decrease is due to a corresponding decline in loan yields and excess cash. The Company held $312 million of cash as of March 31, 2013. The commercial loan yields declined four basis points from the linked quarter due to lower rates on new originations combined with pay-offs of higher yielding legacy loans and a decrease of 18 basis points in home equity line of credit yields over the same period due to significantly lower market rates. The margin variance from the prior year is due to similar pressures in the current interest rate environment.
Non-Interest Income
- Non-interest income was $10.9 million for the quarter ended March 31, 2013, compared to $6.8 million for the quarter ended December 31, 2012 and $5.5 million for the comparable prior year quarter. The increase from the linked quarter was primarily attributable to a gain on sale of available for sale securities of $3.5 million recognized in the current quarter as compared to a loss of $196 thousand as well as a reduction of $1.2 million in derivative credit valuation adjustments for the current quarter as compared to the linked quarter.
Non-Interest Expense
- The Company incurred $31.3 million of non-interest expense in the first quarter of 2013, a decrease of $262 thousand over the linked quarter and an increase of $3.8 million from the comparable prior year quarter. Professional fees and salaries and benefits increased by $1.3 million and $488 thousand, respectively, from the linked quarter. Professional fees have increased due to additional compliance related consulting expenses incurred during the first quarter. These increases were partially offset by decreases in real estate owned costs, other expenses and advertising costs of $774 thousand, $500 thousand and $487 thousand, respectively.
Asset Quality
- The provision for loan losses for the first quarter of 2013 was $171 thousand, as compared to $24.2 million in the linked quarter and $30.7 million in the comparable prior year quarter. The allowance for loan losses was $47.1 million at March 31, 2013, or 2.09% of gross loans held-for-investment, as compared to the allowance for loan losses to gross loans held-for-investment of 2.02% at December 31, 2012 and 2.34% at March 31, 2012. Recoveries were $4.6 million for the first quarter of 2013 primarily driven by the payoff of two commercial loans which resulted in $3.0 million of recoveries. Charge-offs recorded in the current quarter were $3.5 million, as compared to $26.7 million of charge-offs for the linked quarter and $20.2 million of charge-offs for the comparable prior year quarter.
- Total non-performing assets were $82.3 million, or 3.57% of total gross loans held-for-investment, loans held-for-sale and real estate owned at March 31, 2013, as compared to $100.1 million, or 4.18% and $118.8 million, or 5.27%, respectively, at December 31, 2012 and March 31, 2012. Non-performing loans decreased $21.8 million over the linked quarter to $73.8 million at March 31, 2013 from $95.6 million at December 31, 2012 and decreased $40.8 million from $114.6 million at March 31, 2012. The decreases in non-performing loans were due primarily to paydowns and the settlement of nonperforming loans moved to held for sale in the fourth quarter of 2012, both for $12.7 million.
Capital
- Shareholders' equity totaled $264.3 million at March 31, 2013 compared to $262.6 million at December 31, 2012. The Company's tangible equity to tangible assets ratio was 7.02% at March 31, 2013, as compared to 6.95% at December 31, 2012. At March 31, 2013, the Company's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 14.21%, 12.33%, and 9.40%, respectively. At March 31, 2013, Sun National Bank's total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 13.52%, 12.26%, and 9.34%, respectively.
The Company will hold its regularly scheduled conference call on Thursday, April 25, 2013, at 11:00 a.m. (ET). Participants may listen to the live web cast through 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 website for two weeks following the call.
Sun Bancorp, Inc. (NASDAQ: SNBC) is a $3.23 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 about being prepared for rising interest rates, reducing risk in the loan portfolio, building the foundation for the future, reducing problem loans and improving profitability. Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that we will be prepared for rising interest rates, further reduce risk in our loan portfolio, build the desired foundation for the future, further reduce problem loans or improve profitability. 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" in the Company's Form 10-K for the fiscal year ended December 31, 2012 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
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 March 31, 2013, December 31, 2012 and March 31, 2012 were $212 thousand, $210 thousand and $233 thousand, respectively. 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 March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012.
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 March 31:
| For Three Months Ended: |
2013 |
2012 |
|||
| Net interest income |
$ |
23,078 |
$ 24,650 |
||
| Effect of tax exempt income |
212 |
233 |
|||
| Net interest income, tax equivalent basis |
$ |
23,290 |
$ 24,883 |
||
| SUN BANCORP, INC. AND SUBSIDIARIES |
|||||||||||||||||||||||||
| FINANCIAL HIGHLIGHTS (Unaudited) |
|||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) |
|||||||||||||||||||||||||
| For the Three Months Ended |
|||||||||||||||||||||||||
| March 31, |
December 31, |
||||||||||||||||||||||||
| 2013 |
2012 |
2012 |
|||||||||||||||||||||||
| Profitability for the period: |
|||||||||||||||||||||||||
| Net interest income |
$ |
23,078 |
$ |
24,650 |
$ |
23,981 |
|||||||||||||||||||
| Provision for loan losses |
171 |
30,683 |
24,154 |
||||||||||||||||||||||
| Non-interest income |
10,882 |
5,519 |
6,815 |
||||||||||||||||||||||
| Non-interest expense |
31,336 |
27,564 |
31,598 |
||||||||||||||||||||||
| Income (loss) before income taxes |
2,453 |
(28,078) |
(24,956) |
||||||||||||||||||||||
| Net income (loss) |
2,453 |
(28,078) |
(24,956) |
||||||||||||||||||||||
| Net income (loss) available to common shareholders |
$ |
2,453 |
$ |
(28,078) |
$ |
(24,956) |
|||||||||||||||||||
| Financial ratios: |
|||||||||||||||||||||||||
| Return on average assets(1) |
0.31 |
% |
(3.56) |
% |
(3.13) |
% |
|||||||||||||||||||
| Return on average equity(1) |
3.73 |
% |
(35.97) |
% |
(34.70) |
% |
|||||||||||||||||||
| Return on average tangible equity(1),(2) |
4.42 |
% |
(41.97) |
% |
(40.61) |
% |
|||||||||||||||||||
| Net interest margin(1) |
3.16 |
% |
3.48 |
% |
3.30 |
% |
|||||||||||||||||||
| Efficiency ratio |
92.27 |
% |
91.37 |
% |
102.60 |
% |
|||||||||||||||||||
| Earnings (loss) per common share: |
|||||||||||||||||||||||||
| Basic |
$ |
0.03 |
$ |
(0.33) |
$ |
(0.29) |
|||||||||||||||||||
| Diluted |
$ |
0.03 |
$ |
(0.33) |
$ |
(0.29) |
|||||||||||||||||||
| Average equity to average assets |
8.20 |
% |
9.90 |
% |
9.01 |
% |
|||||||||||||||||||
| March 31, |
December 31, |
||||||||||||||||||||||||
| 2013 |
2012 |
2012 |
|||||||||||||||||||||||
| At period-end: |
|||||||||||||||||||||||||
| Total assets |
$ |
3,227,146 |
$ |
3,113,269 |
3,224,031 |
||||||||||||||||||||
| Total deposits |
2,723,337 |
2,631,652 |
2,713,224 |
||||||||||||||||||||||
| Loans receivable, net of allowance for loan losses |
2,204,436 |
2,173,426 |
2,230,287 |
||||||||||||||||||||||
| Loans held-for-sale |
41,469 |
25,034 |
120,935 |
||||||||||||||||||||||
| Investments |
335,844 |
576,457 |
461,980 |
||||||||||||||||||||||
| Borrowings |
71,344 |
31,083 |
70,992 |
||||||||||||||||||||||
| Junior subordinated debentures |
92,786 |
92,786 |
92,786 |
||||||||||||||||||||||
| Shareholders' equity |
264,341 |
283,164 |
262,595 |
||||||||||||||||||||||
| Credit quality and capital ratios: |
|||||||||||||||||||||||||
| Allowance for loan losses to gross loans held-for-investment |
2.09 |
% |
2.34 |
% |
2.02 |
% |
|||||||||||||||||||
| Non-performing loans held-for-investment to gross loans held-for-investment |
3.28 |
% |
5.15 |
% |
3.64 |
% |
|||||||||||||||||||
| Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned |
3.57 |
% |
5.27 |
% |
4.18 |
% |
|||||||||||||||||||
| Allowance for loan losses to non-performing loans held for investment |
63.87 |
% |
45.52 |
% |
55.33 |
% |
|||||||||||||||||||
| Total capital (to risk-weighted assets)(3) : |
|||||||||||||||||||||||||
| Sun Bancorp, Inc. |
14.21 |
% |
14.49 |
% |
13.72 |
% |
|||||||||||||||||||
| Sun National Bank |
13.52 |
% |
13.77 |
% |
13.02 |
% |
|||||||||||||||||||
| Tier 1 capital (to risk-weighted assets) (3): |
|||||||||||||||||||||||||
| Sun Bancorp, Inc. |
12.33 |
% |
12.86 |
% |
11.82 |
% |
|||||||||||||||||||
| Sun National Bank |
12.26 |
% |
12.51 |
% |
11.76 |
% |
|||||||||||||||||||
| Leverage ratio: |
|||||||||||||||||||||||||
| Sun Bancorp, Inc. |
9.40 |
% |
10.21 |
% |
9.30 |
% |
|||||||||||||||||||
| Sun National Bank |
9.34 |
% |
9.93 |
% |
9.24 |
% |
|||||||||||||||||||
| Book value per common share |
$ |
3.06 |
$ |
3.30 |
$ |
3.05 |
|||||||||||||||||||
| Tangible book value per common share |
$ |
2.59 |
$ |
2.78 |
$ |
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) March 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) |
||||||
| March 31, 2013 |
December 31, 2012 |
|||||
| ASSETS |
||||||
| Cash and due from banks |
$ |
63,608 |
$ |
77,564 |
||
| Interest-earning bank balances |
248,052 |
92,052 |
||||
| Cash and cash equivalents |
311,660 |
169,616 |
||||
| Investment securities available for sale (amortized cost of $315,810 and $439,488 at March 31, 2013 and December 31, 2012, respectively) |
317,838 |
443,182 |
||||
| Investment securities held to maturity (estimated fair value of $920 and $960 at March 31, 2013 and December 31, 2012, respectively) |
881 |
912 |
||||
| Loans receivable (net of allowance for loan losses of $47,124 and $45,873 at March 31, 2013 and December 31, 2012, respectively) |
2,204,436 |
2,230,287 |
||||
| Loans held-for-sale, at lower of cost or market |
- |
21,922 |
||||
| Loans held-for-sale, at fair value |
41,469 |
99,013 |
||||
| Restricted equity investments, at cost |
17,125 |
17,886 |
||||
| Bank properties and equipment, net |
49,477 |
50,805 |
||||
| Real estate owned |
8,472 |
7,473 |
||||
| Accrued interest receivable |
7,704 |
8,054 |
||||
| Goodwill |
38,188 |
38,188 |
||||
| Intangible assets |
2,341 |
3,262 |
||||
| Bank owned life insurance (BOLI) |
75,802 |
76,858 |
||||
| Receivable from sales and maturities of investments |
101,947 |
- |
||||
| Other assets |
49,806 |
56,573 |
||||
| Total assets |
$ |
3,227,146 |
$ |
3,224,031 |
||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||
| Liabilities: |
||||||
| Deposits |
$ |
2,723,337 |
$ |
2,713,224 |
||
| Securities sold under agreements to repurchase – customers |
2,726 |
1,968 |
||||
| Advances from the Federal Home Loan Bank of New York (FHLBNY) |
61,077 |
61,415 |
||||
| Obligations under capital lease |
7,541 |
7,609 |
||||
| Junior subordinated debentures |
92,786 |
92,786 |
||||
| Deferred taxes, net |
828 |
1,509 |
||||
| Other liabilities |
74,510 |
82,925 |
||||
| Total liabilities |
2,962,805 |
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; 88,403,100 shares issued and 86,292,929 shares outstanding at March 31, 2013; 88,300,637 shares issued and 86,193,914 shares outstanding at December 31, 2012 |
88,403 |
88,301 |
||||
| Additional paid-in capital |
506,773 |
506,537 |
||||
| Retained deficit |
(305,558) |
(308,011) |
||||
| Accumulated other comprehensive income |
1,200 |
2,186 |
||||
| Deferred compensation plan trust |
(315) |
(256) |
||||
| Treasury stock at cost 2,106,723 shares at March 31, 2013 and December 31, 2012 |
(26,162) |
(26,162) |
||||
| Total shareholders' equity |
264,341 |
262,595 |
||||
| Total liabilities and shareholders' equity |
$ |
3,227,146 |
$ |
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 March 31, |
||||||||||||||||
| 2013 |
2012 |
|||||||||||||||
| INTEREST INCOME |
||||||||||||||||
| Interest and fees on loans |
$ |
24,899 |
$ |
26,204 |
||||||||||||
| Interest on taxable investment securities |
1,544 |
2,542 |
||||||||||||||
| Interest on non-taxable investment securities |
394 |
434 |
||||||||||||||
| Dividends on restricted equity investments |
246 |
227 |
||||||||||||||
| Total interest income |
27,083 |
29,407 |
||||||||||||||
| INTEREST EXPENSE |
||||||||||||||||
| Interest on deposits |
3,015 |
3,684 |
||||||||||||||
| Interest on funds borrowed |
443 |
351 |
||||||||||||||
| Interest on junior subordinated debentures |
547 |
722 |
||||||||||||||
| Total interest expense |
4,005 |
4,757 |
||||||||||||||
| Net interest income |
23,078 |
24,650 |
||||||||||||||
| PROVISION FOR LOAN LOSSES |
171 |
30,683 |
||||||||||||||
| Net interest income (loss) after provision for loan losses |
22,907 |
(6,033) |
||||||||||||||
| NON-INTEREST INCOME |
||||||||||||||||
| Service charges on deposit accounts |
2,155 |
2,668 |
||||||||||||||
| Other service charges |
74 |
73 |
||||||||||||||
| Mortgage banking revenue, net |
3,618 |
716 |
||||||||||||||
| Net gain on sale of available for sale securities |
3,487 |
- |
||||||||||||||
| Investment products income |
679 |
432 |
||||||||||||||
| BOLI income |
448 |
517 |
||||||||||||||
| Derivative credit valuation adjustment |
(504) |
(314) |
||||||||||||||
| Other |
925 |
1,427 |
||||||||||||||
| Total non-interest income |
10,882 |
5,519 |
||||||||||||||
| NON-INTEREST EXPENSE |
||||||||||||||||
| Salaries and employee benefits |
16,333 |
14,771 |
||||||||||||||
| Occupancy expense |
3,576 |
3,049 |
||||||||||||||
| Equipment expense |
1,859 |
1,765 |
||||||||||||||
| Amortization of intangible assets |
921 |
921 |
||||||||||||||
| Data processing expense |
999 |
1,056 |
||||||||||||||
| Professional fees |
2,647 |
479 |
||||||||||||||
| Insurance expense |
1,430 |
1,479 |
||||||||||||||
| Advertising expense |
553 |
297 |
||||||||||||||
| Problem loan expense |
799 |
1,477 |
||||||||||||||
| Real estate owned expense, net |
234 |
81 |
||||||||||||||
| Office supplies expense |
229 |
319 |
||||||||||||||
| Other |
1,756 |
1,870 |
||||||||||||||
| Total non-interest expense |
31,336 |
27,564 |
||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES |
2,453 |
(28,078) |
||||||||||||||
| INCOME TAX EXPENSE |
- |
- |
||||||||||||||
| NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS |
$ |
2,453 |
$ |
(28,078) |
||||||||||||
| Basic earnings (loss) per share |
$ |
0.03 |
$ |
(0.33) |
||||||||||||
| Diluted earnings (loss) per share |
$ |
0.03 |
$ |
(0.33) |
||||||||||||
| Weighted average shares – basic |
86,245,121 |
85,776,858 |
||||||||||||||
| Weighted average shares - diluted |
86,370,435 |
85,776,858 |
||||||||||||||
| SUN BANCORP, INC. AND SUBSIDIARIES |
|||||||||||||||
| HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) |
|||||||||||||||
| (Dollars in thousands) |
|||||||||||||||
| 2013 |
2012 |
2012 |
2012 |
2012 |
|||||||||||
| Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
|||||||||||
| Balance sheet at quarter end: |
|||||||||||||||
| Cash and cash equivalents |
$ |
311,660 |
$ |
169,616 |
83,854 |
$ |
115,891 |
$ |
87,553 |
||||||
| Investment securities |
335,844 |
461,980 |
527,034 |
549,849 |
576,457 |
||||||||||
| Loans held-for-investment: |
|||||||||||||||
| Commercial and industrial |
1,737,079 |
1,725,567 |
1,802,060 |
1,794,830 |
1,820,054 |
||||||||||
| Home equity |
200,084 |
207,720 |
212,911 |
217,768 |
219,926 |
||||||||||
| Second mortgage |
29,235 |
30,842 |
32,610 |
36,429 |
38,815 |
||||||||||
| Residential real estate |
248,875 |
273,413 |
224,346 |
153,373 |
109,807 |
||||||||||
| Other |
36,287 |
38,618 |
39,069 |
42,486 |
36,952 |
||||||||||
| Total gross loans held-for-investment |
2,251,560 |
2,276,160 |
2,310,996 |
2,244,886 |
2,225,554 |
||||||||||
| Allowance for loan losses |
(47,124) |
(45,873) |
(49,016) |
(51,394) |
(52,127) |
||||||||||
| Net loans held-for-investment |
2,204,436 |
2,230,287 |
2,261,980 |
2,193,492 |
2,173,427 |
||||||||||
| Loans held-for-sale |
41,469 |
120,935 |
60,676 |
24,672 |
25,034 |
||||||||||
| Goodwill |
38,188 |
38,188 |
38,188 |
38,188 |
38,188 |
||||||||||
| Intangible assets |
2,341 |
3,262 |
4,183 |
5,104 |
6,025 |
||||||||||
| Total assets |
3,227,146 |
3,224,031 |
3,180,263 |
3,133,487 |
3,113,269 |
||||||||||
| Total deposits |
2,723,337 |
2,713,224 |
2,646,807 |
2,608,034 |
2,631,652 |
||||||||||
| Federal funds purchased |
- |
- |
30,000 |
- |
- |
||||||||||
| Securities sold under agreements to repurchase - customers |
2,726 |
1,968 |
3,587 |
5,454 |
5,870 |
||||||||||
| Advances from FHLBNY |
61,077 |
61,415 |
16,749 |
22,080 |
2,408 |
||||||||||
| Securities sold under agreements to repurchase - FHLBNY |
- |
- |
20,000 |
15,000 |
15,000 |
||||||||||
| Obligations under capital lease |
7,541 |
7,609 |
7,675 |
7,740 |
7,805 |
||||||||||
| Junior subordinated debentures |
92,786 |
92,786 |
92,786 |
92,786 |
92,786 |
||||||||||
| Total shareholders' equity |
264,341 |
262,596 |
287,480 |
284,768 |
283,163 |
||||||||||
| Quarterly average balance sheet: |
|||||||||||||||
| Loans(1): |
|||||||||||||||
| Commercial and industrial |
$ |
1,744,553 |
$ |
1,788,347 |
$ |
1,805,623 |
$ |
1,815,704 |
1,849,216 |
||||||
| Home equity |
204,311 |
210,085 |
215,542 |
218,910 |
220,411 |
||||||||||
| Second mortgage |
30,347 |
32,442 |
35,816 |
38,545 |
41,346 |
||||||||||
| Residential real estate |
330,916 |
319,427 |
230,259 |
155,479 |
123,567 |
||||||||||
| Other |
30,410 |
32,444 |
33,658 |
34,765 |
41,733 |
||||||||||
| Total gross loans |
2,340,537 |
2,382,745 |
2,320,898 |
2,263,403 |
2,276,273 |
||||||||||
| Securities and other interest-earning assets |
607,284 |
545,781 |
555,846 |
583,788 |
580,349 |
||||||||||
| Total interest-earning assets |
2,947,821 |
2,928,526 |
2,876,744 |
2,847,191 |
2,856,622 |
||||||||||
| Total assets |
3,206,536 |
3,193,607 |
3,153,668 |
3,116,627 |
3,154,762 |
||||||||||
| Non-interest-bearing demand deposits |
506,600 |
511,813 |
504,936 |
493,707 |
487,088 |
||||||||||
| Total deposits |
2,703,039 |
2,660,405 |
2,642,048 |
2,604,083 |
2,621,736 |
||||||||||
| Total interest-bearing liabilities |
2,360,883 |
2,318,794 |
2,279,177 |
2,259,370 |
2,265,830 |
||||||||||
| Total shareholders' equity |
263,070 |
287,698 |
289,129 |
285,667 |
312,281 |
||||||||||
| Capital and credit quality measures: |
|||||||||||||||
| Total capital (to risk-weighted assets) (2): |
|||||||||||||||
| Sun Bancorp, Inc. |
14.21% |
13.72% |
14.30 |
% |
14.61 |
% |
14.49 |
% |
|||||||
| Sun National Bank |
13.52% |
13.02% |
13.63 |
% |
13.90 |
% |
13.77 |
% |
|||||||
| Tier 1 capital (to risk-weighted assets) (2): |
|||||||||||||||
| Sun Bancorp, Inc. |
12.33% |
11.82% |
12.71 |
% |
13.00 |
% |
12.86 |
% |
|||||||
| Sun National Bank |
12.26% |
11.76% |
12.37 |
% |
12.64 |
% |
12.51 |
% |
|||||||
| Leverage ratio: |
|||||||||||||||
| Sun Bancorp, Inc. |
9.40% |
9.30% |
10.41 |
% |
10.45 |
% |
10.21 |
% |
|||||||
| Sun National Bank |
9.34% |
9.24% |
10.12 |
% |
10.15 |
% |
9.93 |
% |
|||||||
| Average equity to average assets |
8.20% |
9.01% |
9.17 |
% |
9.17 |
% |
9.90 |
% |
|||||||
| Allowance for loan losses to total gross loans held-for-investment |
2.09% |
2.02% |
2.12 |
% |
2.29 |
% |
2.34 |
% |
|||||||
| Non-performing loans held-for-investment to gross loans held-for-investment |
3.28% |
3.64% |
5.23 |
% |
4.63 |
% |
5.15 |
% |
|||||||
| Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned |
3.57% |
4.18% |
5.32 |
% |
4.84 |
% |
5.27 |
% |
|||||||
| Allowance for loan losses to non-performing loans held-for-investment |
63.87% |
55.33% |
40.56 |
% |
49.44 |
% |
45.52 |
% |
|||||||
| Other data: |
|||||||||||||||
| Net recoveries (charge-offs) |
1,080 |
(26,690) |
(4,246) |
(1,243) |
(20,223) |
||||||||||
| Non-performing assets: |
|||||||||||||||
| Non-accrual loans |
$ |
57,143 |
$ |
64,660 |
$ |
95,383 |
$ |
79,696 |
$ |
87,847 |
|||||
| Non-accrual loans held-for-sale |
- |
10,224 |
- |
- |
- |
||||||||||
| Troubled debt restructurings, non-accrual |
16,640 |
18,244 |
25,454 |
24,256 |
26,674 |
||||||||||
| Troubled debt restructurings, held-for-sale |
- |
2,499 |
- |
- |
- |
||||||||||
| Loans past due 90 days and accruing |
- |
- |
- |
- |
74 |
||||||||||
| Real estate owned, net |
8,472 |
7,473 |
5,513 |
6,116 |
4,165 |
||||||||||
| Total non-performing assets |
82,255 |
103,100 |
126,350 |
110,068 |
118,760 |
||||||||||
| (1) Average balances include non-accrual loans and loans held-for-sale (2) March 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 |
2012 |
2012 |
2012 |
2012 |
|||||||||||||||||
| Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
|||||||||||||||||
| Profitability for the quarter: |
|||||||||||||||||||||
| Tax-equivalent interest income |
$ |
27,295 |
$ |
28,367 |
$ |
28,681 |
$ |
29,619 |
$ |
29,641 |
|||||||||||
| Interest expense |
4,005 |
4,174 |
4,135 |
4,519 |
4,757 |
||||||||||||||||
| Tax-equivalent net interest income |
23,290 |
24,191 |
24,546 |
25,100 |
24,884 |
||||||||||||||||
| Tax-equivalent adjustment |
212 |
212 |
212 |
217 |
234 |
||||||||||||||||
| Provision for loan losses |
171 |
24,154 |
1,868 |
510 |
30,683 |
||||||||||||||||
| Non-interest income |
10,882 |
6,815 |
9,588 |
7,527 |
5,519 |
||||||||||||||||
| Non-interest expense excluding amortization of intangible assets |
30,415 |
30,677 |
29,938 |
29,666 |
26,643 |
||||||||||||||||
| Amortization of intangible assets |
921 |
921 |
922 |
921 |
921 |
||||||||||||||||
| Income (loss) before income taxes |
2,453 |
(24,956) |
1,194 |
1,313 |
(28,078) |
||||||||||||||||
| Income tax expense (benefit) |
- |
- |
(34) |
- |
- |
||||||||||||||||
| Net income (loss) |
2,453 |
(24,956) |
1,228 |
1,313 |
(28,078) |
||||||||||||||||
| Net income (loss) available to common shareholders |
$ |
2,453 |
$ |
(24,956) |
$ |
1,228 |
$ |
1,313 |
$ |
(28,078) |
|||||||||||
| Financial ratios: |
|||||||||||||||||||||
| Return on average assets (1) |
0.31% |
(3.13) |
% |
0.16 |
% |
0.17 |
% |
(3.56) |
% |
||||||||||||
| Return on average equity (1) |
3.73% |
(34.70) |
% |
1.70 |
% |
1.84 |
% |
(35.97) |
% |
||||||||||||
| Return on average tangible equity (1),(2) |
4.42% |
(40.61) |
% |
1.99 |
% |
2.17 |
% |
(41.97) |
% |
||||||||||||
| Net interest margin (1) |
3.16% |
3.30 |
% |
3.41 |
% |
3.53 |
% |
3.48 |
% |
||||||||||||
| Efficiency ratio |
92.27% |
102.60 |
% |
90.97 |
% |
94.38 |
% |
91.37 |
% |
||||||||||||
| Per share data: |
|||||||||||||||||||||
| Income (loss) per common share: |
|||||||||||||||||||||
| Basic |
$ |
0.03 |
$ |
(0.29) |
$ |
0.01 |
$ |
0.02 |
$ |
(0.34) |
|||||||||||
| Diluted |
$ |
0.03 |
$ |
(0.29) |
$ |
0.01 |
$ |
0.02 |
$ |
(0.34) |
|||||||||||
| Book value |
$ |
3.06 |
$ |
3.05 |
$ |
3.34 |
$ |
3.31 |
$ |
3.30 |
|||||||||||
| Tangible book value |
$ |
2.59 |
$ |
2.57 |
$ |
2.85 |
$ |
2.81 |
$ |
2.78 |
|||||||||||
| Average basic shares |
86,245,121 |
86,082,669 |
86,001,929 |
85,884,671 |
85,776,858 |
||||||||||||||||
| Average diluted shares |
86,370,435 |
86,082,669 |
86,047,655 |
85,916,426 |
85,776,858 |
||||||||||||||||
| Non-interest income: |
|||||||||||||||||||||
| Service charges on deposit accounts |
$ |
2,155 |
$ |
2,414 |
$ |
2,848 |
$ |
2,730 |
$ |
2,668 |
|||||||||||
| Other service charges |
74 |
72 |
69 |
80 |
73 |
||||||||||||||||
| Mortgage banking revenue, net |
3,618 |
3,694 |
4,204 |
1,865 |
716 |
||||||||||||||||
| Net gain (loss) on sale of available for sale securities |
3,487 |
(196) |
- |
430 |
- |
||||||||||||||||
| Investment products income |
679 |
606 |
510 |
748 |
432 |
||||||||||||||||
| BOLI income |
448 |
488 |
489 |
492 |
516 |
||||||||||||||||
| Derivative credit valuation adjustment |
(504) |
(1,750) |
(198) |
(13) |
(314) |
||||||||||||||||
| Other income |
925 |
1,487 |
1,666 |
1,195 |
1,428 |
||||||||||||||||
| Total non-interest income |
10,882 |
6,815 |
9,588 |
7,527 |
5,519 |
||||||||||||||||
| Non-interest expense: |
|||||||||||||||||||||
| Salaries and employee benefits |
$ |
16,333 |
$ |
15,845 |
$ |
16,128 |
$ |
15,756 |
$ |
14,771 |
|||||||||||
| Occupancy expense |
3,576 |
3,416 |
3,275 |
3,271 |
3,049 |
||||||||||||||||
| Equipment expense |
1,859 |
2,005 |
1,866 |
1,763 |
1,765 |
||||||||||||||||
| Amortization of intangible assets |
921 |
921 |
922 |
921 |
921 |
||||||||||||||||
| Data processing expense |
999 |
1,138 |
1,084 |
1,106 |
1,056 |
||||||||||||||||
| Professional fees |
2,647 |
1,389 |
713 |
833 |
524 |
||||||||||||||||
| Insurance expense |
1,430 |
1,506 |
1,375 |
1,464 |
1,479 |
||||||||||||||||
| Advertising expense |
553 |
1,040 |
464 |
1,008 |
297 |
||||||||||||||||
| Problem loan costs |
799 |
776 |
2.154 |
1,274 |
1,477 |
||||||||||||||||
| Real estate owned expense, net |
234 |
1,008 |
779 |
490 |
81 |
||||||||||||||||
| Office supplies expense |
229 |
298 |
302 |
328 |
319 |
||||||||||||||||
| Other expense |
1,756 |
2,256 |
1,798 |
2,373 |
1,825 |
||||||||||||||||
| Total non-interest expense |
31,336 |
31,598 |
30,860 |
30,587 |
27,564 |
||||||||||||||||
| (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 March 31, |
|||||||||||||||||||||||
| 2013 |
2012 |
||||||||||||||||||||||
| Average |
Income/ |
Yield/ |
Average |
Income/ |
Yield/ |
||||||||||||||||||
| Balance |
Expense |
Cost |
Balance |
Expense |
Cost |
||||||||||||||||||
| Interest-earning assets: |
|||||||||||||||||||||||
| Loans receivable (1),(2): |
|||||||||||||||||||||||
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