Sun Bancorp, Inc. Reports Fourth Quarter 2012 Results

            Sun Bancorp, Inc. Reports Fourth Quarter 2012 Results

- Risk reduction strategies accelerate leading to a 37% reduction in NPL's
during the 4th quarter as NPL / Loans falls to 3.53%(1)

- Revenue growth initiatives progressing as annual core commercial loan
production increases 39% and annual Sun Home Loans loan closings increase by
246%

- Solid capital ratios after risk reduction efforts with Total Risk Based
Capital Ratio of 13.7% and Tier 1 Leverage Ratio of 9.3%

- Management team enhanced with appointments of new CFO and CRO

PR Newswire

VINELAND, N.J., Jan. 23, 2013

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:

  oAs 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.
  oProvision 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.
  oCommercial 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.
  oThe 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.
  oNon-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.
  oTotal 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

  oTotal assets were $3.22 billion at December 31, 2012, as compared to $3.18
    billion at September 30, 2012 and December 31, 2011.
  oGross 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.
  oDeposits 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.
  oBorrowings increased by $23.0 million from the linked quarter in order to
    fund the continued residential loan growth.

Net Interest Income and Margin

  oOna 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

  oNon-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

  oThe 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

  oThe 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 anallowance 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.
  oTotal 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

  oStockholders' 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

  oThe 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
    additionalreserve 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        24,154         6,826        57,215       74,266
losses
 Non-interest income       6,815          6,804        29,450       13,468
 Non-interest              31,598         27,226       120,608      110,225
expense
 Loss before income        (24,956)       (1,519)      (50,525)     (67,495)
taxes
 Net loss                  (24,956)       (1,519)      (50,491)     (67,505)
 Net loss available     $  (24,956)   $   (1,519)   $  (50,491)   $ (67,505)
to common shareholders
Financial ratios:
 Return on average         (3.13)   %     (0.19)  %    (1.60)   %   (2.05)   %
assets^(1)
 Return on average         (34.70)  %     (1.96)  %    (17.19)  %   (22.57)  %
equity^(1)
 Return on average         (40.61)  %     (2.29)  %    (20.17)  %   (26.77)  %
tangible equity^(1),(2)
 Net interest              3.30     %     3.54    %    3.43     %   3.50     %
margin^(1)
 Efficiency ratio          102.60   %     83.69   %    94.21    %   94.21    %
 Efficiency ratio,
excluding non-operating
income and                    91.55    %     81.02   %    89.87    %   81.05    %
non-operating
expense^(3)
 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         9.01     %     9.62    %    9.31     %   9.10     %
average assets
                            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         2,228,217     2,249,455
losses
 Loans                     123,005       23,192
held-for-sale^(4)
 Investments               461,980       532,715
 Borrowings                70,992        31,269
 Junior subordinated       92,786        92,786
debentures
 Shareholders' equity      262,596       309,083
Credit quality and
capital ratios:
 Allowance for loan
losses to gross               2.04      %   1.82      %
loansheld-for-investment
 Non-performing loans
held-for-investment to        3.53      %   4.69      %
gross loans
held-for-investment
 Non-performing assets
to gross loans
held-for-investment,          4.18      %   4.86      %
loans held-for-sale and
real estate owned
 Allowance for loan
losses to non-performing      57.81     %   38.69     %
loans held-for-investment
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   $ 3.05        $ 3.61
share
 Tangible book value     $ 2.57        $ 3.08
per common share

(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)
                                              December31,
                                                            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      443,182         515,545
December 31, 2012 and December 31, 2011,
respectively)
Investment securities held to maturity
(estimated fair value of $960 and $1,413 at      912             1,344
December 31, 2012 and December 31, 2011,
respectively)
Loans receivable (net of allowance for loan
losses of $46,482 and $41,667 at December 31,    2,228,217       2,249,455
2012 and December 31, 2011, respectively)
 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              1,968           5,668
repurchase – customers
Advances from the Federal Home Loan Bank of      61,415          2,733
New York (FHLBNY)
Securities sold under agreements to              -               15,000
repurchase – FHLBNY
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, 100,000,000
shares authorized; 88,290,735 shares issued
and 86,184,012 shares outstanding at December    88,301          87,825
31, 2012; 87,825,038 shares issued and
85,718,315 shares outstanding at December 31,
2011
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         (26,162)        (26,162)
atDecember 31, 2012 and December 31, 2011
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
                                                       EndedDecember 31,
                              EndedDecember 31,
                              2012          2011       2012         2011
INTEREST INCOME
Interest and fees on loans  $ 25,670     $  27,678   $ 103,707    $ 112,793
Interest on taxable           1,860         2,421      9,138        10,507
investment securities
Interest on non-taxable       390           503        1,618        2,487
investment securities
Dividends on restricted       235           214        970          893
equity investments
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            571           695        2,594        2,997
subordinated debentures
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      (173)         18,903     40,633       29,262
losses
NON-INTEREST INCOME
Service charges on deposit    2,414         2,799      10,660       10,889
accounts
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            -             -          -            (250)
securities
Gain (loss)on sale of        (196)         447        234          1,855
investment securities
Investment products income    606           453        2,296        2,913
BOLI income                   488           1,309      1,986        2,964
Derivative credit valuation   (1,750)       (214)      (2,275)      (12,538)
adjustment
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         15,845        13,011     62,500       52,501
benefits
Occupancy expense             3,416         3,643      13,011       13,373
Equipment expense             2,005         1,858      7,399        7,342
Amortization of intangible    921           921        3,685        3,685
assets
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,    1,008         108        2,358        1,186
net
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)          -             -          (34)         10
EXPENSE
NET LOSS AVAILABLE TO       $ (24,956)   $  (1,519)  $ (50,491)   $ (67,505)
COMMON SHAREHOLDERS
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 –   86,082,669   85,587,878  85,937,110   76,653,990
basic
Weighted average shares -   86,082,669   85,587,878  85,937,110   76,653,990
diluted





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         $ 169,616    $ 83,854     $ 115,891    $ 87,553     $ 119,822
equivalents
Investment securities   461,980      527,034      549,849      576,457      532,715
Loans
held-for-investment:
 Commercial      1,726,073    1,802,060    1,794,830    1,820,054    1,878,026
and industrial
 Home equity    207,814      212,911      217,768      219,926      224,517
 Second          30,842       32,610       36,429       38,815       41,470
mortgage
 Residential     271,385      224,346      153,373      109,807      100,438
real estate
 Other          38,585       39,069       42,486       36,952       46,671
 Total
gross loans             2,274,699    2,310,996    2,244,886    2,225,554    2,291,122
held-for-investment
Allowance for loan      (46,482)     (49,016)     (51,394)     (52,127)     (41,667)
losses
 Net loans   2,228,217    2,261,980    2,193,492    2,173,427    2,249,455
held-for-investment
 Loans                123,005      60,676       24,672       25,034       23,192
held-for-sale
 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        -            30,000       -            -            -
purchased
Securities sold
under agreements to     1,968        3,587        5,454        5,870        5,668
repurchase–
customers
 Advances from       61,415       16,749       22,080       2,408        2,733
FHLBNY
Securities sold
under agreements to     -            20,000       15,000       15,000       15,000
repurchase– FHLBNY
 Obligations under   7,609        7,675        7,740        7,805        7,868
capital lease
 Junior
subordinated            92,786       92,786       92,786       92,786       92,786
debentures
 Total               262,596      287,480      284,768      283,163      309,083
shareholders' equity
Quarterly average
balance sheet:
 Loans^(1):
 Commercial    $ 1,788,347  $ 1,805,623  $ 1,815,704  $ 1,849,216  $ 1,910,635
and industrial
 Home equity     210,085      215,542      218,910      220,411      226,345
 Second          32,442       35,816       38,545       41,346       44,600
mortgage
 Residential     319,427      230,259      155,479      123,567      111,514
real estate
 Other           32,444       33,658       34,765       41,733       46,248
 Total       2,382,745    2,320,898    2,263,403    2,276,273    2,339,342
gross loans
 Securities and
other                   545,781      555,846      583,788      580,349      602,485
interest-earning
assets
 Total
interest-earning        2,928,526    2,876,744    2,847,191    2,856,622    2,941,827
assets
 Total assets       3,193,607    3,153,668    3,116,627    3,154,762    3,229,699

Non-interest-bearing    511,813      504,936      493,707      487,088      536,558
demand deposits
 Total deposits     2,660,405    2,642,048    2,604,083    2,621,736    2,706,772
 Total
interest-bearing        2,318,794    2,279,177    2,259,370    2,265,830    2,294,786
liabilities
 Total               287,698      289,129      285,667      312,281      310,786
shareholders' equity
Capital and credit
quality measures:
Total capital (to
risk-weighted assets)
^ (2):
 Sun Bancorp,    13.73%       14.58%       14.61%       14.49%       15.22%
Inc.
 Sun National    13.04%       13.88%       13.90%       13.77%       13.39%
Bank
 Tier 1 capital
(to risk-weighted
assets) ^ (2):
 Sun Bancorp,    11.83%       13.00%       13.00%       12.86%       13.96%
Inc.
 Sun National    11.78%       12.62%       12.64%       12.51%       12.13%
Bank
 Leverage ratio:
 Sun Bancorp,    9.30%        10.44%       10.45%       10.21%       11.09%
Inc.
 Sun National    9.26%        10.11%       10.15%       9.93%        9.64%
Bank
 Average equity to   9.01%        9.17%        9.17%        9.91%        9.62%
average assets
 Allowance for                                                       
loan losses to total
gross loans             2.04%        2.12%        2.29%        2.34%        1.82%
held-for-investment
 Non-performing
loans
held-for-investment     3.53%        5.23%        4.63%        5.15%        4.69%
to gross loans
held-for-investment
 Non-performing
assets to gross loans
held-for-investment,    4.18%        5.32%        4.84%        5.27%        4.86%
loans held-for-sale
and real estate owned
 Allowance for                                                       
loan losses to
non-performing loans    57.81%       40.56%       49.44%       45.52%       38.69%
held-for-investment
Other data:
Net charge-offs         (26,690)     (4,246)      (1,243)      (20,223)     (20,386)
Non-performing
assets:
           $ 60,528     $ 95,383     $ 79,696     $ 87,847     $ 89,656
Non-accrual loans
 Non-accrual     10,240       -            -            -            -
loans held-for-sale
 Troubled
debt restructurings,    18,244       25,454       24,256       26,674       17,875
non-accrual
 Troubled debt
restructurings,         2,499        -            -            -            -
held-for-sale
 Loans
past due 90 days and    1,638        -            -            74           154
accruing
 Real        7,473        5,513        6,116        4,165        5,020
estate owned, net
 Total   100,622      126,350      110,068      118,760      112,705
non-performing assets
(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  $  28,367     $   28,681   $  29,619    $ 29,641    $  31,087
interest income
Interest           4,174          4,135       4,519       4,758        5,087
expense
Tax-equivalent
net interest       24,191         24,546      25,098      24,883       26,000
income
Tax-equivalent     212            212         217         233          271
adjustment
Provision for      24,154         1,868       510         30,683       6,826
loan losses
Non-interest
income
excluding net
impairment         6,815          9,588       7,527       5,519        6,804
losses on
available for
sale securities
Non-interest
expense
excluding          30,677         29,938      29,666      26,643       26,305
amortization of
intangible
assets
Amortization of
intangible         921            922         921         921          921
assets
(Loss) income
before income      (24,956)       1,194       1,313       (28,078)     (1,519)
taxes
Income tax                        (34)        -           -            -
benefit
Net (loss)         (24,956)       1,228       1,313       (28,078)     (1,519)
income
Net (loss)
income                                                             
available to    $             $            $            $           $
common             (24,956)       1,228       1,313       (28,078)     (1,519)
shareholders
Financial
ratios:
Return on
average assets     (3.13)   %     0.16%       0.17%       (3.56)%      (0.19)%
^(1)
Return on
average equity     (34.70)  %     1.70%       1.84%       (35.97)%     (1.96)%
^(1)
Return on
average            (40.61)  %     1.99%       2.17%       (41.97)%     (2.29)%
tangible equity
^(1),(2)
Net interest       3.30     %     3.41%       3.53%       3.48%        3.54%
margin ^(1)
Efficiency         102.60   %     90.97%      94.38%      91.37%       83.69%
ratio
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   $  2.57       $   2.85     $  2.81      $ 2.78      $  3.08
value
Average basic   86,082,669    86,001,929   85,884,671   85,776,858  85,587,878
shares
Average diluted 86,082,669    86,047,655   85,916,421   85,776,858  85,587,878
shares
Operating
non-interest
income:
Service charges
on deposit      $  2,414      $   2,848    $  2,730     $ 2,668     $  2,799
accounts
Other service      72             69          80          73           71
charges
Gain on sale of    3,694          4,204       1,865       716          906
loans
Net gain on
sale of            (196)          -           430         -            280
available for
sale securities
Investment         606            510         748         432          453
products income
BOLI income        488            489         492         516          1,309
Derivative
credit             (1,750)        (198)       (13)        (314)        (214)
valuation
adjustment
Other income       1,487          1,666       1,195       1,428        1,200
 Total
non-interest    $  6,815      $   9,588    $  7,527     $ 5,519     $  6,804
income
Operating
non-interest
expense:
Salaries and
employee        $  15,845     $   16,128   $  15,756    $ 14,771    $  13,011
benefits
 Occupancy      3,416          3,275       3,271       3,049        3,643
expense
 Equipment      2,005          1,866       1,763       1,765        1,858
expense

Amortization of    921            922         921         921          921
intangible
assets
 Data
processing         1,138          1,084       1,106       1,056        1,118
expense

Professional       1,389          713         833         524          525
fees
 Insurance      1,506          1,375       1,464       1,479        1,433
expense
 Advertising    1,040          464         1,008       297          664
expense
 Problem        776            2,154       1,274       1,477        1,866
loan costs
 Real estate
owned expense,     1,008          779         490         81           108
net
 Office
supplies           298            302         328         319          323
expense
 Other          2,256          1,798       2,373       1,825        1,756
expense
Total
non-interest    $  31,598     $   30,860   $  30,587    $ 27,564    $  27,226
expense

(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       $ 1,788,347  $ 19,628    4.39   %  $ 1,910,635  $ 22,542   4.72   %
industrial
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       319,427      2,959     3.71        111,514      1,338    4.80
estate
Other                  32,444       559       6.89        46,248       794      6.87
Total loans            2,382,745    25,671    4.31        2,339,342    27,678   4.73
receivable
Investment             507,158      2,672     2.11        548,355      3,375    2.46
securities^(3)
Interest-earning       38,623       24        0.25        54,130       34       0.25
bank balances
Total
interest-earning       2,928,526    28,367    3.87        2,941,827    31,087   4.23
assets
Non-interest earning
assets:
 Cash and due from    72,129                             73,863
banks
 Bank properties      51,515                             55,264
and equipment, net
 Goodwill and
intangible assets,     41,902                             45,586
net
 Other assets         99,535                             113,159
Total
non-interest-earning   265,081                            287,872
assets
Total assets         $ 3,193,607                        $ 3,229,699
Interest-bearing
liabilities:
Interest-bearing
deposit accounts:
Interest-bearing     $ 1,224,254  $ 1,178     0.38   %  $ 1,271,991  $ 1,435    0.45   %
demand deposits
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       2,148,592    3,143     0.59        2,170,214    4,041    0.74
deposit accounts
Short-term
borrowings:
Securities sold
under agreements to    3,250        2         0.25        6,047        1        0.07
repurchase-
customers
Long-term
borrowings:
FHLBNY advances ^(4)   66,527       332       2.00        17,842       219      4.91
Obligations under      7,639        127       6.65        7,897        131      6.64
capital lease
Junior subordinated    92,786       572       2.47        92,786       695      3.00
debentures
Total borrowings       170,202      1,033     2.43        124,572      1,046    3.36
Total
interest-bearing       2,318,794    4,176     0.72        2,294,786    5,087    0.89
liabilities
Non-interest bearing
liabilities:

Non-interest-bearing   511,813                            536,558
demand deposits
 Other liabilities    75,302                             87,569
Total non-interest     587,115                            624,127
bearing liabilities
Total liabilities      2,905,909                          2,918,913
Shareholders'          287,698                            310,786
equity
Total liabilities
and shareholders'    $ 3,193,607                        $ 3,229,699
equity
Net interest income               $ 24,191                           $ 26,000
Interest rate spread                          3.15   %                          3.34   %
^(5)
Net interest margin                           3.30   %                          3.54   %
^(6)
Ratio of average
interest-earning
assets to average                             126.30 %                          128.20 %
interest-bearing
liabilities
(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       $ 1,814,626  $ 82,165    4.53   %  $ 1,954,701  $ 92,107    4.71   %
industrial
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       207,553      8,199     3.95        87,858       4,547     5.18
estate
Other                  35,636       2,477     6.95        51,041       3,502     6.86
Total loans            2,311,054    103,707   4.49        2,374,876    112,793   4.75
receivable
Investment             537,710      12,529    2.33        505,006      14,940    2.96
securities ^(3)
Interest-earning       28,646       68        0.24        117,830      288       0.24
bank balances
Total
interest-earning       2,877,410    116,304   4.04        2,997,712    128,021   4.27
assets
Non-interest earning
assets:
 Cash and due from    73,000                             72,455
banks
 Bank properties      52,781                             54,589
and equipment, net
 Goodwill and
intangible assets,     43,280                             46,961
net
 Other assets         108,299                            114,158
Total
non-interest-earning   277,360                            288,163
assets
Total assets         $ 3,154,770                        $ 3,285,875
Interest-bearing
liabilities:
Interest-bearing
deposit accounts:
Interest-bearing     $ 1,225,609  $ 4,778     0.39   %  $ 1,317,816  $ 7,024     0.53   %
demand deposits
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       2,132,738    13,554    0.64        2,265,250    18,737    0.83
deposit accounts
Short-term
borrowings:
Federal funds          5,437        20        0.37        -            -         -
purchased
Securities sold
under agreements to    5,157        7         0.14        6,717        7         0.10
repurchase-
customers
Long-term
borrowings:
FHLBNY advances ^(4)   37,038       898       2.42        18,316       884       4.83
Obligations under      7,737        513       6.63        7,988        527       6.60
capital lease
Junior subordinated    92,786       2,594     2.80        92,786       2,997     3.23
debentures
Total borrowings       148,155      4,032     2.72        125,807      4,415     3.51
Total
interest-bearing       2,280,893    17,586    0.77        2,391,057    23,152    0.97
liabilities
Non-interest bearing
liabilities:

Non-interest-bearing   499,435                            509,678
demand deposits
 Other liabilities    80,777                             86,013
Total non-interest     580,212                            595,691
bearing liabilities
Total liabilities      2,861,105                          2,986,748
Shareholders'          293,665                            299,127
equity
Total liabilities
and shareholders'    $ 3,154,770                        $ 3,285,875
equity
Net interest income               $ 98,718                           $ 104,869
Interest rate spread                          3.27   %                           3.30   %
^(5)
Net interest margin                           3.43   %                           3.50   %
^(6)
Ratio of average
interest-earning
assets to average                             126.15 %                           125.37 %
interest-bearing
liabilities
(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       $ 1,788,347  $ 19,628   4.39   %  $ 1,805,623  $ 20,139   4.46   %
industrial
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       319,427      2,959    3.71        230,259      2,257    3.92
estate
Other                  32,444       559      6.89        33,658       576      6.85
Total loans            2,382,745    25,671   4.31        2,320,898    25,631   4.42
receivable
Investment             507,158      2,672    2.11        534,842      3,038    2.27
securities ^(3)
Interest-earning       38,623       24       0.25        21,004       12       0.23
bank balances
Total
interest-earning       2,928,526    28,367   3.87        2,876,744    28,681   3.99
assets
Non-interest earning
assets:
 Cash and due from    72,129                            75,627
banks
 Bank properties      51,515                            52,127
and equipment, net
 Goodwill and
intangible assets,     41,902                            42,826
net
 Other assets         99,535                            106,344
Total
non-interest-earning   265,081                           276,924
assets
Total assets         $ 3,193,607                       $ 3,153,668
Interest-bearing
liabilities:
Interest-bearing
deposit accounts:
Interest-bearing     $ 1,224,254  $ 1,178    0.38   %  $ 1,218,338  $ 1,195    0.39   %
demand deposits
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       2,148,592    3,143    0.59        2,137,112    3,279    0.61
deposit accounts
Short-term
borrowings:
Federal funds          -            -        -           6,467        4        0.25
purchased
FHLBNY advances        -            -        -           20,000       22       0.44
Securities sold
under agreements to    3,250        2        0.25        4,925        2        0.16
repurchase-
customers
Long-term
borrowings:
FHLBNY advances ^(4)   66,527       332      2.00        10,181       103      4.71
Obligations under      7,639        127      6.65        7,706        128      6.64
capital lease
Junior subordinated    92,786       572      2.47        92,786       597      2.57
debentures
Total borrowings       170,202      1,033    2.43        142,065      856      2.41
Total
interest-bearing       2,318,794    4,176    0.72        2,279,177    4,135    0.73
liabilities
Non-interest bearing
liabilities:

Non-interest-bearing   511,813                           504,936
demand deposits
 Other liabilities    75,302                            80,426
Total non-interest     587,115                           585,362
bearing liabilities
Total liabilities      2,905,909                         2,864,539
Shareholders'          287,698                           289,129
equity
Total liabilities
and shareholders'    $ 3,193,607                       $ 3,153,668
equity
Net interest income               $ 24,191                          $ 24,546
Interest rate spread                         3.15   %                          3.26   %
^(5)
Net interest margin                          3.30   %                          3.41   %
^(6)
Ratio of average
interest-earning
assets to average                            126.30 %                          126.22 %
interest-bearing
liabilities
(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.

Website: http://www.sunnb.com
Contact: Thomas X. Geisel, President & CEO, +1-856-690-4329
 
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