Sun Bancorp, Inc. Reports Third Quarter 2013 Results

             Sun Bancorp, Inc. Reports Third Quarter 2013 Results

Third Quarter Highlights

* Non-Performing Loans declined $16.3 million during the quarter to $55.4
million

* NPL / Loans decreased to 2.55%; down from 3.32% in prior quarter and 5.23%
in the third quarter of 2012

* Excess liquidity grew as interest bearing cash averaged $349.4 million or
10.7% of average assets

PR Newswire

VINELAND, N.J., Oct. 23, 2013

VINELAND, N.J., Oct. 23, 2013 /PRNewswire/ --Sun Bancorp, Inc. (NASDAQ: SNBC)
(the "Company") reported today a net loss available to common shareholders of
$4.9 million, or a loss of $0.06 per diluted share, for the quarter ended
September 30, 2013, compared to net income available to common shareholders of
$678 thousand, or $0.01 per diluted share, and $1.2 million, or $0.01 per
diluted share, for the second quarter of 2013 and the third quarter of 2012,
respectively.

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

  oAcceleration of regulatory remediation efforts and mortgage platform
    enhancements increased professional fees to $5.9 million which is up from
    $4.8 million in the prior quarter and $713 thousand in the third quarter
    of 2012
  oProvision expense of $724 thousand recorded in the third quarter of 2013
    as compared to negative provision of $1.9 million in the second quarter of
    2013. The allowance for loan losses equaled $48.9 million at September 30,
    2013, an increase of $847 thousand from June 30, 2013. The allowance for
    loan losses equaled 2.25% of gross loans held-for-investment and 88.19% of
    non-performing loans held-for-investment at September 30, 2013 as compared
    to 2.22% and 66.93%, respectively, at June 30, 2013 and 2.02% and 55.33%,
    respectively, at December 31, 2012.
  oTotal risk-based capital equaled 14.72% at September 30, 2013, a decrease
    of 8 basis points from 14.80% at June 30, 2013.
  oIncreases in interest rates caused a reduction in mortgage banking income.
    Net mortgage banking income fell $3.5 million compared to the prior
    quarter. Sun National Bank (the "Bank") reduced expenses early in the
    fourth quarter to adjust its fixed cost infrastructure to the new lower
    volume environment by reducing headcount by 19 positions. It is
    anticipated that these reductions will save approximately $1.3 million
    annually going forward.
  oThe Bank deployed approximately $151 million of cash into mortgage backed
    securities during the quarter but interest bearing cash still ended the
    quarter at $376.5 million.

"We believe the third quarter reflects the later stages of the Company's
transition, as we continue to improve our asset quality profile and invest in
risk management infrastructure enhancements," said Thomas X. Geisel, the
Company's President and Chief Executive Officer. "We have focused on
balancing the impacts of a rising rate environment and reducing risk on the
balance sheet with deposit generation, product and service innovations and
managed loan growth. As we finish out the year, we expect to maintain this
focus and continue executing on our strategy."

Discussion of Results:

Balance Sheet

  oTotal assets were $3.24 billion at September 30, 2013, as compared to
    $3.21 billion at June 30, 2013 and $3.22 billion at December 31, 2012.
  oCash and cash equivalents increased $11.3 million and $284.0 million,
    respectively, to $453.6 million at September 30, 2013 as compared to June
    30, 2013 and December 31, 2012, primarily due to an increase in interest
    earning bank balances as a result of commercial loan pay downs generated
    from workout strategies and the sales of jumbo residential mortgage loans
    out of the portfolio.
  oInvestment securities available for sale were $407.2 million as of
    September 30, 2013 compared to $343.1 million at June 30, 2013 and $443.2
    million at December 31, 2012. The increase of $64.1 million from the prior
    quarter was due to the purchase of $151.1 million of mortgage backed
    securities offset by the sale of $71 million of U.S. Treasury securities.
  oGross loans held-for-investment were $2.17 billion at September 30, 2013,
    as compared to $2.16 billion at June 30, 2013 and $2.28 billion at
    December 31, 2012. Compared to December 31, 2012, loans
    held-for-investment decreased $106.6 million, primarily due to pay downs
    of commercial real estate loans and the sale of jumbo residential
    mortgages.

Net Interest Income and Margin

  oNet interest income increased $1.2 million from the linked quarter to
    $23.0 million for the three months ended September 30, 2013. The net
    interest margin increased 14 basis points to 3.10% for the three months
    ended September 30, 2013 from 2.96% for the linked quarter, and decreased
    31 basis points as compared to the third quarter of 2012. The average
    yield on interest-earning assets increased 11 basis points to 3.61% at
    September 30, 2013 from 3.50% at June 30, 2013. This increase was due
    primarily to an increase in commercial loan yields of 27 basis points as
    compared to the linked quarter resulting from an interest recovery of $1.2
    million on the payoff of a nonperforming loan. The margin variance between
    the quarter ended September 30, 2013 and the comparable prior year period
    is primarily due to an increase of $328.4 million in average
    interest-earning bank balances. In addition, there was a 19 basis point
    decline in the yield on investment securities primarily due to a decrease
    in average balances resulting from sales of investment securities in 2013.
    Total average investment securities for the three months ended September
    30, 2013 were $414.2 million compared to $534.8 million for the three
    months ended September 30, 2012.
  oExcluding bulk sales, residential mortgage loans sold during the quarter
    totaled $127.4 million as compared to $161.6 million in the previous
    quarter and $119.7 million in the comparable prior year quarter. The
    locked sale pipeline has decreased to $27 million from $84 million at June
    30, 2013. The increasing interest rate environment has caused a decrease
    in residential mortgage production. Despite this production decline,
    closed loans for the nine months ended September 30, 2013 totaled $595
    million, a 39% increase from the same prior year period. 

Non-Interest Income

  oNon-interest income was $5.8 million for the quarter ended September 30,
    2013, as compared to $10.2 million for the quarter ended June 30, 2013 and
    $9.5 million for the comparable prior year quarter. The decrease from the
    linked quarter was primarily attributable to the decrease in net mortgage
    banking revenue of $4.0 million resulting primarily from a decline in
    production volume due to rising rates as well as a $1.5 million gain
    recognized on the sales of jumbo residential mortgage loans in the second
    quarter. The results of operations for the three months ended September
    30, 2013 also includes a negative derivative credit valuation adjustment
    recorded of $380 thousand compared to a positive derivative credit
    valuation adjustment of $6 thousand recorded during the three months ended
    June 30, 2013.

Non-Interest Expense

  oNon-interest expense was $33.0 million in the third quarter of 2013, a
    decrease of $229 thousand compared to the linked quarter and an increase
    of $2.2 million over the comparable prior year quarter. In comparison to
    the linked quarter, decreases in real estate owned expense, net,
    commission expense and salaries and employee benefits of $1.0 million,
    $555 thousand and $363 thousand, respectively, were partially offset by an
    increase of $1.2 million in professional fees. Professional fees
    increased by $5.2 million from the same prior year quarter due to
    regulatory compliance and mortgage risk related consulting services and
    platform enhancements performed in the first nine months of 2013. This
    increase was partially offset by decreases in problem loan expense and
    salaries and employee benefits of $1.3 million and $1.0 million,
    respectively, compared to the third quarter in 2012.

Asset Quality

  oDuring the third quarter of 2013, provision expense of $724 thousand was
    recorded, as compared to negative provision of $1.9 million in the linked
    quarter and expense of $1.9 million in the comparable prior year quarter.
    The allowance for loan losses was $48.9 million at September 30, 2013, or
    2.25% of gross loans held-for-investment, as compared to 2.22% at June 30,
    2013 and 2.02% at December 31, 2012.Recoveries were $1.8 million in the
    third quarter of 2013, as compared to $4.8 million of recoveries recorded
    in the linked quarter, $3.0 million of which was related to the payoff of
    one commercial real estate loan. Charge-offs recorded during the three
    months ended September 30, 2013 were $1.7 million, as compared to $2.0
    million for the linked quarter and $5.0 million for the comparable prior
    year quarter.
  oTotal non-performing assets were $60.5 million, or 2.76% of total gross
    loans held-for-investment, loans held-for-sale and real estate owned at
    September 30, 2013, as compared to $78.5 million, or 3.51%, and $103.1
    million, or 4.18%, respectively, at June 30, 2013 and December 31, 2012.
    Non-performing loans decreased $16.3 million over the linked quarter to
    $55.4 million at September 30, 2013 from $71.7 million at June 30, 2013
    and decreased $40.2 million from $95.6 million at December 31, 2012. The
    decrease from the linked quarter was primarily due to the payoff of three
    nonperforming commercial loans totaling $15.5 million. For the year, ten
    nonperforming commercial loans totaling $33.9 million have been paid off
    as a result of the Company's workout strategies.

Capital

  oShareholders' equity totaled $257.1 million at September 30, 2013 compared
    to $261.7 million at June 30, 2013 and $262.6 million at December 31,
    2012.The Company's tangible equity to tangible assets ratio was 6.81% at
    September 30, 2013, as compared to 7.00% at June 30, 2013 and 6.95% at
    December 31, 2012. At September 30, 2013, the Company's total risk-based
    capital ratio, Tier 1 capital ratio and leverage capital ratio were
    approximately 14.72%, 12.76%, and 9.13%, respectively. At September 30,
    2013, the Bank's total risk-based capital ratio, Tier 1 capital ratio and
    leverage capital ratio were approximately 13.96%, 12.70%, and 9.09%,
    respectively.

The Company will hold its regularly scheduled conference call on Thursday
October 24, 2013, at 11:00 a.m. (ET).Participants may listen to the live web
cast through the Company's website at www.sunnationalbank.com. Participants
are advised to log on 10 minutes ahead of the scheduled start of the call.An
Internet-based replay will be available at the Company's website for two weeks
following the call.

Sun Bancorp, Inc. (NASDAQ: SNBC) is a $3.24 billion asset bank holding company
headquartered in Vineland, New Jersey, with its executive offices located in
Mt. Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a full
service commercial bank serving customers through 50-plus locations in New
Jersey. Sun National Bank has been named one of Forbes Magazine's "Most
Trustworthy Companies" for five years running. Sun National Bank is an Equal
Housing Lender and its deposits are insured up to the legal maximum by the
Federal Deposit Insurance Corporation (FDIC). For more information about Sun
National Bank and Sun Bancorp, Inc., visit www.sunnationalbank.com.

Cautionary Note Regarding Forward-Looking Statements

The foregoing material contains forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995, concerning the financial
condition, results of operations and business of the Company. Forward-looking
statements are statements that include projections, predictions, expectations
or beliefs about events or results or otherwise are not statements of
historical facts, including statements about anticipated savings from
reductions in personnel, improving our asset quality profile, reducing our
risk, enhancing our regulatory infrastructure and balancing the impacts of a
rising rate environment and reducing risk on the balance sheet with deposit
generation, product and service innovations and managed loan growth and being
in the later stages of the Company's transition. Actual results and trends
could differ materially from those set forth in such statements and there can
be no assurances that we will fully realize the anticipated savings from
reductions in personnel, improve our asset quality profile, reduce our risk,
enhance our regulatory infrastructure or successfully balance the impacts of a
rising rate environment and reducing risk on the balance sheet with deposit
generation, product and service innovations and managed loan growth or that
the Company is in the later stages of its transition. We caution that such
statements are subject to a number of uncertainties, including those detailed
under the headings "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Form 10-K for
the fiscal year ended December 31, 2012, its Form 10-Qs for the quarters ended
March 31, 2013 and June 30, 2013, and in other filings made pursuant to the
Securities Exchange Act of 1934, as amended. Therefore, readers should not
place undue reliance on any forward-looking statements.The Company does not
undertake, and specifically disclaims, any obligation to publicly release the
results of any revisions that may be made to any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or circumstances
after the date of such statements. 

Non-GAAP Financial Measures (Unaudited)

This news release references tax-equivalent interest income. Tax-equivalent
interest income is a non-GAAP financial measure. Tax-equivalent interest
income assumes a 35% marginal federal tax rate for all periods. The fully
taxable equivalent adjustments for the three months ended September 30, 2013,
June 30, 2013, March 31, 2013, and December 31, 2012 and September 30, 2012
were $167 thousand, $175 thousand, $212 thousand, $210 thousand and $212
thousand, respectively. The fully taxable equivalent adjustments for the nine
months ended September 30, 2013 and September 30, 2012 were $554 thousand and
$661 thousand, respectively. This release also references tangible book value
per common share. Tangible book value per common share is a non-GAAP
financial measure. Tangible book value per common share is a ratio of
tangible equity, shareholder's equity less intangible assets, to outstanding
common shares. Intangible assets at September 30, 2013, June 30, 2013, March
31, 2013, December 31, 2012, and September 30, 2012 were $39.4 million, $40.0
million, $40.5 million, $41.5 million, and $42.4 million, respectively.

Tax-equivalent interest income

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


                       September 30,  June 30,  March 31,  December  September
For Three Months       2013           2013      2013       31, 2012  30, 2012
Ended:
Net interest income    $    22,980    $ 21,776  $  23,078  $ 23,981  $  24,334
Effect of tax exempt        167         175        212       210        212
income
Net interest income,   $    23,147    $ 21,951  $  23,290  $ 24,191  $  24,546
tax equivalent basis



For Nine Months Ended:                       September 30,
                                             2013       2012
Net interest income                           $  67,834  $  73,867
Effect of tax exempt income                      554    661
Net interest income, tax equivalent basis     $ 68,388   $  74,528



Tangible book value per common share

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

                         September  June 30,   March 31,  December   September
                         30, 2013   2013       2013       31, 2012   30, 2012
Tangible book value per
common share:
 Shareholders' equity  $ 257,139  $ 261,664  $ 264,339  $ 262,596  $ 287,481
Less: Intangible         39,448     39,988     40,529     41,450     42,371
assets
Tangible equity          $ 217,692  $ 221,676  $ 223,811  $ 221,147  $ 245,110
Common stock             88,618     88,572     88,403     88,301     88,171
Less: Treasury stock     2,068      2,107      2,107      2,107      2,107
Total outstanding shares   86,550     86,465     86,296     86,194     86,064
Tangible book value per  $ 2.52     $ 2.56     $ 2.59     $ 2.57     $ 2.85
common share:



SUN BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except share and per share amounts)
                       For the Three Months Ended   For the Nine Months Ended
                       September 30,                September 30,
                      2013              2012        2013           2012
Profitability for
the period:
 Net interest                      
income                $  22,980         24,334      $ 67,834       $ 73,867
                                      $
 Provision for        724            1,868         (988)          33,061
loan losses
 Non-interest         5,799          9,478         26,939         21,959
income
 Non-interest         32,917         30,750        97,492         88,336
expense
 (Loss) income        (4,862)        1,194         (1,731)        (25,571)
before income taxes
 Net (loss)           (4,862)        1,228         (1,731)        (25,537)
income
 Net (loss)                        
income available to   $  (4,862)        1,228       $ (1,731)      $ (25,537)
common shareholders                   $
Financial ratios:
 Return on            (0.60)    %    0.16      %   (0.07)     %   (1.08)   %
average assets^(1)
 Return on            (7.46)    %    1.70      %   (0.88)     %   (11.52)  %
average equity^(1)
 Return on
average tangible         (8.80)    %    1.99      %   (1.04)     %   (13.52)  %
equity^(1),(2)
 Net interest         3.10      %    3.41      %   3.07       %   3.47     %
margin^(1)
 Efficiency ratio     114.38    %    90.97     %   102.87     %   92.18    %
 (Loss) earnings
per common share:
                                      
 Basic         $  (0.06)         0.01        $ (0.02)       $ (0.30)
                                      $
 Diluted      $  (0.06)       $ 0.01        $ (0.02)       $ (0.30)
 Average equity       7.99      %    9.17      %   8.12       %   9.41     %
to average assets
                       September 30,                 December
                                                    31,
                       2013             2012        2012
At period-end:
                                     
 Total assets       $ 3,236,321      3,180,263   $  3,224,031
                                     $
 Total deposits       2,752,693      2,646,807      2,713,224
 Loans
receivable, net of       2,120,686      2,261,980      2,230,287
allowance for loan
losses
 Loans                18,707         60,676         120,935
held-for-sale
 Investments          425,029        527,034        461,980
 Borrowings           68,953         78,011         70,992
 Junior
subordinated             92,786         92,786         92,786
debentures
 Shareholders'        257,140        287,480        262,595
equity
Credit quality and
capital ratios:
Allowance for
loan losses to gross     2.25      %    2.12      %    2.02      %
loans held-for-
investment
 Non-performing
loans
held-for-investment
to gross loans           2.55      %    5.23      %    3.64      %


held-for-investment
Non-performing
assets to gross
loans
held-for-investment,     2.76      %    5.32      %    4.29      %
loans held-for-sale
and real estate
owned
Allowance for
loan losses to           88.19     %    40.56     %    55.33     %
non-performing loans
held-for-investment
Total capital (to
risk-weighted
assets) ^ (3):
 Sun Bancorp,     14.72     %    14.58     %    13.72     %
Inc.
 Sun National     13.96     %    13.88     %    13.02     %
Bank
Tier 1 capital (to
risk-weighted
assets) ^ (3):
 Sun Bancorp,     12.76     %    13.00     %    11.82     %
Inc.
 Sun National     12.70     %    12.62     %    11.76     %
Bank
Leverage ratio:
 Sun Bancorp,     9.13      %    10.44     %    9.30      %
Inc.
 Sun National     9.09      %    10.11     %    9.24      %
Bank
 Book value per                   
common share           $ 2.97           3.34        $  3.05
                                     $
 Tangible book                    
value per common       $ 2.52           2.85        $  2.57
share                                $
(1) Amounts for the three and nine 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) September 30, 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)
                                             September 30,
                                                            December 31, 2012
                                             2013
ASSETS
Cash and due from banks                      $  77,130      $    77,564
Interest-earning bank balances                  376,453          92,052
Cash and cash equivalents                       453,583          169,616
Investment securities available for sale
(amortized cost of $412,088 and $439,488 at     407,170          443,182
September 30, 2013 and December 31, 2012,
respectively)
Investment securities held to maturity
(estimated fair value of $711 and $960 at       700              912
September 30, 2013 and December 31, 2012,
respectively)
Loans receivable (net of allowance for loan
losses of $48,854 and $45,873 at September      2,120,686        2,230,287
30, 2013 and December 31, 2012,
respectively)
Loans held-for-sale, at lower of cost or        -                21,922
market
Loans held-for-sale, at fair value              18,707           99,013
Restricted equity investments, at cost          17,159           17,886
Bank properties and equipment, net              49,387           50,805
Real estate owned                               5,059            7,473
Accrued interest receivable                     6,566            8,054
Goodwill                                        38,188           38,188
Intangible assets                               1,260            3,262
Deferred taxes, net                             2,009            -
Bank owned life insurance (BOLI)                76,770           76,858
Other assets                                    39,077           56,573
Total assets                                 $  3,236,321   $    3,224,031
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits                                     $  2,752,693   $    2,713,224
Securities sold under agreements to             554              1,968
repurchase – customers
Advances from the Federal Home Loan Bank of     60,997           61,415
New York (FHLBNY)
Obligations under capital lease                 7,402            7,609
Junior subordinated debentures                  92,786           92,786
Deferred taxes, net                             -                1,509
Other liabilities                               64,749           82,925
Total liabilities                               2,979,181        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; 88,617,863 shares issued
and 86,549,666 shares outstanding at            88,618           88,301
September 30, 2013; 88,300,637 shares issued
and 86,193,914 shares outstanding at
December 31, 2012
Additional paid-in capital                      507,011          506,537
Retained deficit                                (309,742)        (308,011)
Accumulated other comprehensive (loss)          (2,909)          2,186
income
Deferred compensation plan trust                (406)            (256)
Treasury stock at cost,2,068,197 shares
atSeptember 30, 2013; and 2,106,723 shares     (25,432)         (26,162)
at December 31, 2012
Total shareholders' equity                      257,140          262,595
Total liabilities and shareholders' equity   $  3,236,321   $    3,224,031





SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands,
except per share amounts)
                                For the Three Months      For the Nine Months

                                EndedSeptember 30,       EndedSeptember 30,
                                2013          2012        2013       2012
INTEREST INCOME
Interest and fees on loans   $  24,576    $   25,631   $  73,420   $ 78,037
Interest on taxable             1,680         2,221       4,449      7,278
investment securities
Interest on non-taxable         310           393         1,028      1,228
investment securities
Dividends on restricted         222           224         685        735
equity investments
Total interest income           26,788        28,469      79,582     87,278
INTEREST EXPENSE
Interest on deposits            2,813         3,279       8,773      10,410
Interest on funds borrowed      445           259         1,332      978
Interest on junior              550           597         1,643      2,023
subordinated debentures
Total interest expense          3,808         4,135       11,748     13,411
Net interest income             22,980        24,334      67,834     73,867
PROVISION FOR LOAN LOSSES       724           1,868       (988)      33,061
Net interest income after       22,256        22,466      68,822     40,806
provision for loan losses
NON-INTEREST INCOME
Service charges on deposit      2,314         2,917       6,793      8,468
accounts
Mortgage banking revenue,       1,593         3,822       10,598     5,838
net
Gain on sale of investment      2             -           3,489      430
securities
Investment products income      678           510         2,085      1,690
BOLI income                     482           489         1,416      1,498
Derivative credit valuation     (380)         (198)       (878)      (525)
adjustment
Other                           1,110         1,938       3,436      4,560
Total non-interest income       5,799         9,478       26,939     21,959
NON-INTEREST EXPENSE
Salaries and employee           12,656        13,666      39,967     40,910
benefits
Commission expense              2,001         2,462       6,598      5,745
Occupancy expense               3,456         3,275       10,113     9,595
Equipment expense               1,796         1,866       5,485      5,394
Amortization of intangible      540           922         2,002      2,764
assets
Data processing expense         995           1,084       3,021      3,246
Professional fees               5,947         713         13,355     2,070
Insurance expenses              1,496         1,375       4,468      4,318
Advertising expense             676           464         1,926      1,769
Problem loan expense            816           2,154       2,638      4,905
Real estate owned expense,      252           779         1,741      1,350
net
Office supplies expense         192           302         612        949
Other                           2,094         1,688       5,612      5,321
Total non-interest expense      32,917        30,750      97,492     88,336
(LOSS) INCOME BEFORE INCOME     (4,862)       1,194       (1,731)    (25,571)
TAXES
INCOME TAX BENEFIT              -             (34)        -          (34)
NET (LOSS) INCOME AVAILABLE  $  (4,862)   $   1,228    $  (1,731)  $ (25,537)
TO COMMON SHAREHOLDERS
Basic (loss) earnings per    $  (0.06)    $   0.01     $  (0.02)   $ (0.30)
share
Diluted (loss) earnings per  $  (0.06)    $   0.01     $  (0.02)   $ (0.30)
share
Weighted average shares –    86,499,587   86,001,929   86,356,867  85,888,236
basic
Weighted average shares -    86,499,587   86,047,655   86,356,867  85,888,236
diluted



SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA(Unaudited)
(Dollars in thousands)
                      2013          2013          2013          2012          2012
                      Q3            Q2            Q1            Q4            Q3
Balance sheet at
quarter end:
Cash and cash         $ 453,583     $ 442,239     $ 311,660     $ 169,616     $ 83,854
equivalents
Investment securities   425,029       361,149       335,844       461,980       527,034
Loans
held-for-investment:
 Commercial      1,636,856     1,676,133     1,737,079     1,725,567     1,802,060
and industrial
 Home equity    192,135       195,938       200,084       207,720       212,911
 Second          26,028        27,276        29,235        30,842        32,610
mortgage
 Residential     281,537       225,147       248,875       273,413       224,346
real estate
 Other          32,984        34,298        36,287        38,618        39,069
 Total
gross loans             2,169,540     2,158,792     2,251,560     2,276,160     2,310,996
held-for-investment
Allowance for loan      (48,854)      (48,007)      (47,124)      (45,873)      (49,016)
losses
 Net loans   2,120,686     2,110,785     2,204,436     2,230,287     2,261,980
held-for-investment
 Loans                18,707        69,417        41,469        120,935       60,676
held-for-sale
 Goodwill           38,188        38,188        38,188        38,188        38,188
 Intangible assets   1,260         1,800         2,341         3,262         4,183
 Total assets       3,236,321     3,205,921     3,227,146     3,224,031     3,180,263
 Total deposits      2,752,693     2,722,038     2,723,337     2,713,224     2,646,807
 Federal funds        -             -             -             -             30,000
purchased
Securities sold
under agreements to     554           562           2,726         1,968         3,587
repurchase-
customers
 Advances from       60,997        61,037        61,077        61,415        16,749
FHLBNY
Securities sold
under agreements to     -             -             -             -             20,000
repurchase- FHLBNY
 Obligations under   7,402         7,472         7,541         7,609         7,675
capital lease
 Junior
subordinated            92,786        92,786        92,786        92,786        92,786
debentures
 Total               257,140       261,664       264,341       262,596       287,480
shareholders' equity
Quarterly average
balance sheet:
 Loans^(1):
 Commercial    $ 1,671,302   $ 1,719,278   $ 1,744,553   $ 1,788,347   $ 1,805,623
and industrial
 Home equity     194,622       197,237       204,311       210,085       215,542
 Second          27,041        28,679        30,347        32,442        35,816
mortgage
 Residential     299,667       307,248       330,916       319,427       230,259
real estate
 Other           27,723        28,929        30,410        32,444        33,658
 Total       2,220,355     2,281,371     2,340,537     2,382,745     2,320,898
gross loans
 Securities and
other                   763,575       680,659       607,284       545,781       555,846
interest-earning
assets
 Total
interest-earning        2,983,930     2,962,030     2,947,821     2,928,526     2,876,744
assets
 Total assets       3,264,884     3,222,106     3,206,536     3,193,607     3,153,668

Non-interest-bearing    549,684       531,210       506,600       511,813       504,936
demand deposits
 Total deposits     2,746,820     2,722,651     2,703,039     2,660,405     2,642,048
 Total
interest-bearing        2,358,923     2,355,086     2,360,883     2,318,794     2,279,177
liabilities
 Total               260,701       263,108       263,070       287,698       289,129
shareholders' equity
Capital and credit
quality measures:
Total capital (to
risk-weighted assets)
^ (2):
 Sun Bancorp,    14.72     %   14.80     %   14.21     %   13.72     %   14.58     %
Inc.
 Sun National    13.96     %   14.05     %   13.50     %   13.02     %   13.88     %
Bank
 Tier 1 capital
(to risk-weighted
assets) ^ (2):
 Sun Bancorp,    12.76     %   12.91     %   12.32     %   11.82     %   13.00     %
Inc.
 Sun National    12.70     %   12.79     %   12.25     %   11.76     %   12.62     %
Bank
 Leverage ratio:
 Sun Bancorp,    9.13      %   9.43      %   9.40      %   9.30      %   10.44     %
Inc.
 Sun National    9.09      %   9.33      %   9.33      %   9.24      %   10.11     %
Bank
 Average equity to   7.99      %   8.17      %   8.20      %   9.01      %   9.17      %
average assets
 Allowance for                                                           
loan losses to total              %             %             %             %             %
gross loans             2.25          2.22          2.09          2.02          2.12
held-for-investment
 Non-performing
loans                                                                       
held-for-investment     2.55      %   3.32      %   3.28      %   3.64          5.23      %
to gross loans                                                              %
held-for-investment

                                                                                 

                                                                                 
Non-performing assets
to gross loans                                                                   
held-for-investment,
loans held-for-sale     2.76      %   3.51      %   3.57      %   4.18      %   5.32      %
and real estate owned
 Allowance for                                                           
loan losses to                    %             %             %             %             %
non-performing loans    88.19         66.93         63.87         55.33         40.56
held-for-investment
Other data:
Net recoveries          123           2,766         1,080         (26,690)      (4,246)
(charge-offs)
Non-performing
assets:
            $ 44,979      $ 54,031      $ 57,143      $ 64,660      $ 95,383
Non-accrual loans

Non-accrual loans       -             -             -             10,224        -
held-for-sale
Troubled
debt restructurings,    10,416        17,693        16,640        18,244        25,454
non-accrual
Troubled
debt restructurings,    -             -             -             2,499         -
held-for-sale
Loans past
due 90 days and         -             -             -             -             -
accruing
Real         5,059         6,743         8,472         7,473         5,513
estate owned, net
 Total $ 60,454      $ 78,467      $ 82,255      $ 103,100     $ 126,350
non-performing assets
(1) Average balances include non-accrual loans and loans held-for-sale.

(2) September 30, 2013 capital ratios are estimated, subject to regulatory filings.





SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA(Unaudited)
(Dollars in thousands, except share and per share amounts)
               2013         2013         2013         2012         2012
               Q3           Q2           Q1           Q4           Q3
Profitability
for the
quarter:
Tax-equivalent
interest       $  26,955    $  25,888    $  27,295    $ 28,367     $  28,681
income
Interest          3,808        3,937        4,005       4,174         4,135
expense
Tax-equivalent
net interest      23,147       21,951       23,290      24,191        24,546
income
Tax-equivalent    167          175          212         212           212
adjustment
Provision for     724          (1,883)      171         24,154        1,868
loan losses
Non-interest      5,799        10,211       10,882      6,815         9,588
income
Non-interest
expense
excluding         32,377       32,651       30,415      30,677        29,938
amortization
of intangible
assets
Amortization
of intangible     540          541          921         921           922
assets
(Loss) Income
before income     (4,862)      678          2,453       (24,956)      1,194
taxes
Income tax        -            -            -           -             (34)
benefit
Net (loss)        (4,862)      678          2,453       (24,956)      1,228
income
Net (loss)                                
income                                                  
available to   $           $           $           $            $  1,228
common                                                  (24,956)
shareholders      (4,862)      678          2,453
Financial
ratios:
Return on
average assets    (0.60)  %    0.08    %    0.31    %   (3.13)   %    0.16    %
^(1)
Return on
average equity    (7.46)  %    1.03    %    3.73    %   (34.70)  %    1.70    %
^(1)
Return on
average
tangible          (8.80)  %    1.22    %    4.42    %   (40.61)  %    1.99    %
equity
^(1),(2)
Net interest      3.10    %    2.96    %    3.16    %   3.30     %    3.41    %
margin ^(1)
Efficiency        114.38  %    103.77  %    92.27   %   102.60   %    90.97   %
ratio
Per share
data:
(Loss) income
per common
share:
Basic          $  (0.06)    $  0.01      $  0.03      $ (0.29)     $  0.01
Diluted        $  (0.06)    $  0.01      $  0.03      $ (0.29)     $  0.01
Book value     $  2.97      $  3.03      $  3.06      $ 3.05       $  3.34
Tangible book  $  2.52      $  2.56      $  2.59      $ 2.57       $  2.85
value
Average basic  86,499,587   86,323,099   86,245,121   86,082,669   86,001,929
shares
Average        86,499,587   86,356,796   86,370,435   86,082,669   86,047,655
diluted shares
Non-interest
income:
Service
charges on     $  2,314     $  2,250     $  2,229     $ 2,486      $  2,917
deposit
accounts
Mortgage
banking           1,593        5,601        3,404       3,694         3,822
revenue, net
Net gain
(loss) on sale    2            (47)         3,487       (196)         -
of investment
securities
Investment
products          678          728          679         606           510
income
BOLI income       482          486          448         488           489
Derivative
credit            (380)        6            (504)       (1,750)       (198)
valuation
adjustment
Other income      1,110        1,187        1,139       1,487         1,938
 Total
non-interest   $  5,799     $  10,211    $  10,882    $ 6,815      $  9,478
income
Non-interest
expense:
Salaries and
employee       $  12,656    $  13,019    $  14,292    $ 13,331     $  13,666
benefits
 Commission     2,001        2,556        2,041       2,514         2,462
expense
 Occupancy     3,456        3,081        3,576       3,416         3,275
expense
 Equipment     1,796        1,830        1,859       2,005         1,866
expense

Amortization      540          541          921         921           922
of intangible
assets
 Data
processing        995          1,027        999         1,138         1,084
expense

Professional      5,947        4,761        2,647       1,389         713
fees
 Insurance     1,496        1,542        1,430       1,506         1,375
expense

Advertising       676          698          553         1,040         464
expense
 Problem       816          1,023        799         776           2,154
loan costs
 Real
estate owned      252          1,255        234         1,008         779
expense, net
 Office
supplies          192          191          229         298           302
expense
 Other         2,094        1,668        1,756       2,256         1,688
expense
Total
non-interest   $  32,917    $  33,192    $  31,336    $ 31,598     $  30,750
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 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 September 30,
                     2013                                 2012
                     Average      Income/    Yield/       Average        Income/    Yield/
                     Balance      Expense    Cost         Balance        Expense    Cost
Interest-earning
assets:
Loans receivable
^(1),(2):
Commercial and       $ 1,671,302  $ 19,205     4.60   %   $  1,805,623   $ 20,139     4.46   %
industrial
Home equity            194,622      1,892      3.89          215,542       2,141      3.97
Second mortgage        27,041       384        5.68          35,816        518        5.79
Residential real       299,667      2,620      3.50          230,259       2,257      3.92
estate
Other                  27,723       475        6.85          33,658        576        6.85
Total loans            2,220,355    24,576     4.43          2,320,898     25,631     4.42
receivable
Investment             414,189      2,157      2.08          534,842       3,038      2.27
securities^(3)
Interest-earning       349,386      222        0.25          21,004        12         0.23
bank balances
Total
interest-earning       2,983,930    26,955     3.61          2,876,744     28,681     3.99
assets
Non-interest earning
assets:
 Cash and due from    72,336                                75,627
banks
 Bank properties      48,590                                52,127
and equipment, net
 Goodwill and
intangible assets,     39,717                                42,826
net
 Other assets         120,311                               106,344
Total
non-interest-earning   280,954                               276,924
assets
Total assets         $ 3,264,884                          $  3,153,668
Interest-bearing
liabilities:
Interest-bearing
deposit accounts:
Interest-bearing     $ 1,263,160  $ 1,064      0.34   %   $  1,218,338   $ 1,195      0.39   %
demand deposits
Savings deposits       270,394      213        0.32          264,112       225        0.34
Time deposits          663,582      1,536      0.93          654,662       1,859      1.14
Total
interest-bearing       2,197,136    2,813      0.51          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    555          -          -             4,925         2          0.16
repurchase-
customers
Long-term
borrowings:
FHLBNY advances ^(4)   61,011       321        2.10          10,181        103        4.71
Obligations under      7,435        124        6.67          7,706         128        6.64
capital lease
Junior subordinated    92,786       550        2.37          92,786        597        2.57
debentures
Total borrowings       161,787      995        2.46          142,065       856        2.46
Total
interest-bearing       2,358,923    3,808      0.65          2,279,177     4,135      0.73
liabilities
Non-interest bearing
liabilities:

Non-interest-bearing   549,684                                  504,936
demand deposits
 Other liabilities    95,576                                80,426
Total non-interest     645,260                               585,362
bearing liabilities
Total liabilities      3,004,183                             2,864,539
Shareholders'          260,701                               289,129
equity
Total liabilities
and shareholders'    $ 3,264,884                          $  3,153,668
equity
Net interest income               $ 23,147                               $ 24,546
Interest rate spread                           2.96   %                               3.26   %
^(5)
Net interest margin                            3.10   %                               3.41   %
^(6)
Ratio of average
interest-earning
assets to average                              126.50 %                               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 September 30, 2013 and 2012 were $167 thousand and
$212 thousand, respectively.
(4) Amounts include Advances from FHLBNY and Securities sold under agreements to
repurchase- FHLBNY.
(5) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of average
interest-earning assets.





SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS(Unaudited)
(Dollars in
thousands)
                     For the Nine Months Ended September 30,
                     2013                              2012
                     Average      Income/   Yield/     Average      Income/   Yield/
                     Balance      Expense   Cost       Balance      Expense   Cost
Interest-earning
assets:
Loans receivable
^(1),(2):
Commercial and       $ 1,711,443  $ 56,786   4.41   %  $ 1,823,449  $ 62,537   4.57   %
industrial
Home equity            198,688      5,709    3.82        218,278      6,683    4.08
Second mortgage        28,677       1,244    5.77        38,559       1,658    5.73
Residential real       312,496      8,176    3.48        169,989      5,241    4.11
estate
Other                  29,010       1,504    6.90        36,707       1,918    6.97
Total loans            2,280,314    73,419   4.28        2,286,982    78,037   4.55
receivable
Investment             405,124      6,192    2.03        547,968      9,858    2.40
securities ^(3)
Interest-earning       279,288      525      0.25        25,296       44       0.23
bank balances
Total
interest-earning       2,964,726    80,136   3.59        2,860,246    87,939   4.10
assets
Non-interest earning
assets:
 Cash and due from    72,025                            73,292
banks
 Bank properties      49,375                            53,206
and equipment, net
 Goodwill and
intangible assets,     40,314                            43,743
net
 Other assets         104,933                           111,242
Total
non-interest-earning   266,647                           281,483
assets
Total assets         $ 3,231,373                       $ 3,141,729
Interest-bearing
liabilities:
Interest-bearing
deposit accounts:
Interest-bearing     $ 1,249,777  $ 3,269    0.35   %  $ 1,226,064  $ 3,600    0.39   %
demand deposits
Savings deposits       268,488      648      0.32        263,091      671      0.34
Time deposits          676,742      4,856    0.95        638,259      6,139    1.28
Total
interest-bearing       2,195,007    8,773    0.53        2,127,414    10,410   0.65
deposit accounts
Short-term
borrowings:
Federal funds          -            -        -           7,263        19       0.35
purchased
FHLBNY advances                                          6,715        41       0.81
Securities sold
under agreements to    1,920        2        0.14        5,797        6        0.14
repurchase-
customers
Long-term
borrowings:
FHLBNY advances ^(4)   61,073       955      2.08        20,421       526      3.43
Obligations under      7,503        375      6.65        7,770        386      6.62
capital lease
Junior subordinated    92,786       1,643    2.36        92,786       2,023    2.91
debentures
Total borrowings       163,282      2,975    2.42        140,752      3,001    2.84
Total
interest-bearing       2,358,289    11,748   0.66        2,268,166    13,411   0.79
liabilities
Non-interest bearing
liabilities:

Non-interest-bearing   529,322                           495,279
demand deposits
 Other liabilities    81,477                            82,615
Total non-interest     610,799                           577,894
bearing liabilities
Total liabilities      2,969,088                         2,846,060
Shareholders'          262,285                           295,669
equity
Total liabilities
and shareholders'    $ 3,231,373                       $ 3,141,729
equity
Net interest income               $ 68,388                          $ 74,528
Interest rate spread                         2.93   %                          3.31   %
^(5)
Net interest margin                          3.07   %                          3.47   %
^(6)
Ratio of average
interest-earning
assets to average                            125.72 %                          126.10 %
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 nine months ended September 30, 2013 and
2012 were $554 thousand and $661 thousand, respectively.
(4) Amounts include Advances from FHLBNY and Securities sold under agreements to
repurchase- FHLBNY.
(5) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of average
interest-earning assets.





SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS(Unaudited)
(Dollars in
thousands)
                     For the Three Months Ended
                     September 30, 2013                June 30, 2013
                     Average      Income/   Yield/     Average      Income/   Yield/
                     Balance      Expense   Cost       Balance      Expense   Cost
Interest-earning
assets:
Loans receivable
^(1),(2):
Commercial and       $ 1,671,302  $ 19,205   4.60   %  $ 1,719,278  $ 18,622   4.33   %
industrial
Home equity            194,622      1,892    3.89        197,237      1,911    3.88
Second mortgage        27,041       384      5.68        28,679       432      6.03
Residential real       299,667      2,620    3.50        307,248      2,485    3.24
estate
Other                  27,723       475      6.85        28,929       495      6.84
Total loans            2,220,355    24,576   4.43        2,281,371    23,945   4.20
receivable
Investment             414,189      2,157    2.08        373,311      1,751    1.88
securities^(3)
Interest-earning       349,386      222      0.25        307,348      192      0.25
bank balances
Total
interest-earning       2,983,930    26,955   3.61        2,962,030    25,888   3.50
assets
Non-interest earning
assets:
 Cash and due from    72,336                            70,968
banks
 Bank properties      48,590                            49,192
and equipment, net
 Goodwill and
intangible assets,     39,717                            40,256
net
 Other assets         120,311                           99,660
Total
non-interest-earning   280,954                           260,076
assets
Total assets         $ 3,264,884                       $ 3,222,106
Interest-bearing
liabilities:
Interest-bearing
deposit accounts:
Interest-bearing     $ 1,263,160  $ 1,064    0.34   %  $ 1,244,074  $ 1,094    0.35   %
demand deposits
Savings deposits       270,394      213      0.32        269,624      220      0.33
Time deposits          663,582      1,536    0.93        677,743      1,632    0.96
Total
interest-bearing       2,197,136    2,813    0.51        2,191,441    2,946    0.54
deposit accounts
Short-term
borrowings:
Federal funds          -            -        -           -            -        -
purchased
Securities sold
under agreements to    555          -        -           2,304        1        0.17
repurchase-
customers
Long-term
borrowings:
FHLBNY advances ^(4)   61,011       321      2.10        61,051       318      2.08
Obligations under      7,435        124      6.67        7,504        125      6.66
capital lease
Junior subordinated    92,786       550      2.37        92,786       547      2.36
debentures
Total borrowings       161,787      995      2.46        163,645      991      2.42
Total
interest-bearing       2,358,923    3,808    0.65        2,355,086    3,937    0.67
liabilities
Non-interest bearing
liabilities:

Non-interest-bearing   549,684                           531,210
demand deposits
 Other liabilities    95,576                            72,702
Total non-interest     645,260                           603,912
bearing liabilities
Total liabilities      3,004,183                         2,958,998
Shareholders'          260,701                           263,108
equity
Total liabilities
and shareholders'    $ 3,264,884                       $ 3,222,106
equity
Net interest income               $ 23,147                          $ 21,951
Interest rate spread                         2.96   %                          2.83   %
^(5)
Net interest margin                          3.10   %                          2.96   %
^(6)
Ratio of average
interest-earning
assets to average                            126.50 %                          125.77 %
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 September 30, 2013
and June 30, 2013 were $167 thousand and $175 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 and Chief Executive Officer (856)
690-4329
 
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