Ross-Backed Sun Bancorp to Cut Workforce by 38%Craig Giammona
Sun Bancorp Inc., the New Jersey lender backed by billionaire investor Wilbur Ross, said it will cut 242 jobs and close or consolidate almost a third of its branches as Thomas O’Brien takes over as chief executive officer. Shares climbed the most since May.
Sun will also eliminate its home mortgage and commercial specialty business units and accelerate disposition of $96 million of “problem loans,” the Mount Laurel-based bank said today in a statement. The restructuring will result in a second-quarter charge of about $20 million, the firm said.
“We had broadly diversified the product menu over the years but it just built too much in the way of cost infrastructure,” O’Brien, 63, who had been working as a consultant for the bank since April, said in a phone interview. “It’s been a struggle for the bank over the last several years to turn the corner financially.”
The lender agreed to sell seven branches in Cape May and Atlantic counties to Stone Harbor, New Jersey-based Sturdy Savings Bank for a premium on deposits of 8.765 percent, Sun said. Sun seeks to cut the number of branches to about 35 from 51 by the end of the year, O’Brien said.
The bank will reduce its workforce by 38 percent as part of the restructuring, which should result in an annual savings of $16.8 million, Sun said.
The jobs cut total “sounds like a big number, but the truth is it brings us down to where most of our peers would be if you looked at an average,” O’Brien said.
The bank announced a 1-for-5 reverse stock split as of Aug. 11, according to the statement.
Sun gained 6.1 percent to $4.34 at 10:16 a.m. in New York, the highest since March 2011. The shares have climbed 23 percent this year, compared with the 2.1 percent advance of the Russell 2000 Financial Services Index.
O’Brien is the former CEO of State Bank of Long Island. His appointment as Sun’s top executive, effective this week, was contingent upon approval by regulators.
WL Ross & Co., the private-equity firm controlled by Wilbur Ross, owned about 24 percent of Sun’s stock as of March 31, according to data compiled by Bloomberg.