SUN BANCORP INC /NJ/ - FORM 8-K - EX-99 - EXHIBIT 99 - PRESS RELEASE

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8-K - FORM8-K 3-31 EARNINGS RELEASE - SUN BANCORP, INC. - SUN BANCORP INC /NJ/	f8k_042413-0079.htm

News Release

For Immediate Release

Contact: Thomas X. Geisel, President and Chief Executive Officer (856) 690-4329

Sun Bancorp, Inc. Reports First Quarter 2013 Results

First Quarter Highlights

·	Profitable quarter with net income of $2.5 million

·	Non-performing loans drop another 11% in Q1 and 39% over the past two quarters

·	Successful workout resolutions generate $1.0 million in net recoveries for the quarter

·	Prepared for rising interest rates by selling $125 million of investments and $52 million of jumbo fixed rate mortgages

·	Solid capital ratios after risk reduction efforts with total risk based capital ratio of 14.2% and Tier 1 leverage ratio of 9.4%

·	Tangible book value increases to $2.59 per share

VINELAND, NJ – April 24, 2013 – Sun Bancorp, Inc. (NASDAQ: SNBC) reported today net income available to common shareholders of $2.5 million, or $0.03 per diluted share, for the first quarter ended March 31, 2013, compared to a net loss available to common shareholders of $28.1 million, or a loss of $0.33 per diluted share, for the first quarter of 2012.

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

·	The Company successfully closed a previously reported sale of $43.1 million of primarily distressed legacy commercial real estate loans with a book balance of $33.6 million to a third party investor in February 2013 for proceeds of $20.9 million.

Provision expense totaled $171 thousand as compared to $24.2 million in the fourth quarter of 2012. The allowance for loan losses equaled $47.1 million at quarter end, an increase of $1.3 million from December 31, 2012. The allowance for loan losses equaled 2.09% of gross loans held-for-investment and 63.9% of non-performing loans held for investment as compared to 2.02% and 55.3%, respectively, at December 31, 2012 and 2.34% and 45.5%, respectively, at March 31, 2012.

·	Non-interest income increased $4.1 million to $10.9 million as compared to the linked quarter primarily due to gains on the sale of available for sale securities of $3.5 million.

·	In March 2013, the Company sold a pool of $51.5 million of jumbo residential mortgage loans at a gain of $856 thousand.

The net interest margin equaled 3.16% versus 3.30% in the linked quarter. This decrease was driven by a decline in commercial loan yields as well as an increase of approximately $141 million in average interest-bearing bank balances resulting from the jumbo mortgage sale and the sale of available-for-sale investment securities in the first quarter.

·	Total risk-based capital equaled 14.2% at March 31, 2013, an increase of 50 basis points from 13.7% at December 31, 2012.

"We continue to make methodical progress in executing on our strategy to reduce the risk in the balance sheet and grow our commercial and consumer businesses,” stated Thomas X. Geisel, Sun's President and Chief Executive Officer. “We were pleased to regain profitability during the quarter and to further reduce risk in our loan portfolio, thereby strengthening our foundation for the future. We will continue to prioritize these efforts and enhance the profitability of the Bank as the year progresses.”

Discussion of Results:

Balance Sheet

● Total assets were $3.23 billion at March 31, 2013, as compared to $3.22 billion at December 31, 2012 and $3.11 billion at March 31, 2012.

● Cash and cash equivalents increased $142.0 million to $311.7 million as compared to the linked quarter, primarily due to the increase in interest earning bank balances due primarily to the aforementioned jumbo mortgage sale and sales of available-for-sale investment securities. Investments available-for-sale decreased $117.1 million from $443.2 million at December 31, 2012 to $326.1 million at March 31, 2013 due primarily to the sale of $124.8 million of securities, of which $94.6 million are pending settlement at March 31, 2013.

● Gross loans held-for-investment were $2.25 billion at March 31, 2013, as compared to $2.27 billion at December 31, 2012 and $2.23 billion at March 31, 2012. Compared to the linked quarter, loans held-for-investment decreased by $24.6 million due primarily to large pay downs of problem loans of $17.2 million and charge-offs of $3.5 million in the first quarter.

● Loans held-for-sale decreased $79.5 million from the linked quarter to $41.5 million at March 31, 2013. This was due to the closing of the commercial loan sale as well as a net decrease of $57.5 million in the residential mortgage loan held-for-sale portfolio.

Net Interest Income and Margin

● On a tax equivalent basis, net interest income decreased $901 thousand over the linked quarter to $23.3 million at March 31, 2013. The net interest margin decreased 14 basis points to 3.16% from 3.30% for the linked quarter, and decreased 32 basis points as compared to the same quarter in 2012. The average yield on interest-earning assets decreased 17 basis points over the linked quarter from 3.87% to 3.70%. This decrease is due to a corresponding decline in loan yields and excess cash. The Company held $312 million of cash as of March 31, 2013. The commercial loan yields declined four basis points from the linked quarter due to lower rates on new originations combined with pay-offs of higher yielding legacy loans and a decrease of 18 basis points in home equity line of credit yields over the same period due to significantly lower market rates. The margin variance from the prior year is due to similar pressures in the current interest rate environment.

Non-Interest Income

● Non-interest income was $10.9 million for the quarter ended March 31, 2013, compared to $6.8 million for the quarter ended December 31, 2012 and $5.5 million for the comparable prior year quarter. The increase from the linked quarter was primarily attributable to a gain on sale of available for sale securities of $3.5 million recognized in the current quarter as compared to a loss of $196 thousand as well as a reduction of $1.2 million in derivative credit valuation adjustments for the current quarter as compared to the linked quarter.

Non-Interest Expense

● The Company incurred $31.3 million of non-interest expense in the first quarter of 2013, a decrease of $262 thousand over the linked quarter and an increase of $3.8 million from the comparable prior year quarter. Professional fees and salaries and benefits increased by $1.3 million and $488 thousand, respectively, from the linked quarter. Professional fees have increased due to additional compliance related consulting expenses incurred during the first quarter. These increases were partially offset by decreases in real estate owned costs, other expenses and advertising costs of $774 thousand, $500 thousand and $487 thousand, respectively.

Asset Quality

● The provision for loan losses for the first quarter of 2013 was $171 thousand, as compared to $24.2 million in the linked quarter and $30.7 million in the comparable prior year quarter. The allowance for loan losses was

$47.1 million at March 31, 2013, or 2.09% of gross loans held-for-investment, as compared to the allowance for loan losses to gross loans held-for-investment of 2.02% at December 31, 2012 and 2.34% at March 31, 2012. Recoveries were $4.6 million for the first quarter of 2013 primarily driven by the payoff of two commercial loans which resulted in $3.0 million of recoveries. Charge-offs recorded in the current quarter were $3.5 million, as compared to $26.7 million of charge-offs for the linked quarter and $20.2 million of charge-offs for the comparable prior year quarter.

● Total non-performing assets were $82.3 million, or 3.57% of total gross loans held-for-investment, loans held-for-sale and real estate owned at March 31, 2013, as compared to $100.1 million, or 4.18% and $118.8 million, or 5.27%, respectively, at December 31, 2012 and March 31, 2012. Non-performing loans decreased $21.8 million over the linked quarter to $73.8 million at March 31, 2013 from $95.6 million at December 31, 2012 and decreased $40.8 million from $114.6 million at March 31, 2012. The decreases in non-performing loans were due primarily to paydowns and the settlement of nonperforming loans moved to held for sale in the fourth quarter of 2012, both for $12.7 million.

Capital

● Shareholders’ equity totaled $264.3 million at March 31, 2013 compared to $262.6 million at December 31, 2012. The Company’s tangible equity to tangible assets ratio was 7.02% at March 31, 2013, as compared to 6.95% at December 31, 2012. At March 31, 2013, the Company’s total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 14.21%, 12.33%, and 9.40%, respectively. At March 31, 2013, Sun National Bank’s total risk-based capital ratio, Tier 1 capital ratio and leverage capital ratio were approximately 13.52%, 12.26%, and 9.34%, respectively.

The Company will hold its regularly scheduled conference call on Thursday, April 25, 2013, at 11:00 a.m. (ET). Participants may listen to the live web cast through the Sun Bancorp, Inc. web site at www.sunnb.com. Participants are advised to log on 10 minutes ahead of the scheduled start of the call. An Internet-based replay will be available at the website for two weeks following the call.

Sun Bancorp, Inc. (NASDAQ: SNBC) is a $3.23 billion asset bank holding company headquartered in Vineland, New Jersey, with its executive offices located in Mt. Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a full service commercial bank serving customers through more than 60 locations in New Jersey. Sun National Bank has been named one of Forbes Magazine's "Most Trustworthy Companies" for five years running. The Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the Federal Deposit Insurance Corporation (FDIC). For more information about Sun National Bank and Sun Bancorp, Inc., visit www.sunnb.com.

The foregoing material contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, concerning the financial condition, results of operations and business of the Company. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about events or results or otherwise are not statements of historical facts, including statements about being prepared for rising interest rates, reducing risk in the loan portfolio, building the foundation for the future, reducing problem loans and improving profitability. Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that we will be prepared for rising interest rates, further reduce risk in our loan portfolio, build the desired foundation for the future, further reduce problem loans or improve profitability. We caution that such statements are subject to a number of uncertainties, including those detailed under the headings “Risk Factors” and “Management’s Discussion and Analysis” in the Company’s Form 10-K for the fiscal year ended December 31, 2012 and in other filings made pursuant to the Securities Exchange Act of 1934, as amended. Therefore, readers should not place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Non-GAAP Financial Measures

This release references tax-equivalent interest income and non-operating income and expenses. Tax-equivalent interest income is a non-GAAP financial measure. Tax-equivalent interest income assumes a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustments for the three months ended March 31, 2013, December 31, 2012 and March 31, 2012 were $212 thousand, $210 thousand and $233 thousand, respectively. Non-operating income (loss) is also a non-GAAP financial measure. Non-operating income (loss) includes impairment losses recognized on available for sale securities included in earnings. There were no non-operating income (loss) items for the three months ended March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012.

Tax-equivalent interest income

The following reconciles net interest income to net interest income on a fully taxable equivalent basis using a 35% tax rate for the three months ended March 31:

For Three Months Ended:	2013			2012


Net interest income		$	23,078		$	24,650
Effect of tax exempt income			212			233
Net interest income, tax equivalent basis		$	23,290		$	24,883

SUN BANCORP, INC. AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS (Unaudited)

(Dollars in thousands, except per share amounts)

	For the Three Months Ended
	March 31,										December 31,
		2013				2012					2012
Profitability for the period:
Net interest income		$	23,078			$		24,650			$				23,981
Provision for loan losses			171					30,683							24,154
Non-interest income			10,882					5,519							6,815
Non-interest expense			31,336					27,564							31,598
Income (loss) before income taxes			2,453					(28,078		)					(24,956		)
Net income (loss)			2,453					(28,078		)					(24,956		)
Net income (loss) available to common shareholders		$	2,453			$		(28,078		)	$				(24,956		)

Financial ratios:
Return on average assets(1)			0.31	%				(3.56)		%					(3.13)		%
Return on average equity(1)			3.73	%				(35.97)		%					(34.70)		%
Return on average tangible equity(1),(2)			4.42	%				(41.97)		%					(40.61)		%
Net interest margin(1)			3.16	%				3.48		%					3.30		%
Efficiency ratio			92.27	%				91.37		%					102.60		%
Earnings (loss) per common share:
Basic		$	0.03			$		(0.33)			$				(0.29		)
Diluted		$	0.03			$		(0.33)			$				(0.29		)

Average equity to average assets			8.20	%				9.90		%					9.01		%
		March 31,											December 31,
		2013			2012								2012
At period-end:
Total assets		$	3,227,146				$		3,113,269							3,224,031
Total deposits			2,723,337						2,631,652							2,713,224
Loans receivable, net of allowance for loan losses			2,204,436						2,173,426							2,230,287
Loans held-for-sale			41,469						25,034							120,935
Investments			335,844						576,457							461,980
Borrowings			71,344						31,083							70,992
Junior subordinated debentures			92,786						92,786							92,786
Shareholders’ equity			264,341						283,164							262,595

Credit quality and capital ratios:
Allowance for loan losses to gross loans held-for-investment			2.09		%				2.34			%				2.02		%
Non-performing loans held-for-investment to gross loans held-for-investment			3.28		%				5.15			%				3.64		%
Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned			3.57		%				5.27			%				4.18		%
Allowance for loan losses to non-performing loans held for investment			63.87		%				45.52			%				55.33		%

Total capital (to risk-weighted assets)(3) :
Sun Bancorp, Inc.			14.21		%				14.49			%				13.72		%
Sun National Bank			13.52		%				13.77			%				13.02		%
Tier 1 capital (to risk-weighted assets) (3):
Sun Bancorp, Inc.			12.33		%				12.86			%				11.82		%
Sun National Bank			12.26		%				12.51			%				11.76		%
Leverage ratio:
Sun Bancorp, Inc.			9.40		%				10.21			%				9.30		%
Sun National Bank			9.34		%				9.93			%				9.24		%

Book value per common share		$	3.06				$		3.30					$		3.05
Tangible book value per common share		$	2.59				$		2.78					$		2.57
(1) Amounts for the three months ended are annualized.
(2) Return on average tangible equity is computed by dividing annualized net income for the period by average tangible equity. Average tangible equity equals average equity less average identifiable intangible assets and goodwill.
(3) March 31, 2013 capital ratios are estimated, subject to regulatory filings.

SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands, except par value amounts)
	March 31, 2013			December 31, 2012
ASSETS
Cash and due from banks	$	63,608		$	77,564
Interest-earning bank balances		248,052			92,052
Cash and cash equivalents		311,660			169,616
Investment securities available for sale (amortized cost of $315,810 and $439,488 at March 31, 2013 and December 31, 2012, respectively)		317,838			443,182
Investment securities held to maturity (estimated fair value of $920 and $960 at March 31, 2013 and December 31, 2012, respectively)		881			912
Loans receivable (net of allowance for loan losses of $47,124 and $45,873 at March 31, 2013 and December 31, 2012, respectively)		2,204,436			2,230,287
Loans held-for-sale, at lower of cost or market		-			21,922
Loans held-for-sale, at fair value		41,469			99,013
Restricted equity investments, at cost		17,125			17,886
Bank properties and equipment, net		49,477			50,805
Real estate owned		8,472			7,473
Accrued interest receivable		7,704			8,054
Goodwill		38,188			38,188
Intangible assets		2,341			3,262
Bank owned life insurance (BOLI)		75,802			76,858
Receivable from sales and maturities of investments		101,947			-
Other assets		49,806			56,573
Total assets	$	3,227,146		$	3,224,031

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	2,723,337		$	2,713,224
Securities sold under agreements to repurchase – customers		2,726			1,968
Advances from the Federal Home Loan Bank of New York (FHLBNY)		61,077			61,415
Obligations under capital lease		7,541			7,609
Junior subordinated debentures		92,786			92,786
Deferred taxes, net		828			1,509
Other liabilities		74,510			82,925
Total liabilities		2,962,805			2,961,436

Shareholders’ equity:
Preferred stock, $1 par value, 1,000,000 shares authorized; none issued					-
Common stock, $1 par value, 200,000,000 shares authorized; 88,403,100 shares issued and 86,292,929 shares outstanding at March 31, 2013; 88,300,637 shares issued and 86,193,914 shares outstanding at December 31, 2012		88,403			88,301
Additional paid-in capital		506,773			506,537
Retained deficit		(305,558	)		(308,011	)
Accumulated other comprehensive income		1,200			2,186
Deferred compensation plan trust		(315	)		(256	)
Treasury stock at cost 2,106,723 shares at March 31, 2013 and December 31, 2012		(26,162	)		(26,162	)
Total shareholders’ equity		264,341			262,595
Total liabilities and shareholders’ equity	$	3,227,146		$	3,224,031

SUN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands, except per share amounts)

	For the Three Months Ended March 31,
	2013			2012
INTEREST INCOME
Interest and fees on loans	$	24,899		$	26,204
Interest on taxable investment securities		1,544			2,542
Interest on non-taxable investment securities		394			434
Dividends on restricted equity investments		246			227
Total interest income		27,083			29,407
INTEREST EXPENSE
Interest on deposits		3,015			3,684
Interest on funds borrowed		443			351
Interest on junior subordinated debentures		547			722
Total interest expense		4,005			4,757
Net interest income		23,078			24,650
PROVISION FOR LOAN LOSSES		171			30,683
Net interest income (loss) after provision for loan losses		22,907			(6,033	)
NON-INTEREST INCOME
Service charges on deposit accounts		2,155			2,668
Other service charges		74			73
Mortgage banking revenue, net		3,618			716
Net gain on sale of available for sale securities		3,487			-
Investment products income		679			432
BOLI income		448			517
Derivative credit valuation adjustment		(504	)		(314	)
Other		925			1,427
Total non-interest income		10,882			5,519
NON-INTEREST EXPENSE
Salaries and employee benefits		16,333			14,771
Occupancy expense		3,576			3,049
Equipment expense		1,859			1,765
Amortization of intangible assets		921			921
Data processing expense		999			1,056
Professional fees		2,647			479
Insurance expense		1,430			1,479
Advertising expense		553			297
Problem loan expense		799			1,477
Real estate owned expense, net		234			81
Office supplies expense		229			319
Other		1,756			1,870
Total non-interest expense		31,336			27,564
INCOME (LOSS) BEFORE INCOME TAXES		2,453			(28,078	)
INCOME TAX EXPENSE		-			-
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	2,453		$	(28,078	)

Basic earnings (loss) per share	$	0.03		$	(0.33	)
Diluted earnings (loss) per share	$	0.03		$	(0.33	)
Weighted average shares – basic		86,245,121			85,776,858
Weighted average shares - diluted		86,370,435			85,776,858

SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands)
	2013			2012			2012			2012			2012
	Q1			Q4			Q3			Q2			Q1
Balance sheet at quarter end:
Cash and cash equivalents	$	311,660		$	169,616			83,854		$	115,891		$	87,553
Investment securities		335,844			461,980			527,034			549,849			576,457
Loans held-for-investment:
Commercial and industrial		1,737,079			1,725,567			1,802,060			1,794,830			1,820,054
Home equity		200,084			207,720			212,911			217,768			219,926
Second mortgage		29,235			30,842			32,610			36,429			38,815
Residential real estate		248,875			273,413			224,346			153,373			109,807
Other		36,287			38,618			39,069			42,486			36,952
Total gross loans held-for-investment		2,251,560			2,276,160			2,310,996			2,244,886			2,225,554
Allowance for loan losses		(47,124	)		(45,873	)		(49,016	)		(51,394	)		(52,127	)
Net loans held-for-investment		2,204,436			2,230,287			2,261,980			2,193,492			2,173,427
Loans held-for-sale		41,469			120,935			60,676			24,672			25,034
Goodwill		38,188			38,188			38,188			38,188			38,188
Intangible assets		2,341			3,262			4,183			5,104			6,025
Total assets		3,227,146			3,224,031			3,180,263			3,133,487			3,113,269
Total deposits		2,723,337			2,713,224			2,646,807			2,608,034			2,631,652
Federal funds purchased		-			-			30,000			-			-
Securities sold under agreements to repurchase - customers		2,726			1,968			3,587			5,454			5,870
Advances from FHLBNY		61,077			61,415			16,749			22,080			2,408
Securities sold under agreements to repurchase - FHLBNY		-			-			20,000			15,000			15,000
Obligations under capital lease		7,541			7,609			7,675			7,740			7,805
Junior subordinated debentures		92,786			92,786			92,786			92,786			92,786
Total shareholders' equity		264,341			262,596			287,480			284,768			283,163
Quarterly average balance sheet:
Loans(1):
Commercial and industrial	$	1,744,553		$	1,788,347		$	1,805,623		$	1,815,704			1,849,216
Home equity		204,311			210,085			215,542			218,910			220,411
Second mortgage		30,347			32,442			35,816			38,545			41,346
Residential real estate		330,916			319,427			230,259			155,479			123,567
Other		30,410			32,444			33,658			34,765			41,733
Total gross loans		2,340,537			2,382,745			2,320,898			2,263,403			2,276,273
Securities and other interest-earning assets		607,284			545,781			555,846			583,788			580,349
Total interest-earning assets		2,947,821			2,928,526			2,876,744			2,847,191			2,856,622
Total assets		3,206,536			3,193,607			3,153,668			3,116,627			3,154,762
Non-interest-bearing demand deposits		506,600			511,813			504,936			493,707			487,088
Total deposits		2,703,039			2,660,405			2,642,048			2,604,083			2,621,736
Total interest-bearing liabilities		2,360,883			2,318,794			2,279,177			2,259,370			2,265,830
Total shareholders' equity		263,070			287,698			289,129			285,667			312,281
Capital and credit quality measures:
Total capital (to risk-weighted assets) (2):
Sun Bancorp, Inc.		14.21	%		13.72	%		14.30	%		14.61	%		14.49	%
Sun National Bank		13.52	%		13.02	%		13.63	%		13.90	%		13.77	%
Tier 1 capital (to risk-weighted assets) (2):
Sun Bancorp, Inc.		12.33	%		11.82	%		12.71	%		13.00	%		12.86	%
Sun National Bank		12.26	%		11.76	%		12.37	%		12.64	%		12.51	%
Leverage ratio:
Sun Bancorp, Inc.		9.40	%		9.30	%		10.41	%		10.45	%		10.21	%
Sun National Bank		9.34	%		9.24	%		10.12	%		10.15	%		9.93	%

Average equity to average assets		8.20	%		9.01	%		9.17	%		9.17	%		9.90	%
Allowance for loan losses to total gross loans held-for-investment		2.09	%		2.02	%		2.12	%		2.29	%		2.34	%
Non-performing loans held-for-investment to gross loans held-for-investment		3.28	%		3.64	%		5.23	%		4.63	%		5.15	%
Non-performing assets to gross loans held-for-investment, loans held-for-sale and real estate owned		3.57	%		4.18	%		5.32	%		4.84	%		5.27	%
Allowance for loan losses to non-performing loans held-for-investment		63.87	%		55.33	%		40.56	%		49.44	%		45.52	%

Other data:
Net recoveries (charge-offs)		1,080			(26,690	)		(4,246	)		(1,243	)		(20,223	)
Non-performing assets:
Non-accrual loans	$	57,143		$	64,660		$	95,383		$	79,696		$	87,847
Non-accrual loans held-for-sale		-			10,224			-			-			-
Troubled debt restructurings, non-accrual		16,640			18,244			25,454			24,256			26,674
Troubled debt restructurings, held-for-sale		-			2,499			-			-			-
Loans past due 90 days and accruing		-			-			-			-			74
Real estate owned, net		8,472			7,473			5,513			6,116			4,165
Total non-performing assets		82,255			103,100			126,350			110,068			118,760
(1) Average balances include non-accrual loans and loans held-for-sale (2) March 31, 2013 capital ratios are estimated, subject to regulatory filings.

SUN BANCORP, INC. AND SUBSIDIARIES

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)

(Dollars in thousands, except share and per share amounts)

	2013			2012			2012			2012			2012
	Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	27,295		$	28,367		$	28,681		$	29,619		$	29,641
Interest expense		4,005			4,174			4,135			4,519			4,757
Tax-equivalent net interest income		23,290			24,191			24,546			25,100			24,884
Tax-equivalent adjustment		212			212			212			217			234
Provision for loan losses		171			24,154			1,868			510			30,683
Non-interest income		10,882			6,815			9,588			7,527			5,519
Non-interest expense excluding amortization of intangible assets		30,415			30,677			29,938			29,666			26,643
Amortization of intangible assets		921			921			922			921			921
Income (loss) before income taxes		2,453			(24,956	)		1,194			1,313			(28,078	)
Income tax expense (benefit)		-			-			(34	)		-			-
Net income (loss)		2,453			(24,956	)		1,228			1,313			(28,078	)
Net income (loss) available to common shareholders	$	2,453		$	(24,956	)	$	1,228		$	1,313		$	(28,078	)
Financial ratios:
Return on average assets (1)		0.31	%		(3.13	) %		0.16	%		0.17	%		(3.56	) %
Return on average equity (1)		3.73	%		(34.70	) %		1.70	%		1.84	%		(35.97	) %
Return on average tangible equity (1),(2)		4.42	%		(40.61	) %		1.99	%		2.17	%		(41.97	) %
Net interest margin (1)		3.16	%		3.30	%		3.41	%		3.53	%		3.48	%
Efficiency ratio		92.27	%		102.60	%		90.97	%		94.38	%		91.37	%
Per share data:
Income (loss) per common share:
Basic	$	0.03		$	(0.29	)	$	0.01		$	0.02		$	(0.34	)
Diluted	$	0.03		$	(0.29	)	$	0.01		$	0.02		$	(0.34	)
Book value	$	3.06		$	3.05		$	3.34		$	3.31		$	3.30
Tangible book value	$	2.59		$	2.57		$	2.85		$	2.81		$	2.78
Average basic shares		86,245,121			86,082,669			86,001,929			85,884,671			85,776,858
Non-interest income:		86,370,435			86,082,669			86,047,655			85,916,426			85,776,858
Service charges on deposit accounts	$	2,155		$	2,414		$	2,848		$	2,730		$	2,668
Other service charges		74			72			69			80			73
Mortgage banking revenue, net		3,618			3,694			4,204			1,865			716
Net gain (loss) on sale of available for sale securities		3,487			(196	)		-			430			-
Investment products income		679			606			510			748			432
BOLI income		448			488			489			492			516
Derivative credit valuation adjustment		(504	)		(1,750	)		(198	)		(13	)		(314	)
Other income		925			1,487			1,666			1,195			1,428
Total non-interest income		10,882			6,815			9,588			7,527			5,519
Non-interest expense:
Salaries and employee benefits	$	16,333		$	15,845		$	16,128		$	15,756		$	14,771
Occupancy expense		3,576			3,416			3,275			3,271			3,049
Equipment expense		1,859			2,005			1,866			1,763			1,765
Amortization of intangible assets		921			921			922			921			921
Data processing expense		999			1,138			1,084			1,106			1,056
Professional fees		2,647			1,389			713			833			524
Insurance expense		1,430			1,506			1,375			1,464			1,479
Advertising expense		553			1,040			464			1,008			297
Problem loan costs		799			776			2.154			1,274			1,477
Real estate owned expense, net		234			1,008			779			490			81
Office supplies expense		229			298			302			328			319
Other expense		1,756			2,256			1,798			2,373			1,825
Total non-interest expense		31,336			31,598			30,860			30,587			27,564

(1) Amounts are annualized

(2) Return on average tangible equity is computed by dividing annualized net income for the period by average tangible equity. Average tangible equity equals average equity less average identifiable intangible assets and goodwill.

SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (Unaudited)
(Dollars in thousands)
	For the Three Months Ended March 31,
	2013							2012
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial	$	1,744,553		18,959		4.35	%	$	1,849,216	$	21,275		4.60	%
Home equity		204,311		1,906		3.73			220,411		2,244		4.07
Second mortgage		30,347		428		5.64			41,346		590		5.71
Residential real estate		330,916		3,071		3.71			123,567		1,376		4.45
Other		30,410		535		7.04			41,733		719		6.89
Total loans receivable		2,340,537		24,899		4.26			2,276,273		26,204		4.60
Investment securities(3)		428,024		2,285		2.14			550,498		3,420		2.49
Interest-earning bank balances		179,260		111		0.25			29,851		17		0.23
Total interest-earning assets		2,947,821		27,295		3.70			2,856,622		29,641		4.15
Non-interest earning assets:
Cash and due from banks		72,775							71,751
Bank properties and equipment, net		50,363							54,338
Goodwill and intangible assets, net		40,983							44,666
Other assets		94,594							127,385
Total non-interest-earning assets		258,715							298,140
Total assets	$	3,206,536						$	3,154,762

Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	1,241,861		1,111		0.36	%	$	1,251,690		1,259		0.40	%
Savings deposits		265,391		215		0.32			262,203		229		0.35
Time deposits		689,187		1,689		0.98			620,755		2,196		1.42
Total interest-bearing deposit accounts		2,196,439		3,015		0.55			2,134,648		3,684		0.69
Short-term borrowings:
Federal funds purchased		-		-		-			6,374		6		0.38
Securities sold under agreements to repurchase - customers		2,926		1		0.14			6,669		2		0.12
Long-term borrowings:
FHLBNY advances (4)		61,160		316		2.07			17,519		214		4.89
Obligation under capital lease		7,572		126		6.66			7,834		130		6.64
Junior subordinated debentures		92,786		547		2.36			92,786		722		3.11
Total borrowings		164,444		990		2.41			131,182		1,074		3.27
Total interest-bearing liabilities		2,360,883		4,005		0.68			2,265,830		4,758		0.84
Non-interest bearing liabilities:
Non-interest-bearing demand deposits		506,600							487,088
Other liabilities		75,983							89,562
Total non-interest bearing liabilities		582,583							576,650
Total liabilities		2,943,466							2,842,480
Shareholders' equity		263,070							312,281
Total liabilities and shareholders' equity	$	3,206,536						$	3,154,762

Net interest income			$	23,290						$	24,883
Interest rate spread (5)						3.02	%						3.31	%
Net interest margin (6)						3.16	%						3.48	%
Ratio of average interest-earning assets to average interest-bearing liabilities						124.86	%						126.07	%
(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 March 31, 2013 and 2012 were $212 thousand and $233 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
	March 31, 2013							December 31, 2012
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial	$	1,744,553		18,959		4.35	%	$	1,788,347	$	19,628		4.39	%
Home equity		204,311		1,906		3.73			210,085		2,055		3.91
Second mortgage		30,347		428		5.64			32,442		470		5.79
Residential real estate		330,916		3,071		3.71			319,427		2,959		3.71
Other		30,410		535		7.04			32,444		559		6.89
Total loans receivable		2,340,537		24,899		4.26			2,382,745		25,671		4.31
Investment securities(3)		428,024		2,285		2.14			507,158		2,672		2.11
Interest-earning bank balances		179,260		111		0.25			38,623		24		0.25
Total interest-earning assets		2,947,821		27,295		3.70			2,928,526		28,367		3.87
Non-interest earning assets:
Cash and due from banks		72,775							72,129
Bank properties and equipment, net		50,363							51,515
Goodwill and intangible assets, net		40,983							41,902
Other assets		94,594							99,535
Total non-interest-earning assets		258,715							265,081
Total assets	$	3,206,536						$	3,193,607

Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	1,241,861		1,111		0.36	%	$	1,224,254		1,178		0.38	%
Savings deposits		265,391		215		0.32			263,949		228		0.35
Time deposits		689,187		1,689		0.98			660,389		1,737		1.05
Total interest-bearing deposit accounts		2,196,439		3,015		0.55			2,148,592		3,143		0.59
Short-term borrowings:
Securities sold under agreements to repurchase - customers		2,926		1		0.14			3,250		2		0.25
Long-term borrowings:
FHLBNY advances (4)		61,160		316		2.07			66,527		332		2.00
Obligation under capital lease		7,572		126		6.66			7,639		127		6.65
Junior subordinated debentures		92,786		547		2.36			92,786		572		2.47
Total borrowings		164,444		990		2.41			170,202		1,033		2.43
Total interest-bearing liabilities		2,360,883		4,005		0.68			2,318,794		4,176		0.72
Non-interest bearing liabilities:
Non-interest-bearing demand deposits		506,600							511,813
Other liabilities		75,983							75,302
Total non-interest bearing liabilities		582,583							587,115
Total liabilities		2,943,466							2,905,909
Shareholders' equity		263,070							287,698
Total liabilities and shareholders' equity	$	3,206,536						$	3,193,607

Net interest income			$	23,290						$	24,191
Interest rate spread (5)						3.02	%						3.15	%
Net interest margin (6)						3.16	%						3.30	%
Ratio of average interest-earning assets to average interest-bearing liabilities						124.86	%						126.30	%
(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 March 31, 2013 and December 31, 2012 were $212 thousand and $210 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 /NJ/ - FORM 8-K - EX-99 - EXHIBIT 99 - PRESS RELEASE - April 25, 2013

Attached files

SUN BANCORP INC /NJ/ Reports