VINELAND, N.J., Oct. 27 /PRNewswire-FirstCall/ -- Sun Bancorp, Inc. reported today a net loss available to common shareholders of $6.5 million, or $0.28 net loss per diluted share, for the third quarter ended September 30, 2009, compared to net income of $4.1 million, or $0.17 per diluted share, for the third quarter of 2008.

For the nine months ended September 30, 2009, the Company reported a net loss available to common shareholders of $16.1 million, or $0.70 net loss per diluted share, compared to net income of $10.6 million, or $0.44 per diluted share, in the prior year period.

"We believe we are moving proactively beyond the phase where the identification of problem assets inhibits forward momentum," said Thomas X. Geisel, president and chief executive officer. "While we have an experienced group who are focused on managing asset quality, the majority of our employees continue to seek and deliver on opportunities to grow the business in these still challenging times. Our loan loss provisions over the last several quarters and the increased level of charge-offs have obviously had a negative impact on our financial performance, but we expect these decisive actions will help to move us through this cycle as rapidly as possible and positively position us for 2010. Our goal is to focus all of the Company''s resources on growing our position as the second largest banking company headquartered in New Jersey."

"In terms of our underlying operating performance, we have been doing very well," said Geisel. "Third quarter net interest income of $27.0 million (tax-equivalent basis) was up, versus $24.3 million for the linked quarter and $22.3 million for first quarter of 2009. Importantly, the net interest margin, the main driver of future profitability, increased to 3.36%, as compared to 3.01% for the linked quarter and 2.74% for first quarter 2009."

"Our cost of average interest-bearing deposits for the third quarter (1.59%) decreased 36 basis points over the linked quarter, 60 basis points over the first quarter 2009 and 106 basis points over third quarter 2008. And the return we produced (yield) on average loans for the third quarter was 4.88%, an increase of 5 basis points over the linked quarter and 16 basis points over first quarter 2009. These trends indicate we are successfully managing in the right direction the basic fundamentals of good community banking, despite a continuing tough operating environment," said Geisel.

As previously announced, results for the third quarter 2009 include the following charges:

-- The Company recorded a $16.2 million provision for loan losses, or $0.41 per diluted share, increasing the allowance for loan losses to 1.70% of outstanding loans at September 30, 2009 as compared to 1.62% at June 30, 2009 and 1.36% at December 31, 2008. The provision for loan losses for the third quarter was 0.59% of average loans as compared to 0.25% of average loans for the linked second quarter 2009 and 0.14% of average loans for the comparable prior year quarter. Net charge-offs during the third quarter were $14.5 million, or 0.53% of average loans outstanding, as compared to $2.0 million, or 0.07% of average loans outstanding, for the linked quarter and $1.1 million, or 0.04% of average loans outstanding, for the comparable prior year quarter. -- The Company recognized a pre-tax impairment charge during the quarter of $1.9 million, or $0.05 per diluted share, due to further deterioration of underlying collateral on a pooled trust preferred security. This security, which had an original cost basis of $7.0 million, had been previously written down $5.1 million in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) guidance on the recognition and presentation of other-than-temporary impairments, which the Company previously adopted in the first quarter of 2009. -- The Company recognized a pre-tax write-down of $800,000, or $0.02 per diluted share, on the value of a commercial warehouse that is currently the largest property held as Real Estate Owned.

Selected core operating highlights reflecting favorable performance in the third quarter include:

-- Third quarter net interest income of $27.0 million (tax-equivalent basis) compared favorably to $24.3 million for the linked quarter and $22.3 million for first quarter 2009. Net interest income was $25.4 million for third quarter 2008. -- The third quarter net interest margin increased to 3.36%, as compared to 3.01% for the linked quarter and 2.74% for first quarter 2009. The net interest margin was 3.28% for the third quarter 2008. The margin increase over the two quarters since year-end 2008 reflects the Company''s focus on margin improvement initiatives on both sides of the balance sheet. -- The cost of average interest-bearing deposits for the third quarter of 1.59% decreased 36 basis points from 1.95% for the linked quarter, 60 basis points from 2.19% for first quarter 2009 and 106 basis points from 2.65% for third quarter 2008. -- The yield on average loans for the third quarter of 4.88% increased 5 basis points from 4.83% for the linked quarter and 16 basis points from 4.72% for first quarter 2009. Other key financial highlights include: -- Total assets were $3.55 billion at September 30, 2009, as compared to $3.43 billion at September 30, 2008 and $3.56 billion at June 30, 2009. -- Total loans before allowance for loan losses were $2.71 billion at September 30, 2009, as compared to $2.67 billion at September 30, 2008 and $2.73 billion at June 30, 2009. Commercial loans, on average, were essentially level on a linked quarter basis, residential mortgages increased on average 1.1% and home equity loans decreased on average 2.3%. -- Total non-performing assets were $94.1 million at September 30, 2009, or 3.46% of total loans and real estate owned, compared to $74.1 million, or 2.70%, at June 30, 2009 and $49.9 million, or 1.87%, at September 30, 2008. The allowance for loan losses to non-performing loans was 54.58% at September 30, 2009, as compared to 69.82% at June 30, 2009 and 71.80% at September 30, 2008. -- Total deposits were $2.93 billion at September 30, 2009, an increase of $59.5 million, or 2.1%, from September 30, 2008 and $57.4 million, or 2.0%, from June 30, 2009. Average total deposits declined $29.1 million over the linked quarter as average certificates of deposit decreased $172.3 million, offset by an increase in average core deposits of $143.2 million, or 8.2%. -- The third quarter net interest margin was 3.36%, as compared to 3.01% for the linked quarter and 3.28% for third quarter 2008. The interest rate spread as compared to the linked second quarter increased 38 basis points, with a yield increase of 3 basis points on interest-earnings assets, offset by a decrease in the cost of interest-bearing liabilities of 35 basis points. Average interest-earning assets for the quarter of $3.22 billion remained relatively stable over the linked quarter. -- Total operating non-interest income for the quarter of $6.4 million, which excludes the impairment charge of $1.9 million, increased $114,000, or 1.8%, over the linked quarter, which excludes an impairment charge of $4.6 million, and decreased $642,000, or 9.1%, over the comparable prior year period. The increase over the linked quarter was primarily due to an increase in investment products income of $138,000 and an increase in service charges on deposit accounts, such as NSF and overdraft fees, of $54,000, offset by a decrease in gain on derivative instruments of $85,000 due to a planned decline in transaction volume. The decrease over the prior year period was primarily attributable to a reduction in service charges on deposit accounts of $551,000, a decrease in gain on derivative instruments of $491,000 due to a planned decline in transaction volume and a decrease in bank owned life insurance (BOLI) income of $203,000 due to lower yields earned on the separate account policy. These decreases were offset with an increase in gain on sale of loans of $425,000 and an increase in investment products income of $166,000. -- Total non-interest expense for the quarter of $26.9 million decreased $783,000, or 2.8%, over the linked quarter, and increased $3.8 million, or 16.6%, over the comparable prior year period. The decrease over the linked quarter was attributable to a reduction in insurance expense of $1.8 million as a result of the $1.6 million Federal Deposit Insurance Corporation (FDIC) special assessment recognized in the second quarter and a decrease in advertising expense of $620,000 due to the second quarter "Switch to Sun" campaign. These decreases were offset by an increase in salaries and benefits of $938,000 primarily due to severance and other related charges, and an increase in cost of real estate owned of $761,000 primarily due to an $800,000 write-down on the carrying value of one commercial property. The increase over the prior year period was attributable to an increase in salaries and benefits of $1.9 million due to the addition of several key management and business line staff, and severance and other related charges, an increase in cost of real estate owned of $841,000 primarily due to the aforementioned $800,000 write-down recognized on the carrying value of one commercial property and an increase in insurance expense of $774,000 primarily due to an increase in FDIC assessment rates, additional coverage under the Temporary Liquidity Guarantee Program (TLGP) and an overall increase in assessable deposits. -- The income tax benefit is a result of the pre-tax loss in combination with the relatively large levels of tax-free income earned on tax-exempt securities and BOLI policies. -- The Company''s ratio of tangible equity to tangible assets was 6.45% at September 30, 2009, as compared to 6.33% at June 30, 2009 and 6.39% at September 30, 2008.

The Company will hold its regularly scheduled conference call on Wednesday, October 28, 2009, at 11:30 a.m. (ET). Participants may listen to the live Web cast through the Sun Bancorp Web site at http://www.sunnb.com/. Participants are advised to log on 10 minutes ahead of the scheduled start of the call. An Internet-based replay will be available at the Web site for two weeks following the call.

Sun Bancorp, Inc. is a $3.5 billion asset bank holding company headquartered in Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving customers through 70 locations in New Jersey. The Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. For more information about Sun National Bank and Sun Bancorp, Inc., visit http://www.sunnb.com/.

The foregoing material contains forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, 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.

SUN BANCORP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share data) For the Three Months For the Nine Months Ended Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Profitability for the period: Net interest income $26,466 $24,962 $ 72,089 $74,189 Provision for loan losses 16,237 3,723 27,187 12,383 Non-interest income 4,476 7,046 11,529 22,223 Non-interest expense 26,867 23,050 78,334 69,928 (Loss) income before income taxes (12,162) 5,235 (21,903) 14,101 Net (loss) income (6,542) 4,129 (10,791) 10,641 Net (loss) income available to common share- holders $(6,542) $ 4,129 $(16,142) $10,641 ======= ======= ======= ======== ======= Financial ratios: Return on average assets (1) (0.73) % 0.48 % (0.40) % 0.42 % Return on average equity (1) (7.16) % 4.56 % (3.66) % 3.88 % Return on average tangible equity (1),(2) (11.81) % 7.74 % (5.80) % 6.58 % Net interest margin (1) 3.36 % 3.28 % 3.03 % 3.31 % Efficiency ratio 86.83 % 72.01 % 93.68 % 72.53 % Efficiency ratio, excluding non-operating income and non-operating expense (3) 81.74 % 72.01 % 86.67 % 72.35 % Earnings per common share (4): Basic $ (0.28) $ 0.18 $ (0.70) $ 0.45 Diluted $ (0.28) $ 0.17 $ (0.70) $ 0.44 Average equity to average assets 10.17 % 10.57 % 10.88 % 10.83 % September 30, ------------- December 31, 2009 2008 2008 ---- ---- ---- At period-end: Total assets $3,545,639 $3,425,379 $3,622,126 Total deposits 2,932,880 2,873,378 2,896,364 Loans receivable, net of allowance for loan losses 2,663,697 2,632,019 2,702,516 Investments 428,696 396,117 453,584 Borrowings 65,873 78,117 154,097 Junior subordinated debentures 92,786 92,786 92,786 Shareholders'' equity 362,457 357,282 358,508 Credit quality and capital ratios: Allowance for loan losses to gross loans 1.70 % 1.28 % 1.36 % Non-performing assets to gross loans and real estate owned 3.46 % 1.87 % 1.78 % Allowance for loan losses to non-performing loans 54.58 % 71.80 % 79.69 % Total capital (to risk-weighted assets) (5): Sun Bancorp, Inc. 11.60 % 11.67 % 11.37 % Sun National Bank 11.11 % 11.02 % 10.84 % Tier 1 capital (to risk-weighted assets) (5): Sun Bancorp, Inc. 10.34 % 10.51 % 10.17 % Sun National Bank 9.85 % 9.86 % 9.64 % Leverage ratio (5): Sun Bancorp, Inc. 9.21 % 9.56 % 9.58 % Sun National Bank 8.77 % 8.97 % 9.10 % Book value (4) $ 15.63 $ 15.18 $ 15.57 Tangible book value (4) $ 9.46 $ 8.90 $ 9.20 (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) Efficiency ratio, excluding non-operating income and non-operating expense, is computed by dividing non-interest expense for the period by the summation of net interest income and non-interest income. Non-interest income for the three and nine months ended September 30, 2009 exclude a net impairment loss on available for sale securities of $1.9 million and $6.8 million, respectively. Non-interest income for the nine months ended September 30, 2008 excludes a gain on the mandatory redemption of Visa stock of $207,000. Non-interest expense for the nine months ended September 30, 2008 excludes a $250,000 executive sign-on incentive and $72,000 in lease buyout charges. (4) Data is adjusted for a 5% stock dividend issued in May 2009. (5) September 30, 2009 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) September 30, December 31, 2009 2008 ---- ---- ASSETS Cash and due from banks $ 57,893 $ 31,237 Interest-earning bank balances 2,361 26,784 Federal funds sold - 412 ------------------ ---------- ---------- Cash and cash equivalents 60,254 58,433 Investment securities available for sale (amortized cost - $405,466 and $444,628 at September 30, 2009 and December 31, 2008, respectively) 405,141 423,513 Investment securities held to maturity (estimated fair value - $8,221 and $13,601 at September 30, 2009 and December 31, 2008, respectively) 8,052 13,765 Loans receivable (net of allowance for loan losses - $46,067 and $37,309 at September 30, 2009 and December 31, 2008, respectively) 2,663,697 2,702,516 Restricted equity investments 15,503 16,306 Bank properties and equipment, net 52,537 48,642 Real estate owned, net 9,667 1,962 Accrued interest receivable 11,166 12,254 Goodwill 127,894 127,894 Intangible assets, net 15,237 18,769 Deferred taxes, net 13,965 16,707 Bank owned life insurance (BOLI) 77,153 75,504 Other assets 85,373 105,861 ------------ ------ ------- Total assets $3,545,639 $3,622,126 ============ ========== ========== LIABILITIES & SHAREHOLDERS'' EQUITY LIABILITIES Deposits $2,932,880 $2,896,364 Federal funds purchased 6,000 71,500 Securities sold under agreements to repurchase - customers 21,018 20,327 Advances from the Federal Home Loan Bank of New York (FHLBNY) 15,512 42,081 Securities sold under agreements to repurchase - FHLBNY 15,000 15,000 Obligations under capital lease 8,343 5,189 Junior subordinated debentures 92,786 92,786 Other liabilities 91,643 120,371 ----------------- ------ ------- Total liabilities 3,183,182 3,263,618 ----------------- --------- --------- SHAREHOLDERS'' EQUITY Preferred stock, $1 par value, 1,000,000 shares authorized; none issued - - Common stock, $1 par value, 50,000,000 shares authorized; 25,295,153 shares issued and 23,188,430 shares outstanding at September 30, 2009; 24,037,431 shares issued and 21,930,708 shares outstanding at December 31, 2008 25,295 24,037 Additional paid-in capital 361,571 351,430 Retained earnings 1,743 22,580 Accumulated other comprehensive gain (loss) 31 (13,377) Deferred compensation plan trust (21) - Treasury stock at cost, 2,106,723 shares at September 30, 2009 and December 31, 2008 (26,162) (26,162) --------------------------------- ------- ------- Total shareholders'' equity 362,457 358,508 -------------------------- ------- ------- Total liabilities and shareholders'' equity $3,545,639 $3,622,126 =================================== ========== ========== SUN BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except share and per share amounts) For the Three Months Ended September 30, ------------- 2009 2008 ---- ---- INTEREST INCOME Interest and fees on loans $ 33,299 $ 37,819 Interest on taxable investment securities 3,405 3,943 Interest on non-taxable investment securities 969 830 Dividends on restricted equity investments 219 250 Interest on federal funds sold - 137 ------------------------------ --- --- Total interest income 37,892 42,979 --------------------- ------ ------ INTEREST EXPENSE Interest on deposits 9,797 15,905 Interest on funds borrowed 548 753 Interest on junior subordinated debentures 1,081 1,359 ----------------------- ----- ----- Total interest expense 11,426 18,017 ---------------------- ------ ------ Net interest income 26,466 24,962 PROVISION FOR LOAN LOSSES 16,237 3,723 ------------------------- ------ ----- Net interest income after provision for loan losses 10,229 21,239 ------------------------- ------ ------ NON-INTEREST INCOME Service charges on deposit accounts 3,150 3,701 Other service charges 85 82 Gain on sale of loans 711 286 Gain on derivative instruments - 491 Investment products income 894 728 BOLI income 575 778 Net impairment losses on available for sale securities: Total impairment losses (1,928) - Portion of loss recognized in other comprehensive income (before taxes) - - --- --- Net impairment losses recognized in earnings (1,928) - Other 989 980 ----- --- --- Total non-interest income 4,476 7,046 ------------------------- ----- ----- NON-INTEREST EXPENSE Salaries and employee benefits 14,154 12,277 Occupancy expense 2,689 2,912 Equipment expense 1,619 1,522 Data processing expense 980 1,154 Amortization of intangible assets 1,177 1,177 Insurance expense 1,519 745 Professional fees 595 542 Advertising expense 251 336 Real estate owned expense, net 854 13 Other 3,029 2,372 ----- ----- ----- Total non-interest expense 26,867 23,050 -------------------------- ------ ------ (LOSS) INCOME BEFORE INCOME TAXES (12,162) 5,235 INCOME TAX (BENEFIT) EXPENSE (5,620) 1,106 ---------------------------- ------ ----- NET (LOSS) INCOME (6,542) 4,129 Preferred stock dividend and discount accretion - - ---------------------------- --- --- NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS $ (6,542) $ 4,129 ============================== ====== ===== Basic (loss) earnings per share (1) $ (0.28) $ 0.18 ============================= ===== ==== Diluted (loss) earnings per share (1) $ (0.28) $ 0.17 ============================= ===== ==== Weighted average shares - basic (1) 23,162,992 23,512,826 ============================= ========== ========== Weighted average shares - diluted (1) 23,162,992 24,084,540 ============================= ========== ========== For the Nine Months Ended September 30, ------------- 2009 2008 ---- ---- INTEREST INCOME Interest and fees on loans $ 98,487 $ 116,104 Interest on taxable investment securities 11,341 11,933 Interest on non-taxable investment securities 2,695 2,434 Dividends on restricted equity investments 609 796 Interest on federal funds sold - 234 ---------------------------- --- --- Total interest income 113,132 131,501 --------------------- ------- ------- INTEREST EXPENSE Interest on deposits 36,132 50,175 Interest on funds borrowed 1,511 2,880 Interest on junior subordinated debentures 3,400 4,257 ------------------------ ----- ----- Total interest expense 41,043 57,312 ---------------------- ------ ------ Net interest income 72,089 74,189 PROVISION FOR LOAN LOSSES 27,187 12,383 ------------------------- ------ ------ Net interest income after provision for loan losses 44,902 61,806 -------------------------- ------ ------ NON-INTEREST INCOME Service charges on deposit accounts 9,290 10,655 Other service charges 246 235 Gain on sale of loans 1,749 1,121 Gain on derivative instruments 212 2,167 Investment products income 2,172 2,353 BOLI income 1,649 2,356 Net impairment losses on available for sale securities: Total impairment losses (6,764) - Portion of loss recognized in other comprehensive income (before taxes) - - --- --- Net impairment losses recognized in earnings (6,764) - Other 2,975 3,336 ----- ----- ----- Total non-interest income 11,529 22,223 ------------------------- ------ ------ NON-INTEREST EXPENSE Salaries and employee benefits 39,333 36,980 Occupancy expense 8,606 8,764 Equipment expense 4,842 4,812 Data processing expense 3,042 3,339 Amortization of intangible assets 3,532 3,532 Insurance expense 6,292 2,142 Professional fees 1,480 1,590 Advertising expense 1,667 1,519 Real estate owned expense, net 1,127 (512) Other 8,413 7,762 ----- ----- ----- Total non-interest expense 78,334 69,928 -------------------------- ------ ------ (LOSS) INCOME BEFORE INCOME TAXES (21,903) 14,101 INCOME TAX (BENEFIT) EXPENSE (11,112) 3,460 ------------------------------- ------- ----- NET (LOSS) INCOME (10,791) 10,641 Preferred stock dividend and discount accretion 5,351 - ---------------------------- ----- --- NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS $ (16,142) $ 10,641 ============================== ======= ====== Basic (loss) earnings per share (1) $ (0.70) $ 0.45 ============================= ===== ==== Diluted (loss) earnings per share (1) $ (0.70) $ 0.44 ============================= ===== ==== Weighted average shares - basic (1) 23,104,419 23,755,567 ============================= ========== ========== Weighted average shares - diluted (1) 23,104,419 24,355,870 ============================= ========== ========== (1) Data is adjusted for a 5% stock dividend issued in May 2009. SUN BANCORP, INC. AND SUBSIDIARIES HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (Dollars in thousands) 2009 2009 2009 Q3 Q2 Q1 -- -- -- Balance sheet at quarter end: Loans: Commercial and industrial $2,234,616 $2,240,368 $2,243,698 Home equity 261,206 265,407 268,122 Second mortgage 71,578 73,856 78,589 Residential real estate 72,292 79,627 69,971 Other 70,072 74,714 77,638 ----- ------ ------ ------ Total gross loans 2,709,764 2,733,972 2,738,018 Allowance for loan losses (46,067) (44,316) (39,406) ------------------------- ------- ------- ------- Net loans 2,663,697 2,689,656 2,698,612 Goodwill 127,894 127,894 127,894 Intangible assets, net 15,237 16,414 17,592 Total assets 3,545,639 3,561,110 3,635,697 Total deposits 2,932,880 2,875,502 2,930,084 Federal funds purchased 6,000 87,500 - Securities sold under agreements to repurchase - customers 21,018 17,398 14,170 Advances from FHLBNY 15,512 15,805 16,096 Securities sold under agreements to repurchase - FHLBNY 15,000 15,000 15,000 Obligations under capital lease 8,343 8,383 5,171 Junior subordinated debentures 92,786 92,786 92,786 Total shareholders'' equity 362,457 360,660 447,984 Quarterly average balance sheet: Loans: Commercial and industrial $2,247,234 $2,236,745 $2,229,016 Home equity 263,494 268,276 268,921 Second mortgage 72,830 75,967 81,854 Residential real estate 76,626 75,812 70,868 Other 70,790 75,133 79,324 ----- ------ ------ ------ Total gross loans 2,730,974 2,731,933 2,729,983 Securities and other interest-earning assets 486,274 491,348 527,318 Total interest-earning assets 3,217,248 3,223,281 3,257,301 Total assets 3,593,037 3,611,679 3,644,558 Non-interest-bearing demand deposits 476,478 431,836 397,237 Total deposits 2,946,281 2,975,358 2,936,452 Total interest-bearing liabilities 2,663,226 2,705,069 2,694,326 Total shareholders'' equity 365,440 370,196 445,040 Capital and credit quality measures: Total capital (to risk-weighted assets) (1): Sun Bancorp, Inc. 11.60 % 11.62 % 14.32 % Sun National Bank 11.11 % 11.15 % 10.99 % Tier 1 capital (to risk-weighted assets) (1): Sun Bancorp, Inc. 10.34 % 10.37 % 13.07 % Sun National Bank 9.85 % 9.90 % 9.74 % Leverage ratio (1): Sun Bancorp, Inc. 9.21 % 9.29 % 11.81 % Sun National Bank 8.77 % 8.88 % 8.80 % Average equity to average assets 10.17 % 10.25 % 12.21 % Allowance for loan losses to total gross loans 1.70 % 1.62 % 1.44 % Non-performing assets to total gross loans and real estate owned 3.46 % 2.70 % 2.34 % Allowance for loan losses to non-performing loans 54.58 % 69.82 % 73.76 % Other data: Net charge-offs (14,486) (2,040) (1,903) Non-performing assets: Non-accrual loans $ 80,333 $ 55,801 $ 50,481 Loans past due 90 days and accruing 4,067 7,675 2,945 Real estate owned, net 9,667 10,620 10,834 ------------------ ----- ------ ------ Total non-performing assets $ 94,067 $ 74,096 $ 64,260 =============== ======= ======= ======= 2008 2008 Q4 Q3 -- -- Balance sheet at quarter end: Loans: Commercial and industrial $2,234,202 $2,164,523 Home equity 274,360 271,197 Second mortgage 84,388 85,734 Residential real estate 67,473 61,845 Other 79,402 82,840 ----- ------ ------ Total gross loans 2,739,825 2,666,139 Allowance for loan losses (37,309) (34,120) ------------------------- ------- ------- Net loans 2,702,516 2,632,019 Goodwill 127,894 127,894 Intangible assets, net 18,769 19,947 Total assets 3,622,126 3,425,379 Total deposits 2,896,364 2,873,378 Federal funds purchased 71,500 - Securities sold under agreements to repurchase - customers 20,327 38,359 Advances from FHLBNY 42,081 19,551 Securities sold under agreements to repurchase - FHLBNY 15,000 15,000 Obligations under capital lease 5,189 5,207 Junior subordinated debentures 92,786 92,786 Total shareholders'' equity 358,508 357,282 Quarterly average balance sheet: Loans: Commercial and industrial $2,195,218 $2,146,204 Home equity 275,791 268,178 Second mortgage 85,530 84,404 Residential real estate 62,481 57,471 Other 81,426 84,116 ----- ------ ------ Total gross loans 2,700,446 2,640,373 Securities and other interest-earning assets 476,305 461,276 Total interest-earning assets 3,176,751 3,101,649 Total assets 3,483,145 3,422,764 Non-interest-bearing demand deposits 407,151 435,249 Total deposits 2,916,153 2,837,147 Total interest-bearing liabilities 2,679,673 2,600,310 Total shareholders'' equity 361,513 361,895 Capital and credit quality measures: Total capital (to risk-weighted assets) (1): Sun Bancorp, Inc. 11.37 % 11.67 % Sun National Bank 10.84 % 11.02 % Tier 1 capital (to risk-weighted assets) (1): Sun Bancorp, Inc. 10.17 % 10.51 % Sun National Bank 9.64 % 9.86 % Leverage ratio (1): Sun Bancorp, Inc. 9.58 % 9.56 % Sun National Bank 9.10 % 8.97 % Average equity to average assets 10.38 % 10.57 % Allowance for loan losses to total gross loans 1.36 % 1.28 % Non-performing assets to total gross loans and real estate owned 1.78 % 1.87 % Allowance for loan losses to non-performing loans 79.69 % 71.80 % Other data: Net charge-offs (4,428) (1,093) Non-performing assets: Non-accrual loans $ 42,233 $ 45,940 Loans past due 90 days and accruing 4,587 1,583 Real estate owned, net 1,962 2,381 ---------------------- ----- ----- Total non-performing assets $ 48,782 $ 49,904 =========================== ======= ======= (1) September 30, 2009 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 data) 2009 2009 2009 Q3 Q2 Q1 -- -- -- Profitability for the quarter: Tax-equivalent interest income $ 38,413 $ 38,276 $ 37,894 Interest expense 11,426 14,017 15,600 Tax-equivalent net interest income 26,987 24,259 22,294 Tax-equivalent adjustment 521 475 455 Provision for loan losses 16,237 6,950 4,000 Non-interest income excluding net gain on sale of branches and net impairment losses on available for sale securities 6,404 6,290 5,599 Net gain on sale of branches - - - Net impairment losses on available for sale securities (1,928) (4,558) (278) Non-interest expense excluding amortization of intangible assets 25,690 26,472 22,640 Amortization of intangible assets 1,177 1,178 1,177 (Loss) income before income taxes (12,162) (9,084) (657) Income tax (benefit) expense (5,620) (4,450) (1,042) Net (loss) income (6,542) (4,634) 385 Net (loss) income available to common shareholders $ (6,542) $ (8,780) $ (820) ==================== ======= ======= ===== Financial ratios: Return on average assets (1) (0.73) % (0.51) % 0.04% Return on average equity (1) (7.16) % (5.01) % 0.35% Return on average tangible equity (1),(2) (11.81) % (8.23) % 0.52% Net interest margin (1) 3.36 % 3.01 % 2.74% Efficiency ratio 86.83 % 108.36 % 87.69% Efficiency ratio, excluding non-operating income and non-operating expense 81.74 % 91.94 % 86.80% Per share data (3): (Loss) earnings per common share: Basic $ (0.28) $ (0.38) $ (0.04) Diluted $ (0.28) $ (0.38) $ (0.04) Book value $ 15.63 $ 15.59 $ 15.72 Tangible book value $ 9.46 $ 9.35 $ 9.41 Average basic shares (3) 23,162,992 23,103,975 23,043,056 Average diluted shares (3) 23,162,992 23,103,975 23,043,056 Operating non-interest income: Service charges on deposit accounts $ 3,150 $ 3,096 $ 3,044 Other service charges 85 79 82 Gain on sale of loans 711 693 345 Gain on derivative instruments - 85 127 Investment products income 894 756 522 BOLI income 575 561 513 Other income 989 1,020 966 ------------ --- ----- --- Total operating non-interest income 6,404 6,290 5,599 -------------------- ----- ----- ----- Non-operating income (4): Net gain on sale of branches - - - Net impairment losses on available for sale securities recognized in earnings (1,928) (4,558) (278) ---------------------------------- ------ ------ ---- Total non-operating income (1,928) (4,558) (278) -------------------------- ------ ------ ---- Total non-interest income $ 4,476 $ 1,732 $ 5,321 ========================= ====== ====== ====== Operating non-interest expense: Salaries and employee benefits $ 14,154 $ 13,216 $ 11,963 Occupancy expense 2,689 2,782 3,135 Equipment expense 1,619 1,685 1,538 Data processing expense 980 1,052 1,010 Amortization of intangible assets 1,177 1,178 1,177 Insurance expense 1,519 3,330 1,443 Professional fees 595 507 378 Advertising expense 251 871 545 Real estate owned expense (income), net 854 93 180 Other expenses 3,029 2,936 2,448 -------------- ----- ----- ----- Total operating non-interest expense 26,867 27,650 23,817 --------------------- ------ ------ ------ Total non-interest expense $ 26,867 $ 27,650 $ 23,817 ========================== ======= ======= ======= 2008 2008 Q4 Q3 -- -- Profitability for the quarter: Tax-equivalent interest income $43,574 $43,426 Interest expense 17,661 18,017 Tax-equivalent net interest income 25,913 25,409 Tax-equivalent adjustment 441 447 Provision for loan losses 7,617 3,723 Non-interest income excluding net gain on sale of branches and net impairment losses on available for sale securities 6,119 7,046 Net gain on sale of branches 11,454 - Net impairment losses on available for sale securities (7,497) - Non-interest expense excluding amortization of intangible assets 21,534 21,873 Amortization of intangible assets 1,178 1,177 (Loss) income before income taxes 5,219 5,235 Income tax (benefit) expense 966 1,106 Net (loss) income 4,253 4,129 Net (loss) income available to common shareholders $ 4,253 $ 4,129 ===================================== ====== ====== Financial ratios: Return on average assets (1) 0.49 % 0.48 % Return on average equity (1) 4.71 % 4.56 % Return on average tangible equity (1),(2) 7.94 % 7.74 % Net interest margin (1) 3.26 % 3.28 % Efficiency ratio 63.89 % 72.01 % Efficiency ratio, excluding non-operating income and non-operating expense 71.89 % 72.01 % Per share data (3): (Loss) earnings per common share: Basic $ 0.18 $ 0.18 Diluted $ 0.18 $ 0.17 Book value $ 15.57 $ 15.18 Tangible book value $ 9.20 $ 8.90 Average basic shares (3) 23,323,693 23,512,826 Average diluted shares (3) 23,410,606 24,084,540 Operating non-interest income: Service charges on deposit accounts $ 3,263 $ 3,701 Other service charges 82 82 Gain on sale of loans 204 286 Gain on derivative instruments 411 491 Investment products income 688 728 BOLI income 661 778 Other income 810 980 ------------ --- --- Total operating non-interest income 6,119 7,046 ----------------------------------- ----- ----- Non-operating income (4): Net gain on sale of branches 11,454 - Net impairment losses on available for sale securities recognized in earnings (7,497) - --------------------------------------- ------ --- Total non-operating income 3,957 - -------------------------- ----- --- Total non-interest income $10,076 $ 7,046 ========================= ======= ====== Operating non-interest expense: Salaries and employee benefits $10,643 $12,277 Occupancy expense 2,919 2,912 Equipment expense 1,609 1,522 Data processing expense 1,120 1,154 Amortization of intangible assets 1,178 1,177 Insurance expense 901 745 Professional fees 745 542 Advertising expense 849 336 Real estate owned expense (income), net (116) 13 Other expenses 2,864 2,372 -------------- ----- ----- Total operating non-interest expense 22,712 23,050 ------------------------------------ ------ ------ Total non-interest expense $22,712 $23,050 ========================== ======= ======= (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. (3) Data is adjusted for a 5% stock dividend issued in May 2009. (4) Amount consists of items which the Company believes are not a result of normal operations. SUN BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEETS (Unaudited) (Dollars in thousands) For the Three Months Ended September 30, 2009 ------------------ Average Income Yield/ Balance Expense Cost ------- ------- ---- Interest-earning assets: Loans receivable (1),(2): Commercial and industrial $2,247,234 $26,590 4.73 % Home equity 263,494 3,248 4.93 Second mortgage 72,830 1,182 6.49 Residential real estate 76,626 1,099 5.74 Other 70,790 1,180 6.67 ------ ----- Total loans receivable 2,730,974 33,299 4.88 Investment securities (3) 439,661 5,091 4.63 Interest-earning bank balances 46,613 23 0.20 Federal funds sold - - - --- --- Total interest-earning assets 3,217,248 38,413 4.78 --------- ------ Cash and due from banks 46,724 Bank properties and equipment, net 52,058 Goodwill and intangible assets, net 143,868 Other assets 133,139 ------- Total non-interest-earning assets 375,789 ------- Total assets $3,593,037 ========== Interest-bearing liabilities: Interest-bearing deposit accounts: Interest-bearing demand deposits $1,112,999 2,658 0.96 % Savings deposits 299,590 693 0.93 Time deposits 1,057,214 6,446 2.44 --------- ----- Total interest-bearing deposit accounts 2,469,803 9,797 1.59 --------- ----- Short-term borrowings: Federal funds purchased 42,836 36 0.34 Securities sold under agreements to repurchase - customers 18,823 12 0.26 Long-term borrowings: FHLBNY advances (4) 30,607 361 4.72 Obligations under capital lease 8,371 139 6.64 Junior subordinated debentures 92,786 1,081 4.66 ------ ----- Total borrowings 193,423 1,629 3.37 ------- ----- Total interest-bearing liabilities 2,663,226 11,426 1.72 --------- ------ Non-interest-bearing demand deposits 476,478 Other liabilities 87,893 ------ Total non-interest bearing liabilities 564,371 ------- Total liabilities 3,227,597 Shareholders'' equity 365,440 ------- Total liabilities and shareholders'' equity $3,593,037 ========== Net interest income $26,987 ======= Interest rate spread (5) 3.06 % ==== Net interest margin (6) 3.36 % ==== Ratio of average interest-earning assets to average interest-bearing liabilities 120.80 % ====== For the Three Months Ended September, 2008 --------------- Average Income/ Yield/ Balance Expense Cost ------- ------- ---- Interest-earning assets: Loans receivable (1),(2): Commercial and industrial $2,146,204 $30,243 5.64 % Home equity 268,178 3,800 5.67 Second mortgage 84,404 1,384 6.56 Residential real estate 57,471 911 6.34 Other 84,116 1,481 7.04 ------ ----- Total loans receivable 2,640,373 37,819 5.73 Investment securities (3) 422,897 5,423 5.13 Interest-earning bank balances 9,418 47 2.00 Federal funds sold 28,961 137 1.89 ------ --- Total interest-earning assets 3,101,649 43,426 5.60 --------- ------ Cash and due from banks 57,463 Bank properties and equipment, net 48,204 Goodwill and intangible assets, net 148,577 Other assets 66,871 ------ Total non-interest-earning assets 321,115 ------- Total assets $3,422,764 ========== Interest-bearing liabilities: Interest-bearing deposit accounts: Interest-bearing demand deposits $ 927,312 4,180 1.80 % Savings deposits 378,699 1,652 1.74 Time deposits 1,095,887 10,073 3.68 --------- ------ Total interest-bearing deposit accounts 2,401,898 15,905 2.65 --------- ------ Short-term borrowings: Federal funds purchased 17,766 102 2.30 Securities sold under agreements to repurchase - customers 35,426 104 1.17 Long-term borrowings: FHLBNY advances (4) 47,221 452 3.83 Obligations under capital lease 5,213 95 7.29 Junior subordinated debentures 92,786 1,359 5.86 ------ ----- Total borrowings 198,412 2,112 4.26 ------- ----- Total interest-bearing liabilities 2,600,310 18,017 2.77 --------- ------ Non-interest-bearing demand deposits 435,249 Other liabilities 25,310 ------ Total non-interest bearing liabilities 460,559 ------- Total liabilities 3,060,869 Shareholders'' equity 361,895 ------- Total liabilities and shareholders'' equity $3,422,764 ========== Net interest income $25,409 ======= Interest rate spread (5) 2.83 % ==== Net interest margin (6) 3.28 % ==== Ratio of average interest-earning assets to average interest-bearing liabilities 119.28 % ====== (1) Average balances include non-accrual loans. (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 adjustment for three months ended September 30, 2009 and 2008 was $521,000 and $447,000, 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, 2009 ------------------ Average Income/ Yield/ Balance Expense Cost ------- ------- ---- Interest-earning assets: Loans receivable (1),(2): Commercial and industrial $2,237,732 $77,774 4.63 % Home equity 266,878 10,080 5.04 Second mortgage 76,851 3,715 6.45 Residential real estate 74,456 3,264 5.85 Other 75,051 3,654 6.49 ------ ----- Total loans receivable 2,730,968 98,487 4.81 Investment securities (3) 450,572 16,015 4.74 Interest-earning bank balances 50,799 81 0.21 Federal funds sold 125 - - --- --- Total interest-earning assets 3,232,464 114,583 4.73 --------- ------- Cash and due from banks 48,203 Bank properties and equipment, net 49,637 Goodwill and intangible assets, net 145,028 Other assets 140,904 ------- Total non-interest-earning assets 383,772 ------- Total assets $3,616,236 ========== Interest-bearing liabilities: Interest-bearing deposit accounts: Interest-bearing demand deposits $1,038,932 7,969 1.02 % Savings deposits 297,404 2,264 1.02 Time deposits 1,180,923 25,899 2.92 --------- ------ Total interest-bearing deposit accounts 2,517,259 36,132 1.91 --------- ------ Short-term borrowings: Federal funds purchased 21,154 61 0.38 Securities sold under agreements to repurchase - customer 17,151 32 0.25 Long-term borrowings: FHLBNY advances (4) 32,805 1,090 4.43 Obligations under capital lease 6,271 328 6.97 Junior subordinated debentures 92,786 3,400 4.89 ------ ----- Total borrowings 170,167 4,911 3.85 ------- ----- Total interest-bearing liabilities 2,687,426 41,043 2.04 --------- ------ Non-interest-bearing demand deposits 435,474 Other liabilities 100,069 ------- Total non-interest-bearing liabilities 535,543 ------- Total liabilities 3,222,969 Shareholders'' equity 393,267 ------- Total liabilities and shareholders'' equity $3,616,236 ========== Net interest income $73,540 ======= Interest rate spread (5) 2.69 % ==== Net interest margin (6) 3.03 % ==== Ratio of average interest-earning assets to average interest-bearing liabilities 120.28 % ====== For the Nine Months Ended September 30, 2008 ------------------ Average Income/ Yield/ Balance Expense Cost ------- ------- ---- Interest-earning assets: Loans receivable (1),(2): Commercial and industrial $2,094,470 $93,089 5.93 % Home equity 267,169 11,880 5.93 Second mortgage 82,615 4,037 6.52 Residential real estate 53,287 2,547 6.37 Other 85,633 4,551 7.09 ------ ----- Total loans receivable 2,583,174 116,104 5.99 Investment securities (3) 434,928 16,290 4.99 Interest-earning bank balances 9,811 184 2.50 Federal funds sold 15,760 234 1.98 ------ --- Total interest-earning assets 3,043,673 132,812 5.82 --------- ------- Cash and due from banks 57,580 Bank properties and equipment, net 48,156 Goodwill and intangible assets, net 149,744 Other assets 73,481 ------ Total non-interest-earning assets 328,961 ------- Total assets $3,372,634 ========== Interest-bearing liabilities: Interest-bearing deposit accounts: Interest-bearing demand deposits $828,107 10,547 1.70 % Savings deposits 420,997 6,323 2.00 Time deposits 1,088,507 33,305 4.08 --------- ------ Total interest-bearing deposit accounts 2,337,611 50,175 2.86 --------- ------ Short-term borrowings: Federal funds purchased 21,244 404 2.54 Securities sold under agreements to repurchase - customer 36,650 445 1.62 Long-term borrowings: FHLBNY advances (4) 56,522 1,745 4.12 Obligations under capital lease 5,230 286 7.29 Junior subordinated debentures 92,899 4,257 6.11 ------ ----- Total borrowings 212,545 7,137 4.48 ------- ----- Total interest-bearing liabilities 2,550,156 57,312 3.00 --------- ------ Non-interest-bearing demand deposits 427,505 Other liabilities 29,613 ------ Total non-interest-bearing liabilities 457,118 ------- Total liabilities 3,007,274 Shareholders'' equity 365,360 ------- Total liabilities and shareholders'' equity $3,372,634 ========== Net interest income $75,500 ======= Interest rate spread (5) 2.82 % ==== Net interest margin (6) 3.31 % ==== Ratio of average interest-earning assets to average interest-bearing liabilities 119.35 % ====== (1) Average balances include non-accrual loans. (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 adjustment for nine months ended September 30, 2009 and 2008 was $1.5 million and $1.3 million, respectively. (4) Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY. (5) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. (6) Net interest margin represents net interest income as a percentage of average interest-earning assets.

Sun Bancorp, Inc.

CONTACT: Dan Chila, EVP, Sun Bancorp, Inc., Chief Financial Officer,
+1-856-691-7700

Web Site: http://www.sunnb.com/