UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
-------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------------- ----------------------
Commission file number 0 - 20957
------------------------------------------------------
SUN BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 52-1382541
--------------------------------------------- ----------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification)
226 Landis Avenue, Vineland, New Jersey 08360
---------------------------------------------
(Address of principal executive offices)
(Zip Code)
(609) 691 - 7700
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
$ 1.00 Par Value Common Stock 1,847,879 November 6, 1996
- ----------------------------- --------- ----------------
Class Number of shares outstanding Date
1
<PAGE>
SUN BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
Cash and due from banks $ 21,923,596 $ 17,242,366
Federal funds sold - -
------------- -------------
Cash and cash equivalents 21,923,596 17,242,366
Investment securities available for sale (amortized cost -
$128,257,737; 1996, and $146,379,244; 1995) 125,359,332 147,008,896
Loans receivable (net of allowance for loan losses -
$2,375,055; 1996, and $2,064,640; 1995) 265,310,684 183,633,631
Bank properties and equipment 11,560,107 11,419,175
Real estate owned, net 573,863 876,302
Accrued interest receivable 3,511,077 2,564,921
Excess of cost over fair value of assets acquired 5,571,893 6,191,919
Deferred taxes 1,953,791 205,169
Other assets 506,063 752,257
------------- -------------
TOTAL $ 436,270,406 $ 369,894,636
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $ 380,159,613 $ 335,247,796
Advances from the Federal Home Loan Bank 15,000,000 8,000,000
Federal funds purchased and securities sold under agreements to repurchase 13,212,841 -
Other liabilities 2,166,427 1,976,044
------------- -------------
Total liabilities 410,538,881 345,223,840
------------- -------------
SHAREHOLDERS' EQUITY
Preferred stock, none issued - -
Common stock, $1 par value, 10,000,000 shares authorized,
issued and outstanding: 1,759,987 in 1996; and 1,651,175 in 1995; 1,759,987 1,651,175
Surplus 18,097,909 17,197,275
Retained earnings 7,573,956 5,406,774
Unrealized (loss) gain on securities available for sale, net of income taxes (1,700,327) 415,572
------------- -------------
Total shareholders' equity 25,731,525 24,670,796
------------- -------------
TOTAL $ 436,270,406 $ 369,894,636
============= =============
</TABLE>
- --------------------------------------------------------------------------------
See notes to consolidated financial statements
2
<PAGE>
SUN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
(Unaudited)
INTEREST INCOME:
<S> <C> <C> <C> <C>
Interest and fees on loans $ 6,042,729 $ 3,989,084 $ 15,639,104 $ 10,800,740
Interest on investment securities 1,874,270 1,584,971 5,583,751 3,514,951
Interest on federal funds sold 466 54,857 65,489 428,968
---------- ---------- ---------- ----------
Total interest income 7,917,465 5,628,912 21,288,344 14,744,659
---------- ---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 3,222,283 2,007,181 8,733,467 5,252,533
Interest on borrowed funds 207,165 16,733 294,233 18,260
---------- ---------- ---------- ----------
Total interest expense 3,429,448 2,023,914 9,027,700 5,270,793
---------- ---------- ---------- ----------
Net interest income 4,488,017 3,604,998 12,260,644 9,473,866
PROVISION FOR LOAN LOSSES 225,000 257,660 675,000 547,660
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 4,263,017 3,347,338 11,585,644 8,926,206
---------- ---------- ---------- ----------
OTHER INCOME:
Service charges on deposit accounts 262,183 169,875 750,455 455,672
Other service charges 41,527 16,976 86,274 45,846
Gain on sale of fixed assets 700 15,229
Gain on sale of loans 207,984
Gain on sale of investment securities 12,166 49,021 203,454 49,021
Other 137,225 101,910 256,879 280,553
---------- ---------- ---------- ----------
Total other income 453,801 337,782 1,312,291 1,039,076
---------- ---------- ---------- ----------
OTHER EXPENSES:
Salaries and employee benefits 1,929,949 1,238,468 4,797,294 3,380,654
Occupancy expense 304,073 407,682 1,074,118 971,414
Equipment expense 232,557 122,091 582,342 301,277
Professional fees and services 88,964 58,018 243,111 206,153
Data processing expense 285,596 165,067 800,855 403,833
Amortization of excess of cost over
fair value of assets acquired 206,606 97,186 620,026 192,399
Postage and supplies 97,342 89,413 339,880 224,660
Insurance 60,006 2,223 133,970 310,780
Other 404,016 406,695 1,138,159 1,085,718
---------- ---------- ---------- ----------
Total other expenses 3,609,109 2,586,843 9,729,755 7,076,888
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 1,107,709 1,098,277 3,168,180 2,888,394
INCOME TAXES 333,000 329,000 1,001,000 829,000
---------- ---------- ---------- ----------
NET INCOME $ 774,709 $ 769,277 $ 2,167,180 $ 2,059,394
========== ========== ========== ==========
Earnings per common and common equivalent share
Net income $ 0.42 $ 0.45 $ 1.22 $ 1.21
========== ========== ========== ==========
Earnings per common share - assuming full dilution
Net income $ 0.42 $ 0.45 $ 1.21 $ 1.21
========== ========== ========== ==========
</TABLE>
- -------------------------------------------------------
See notes to consolidated financial statements
3
<PAGE>
SUN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
--------------------
1996 1995
---- ----
(Unaudited)
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 2,167,180 $ 2,059,394
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses 675,000 547,660
Depreciation and amortization 351,878 221,075
Amortization of excess cost over fair value of assets acquired 620,026 192,399
Gain on sale of investment securities available for sale (203,454)
Gain on sale of bank properties and equipment (15,229)
Gain on sale of loans
(207,984)
Change in assets and liabilities which (used) provided cash:
Accrued interest and other assets (1,358,576)
Accounts payable and accrued expenses 190,383 660,299
---------- ---------
Net cash provided by operating activities 2,427,208 2,029,885
---------- ---------
INVESTING ACTIVITIES:
Purchases of investment securities held to maturity (61,745,458)
Purchases of investment securities available for sale (154,241,179)
Increase of investment securities resulting from branch acquisition (45,600,000)
Proceeds from maturities of investment securities held to maturity 69,792,560
Proceeds from maturities of investment securities available for sale 68,156,579
Proceeds from maturities of mortgage-backed securities held to maturity 113,512
Proceeds from sale of investment securities available for sale 53,881,713
Proceeds from sale of mortgage-backed securities available for sale 50,850,000
Proceeds from sale of loans 1,870,608
Net increase in loans (82,352,053) (33,648,284)
Purchase of bank properties and equipment (492,810) (2,407,306)
Proceeds from sale of bank properties and equipment 15,229
Excess of cost over fair value of branch assets acquired (2,082,310)
Decrease (increase) in real estate owned, net 302,439 (55,120)
----------- -----------
Net cash used in investing activities (63,880,082) (71,423,978)
----------- -----------
</TABLE>
4
<PAGE>
SUN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
<TABLE>
<CAPTION>
FINANCING ACTIVITIES:
<S> <C> <C>
Net increase in deposits 44,911,817 18,473,222
Increase in deposits resulting from branch acquisition 52,316,958
Net short-term borrowings 20,212,841
Proceeds from exercise of stock options 1,009,446 592,860
Proceeds from issuance of common stock 260,000
----------
Net cash provided by financing activities 66,134,104 71,643,040
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,681,230 2,248,947
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 17,242,366 10,170,697
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,923,596 $ 12,419,644
========== ==========
</TABLE>
- --------------------------------------------------------------------
See notes to consolidated financial statements
5
<PAGE>
SUN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The audited and unaudited consolidated financial statements contained
herein for Sun Bancorp, Inc. (the "Company") include the accounts of
Sun Bancorp, Inc. and its wholly-owned subsidiary, Sun National Bank
(the "Bank") and the bank's wholly-owned subsidiary, Med-Vine, Inc. All
significant inter-company balances and transactions have been
eliminated.
The accompanying consolidated financial statements were prepared in
accordance with instructions to Form 10-Q, and therefore, do not
include information or footnotes necessary for a complete presentation
of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. However, all
normal recurring adjustments which, in the opinion of management, are
necessary for a fair presentation of the financial statements, have
been included. These financial statements should be read in conjunction
with the audited financial statements and the accompanying notes
thereto included in the Company's Annual Report for the period ended
December 31, 1995. The results for the nine months and quarter ended
September 30, 1996 are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1996.
(2) Loans
The components of loans as of September 30, 1996 and December 31, 1995
were as follows:
September 30, 1996 December 31, 1995
(Unaudited)
Commercial and industrial $ 196,883,794 $ 118,874,150
Real estate-residential mortgages 54,083,901 54,414,800
Installment 16,718,044 12,409,321
----------- -----------
Total gross loans 267,685,739 185,698,271
Allowance for loan losses (2,375,055) (2,064,640)
----------- -----------
Net Loans $ 265,310,684 $ 183,633,631
=========== ===========
Non-accrual loans $ 1,947,129 $ 2,658,118
6
<PAGE>
(3) Allowance For Loan Losses
Changes in the allowance for loan losses were as follows:
For the nine
month
period ended December 31, 1995
September 30,
1996
(Unaudited)
Balance, beginning of period $ 2,064,640 $ 1,607,375
Charge-offs (377,311) (426,289)
Recoveries 12,726 75,894
--------- ---------
Net charge-offs (364,585) (350,395)
Provision for loan losses 675,000 807,660
--------- ---------
Balance, end of period $ 2,375,055 $ 2,064,640
========= =========
The provision for loan losses charged to expense is based upon past
loan and loss experience and an evaluation of potential losses in the
current loan portfolio, including the evaluation of impaired loans
under SFAS Nos. 114 and 118. A loan is considered to be impaired when,
based upon current information and events, it is probable that the Bank
will be unable to collect all amounts due according to the contractual
terms of the loan.
An insignificant delay or insignificant shortfall in amount of payments
does not necessarily result in a loan being identified as impaired. For
this purpose, delays less than 90 days are considered to be
insignificant.
Impairment losses are included in the provision for loan losses. SFAS
Nos. 114 and 118 do not apply to large groups of smaller balance,
homogeneous loans that are collectively evaluated for impairment,
except for those loans restructured under a troubled debt
restructuring. Loans collectively evaluated for impairment include
consumer loans and residential real estate loans, and are not included
in the data that follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
Impaired loans with related reserve for loan
<S> <C> <C>
losses ($296,307) calculated under SFAS No. 114 -- $ 454,489
Impaired loans with no related reserve for loan
losses calculated under SFAS No. 114 $ 619,939 527,908
------- -------
Total impaired loans $ 619,939 $ 982,397
For the Nine
Months Ended
September 30, December 31,
1996 1995
(Unaudited)
Average impaired loans $ 589,262 $ 411,289
Interest income recognized on impaired loans -- 18,561
Cash basis interest income recognized on impaired loans -- --
</TABLE>
7
<PAGE>
(4) Deposits
Deposits consist of the following major classifications:
September 30, December 31, 1995
1996
(Unaudited)
Demand deposits $ 126,696,843 $ 128,802,293
Savings deposits 67,604,558 66,970,293
Time certificates under $100,000 148,471,463 122,415,317
Time certificates $100,000 or more 37,386,749 17,059,893
----------- -----------
Total $ 380,159,613 $ 335,247,796
=========== ===========
Of the total demand deposits, approximately, $68,082,000 (unaudited)
and $62,700,000 are non-interest bearing at September 30, 1996 and
December 31, 1995.
(5) Dividends
On September 17, 1996, the Company declared a 5% stock dividend paid on
October 30, 1996 to shareholders of record at October 15, 1996. No
fractional shares were issued, and in lieu thereof, shareholders
received cash based on the fair market value of the common stock on the
record date.
The dividend had no effect on the consolidated financial statements at
or for the nine month period ended September 30, 1996.
8
<PAGE>
(6) Earnings Per Share
Earnings per share were calculated as follows:
<TABLE>
<CAPTION>
For the Three Month Periods Ended For the Nine Month Periods Ended
September 30, September 30,
--------------------------------- ---------------------------------
(Unaudited)
PRIMARY 1996 1995 1996 1995
---- ---- ---- ----
Assumptions:
<S> <C> <C> <C> <C>
Net income for the period $ 774,709 $ 769,277 $ 2,167,180 $ 2,059,394
Average common shares outstanding 1,759,987 1,648,609 1,694,700 1,634,868
Dilutive options outstanding to purchase
equivalent shares 217,643 184,296 217,643 184,296
Average exercise price per share $ 11.282 $ 8.640 $ 11.282 $ 8.640
Estimated market value per common share
to be used $ 21.04 $ 13.00 $ 18.85 $ 13.00
Computations:
Application of assumed proceeds:
Towards repurchase of outstanding
common shares at applicable market value $ 2,455,448 $ 1,592,317 $ 2,455,448 $ 1,592,317
Adjustment of shares outstanding:
Actual average shares outstanding 1,759,987 1,648,609 1,694,700 1,634,868
Net additional shares issuable 100,958 61,810 87,365 61,810
--------- --------- --------- ---------
Adjusted shares outstanding 1,860,945 1,710,419 1,782,065 1,696,678
========= ========= ========= =========
Earnings per share:
Before adjustment $ 0.44 $ 0.47 $ 1.28 $ 1.26
========= ========= ========= =========
After adjustment $ 0.42 $ 0.45 $ 1.22 $ 1.21
========= ========= ========= =========
FULLY DILUTED
Assumptions:
Net income for the period $ 774,709 $ 769,277 $ 2,167,180 $ 2,059,394
Average common shares outstanding 1,759,987 1,648,609 1,694,700 1,634,868
Dilutive options outstanding to purchase
equivalent shares 217,643 184,296 217,643 184,296
Average exercise price per share $ 11.282 $ 8.640 $ 11.282 $ 8.640
Estimated market value per common share
to be used $ 21.04 $ 13.00 $ 21.00 $ 13.00
Computations:
Application of assumed proceeds:
Towards repurchase of outstanding
common shares at applicable market value $ 2,455,448 $ 1,592,317 $ 2,455,448 $ 1,592,317
Adjustment of shares outstanding:
Actual average shares outstanding 1,759,987 1,648,609 1,694,700 1,634,868
Net additional shares issuable 100,958 61,810 100,717 61,810
--------- --------- --------- ---------
Adjusted shares outstanding 1,860,945 1,710,419 1,795,417 1,696,678
========= ========= ========= =========
Earnings per share:
Before adjustment $ 0.44 $ 0.47 $ 1.28 $ 1.26
========= ========= ========= =========
After adjustment $ 0.42 $ 0.45 $ $ 1.21
========= ========= ========= =========
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
Total Assets at September 30, 1996 increased by $66.4 million to $436.3
million as compared to $369.9 million at December 31, 1995, representing growth
of about 17.9%. The increase was due to $81.7 million in loan growth, primarily
commercial loans, partially offset by a $21.6 million decrease in investment
securities. The increase in total assets was funded by a growth of $44.9 million
in deposits and $13.2 million in federal funds purchased and securities sold
under agreements to repurchase and an increase of $7 million in advances from
the Federal Home Loan Bank.
Total capital increased $1.1 million from December 31, 1995 to
September 30, 1996. The increase resulted from the exercise of stock options
$1.0 million; the Company's nine month earnings of $2.2 million, and offset by
the change in unrealized losses on securities available for sale of $2.1
million.
Liquidity and Capital Resources
Liquidity management is a daily and long-term business function. The
Company's liquidity, represented in part by cash and cash equivalents, is a
product of its operating, investing and financing activities. Proceeds from
repayment of loans, maturities of investment securities, net income and
increases in deposits are the primary sources of liquidity of the Company.
The Company has experienced a significant increase in commercial loan
demand and expects such demand to continue for the remainder of the current
fiscal year and into 1997. Management has demonstrated the ability to meet this
increased need for funds by attracting higher levels of time deposits, engaging
in repurchase agreements and utilizing its lines of credit with other financial
institutions. It also has the ability to liquidate portions of its investment
portfolio.
The increase of commercial loans has had the effect of lowering the
Company's risk-based capital ratios. In general, commercial loans are
categorized as having a 100% risk-weighting using the calculations required by
the Company's regulators. The rate at which commercial loans have grown has
outpaced the growth rate of the Company's capital.
It is management's intent to maintain risk-based capital levels that
are acceptable to its regulators. Management monitors the Company's capital
levels, and when appropriate, will recommend a capital raising effort to the
Company's board of directors.
Comparison of Operating Results for the Three Months Ended September 30, 1996
and 1995.
Net Income. Net income increased by $6,000 for the three months ended
September 30, 1996 to $775,000 from $769,000 for the three months ended
September 30, 1995. Net interest income increased $883,000 and the provision for
loan losses decreased $33,000 for the three months ended September 30, 1996
compared to the same period in 1995. Other income increased by $116,000 to
$454,000 for the three months ended September 30, 1996 as compared to $338,000
for the three months ended September 30, 1995. Other expenses increased by $1.0
million to $3.6 million for the three months ended September 30, 1996 as
compared to $2.6 million for the three months ended September 30, 1995.
Net Interest Income. The increase in net interest income was due to a
$2.3 million increase in interest income partially offset by a $1.4 million
increase in interest expense.
10
<PAGE>
The increase to interest income was a result of significant loan growth
and higher levels of investment securities outstanding, and partially offset by
lower amounts of federal funds sold. Interest and fees on loans amounted to $6.0
million for the three months ended September 30, 1996 compared to $4.0 million
for the same period in 1995; an increase of about $2.0 million, or 51.5 %.
Interest on investment securities increased $289,000, or 18.3 % for the three
months ended September 30, 1996 to $1.9 million from about $1.6 million for the
three months ended September 30, 1995. Interest income on federal funds sold
only amounted to $500 for the three months ended September 30, 1996 compared to
$55,000 for the same period in 1995.
Deposit growth, as a result of the acquisition of eight branches from
other financial institutions in 1995, caused a sharp increase of interest
expense on deposit accounts. For the three months ended September 30, 1996,
interest on deposits amounted to almost $3.2 million, or a $1.2 million increase
from the three months ended September 30, 1995.
For the three months ended September 30, 1996, the provision for loan
losses amounted to $225,000, a decrease of $33,000 compared to the same period
in 1995. Management continually reviews the adequacy of the loan loss reserve
using guidelines promulgated by the bank's primary regulator.
Other Income and Other Expenses.
Other income increased $116,000 for the three month period ended
September 30, 1996 compared to the three month period ended September 30, 1995.
The increase was mostly a result of higher levels of service charges on deposit
accounts. As was previously mentioned, the Company showed a sharp increase in
deposits as a result of its acquisition of branch offices.
Other expenses increased approximately $1.0 million, to $3.6 million
for the three months ended September 30, 1996 as compared to the same period in
1995. The increase was a result of operating a much larger organization and
amortizing the premium paid on prior acquisitions. Also, during the third
quarter of 1995, the Company received a rebate of insurance premiums from the
Federal Deposit Insurance Corporation. Salaries and employee benefits increased
$690,000, data processing expense increased $120,000, occupancy and equipment
expense were virtually unchanged and amortization of intangibles increased about
$109,000.
Comparison of Operating Results for the Nine Months Ended September 30, 1996 and
1995.
Net Income. Net income increased by $108,000 or 5.2% for the nine
months ended September 30, 1996 to $2.2 million from $2.1 million for the nine
months ended September 30, 1995. Net interest income increased $2.8 million and
the provision for loan losses increased $130,000 for the nine months ended
September 30, 1996 compared to the same period in 1995. Other income increased
by $270,000 to $1.3 million for the nine months ended September 30, 1996 as
compared to $1.0 million for the nine months ended September 30, 1995. Other
expenses increased by $2.6 million to $9.7 million for the nine months ended
September 30, 1996 as compared to $7.1 million for the nine months ended
September 30, 1995.
Net Interest Income. The increase in net interest income was primarily
due to a $6.5 million increase in interest income partially offset by a $3.8
million increase in interest expense.
The increase to interest income was a result of the aforementioned loan
growth and higher levels of investment securities outstanding, and partially
offset by lower amounts of federal funds sold. Interest and fees on loans
amounted to $15.6 million for the nine months ended September 30, 1996 compared
to $10.8 million for the same period in 1995; an increase of $4.8 million, or
44.8 %. Interest on investment securities increased $2.1 million, or 58.9 % for
the nine months ended September 30, 1996 to $5.6 million from $3.5 million for
the nine months ended September 30, 1995. Interest income on federal funds sold
amounted to $65,000 for the nine months ended September 30, 1996 compared to
$430,000 for the same period in 1995.
11
<PAGE>
Deposit growth, as a result of the acquisition of eight branches from
other financial institutions in 1995, caused a sharp increase of interest
expense on deposit accounts. For the nine months ended September 30, 1996,
interest on deposits amounted to over $8.7 million, or a $3.5 million increase
from the nine months ended September 30, 1995.
For the nine months ended September 30, 1996, the provision for loan
losses amounted to $675,000, an increase of $127,000 compared to the same period
in 1995. This increase was a result of an increase in commercial loan balances
in 1996. Management continually reviews the adequacy of the loan loss reserve
using guidelines promulgated by the bank's primary regulator.
Other Income and Other Expenses.
Other income increased $270,000 for the nine month period ended
September 30, 1996 compared to the nine month period ended September 30, 1995.
The increase was mostly a result of higher levels of service charges on deposit
accounts. As was previously mentioned, the Company showed a sharp increase in
deposits as a result of its acquisition of branch offices. For the nine months
ended September 30, 1996, the Company also realized a gain on the sale of
investment securities in the amount of $203,000. For the same period in 1995,
the Company realized a gain on the sale of loans in the amount of $208,000.
Other expenses increased approximately $2.7 million, to $9.7 million
for the nine months ended September 30, 1996 as compared to the same period in
1995. The increase was a result of operating a much larger organization and
amortizing the premium paid on prior acquisitions. Salaries and employee
benefits increased $1.4 million, data processing expense increased $400,000,
occupancy and equipment expense increased $380,000 and amortization of
intangibles increased about $430,000.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
The Company is not engaged in any legal proceedings of a material
nature at September 30, 1996. From time to time, the Company is a party
to legal proceedings in the ordinary course of business wherein it
enforces its security interest in loans.
Item 2 Changes in Securities
Not applicable
Item 3 Defaults Upon Senior Securities
Not applicable
Item 4 Submission of Matters to a Vote of Security Holders
Not applicable
Item 5 Other Information
Not applicable
Item 6 Exhibits and Reports on Form 8-K
(a) Not Applicable
(b) No Form 8-K reports were filed during this quarter.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Ace of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 8, 1996 Sun Bancorp, Inc.
---------------- -----------------------------
(Registrant)
/s/ Philip W. Koebig, III
------------------------------
Philip W. Koebig, III
Executive Vice President
Date November 8, 1996 /s/ Robert F. Mack
---------------- ------------------------------
Robert F. Mack
Controller
14
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 21,924
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 125,359
<INVESTMENTS-CARRYING> 125,359
<INVESTMENTS-MARKET> 125,359
<LOANS> 267,686
<ALLOWANCE> 2,375
<TOTAL-ASSETS> 436,270
<DEPOSITS> 380,160
<SHORT-TERM> 28,213
<LIABILITIES-OTHER> 2,166
<LONG-TERM> 0
0
0
<COMMON> 1,760
<OTHER-SE> 23,972
<TOTAL-LIABILITIES-AND-EQUITY> 436,270
<INTEREST-LOAN> 15,639
<INTEREST-INVEST> 5,584
<INTEREST-OTHER> 65
<INTEREST-TOTAL> 21,288
<INTEREST-DEPOSIT> 8,733
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<EXPENSE-OTHER> 9,730
<INCOME-PRETAX> 3,168
<INCOME-PRE-EXTRAORDINARY> 3,168
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<NET-INCOME> 2,167
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.21
<YIELD-ACTUAL> 4.18
<LOANS-NON> 1,947
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<ALLOWANCE-CLOSE> 2,375
<ALLOWANCE-DOMESTIC> 2,375
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,375
</TABLE>
