SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 17, 1998
SUN BANCORP, INC.
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(Exact name of Registrant as specified in its Charter)
New Jersey 0-20957 52-1382541
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(State or other jurisdiction (SEC File No.) (IRS Employer
of incorporation) Identification
Number)
226 Landis Avenue, Vineland, New Jersey 08360
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 691-7700
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Not Applicable
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(Former name or former address, if changed since last Report)
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SUN BANCORP, INC.
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INFORMATION TO BE INCLUDED IN REPORT
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Item 2. Acquisition or Disposition of Assets.
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On December 17, 1998, effective at the close of business, Sun National
Bank, Delaware, a national bank located in Wilmington, Delaware (the "Bank")
recently chartered by Sun Bancorp, Inc. (the "Registrant"), acquired certain
assets and assumed certain liabilities of eight branch offices, including
approximately $170 million in deposits and $126 million in loans, of Beneficial
Bank, Wilmington, Delaware ("Beneficial"). Beneficial Bank was acquired by
Household Bank, f.s.b., Prospect Heights, Illinois ("Household"), earlier this
year.
In this purchase and assumption transaction, the Bank assumed
approximately $170 million in deposits (including certain accrued interest), and
acquired certain assets consisting principally of cash, banking equipment, and
loans in the principal amount of approximately $126 million. The Bank assumed
the real estate leases for the leased branches.
In accordance with the Agreement, Household paid cash to the Bank equal
to the amount of the deposits (including accrued interest) assumed, net of a $24
million premium which forms the consideration for the transaction. Additionally,
the Bank paid approximately $406,000 to Household for banking equipment and
other assets purchased. The Bank's source of funds was cash on hand. The
purchase price was determined through arms-length negotiation with Household.
The acquisition was accounted for under the purchase method of accounting.
Subsequent to the acquisition, the acquired branches are being operated
by the Bank as branch banking offices used in its banking business. As the
result of this acquisition, the Registrant currently operates 50 branch offices
in southern and central New Jersey and Delaware. This acquisition is consistent
with the Registrant's strategic goal of growing its market share within its
market area and reaching into adjacent market areas, through low-cost, fill-in
or market-extension acquisitions.
Although the assets acquired consisted principally of cash, the
approximate $19.9 million of goodwill will change the Registrant's risk-based
capital ratios and leverage ratio. Assuming the transaction had been consummated
at September 30, 1998, after giving effect to the issuance by the Registrant of
Common Shares in November 1998 and Preferred Securities in October 1998, the pro
forma effect of the transaction on the Registrant's capital ratios was as
follows: (1) Tier 1 and Leverage capital ratios were reduced from 11.18% and
6.30% to 7.02% and 4.17%; and (2) Total risk-based capital ratio was reduced
from 16.77% to 11.86%. All ratios remain above the levels necessary for the
Registrant to be considered "adequately capitalized" under applicable
regulations.
The acquisition of the Beneficial branches improved the liquidity of
the Registrant and the Bank due to the fact that $20.7 million of cash was
received in addition to branch cash. The cash was invested in short term
investment securities pending deployment by the Bank into earning assets in the
ordinary course of operating its banking business.
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Management of the Registrant is unable to predict with any certainty
the impact of the branch acquisition on the Registrant's future financial
results taken as a whole. Although management believes there are opportunities
to reduce non-interest expense through operational and administrative synergies
and to achieve lower funding costs, there will also be systems conversion costs,
marketing campaign expenses, and expenses of improving certain leasehold
branches. Further, management will be challenged to effectively and profitably
deploy the cash received in the transaction into earning assets, principally
loans. Goodwill resulting from the branch acquisition will be amortized over ten
years.
Item 7. Financial Statements and Exhibits.
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2.1 - Agreement dated July 20, 1998, between the Registrant and
Household, relating to Beneficial branches. (Incorporated by reference to
Exhibit 99.1 to the Registrant's Current Report on Form 8-K dated July 20,
1998).
99.1 - Press Release dated July 20, 1998, of Sun Bancorp, Inc.
(Incorporated by reference to Exhibit 99.2 to the Registrant's Current Report in
Form 8-K, dated July 20, 1998).
99.2 - Press Release dated December 18, 1998, of Sun Bancorp, Inc.
announcing consummation of the Beneficial branch acquisition.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SUN BANCORP, INC.
Date: January 15, 1999 By: /s/Robert F. Mack
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Robert F. Mack
Executive Vice President
(Duly Authorized Representative)
EXHIBIT 99.2
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SUN BANCORP, INC.
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
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December 18, 1998 Robert F. Mack
Executive Vice President
(609) 691-7700
SUN COMPLETES PURCHASE OF DELAWARE BRANCHES
Sun Bancorp, Inc. (Nasdaq National Market: SNBC), the Vineland New Jersey bank
holding company of Sun National Bank announced that yesterday it had completed
the purchase of eight branch offices of Beneficial Bank from Household Bank,
f.s.b., Prospect Heights, Illinois. The eight offices are located in the New
Castle County Delaware communities of Wilmington, Newark, New Castle and Bear.
The branches were merged into Sun National Bank, Delaware, a de novo commercial
bank created for this transaction with its headquarters in Wilmington. As a
result of the completed transaction, Sun National Bank, Delaware has deposits of
approximately $170 million, loans of approximately $126 million and total assets
of approximately $200 million.
"We are very pleased to be entering the New Castle County market," remarked
Bernard A. Brown, Chairman of Sun. "Although it is a highly competitive
marketplace, Delaware has long been a strategic target of ours. We are very
pleased to serve these new communities and the areas that surround them."
"Sun National Bank, Delaware plans to increase the number of deposit and loan
products offered to our customers in these branches," remarked Robert W. Pierce,
President and Chief Executive Officer of Sun National Bank, Delaware. "We are
especially excited about the sophisticated cash management capabilities now
available for small and medium sized business," he added.
The transaction is the tenth in a series of acquisitions that continue to
fulfill Sun Bancorp, Inc.'s growth goals. Sun Bancorp, Inc. is a $1.5 billion
bank holding company with fifty branches located in Delaware and southern and
central New Jersey serving the retail and commercial markets. Its deposits are
insured by the F.D.I.C.
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