FORM 10-Q-QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 March 31, 1998
-------------------------------------------------
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: 0-14745
---------------------------------------------------------
SUN BANCORP, INC. (SUN)
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2233584
- ------------------------------------------ -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
PO Box 57, Selinsgrove, Pennsylvania 17870
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(717) 374-1131
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(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. X Yes No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes 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.
Common Stock, $0.83 Par Value 6,217,369
- --------------------------------------- --------------------------------------
Class Outstanding Shares At March 31, 1998
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
CONTENTS Page
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1 - Financial Statements:
Consolidated Balance Sheet as of March 31, 1998
(Unaudited) and December 31, 1997 3
Consolidated Statement of Income for the Three Months Ended
March 31, 1998 and 1997 (Unaudited) 5
Consolidated Statement of Cash Flows for the Three Months Ended
March 31, 1998 and 1997 (Unaudited) 7
Notes to the Consolidated Financial Statements (Unaudited) 9
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II - OTHER INFORMATION 15
- ---------------------------
SIGNATURES 16
2
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 1. Financial Statements
SUN BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(In Thousands)
March 31, 1998 December 31, 1997
(Unaudited) (Note)
----------- ------
ASSETS
Cash and due from banks $ 9,255 $ 8,173
Interest-bearing deposits in banks 18,057 786
--------- ---------
Total cash and cash equivalents 27,312 8,959
Securities available-for-sale 187,868 165,284
Loans, net 310,130 310,300
Bank premises and equipment, net 8,868 8,964
Intangible asset, goodwill, net 10,758 10,946
Accrued interest and other assets 5,075 6,275
--------- ---------
Total assets $ 550,011 $ 510,728
========= =========
Note: The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 1. Financial Statements
SUN BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(In Thousands)
March 31, 1998 December 31, 1997
(Unaudited) (Note)
----------- ------
LIABILITIES & SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 35,766 $ 30,563
Interest-bearing 304,984 296,455
---------- ----------
Total deposits 340,750 327,018
Short-term borrowings 16,160 20,259
Other borrowed funds 123,025 93,025
Accrued interest and other liabilities 4,243 4,813
---------- ----------
Total liabilities 484,178 445,115
---------- ----------
Shareholders' Equity
Common Stock, par value $0.83 per share
in 1998, and $1.25 per share in 1997
Authorized 20,000,000 shares;
Issued 6,288,632 shares in 1998 and
6,271,944 shares in 1997 5,220 5,206
Additional paid in capital 56,369 56,155
Retained earnings 3,286 2,485
Accumulated other comprehensive income
Unrealized gains on
available-for-sale securities, net 2,367 3,176
Less: Treasury stock, At cost
71,263 shares in 1997 and
47,509 shares in 1996 (1,409) (1,409)
---------- ----------
Total shareholders' equity 65,833 65,613
---------- ----------
Total liabilities and
shareholders' equity $ 550,011 $ 510,728
========== ==========
Note: The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 1. Financial Statements
SUN BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
-----------
(In Thousands)
For the Three Months
Ended March 31
--------------
1998 1997
---- ----
Interest Income:
Interest and fees on loans $ 7,169 $ 4,871
Income from available-for-sale securities
Taxable 1,906 1,333
Tax Exempt 657 639
Dividends 133 182
Interest on deposits in banks 94 13
------- -------
Total interest income 9,959 7,038
------- -------
Interest Expense:
Interest on deposits 3,283 2,152
Interest on short-term borrowings 129 273
Interest on other borrowed funds 1,549 1,203
------- -------
Total interest expense 4,961 3,628
------- -------
Net interest income 4,998 3,410
Provision for possible loan losses 300 150
------- -------
Net interest income, after provision for
possible loan losses 4,698 3,260
------- -------
The accompanying notes are an intergral part of these financial statements.
5
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 1. Financial Statements
SUN BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
-----------
(Continued)
(In Thousands)
For the Three Months
Ended March 31
--------------
1998 1997
---- ----
Other Operating Income:
Service charges on deposit accounts $ 280 $ 141
Trust income 120 108
Net security gains 310 209
Income from insurance subsidiary 40 43
Other income 129 79
------- -------
Total other operating income 879 580
------- -------
Other Operating Expense:
Salaries and employee benefits 1,460 908
Net occupancy expenses 181 107
Furniture and equipment expenses 219 134
Amortization of goodwill 188 -
Expenses of insurance subsidiary 76 7
Other expenses 721 403
------- -------
Total other operating expense 2,845 1,559
------- -------
Income before income tax provision 2,732 2,281
Income tax provision 689 478
------- -------
Net income $ 2,043 $ 1,803
======= =======
PER SHARE DATA
Net income per share - Basic $ 0.33 $ 0.34
Weighted average number of shares outstanding - Basic 6,206,155 5,316,027
Net income per share - Diluted $ 0.33 $ 0.34
Weighted average number of shares outstanding - Diluted 6,284,220 5,380,483
Dividends paid $ 0.200 $ 0.165
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 1. Financial Statements
SUN BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
-----------
(In Thousands) For the Three Months Ended
March 31
--------
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 2,043 $ 1,803
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 300 150
Provision for depreciation 255 113
Amortization of goodwill 188 -
Amortization and accretion of securities, net 57 58
Net security gains (310) (209)
(Increase) decrease in accrued interest and
other assets 1,643 (598)
Decrease in accrued interest and
other liabilities (570) (189)
---------- ----------
Net cash provided by operating activities 3,606 1,128
---------- ----------
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities 758 502
Proceeds from maturities of available-for-sale
securities 8,504 3,617
Purchases of available-for-sale securities (32,818) (5,163)
Net increase in loans (157) (2,002)
Capital expenditures (159) (463)
---------- ----------
Net cash used in investing activities (23,872) (3,509)
---------- ----------
Cash flows from financing activities:
Net increase in deposit accounts 13,732 5,720
Net decrease in short-term borrowings (4,099) (10,040)
Proceeds from other borrowed funds 45,000 10,000
Repayments of other borrowed funds (15,000) -
Cash dividends paid (1,242) (877)
Proceeds from sale of stock for employee benefits
program 228 210
---------- ----------
Net cash provided by financing activities 38,619 5,013
---------- ----------
Net increase in cash and cash equivalents 18,353 2,574
Cash and cash equivalents at beginning of period 8,959 7,499
---------- ----------
Cash and cash equivalents at end of period $27,312 $10,073
========== ==========
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 1. Financial Statements
SUN BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
-----------
(Continued)
For the Three Months
Ended March 31
--------------
1998 1997
---- ----
Supplemental disclosure of cash flow information (in thousands):
Cash paid during the period for:
Interest $ 4,830 $ 3,605
Income taxes - -
Supplemental schedule of noncash investing and financing
activities:
During the three-month period ended March 31, 1998,
loans with an estimated value of $27,000 were reclassified
to other real estate owned.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 1. Financial Statements
SUN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
Note 1 -- Basis of Presentation
---------------------
The consolidated financial statements include the accounts of SUN BANCORP,
INC. (SUN), the parent company, and its wholly-owned subsidiaries of Sun Bank
(Bank), doing business as Snyder County Trust Company, Watsontown Bank, Central
Pennsylvania Bank, Bucktail Bank and Trust Company, and the Pennsylvania SUN
Life Insurance Company. All significant intercompany balances and transactions
have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements for the interim
periods do not include all of the information and footnotes required by
generally accepted accounting principles. However, in the opinion of
management, all adjustments necessary for a fair presentation of the results of
the interim period have been included. Operating results for the three-month
period ended March 31, 1998 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1998.
The accounting policies followed in the presentation of interim financial
results are the same as those followed on an annual basis. These policies are
presented on pages 10 and 11 of the 1997 Annual Report to Shareholders.
Note 2 -- Subsequent Event - Announcement of Stock Dividend
-------------------------------------------------
On April 20, 1998, SUN's Board approved a 5% stock dividend, effective for
shareholders of record as of the close of business on May 22, 1998, with the
additional shares to be distributed on June 5, 1998. Since this transaction is
expected to be consummated after the issuance of the accompanying financial
statements, per share data does not include the effect of the stock dividend.
9
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 1. Financial Statements
Note 3 -- Consolidated Statement of Comprehensive Income
----------------------------------------------
Beginning with this quarterly period, a consolidated statement of
comprehensive income will be presented. The purpose of reporting comprehensive
income is to report a measure of all changes in SUN's equity that result from
economic events other than transactions with shareholders in their capacity as
shareholders. For SUN, "comprehensive income" includes traditional income
statement amounts as well as unrealized gains and losses on certain investments
in debt and equity securities (i.e., available-for-sale securities).
<TABLE>
<CAPTION>
(In Thousands) For the Three Months
Ending March 31
(Unaudited)
-----------
1998 1997
---- ----
<S> <C> <C>
Net income $ 2,043 $ 1,803
--------- ---------
Other comprehensive loss:
Unrealized holding losses on available-for-sale securities:
Losses arising during the first three months (916) (1,874)
Reclassification adjustment (310) (209)
--------- ---------
Other comprehensive loss before income tax provision (1,226) (2,083)
Income tax benefit related to other comprehensive loss 417 708
--------- ---------
Other comprehensive loss (809) (1,375)
--------- ---------
Comprehensive income $ 1,234 $ 428
========= =========
</TABLE>
10
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following is management's discussion and analysis of the significant
changes in the results of operations, capital resources and liquidity presented
in its accompanying consolidated financial statements for SUN BANCORP, INC., a
bank holding company, and its wholly-owned subsidiary, Sun Bank. SUN also owns
a captive insurance company, the Pennsylvania SUN Life Insurance Company, that
provides credit life and disability insuarance to Sun Bank's credit customers.
consolidated financial condition and results of operations consist almost
entirely of the bank's financial condition and results of operations. This
discussion should be read in conjunction with the 1997 Annual Report. Current
performance does not guarantee or assure similar performance in the future, and
may not be indicative of future results.
SUN's net income for the three months ended March 31, 1998 amounted to
$2,043,000, an increase of 13.3% over the first three months of 1997. Basic and
diluted earnings per share were $.33 for the three months ended March 31, 1998,
compared to $.34 for the same period in 1997. SUN achieved a 1.55% return on
average assets and a 12.34% return on average equity for the three months ended
March 31, 1998, compared to ratios of 1.95% and 18.17% for the previous
comparable period. Per share data, for the first quarter of 1997, has been
adjusted to reflect the effects of the 5% stock dividend June 6, 1997 and the
three-for-two stock split December 12, 1997.
Results of Operations - Three Months Ended March 31, 1998 and 1997
- ------------------------------------------------------------------
SUN's income statement for the first quarter of 1998, compared to the same
period in 1997, was significantly affected by the acquisition of Bucktail Bank
and Trust Company (Bucktail) on June 30, 1997. The effects of the Bucktail
purchase were to substantially increase the average balances of earning assets
and interest-bearing liabilities. Corresponding increases in total interest
income and total interest expense resulted in an overall increase in net
interest income of $1,588,000 to $4,998,000, a 46.6% increase over the same
period in 1997.
Total other operating income increased $299,000, or 51.6%, in the first
quarter of 1998 compared to the same quarter of 1997. Service charges on
deposit accounts increased $139,000 due in part to the addition of Bucktail
accounts and to an increase in automatic teller machine fees. Also, net
security gains, primarily from the sales of equity securities, were $310,000 in
the three months ended March 31, 1998 compared to gains of $209,000 for the same
period in 1997.
Other operating expenses increased to $2,845,000 in the first quarter of
1998, compared to $1,559,000 in 1997. Increases in salaries and employee
benefits, net occupancy expenses, furniture and equipment expenses, and other
expenses were reflective of increased operating costs associated with the
addition of seven former Bucktail locations. Also, amortization of $188,000
was recorded in the first quarter of 1998, resulting from goodwill related to
the Bucktail acquisition.
11
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Balance Sheet - March 31, 1998 and December 31, 1997
- ----------------------------------------------------
Total assets increased $39,283,000 or 7.7% to $550,011,000 at March 31, 1998
from $510,728,000 at December 31, 1997. The asset increases occurred in
primarily two categories: interest-bearing deposits in banks and
available-for-sale securities. Interest-bearing deposits in banks increased
$17,271,000, while available-for-sale securities increased $22,584,000. The
investment portfolio is mainly comprised of mortgage-backed securities and state
and municipal bonds. Total liabilities increased $39,063,000 OR 8.8% from
December 31, 1997 to March 31, 1998. The increase is the result of deposits
increasing $13,732,000 with growth in the following areas: demand deposits
$5,202,000, NOW, Insured Money Market, and other deposit savings accounts
$4,744,000, and certificates of deposit $3,786,000. In addition to deposits
increasing, borrowed funds increased $25,901,000. The increase in borrowed
funds is the net result of short-term borrowings decreasing $4,099,000, while
term FHLB borrowings increased $30,000,000.
Allowance for Possible Loan Losses
- ----------------------------------
Losses on loans are charged against the allowance in the period in which they
have been determined to be uncollectible. Recoveries of loans previously
charged off are credited to the allowance as they are received. A monthly
review of the allowance for possible loan losses is done to determine the
collectibility of certain loans based on internal analysis and management's
assumptions as to the ability of the borrower to service the loan. As of
March 31, 1998, the allowance for possible loan losses was $3,238,000. This
allowance amount represents 1.04% of total loans. Management deems the
allowance to be adequate; however, future additions may be necessary based on
economic, market, or other unforeseeable conditions. Although management makes
its best estimate as to the additions to the allowance, there can be no
assurance that future material additions may not be needed. The allocation of
the allowance for possible loan losses is also based on historical data, the
composition of the portfolio, possible future losses and current economic
conditions. The allocation is judgemental and is subject to variations
depending on econcomic market conditions affecting specific loan categories.
12
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART 1
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Adequacy
- ----------------
Management believes capital is being maintained at adequate levels. SUN paid
a cash dividend of $.20 per share to its shareholders on March 13, 1998. SUN's
stock is traded publicly on the NASDAQ national market system under the symbol
SUBI. SUN's strong capital position is evidenced by the following capital
ratios which are well above the regulatory minimum levels.
(In Thousands) For Capital
Actual Adequacy Purposes
------ -----------------
Amount Ratio Ratio
------ ----- -----
As of March 31, 1998:
Total Capital $55,947 17.7% 8.0%
(to Risk Weighted Assets)
Tier I Capital 52,709 16.6% 4.0%
(to Risk Weighted Assets)
Tier I Capital 52,709 10.2% 4.0%
(to Average Assets)
As of December 31, 1997:
Total Capital $54,621 17.8% 8.0%
(to Risk Weighted Assets)
Tier I Capital 51,491 16.8% 4.0%
(to Risk Weighted Assets)
Tier I Capital 51,491 10.3% 4.0%
(to Average Assets)
Effects of Cash and Stock Dividends on Retained Earnings
- --------------------------------------------------------
SUN and other corporate entities are subject to accounting standards that
dictate how we report our financial performance. These rules are written to
apply to all corporations. The accounting of SUN's shareholders' equity account
is one example.
Net income is transferred to the retained earnings acount and dividends are
paid from this account. When stock dividends of less than 20% are declared, the
difference between the par value of the stock dividend must be recorded as a
decrease in the retained earnings with corresponding increases recorded in
common stock and additional paid-in capital. Over the last several years,
numerous stock dividends coupled with market price appreciation have reduced the
balance of our retained earnings account. We expect the June 5, 1998 payment of
the 5% stock dividend to push our retained earnings into a negative balance.
A review of SUN's balance sheet supports the fact that its total
shareholders' equity reflects our intention of maintaining a high level of
safety and soundness. Our intention is to continue paying shareholders a
significant portion of the profits we earn while maintaining the safety and
soundness of your institution.
13
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART 1
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Regulatory and Industry Merger Activity
- ---------------------------------------
From time to time, various types of federal and state legislation have been
proposed that could result in additional regulation of, and restrictions on, the
business of SUN and Sun Bank. It cannot be predicted whether such legislation
will be adopted or, if adopted, how such legislation would affect the business
of SUN and Sun Bank. As a consequence of the extensive regulation of commercial
banking activities in the United States, SUN's and Sun Bank's business is
particularly susceptible to being affected by federal legislation and
regulations that may increase the costs of doing business. Except as
specifically described above, management believes that the effect of the
provisions of legislation on the liquidity, capital resources, and results of
operations of SUN will be immaterial. Management is not aware of any other
current specific recommendations by regulatory authorities or proposed
legislation, which if they were implemented, would have a material adverse
effect upon the liquidity, capital resources, or results of operations, although
the general cost of compliance with numerous and multiple federal and state laws
and regulations does have, and in the future may have, a negative impact on
SUN's results of operations.
Further, the business of SUN is also affected by the state of the financial
services industry in general. As a result of legal and industry changes,
management predicts that the industry will continue to experience an increase in
consolidations and mergers as the financial services industry strives for
greater cost efficiencies and market share. Management also expects increased
diversification of financial products and services offered by Sun Bank and its
competitors. Management believes that such consolidations and mergers, and
diversification of products and services may enhance its competitive position as
a community bank.
14
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART II
Items 1, 2 and 3 -- Omitted pursuant to instructions to Part II
Item 4 -- Submission of Matters to a Vote of Security Holders
a. SUN BANCORP, INC. held its 1998 Annual Meeting on Thursday,
April 23, 1998
b. This information is incorporated by reference to Exhibit 1, item
number one. Those directors whose term of office continued after
the meeting are:
George F. Keller Dr. Robert E. Funk
Fred W. Kelly, Jr. Paul R. John
Jeffrey E. Hoyt Dennis J. Van
David R. Dieck Jerry A. Soper
Louis A. Eaton
c. This information is incorporated by reference to Exhibit 1.
d. None
Item 5 -- Other information
The registrant's Board of Directors continued the authorization for the
repurchase of up to 5% of SUN BANCORP, INC.'s outstanding shares. The stock
buy-back program is effective until April 1999. The purchased shares will be
used for general corporate purposes.
In April 1998, the Board of Directors also approved a 5% stock dividend and
an increased quarterly dividend payment from $.20 per share to $.205 per share
for stockholders of record May 22, 1998 payable June 5, 1998.
Item 6 -- Exhibits and Reports on Form 8-K
a. No reports on Form 8-K were filed for the quarter ending
March 31, 1998.
15
<PAGE>
SUN BANCORP, INC.
FORM 10-Q
PART II
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 5/15/98 /s/ Fred W. Kelly, Jr.
---------------------- -----------------------
Fred W. Kelly, Jr.
Chief Executive Officer
(Principal Executive Officer)
/s/ Jeffrey E. Hoyt
---------------------
Jeffrey E. Hoyt
Executive Vice President,
Chief Operating Officer and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
SUN BANCORP, INC.
PO Box 57
Selinsgrove, PA 17870
(717) 374-1131
16
<PAGE>
SUN BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
CERTIFICATE OF JUDGES OF ELECTION
---------------------------------
We, Max B. Baslick, Michael G. Bower, Robert L. Zettelmoyer and Stephen G.
Kaiser (Alternate), Judges of Election at the Annual Meeting of Shareholders of
SUN BANCORP, INC. held on April 23, 1998, hereby certify as follows:
a) That we have reviewed the list of shareholders, proxies and other
relevant papers and records in connection with the aforesaid meeting:
b) That there are, and were, at the close of business on March 5, 1998,
the record date for the aforesaid meeting, 6,208,489 shares of the
Corporation outstanding:
c) That we have examined all of the proxies submitted to us with respect
to the aforesaid meeting:
d) That there were present in person or by valid proxy, the holder of
5,172,178 shares:
e) That we have counted and tabulated all ballots submitted by the
aforesaid holders, in person or by proxy:
f) That the vote for the election of seven (7) directors to the
Corporation whose terms end as indicated below is as follows:
Max E. Bingaman, 3 year term to expire in 2001
FOR 5,167,950 AGAINST 745
Stephen J. Gurgovits, 3 year term to expire in 2001
FOR 5,099,900 AGAINST 68,795
Robert A. Hormell, 3 year term to expire in 2001
FOR 5,160,394 AGAINST 8,301
<PAGE>
Lehman B. Mengel, 3 year term to expire in 2001
FOR 5,124,825 AGAINST 43,870
Howard H. Schnure, 3 year term to expire in 2001
FOR 5,097,871 AGAINST 70,824
Marlin T. Sierer, 3 year term to expire in 2001
FOR 5,145,430 AGAINST 23,265
Thomas B. Hebble, 2 year term to expire in 2000
FOR 5,147,804 AGAINST 20,891
g) To amend and restate Article 6 of the Corporation's Articles of
Incorporation, as amended, to eliminate par value for the
Corporation's Common Stock.
FOR 5,040,187 AGAINST 103,666 ABSTAIN 28,325
h) To approve and adopt the 1998 Independent Director's Stock Option Plan.
FOR 4,738,710 AGAINST 112,568 ABSTAIN 35,927
i) To approve and adopt the 1998 Employee Stock Purchase Plan.
FOR 4,826,100 AGAINST 27,091 ABSTAIN 34,014
j) To approve and adopt the 1998 Stock Incentive Plan.
FOR 4,770,290 AGAINST 82,233 ABSTAIN 34,682
k) To ratify the appointment of Parente, Randolph, Orlando, Carey &
Associates, Certified Public Accountants as the independent certified
public accountants for SUN BANCORP, INC. for the year 1998.
FOR 5,128,563 AGAINST 29,685 ABSTAIN 13,930
Judges of Election
/s/ Max B. Baslick
-----------------------------
Max B. Baslick
/s/ Michael G. Bower
-----------------------------
Michael G. Bower
/s/ Robert L. Zettelmoyer
-----------------------------
Robert L. Zettelmoyer
/s/ Stephen G. Kaiser
-----------------------------
Stephen G. Kaiser (Alternate)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 9255
<INT-BEARING-DEPOSITS> 18057
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 187868
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 313548
<ALLOWANCE> 3238
<TOTAL-ASSETS> 550011
<DEPOSITS> 340750
<SHORT-TERM> 16160
<LIABILITIES-OTHER> 4243
<LONG-TERM> 123025
<COMMON> 5220
0
0
<OTHER-SE> 60613
<TOTAL-LIABILITIES-AND-EQUITY> 550011
<INTEREST-LOAN> 7169
<INTEREST-INVEST> 2696
<INTEREST-OTHER> 94
<INTEREST-TOTAL> 9959
<INTEREST-DEPOSIT> 3283
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</TABLE>
