<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
(Mark One)
[ X ] Annual Report pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
[ ] Transition Report pursuant to Section 15(d) of
the Securities Exchange Act of 1934
For the transition period from _________ to ___________
Commission file number 0-14745
A. Full title of plan: Sun Bancorp, Inc. 401(k) Plan
B. Name of issuer of the service held pursuant to the plan and the
address of its principle executive office:
Sun Bancorp, Inc.
2-16 South Market Street
Selinsgrove, PA 17870-0057
(570) 374-1131
Page 1 of 17 Sequentially Number Pages
Index to Exhibits Found on Page 15
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SUN BANCORP, INC. 401(k) PLAN
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report............................................................. 5
Financial Statements:
Statement of Net Assets Available For Benefits.................................. 6
Statement of Changes in Net Assets Available For Benefits....................... 7
Notes to Financial Statements................................................... 8
Supplemental Schedule,
Schedule H, Line 4i - Schedule of Assets Held For Investment Purposes
At End of Year.................................................................. 12
Required Information..................................................................... 13
Exhibits
Exhibit 23 - Independent Auditors' Consent...................................... 16
</TABLE>
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Sun Bancorp, Inc. 401 (k) Plan
-------------------------
Financial Statements
For The Years Ended
December 31, 1999 and 1998
&
Independent Auditors' Report
&
Supplemental Schedule
<PAGE> 4
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report..................................................... 5
Financial Statements:
Statement of Net Assets Available For Benefits.......................... 6
Statement of Changes in Net Assets Available For Benefits............... 7
Notes to Financial Statements........................................... 8
Supplemental Schedule,
Schedule H, Line 4i - Schedule of Assets Held For Investment Purposes
At End of Year.......................................................... 12
</TABLE>
<PAGE> 5
Independent Auditors' Report
To the Administrative Committee of the
Sun Bancorp, 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of Sun Bancorp, Inc. 401(k) Plan (the "Plan") as of December 31, 1999 and 1998,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 1999. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the year ended December 31, 1999 in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 1999 is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Parente Randolph
Williamsport, Pennsylvania
June 8, 2000
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SUN BANCORP, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments $4,822,913 $4,441,472
---------- ----------
Receivables:
Employer contribution 326,897 327,503
Accrued investment income 5,211 7,334
---------- ----------
Total receivables 332,108 334,837
---------- ----------
Cash and cash equivalents 2,550 10,305
---------- ----------
Total assets 5,157,571 4,786,614
LIABILITIES -- --
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $5,157,571 $4,786,614
========== ==========
</TABLE>
See Notes to Financial Statements
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<PAGE> 7
SUN BANCORP, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income (loss):
Net depreciation in fair value of investments $ (100,934)
Interest 20,854
Dividends 354,301
----------
Net investment income 274,221
----------
Contributions:
Employer 326,897
Employee 276,783
Rollover 32,461
----------
Total contributions 636,141
----------
Total additions 910,362
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO,
Benefit payments 539,405
----------
NET INCREASE 370,957
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 4,786,614
----------
End of year $5,157,571
==========
</TABLE>
See Notes to Financial Statements
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<PAGE> 8
SUN BANCORP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
The following description of the Sun Bancorp, Inc. 401(k) Plan (the
"Plan") provides only general information. Participants should refer to
the Plan agreement for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan covering substantially all
employees of Sun Bancorp, Inc. and its wholly-owned subsidiary, Sun
Bank (collectively, "Sun"). The Plan contains two components, a 401(k)
component (salary reduction contributions) and an employer defined
contribution component. All employees who are 18 years of age before
January 1 of the Plan year are eligible to participate in the 401(k)
component. To become a participant in the employer defined contribution
component, an employee must complete one year of service and attain age
21. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Each year, participants in the Plan may contribute up to 15 percent of
pretax annual compensation, as defined in the Plan. Participants may
also contribute amounts representing distributions from other qualified
defined benefit or defined contribution plans. Sun contributes 100
percent of the first 3 percent of participant contributions to the
401(k) component of the Plan. The Plan also provides for an employer
discretionary contribution. Sun made a discretionary contribution of 5
percent based on eligible wages, as defined, to the defined
contribution component of the Plan. Participants direct the investment
of all contributions into various investment options offered by the
Plan. The Plan currently offers eight mutual funds, one common stock
and one money market fund as investment options for participants.
Contributions are subject to certain limitations.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and allocations of Sun's contributions and Plan earnings.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
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SUN BANCORP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
VESTING
Participants are vested immediately in their contributions plus actual
earnings thereon. Vesting in Sun's matching and defined contribution
portion of their accounts is based on years of continuous service. A
participant is 100 percent vested after five years of credited service.
PAYMENT OF BENEFITS
On termination of service due to retirement, death or disability, the
vested balance of a participant's Plan account will be distributed in
the form of a single sum payment or an annuity. For termination of
service for other reasons, the Plan will distribute a participant's
vested account balance upon request.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING CHANGES
Effective January 1, 1999, the Plan adopted Statement of Position 99-3,
"Accounting for and Reporting of Certain Defined Contribution Plan
Investments and other Disclosure Matters" ("SOP 99-3"). SOP 99-3 amends
the AICPA Audit and Accounting Guide, Audits of Employee Benefit Plans,
and simplifies disclosures for certain investments. It does not change
the measurement or recognition of the Plan. Prior year financial
statements and disclosures have been restated to conform to SOP 99-3
requirements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect certain reported amounts and
disclosures. Actual results may differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value except for the money
market fund which is stated at cost, which approximates fair value.
Shares of mutual funds are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year end.
Common stock is carried at fair value based on quoted market values.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
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<PAGE> 10
SUN BANCORP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
FORFEITED ACCOUNTS
Forfeited nonvested accounts totaled $17,000 at December 31, 1999 and
$7,500 at December 31, 1998. These accounts were used to reduce
employer contributions. In 1999 employer contributions were reduced
$17,000 from forfeited nonvested accounts.
3. INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Sun Bancorp, Inc. common stock, 47,454 and 42,556 shares, respectively $ 913,484 $1,180,918
Federated Stock Trust Fund, 32,334 and 30,647 shares, respectively 1,166,608 1,128,745
Fidelity Contra Fund, 14,262 and 11,626 shares, respectively 856,005 660,233
Federated GNMA Trust Fund, 36,676 and 34,108 shares, respectively 395,006 387,812
Homestate Pennsylvania Growth Fund, 22,399 and 21,497 shares, respectively 441,710 229,800
Money Market Fund, 522,337 and 437,607 shares, respectively 522,337 437,607
</TABLE>
During 1999 the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $(100,934) as follows:
<TABLE>
<CAPTION>
<S> <C>
Common stock $(333,654)
Mutual funds 232,720
---------
Total $(100,934)
=========
</TABLE>
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<PAGE> 11
SUN BANCORP, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
4. PLAN TERMINATION
Although it has not expressed any intention to do so, Sun has the right
under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event the
Plan terminates, all participants would become fully vested in their
accounts.
5. INCOME TAX STATUS
The Internal Revenue Service has determined and informed Sun by a letter
dated April 19, 1994, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC).
The Plan has been amended since receiving the determination letter.
However, the plan administrator believes that the Plan is designed and is
currently being operated in compliance with the applicable requirements of
the IRC.
6. NET ASSETS AVAILABLE FOR BENEFITS
Net assets available for benefits include $177,794 at December 31, 1999
and $404,953 at December 31, 1998 allocated to accounts of participants
who have withdrawn from participation in the Plan.
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SUN BANCORP, INC. 401 (k) PLAN
EMPLOYER IDENTIFICATION NUMBER 23-1102550
PLAN NUMBER 002
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 1999
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
IDENTITY CURRENT
OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE
<S> <C> <C> <C> <C> <C>
MUTUAL FUNDS: 32,334 shs. Federated Stock Trust Fund $ 1,023,422 $ 1,166,608
14,262 shs. Fidelity Contra Fund 641,200 856,005
22,399 shs. Homestate Pennsylvania Growth Fund 230,290 441,710
36,676 shs. Federated GNMA Trust Fund 415,139 395,006
10,185 shs. Strong Common Stock Fund 228,623 256,763
17,288 shs. Federated U.S. Government Securities Fund 180,994 178,931
1,577 shs. Harbor International Fund 58,534 66,001
703 shs. Vanguard Growth & Income Fund 25,527 26,068
* COMMON STOCK: 47,454 shs. Sun Bancorp, Inc. 710,737 913,484
* MONEY MARKET: 522,337 shs. Money Market Fund 522,337 522,337
------------ -----------
TOTAL INVESTMENTS $ 4,036,803 $ 4,822,913
============ ===========
* Party-in-interest
</TABLE>
See Notes to Financial Statements
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REQUIRED INFORMATION
The Statement of Net Assets Available for Plan Benefits of the Plan as
of December 31, 1998 and the related Statement of Changes in Net Assets
Available for the Plan Benefits and supplemental schedules for the year ended
December 31, 1999, together with the Independent Auditors' Report and Consent
are attached and filed herewith.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Committee under the Plan, which administers the Plan, has duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
Sun Bancorp, Inc. 401(k) Plan
By: /s/ Fred W. Kelly, Jr.
---------------------------
Fred W. Kelly, Jr.
Administrator
Dated: June 28, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
<S> <C>
23 Consent of Parente Randolph.
</TABLE>
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