Sun Bancorp Inc. (SNBC, Financial) filed Quarterly Report for the period ended 2010-06-30.
Sun Bancorp Inc. has a market cap of $123.2 million; its shares were traded at around $5.26 with and P/S ratio of 0.7. SNBC is in the portfolios of Private Capital of Private Capital Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Goodwill was $38.2 million at June 30, 2010 as compared to $127.9 million at December 31, 2009. The Company recognized a $89.7 million impairment charge as the goodwill analysis results indicated the carrying amount of goodwill exceeded its implied fair value. The net deferred tax asset increased $22.4 million to $43.2 million primarily as a result of the tax benefit recorded on goodwill. Although unable to record amortization of goodwill for book purposes, the Company had been permitted to amortize a portion of goodwill for tax purposes. Therefore, upon recording this impairment charge, the Company was able to record a tax benefit of $13.8 million, also included in the Unaudited Condensed Consolidated Statement of Income, on the portion of goodwill deemed tax deductible. The deferred tax asset on goodwill was $6.5 million at June 30, 2010 as compared to a deferred tax liability of $6.8 million at December 31, 2009. In addition, the deferred tax asset increased as a result of the increase in the provision for loan losses.
Other assets increased $34.8 million, or 39.1%, to $124.0 million at June 30, 2010 from $89.2 million at December 31, 2009. This increase was primarily the result of an $11.7 million receivable due from government-sponsored agencies as a result of pay downs on mortgage-backed securities within the Company s investment portfolio as of June 30, 2010. In addition, the fair value of the Company s financial derivative instruments offered to commercial customers increased $23.3 million due to a decrease in forward-looking benchmark interest rates and a reduction in underlying notional values applied in the valuation of these instruments. This increase is offset by a $23.3 million increase in the fair value of related financial derivative instruments recorded in the other liabilities section of the Unaudited Condensed Consolidated Statements of Financial Condition. For more information on the Company s financial derivative instruments, see Note 7 of the Notes to Unaudited Condensed Consolidated Statements.
Overview. The Company recognized a net loss available to common shareholders for the three months ended June 30, 2010 of $81.2 million, or a $3.46 net loss per common share, compared to a net loss of $8.8 million, or a $0.38 net loss per common share, for the same period in 2009. During the three months ended June 30, 2010, the Company recognized a goodwill impairment charge of $89.7 million, or $3.24 per share. During the three months ended June 30, 2009, the Company incurred total charges of $10.3 million, or $0.34 per diluted share, as a result of the preferred shares issued and subsequently repurchased under the Troubled Asset Relief Program Capital Purchase Program (“TARP CPP”), the Federal Deposit Insurance Corporation (“FDIC”) 5 basis point special assessment, as well as other-than-temporary impairment ("OTTI") charges.
Net interest income (on a tax-equivalent basis) increased $4.4 million to $28.7 million for the three months ended June 30, 2010, from $24.3 million for the same period in 2009. Interest income (on a tax-equivalent basis) decreased $927,000 from the comparable year to $37.3 million while interest expense decreased $5.3 million from the prior period to $8.7 million. The interest rate spread and net interest margin (on a tax-equivalent basis) for the three months ended June 30, 2010 was 3.39% and 3.62%, respectively, compared to 2.68% and 3.01%, respectively, for the same period in 2009. The increase in margin for the three months ended June 30, 2010 over the comparable prior year period reflects the Company s continued focus on margin improvement initiatives. Such initiatives, which began in 2009, include the implementation of interest rate floors on new and renewable variable rate loans and a planned reduction in deposit rates, particularly certificates of deposit, which resulted in a shift from higher cost deposit products to lower cost core deposits.
Interest income (on a tax-equivalent basis) decreased $927,000, or 2.4%, for the three months ended June 30, 2010, as compared to the same period in 2009. This decrease was a result of lower volume combined with interest rates. Average loans receivable decreased $11.9 million due to a weak, though stabilizing, loan demand during the respective periods, resulting in a reduction in interest income of $254,000. Investment income decreased $237,000 and $611,000 as a result of a decrease in average investment securities of $20.8 million and a 57 basis point reduction in the cost on investment securities, respectively. The reduction in the volume of investment securities was the result of principal pay downs of mortgage-backed securities, sales of municipal securities, as well as maturities, which was partially offset by reinvestments in agency and mortgage-backed securities.
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Sun Bancorp Inc. has a market cap of $123.2 million; its shares were traded at around $5.26 with and P/S ratio of 0.7. SNBC is in the portfolios of Private Capital of Private Capital Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Total assets were $3.51 billion at June 30, 2010 as compared to $3.58 billion at December 31, 2009. Goodwill and total investments decreased $89.7 million, or 70.1%, and $28.8 million, or 6.3%, respectively. These decreases were offset by increases in total loans before allowance for loan losses of $27.9 million, or 1.0%, and in other assets of $34.8 million, or 39.1%. In addition, the net deferred tax asset increased $22.4 million, or 108.3%, as compared to December 31, 2009. Total liabilities increased $16.8 million, or 0.5%, to $3.24 billion at June 30, 2010 compared to $3.22 billion at December 31, 2009 as deposits and other liabilities increased $52.5 million, or 1.8%, and $28.5 million, or 38.5%, respectively. These increases were offset by a decrease in federal funds purchased of $52.0 million, or 58.4%. Stockholders equity was $273.2 million at June 30, 2010 as compared to $356.6 million at December 31, 2009 primarily due to the increases in retained deficit and accumulated other comprehensives losses of $81.9 million and $2.7 million, respectively.Goodwill was $38.2 million at June 30, 2010 as compared to $127.9 million at December 31, 2009. The Company recognized a $89.7 million impairment charge as the goodwill analysis results indicated the carrying amount of goodwill exceeded its implied fair value. The net deferred tax asset increased $22.4 million to $43.2 million primarily as a result of the tax benefit recorded on goodwill. Although unable to record amortization of goodwill for book purposes, the Company had been permitted to amortize a portion of goodwill for tax purposes. Therefore, upon recording this impairment charge, the Company was able to record a tax benefit of $13.8 million, also included in the Unaudited Condensed Consolidated Statement of Income, on the portion of goodwill deemed tax deductible. The deferred tax asset on goodwill was $6.5 million at June 30, 2010 as compared to a deferred tax liability of $6.8 million at December 31, 2009. In addition, the deferred tax asset increased as a result of the increase in the provision for loan losses.
Other assets increased $34.8 million, or 39.1%, to $124.0 million at June 30, 2010 from $89.2 million at December 31, 2009. This increase was primarily the result of an $11.7 million receivable due from government-sponsored agencies as a result of pay downs on mortgage-backed securities within the Company s investment portfolio as of June 30, 2010. In addition, the fair value of the Company s financial derivative instruments offered to commercial customers increased $23.3 million due to a decrease in forward-looking benchmark interest rates and a reduction in underlying notional values applied in the valuation of these instruments. This increase is offset by a $23.3 million increase in the fair value of related financial derivative instruments recorded in the other liabilities section of the Unaudited Condensed Consolidated Statements of Financial Condition. For more information on the Company s financial derivative instruments, see Note 7 of the Notes to Unaudited Condensed Consolidated Statements.
Overview. The Company recognized a net loss available to common shareholders for the three months ended June 30, 2010 of $81.2 million, or a $3.46 net loss per common share, compared to a net loss of $8.8 million, or a $0.38 net loss per common share, for the same period in 2009. During the three months ended June 30, 2010, the Company recognized a goodwill impairment charge of $89.7 million, or $3.24 per share. During the three months ended June 30, 2009, the Company incurred total charges of $10.3 million, or $0.34 per diluted share, as a result of the preferred shares issued and subsequently repurchased under the Troubled Asset Relief Program Capital Purchase Program (“TARP CPP”), the Federal Deposit Insurance Corporation (“FDIC”) 5 basis point special assessment, as well as other-than-temporary impairment ("OTTI") charges.
Net interest income (on a tax-equivalent basis) increased $4.4 million to $28.7 million for the three months ended June 30, 2010, from $24.3 million for the same period in 2009. Interest income (on a tax-equivalent basis) decreased $927,000 from the comparable year to $37.3 million while interest expense decreased $5.3 million from the prior period to $8.7 million. The interest rate spread and net interest margin (on a tax-equivalent basis) for the three months ended June 30, 2010 was 3.39% and 3.62%, respectively, compared to 2.68% and 3.01%, respectively, for the same period in 2009. The increase in margin for the three months ended June 30, 2010 over the comparable prior year period reflects the Company s continued focus on margin improvement initiatives. Such initiatives, which began in 2009, include the implementation of interest rate floors on new and renewable variable rate loans and a planned reduction in deposit rates, particularly certificates of deposit, which resulted in a shift from higher cost deposit products to lower cost core deposits.
Interest income (on a tax-equivalent basis) decreased $927,000, or 2.4%, for the three months ended June 30, 2010, as compared to the same period in 2009. This decrease was a result of lower volume combined with interest rates. Average loans receivable decreased $11.9 million due to a weak, though stabilizing, loan demand during the respective periods, resulting in a reduction in interest income of $254,000. Investment income decreased $237,000 and $611,000 as a result of a decrease in average investment securities of $20.8 million and a 57 basis point reduction in the cost on investment securities, respectively. The reduction in the volume of investment securities was the result of principal pay downs of mortgage-backed securities, sales of municipal securities, as well as maturities, which was partially offset by reinvestments in agency and mortgage-backed securities.
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