exhibit_99.htm

News Release

For Immediate Release

Contact: Thomas X. Geisel, President, Chief Executive Officer, (856) 690-4329

Sun Bancorp, Inc. Reports Fourth Quarter and

Full Year Results for 2009

VINELAND, NJ – January 27, 2010 – Sun Bancorp, Inc. (NASDAQ: SNBC) reported today a net loss available to common shareholders of $6.3 million, or $0.27 per diluted share, for the fourth quarter ended December 31, 2009, compared to net income of $4.3 million, or $0.18 per diluted share, for the fourth quarter of 2008. During the fourth quarter 2009 the Company recorded a loan loss provision of $19.5 million, or $0.50 per share, and incurred pre-tax other-than-temporary impairment (OTTI) charges of $351,000, or $0.01 per share, which compares to a $7.6 million provision for loan losses, or $0.19 per share, and OTTI charges of $7.5 million, or $0.19 per share, for fourth quarter 2008. In addition, the fourth quarter 2008 included a net gain on sale of branches of $11.5 million, or $0.29 per share.

For the year ended December 31, 2009, the Company reported a net loss available to common shareholders of $22.4 million, or $0.97 per diluted share, compared to net income of $14.9 million, or $0.62 per diluted share, in the prior year period.

The following were key items which affected the results for the year ended December 31, 2009:

·	Loan loss provision of $46.7 million, or $1.19 per share, as compared to $20.0 million, or $0.49 per share for 2008.

·	OTTI charges of $7.1 million, or $0.18 per share, as compared to $7.5 million, or $0.19 for 2008.

·	A special assessment by the Federal Deposit Insurance Corporation (FDIC) of 5 basis points resulting in a charge of $1.6 million, or $0.04 per share.

·	The Company’s participation in the Troubled Asset Relief Program (TARP) which resulted in $5.4 million in preferred stock dividends and discount accretion, or $0.23 per share.

“We are eager to close out one of the most difficult and disappointing economic years in the history of our Country and our Company," said Thomas X. Geisel, president and chief executive offier of Sun Bancorp. "Although the current economic, regulatory and banking industry headwinds have not completely subsided, we believe that we have taken all appropriate measures within our control to position Sun Bancorp to return to profitability in 2010. This is evidenced by the quarterly improvements throughout the year in our core operating and margin performance. Had there not been an increase over our planned loan loss provision, OTTI charges and the impact of participating in TARP, all largely driven by the uncontrollable effects of the economy, the Company would have been profitable in 2009. Our principal strategic objective is to emerge from this cycle as the dominant New Jersey-based bank in the markets we serve, while continuing to provide value to our customers and shareholders.”

Selected core operating highlights for the quarter continue to reflect the favorable trending throughout all of 2009 as follows:

The net interest margin was 3.64% for fourth quarter 2009, as compared to 3.36% for linked quarter, 3.01% for the second quarter and 2.74% for the first quarter 2009. The net interest margin was 3.26% for the fourth quarter 2008. The margin increase throughout 2009 reflects the Company’s focus on margin improvement initiatives on both sides of the balance sheet.

·	Net interest income was $28.6 million (tax-equivalent basis) for the fourth quarter 2009 as compared to $27.0 million for the linked quarter, $24.3 million for the second quarter and $22.3 million for first quarter 2009. Net interest income was $25.9 million for fourth quarter 2008.

·	The yield on average loans was 4.92% for fourth quarter 2009, an increase of 4 basis points from 4.88% for the linked quarter, an increase of 9 basis points from 4.83% for second quarter and an increase of 20 basis points from 4.72% for first quarter 2009.

The cost of average interest-bearing deposits was 1.37% for the fourth quarter 2009, a decrease of 22 basis points from 1.59% for the linked quarter, a decrease of 58 basis points from 1.95% for the second quarter, and a decrease of 82 basis points from 2.19% for the first quarter. The cost of average interest-bearing deposits also decreased 113 basis points from 2.50% for the fourth quarter 2008.

Other key financial highlights include:

·	Total assets were $3.58 billion at December 31, 2009, as compared to $3.55 billion at September 30, 2009 and $3.62 billion at December 31, 2008.

Total loans before allowance for loan losses were $2.72 billion at December 31, 2009, as compared to $2.71 billion at September 30, 2009 and $2.74 billion at December 31, 2008. Commercial loans, on average, were essentially level on a linked quarter basis, residential mortgages and home equity loans decreased on average 1.0% and 1.8%, respectively.

The provision for loan losses was $19.5 million for the fourth quarter, increasing the allowance for loan losses to 2.21% of outstanding loans at December 31, 2009 as compared to 1.70% at September 30, 2009 and 1.36% at December 31, 2008. The provision for loan losses for the fourth quarter was 0.72% of average loans, as compared to 0.59% of average loans for the linked third quarter 2009 and 0.28% of average loans for the comparable prior year quarter. Net charge-offs during the fourth quarter were $5.6 million, or 0.21% of average loans, as compared to $14.5 million, or 0.53% of average loans, for the linked quarter and $4.4 million, or 0.16% of average loans outstanding, for the comparable prior year quarter. The provision for loan losses for the year ended December 31, 2009 was $46.7 million, or 1.71% of average loans, as compared to $20.0 million, or 0.77% of average loans, for the same period in 2008. Net charge-offs for the year ended December 31, 2009 was $24.0 million, or 0.88% of average loans, as compared to $9.7 million, or 0.37% of average loans, for the comparable prior year.

Total non-performing assets were $105.4 million at December 31, 2009, or 3.86% of total loans and real estate owned, as compared to $94.1 million at September 30, 2009, or 3.46% of total loans and real estate owned, and $48.8 million, or 1.78%, at December 31, 2008. The allowance for loan losses to non-performing loans was 62.56% at December 31, 2009, as compared to 54.58% at September 30, 2009, and 79.69% at December 31, 2008.

Total deposits were $2.91 billion at December 31, 2009, which were essentially level with September 30, 2009 and December 31, 2008, which were at $2.93 billion and $2.90 billion, respectively. Average deposits declined $60.0 million over the linked quarter as average certificates of deposit decreased $125.5 million, or 11.9%, offset by an increase in average core deposits of $65.5 million, or 3.5%.

The fourth quarter net interest margin was 3.64%, as compared to 3.36% for the linked quarter and 3.26% for the fourth quarter 2008. The net interest margin was 3.18% for the year ended December 31, 2009, as compared to 3.30% for the prior year. The interest rate spread as compared to the linked third quarter increased 35 basis points to 3.41%, with a yield increase of 11 basis points on interest-earnings assets, offset by a decrease in the cost of interest-bearing liabilities of 24 basis points. Average interest-earning assets for the quarter of $3.15 billion remained relatively stable from prior year quarter, while decreasing 2.2% over the linked quarter. The interest rate spread for the year ended December 31, 2009 was 2.87%, as compared to 2.83% for the comparable prior year.

Total operating non-interest income for the quarter ended December 31, 2009 of $5.9 million decreased $512,000, or 8.0%, over the linked quarter and $227,000, or 3.7%, over the comparable prior year period. The decrease over the linked quarter was primarily due to a decrease in investment products income of $397,000 as a result of lower volume and a decrease in gain on sale of loans of $108,000, primarily related to SBA loans. The decrease over the comparable prior year period was primarily attributable to a decrease in gain on derivative instruments of $361,000 due to a planned decline in transaction volume, a decrease in investment products income of $191,000 as a result of lower volume and a reduction in service charges on deposit accounts, such as cycle service, NSF and overdraft fees, of $113,000. These decreases were offset with an increase in gain on sale of loans of $399,000 primarily related to mortgages sold in the secondary market. Total operating non-interest income for the year ended December 31, 2009 decreased $4.0 million, or 14.0%, to $24.2 million from $28.1 million in 2008. The decrease over prior year was primarily attributable to a reduction in service charges on deposit accounts of $1.5 million, a decrease in gain on derivative instruments of $2.3 million due to a planned decline in transaction volume, a decrease in bank owned life insurance (BOLI) income of $768,000 due to lower yields earned on the separate account policy and a decrease in investment products income of $372,000 as a result of customer migration toward lower yielding commission products. These decreases were offset by an increase in gain on sale of loans of $1.0 million related to mortgages sold in the secondary market.

Total operating non-interest expense for the quarter ended December 31, 2009 decreased $1.3 million, or 4.7%, to $25.6 million in comparison to the linked quarter and increased $2.9 million, or $12.7%, over the comparable prior year period. Salaries and benefits decreased $1.7 million and cost of real estate owned decreased $826,000 in comparison to the linked third quarter. These decreases were primarily attributed to non-recurring charges recognized during the third quarter, which included severance and other related charges of $934,000 and an $800,000 write-down on the carrying value of one commercial property. These decreases were offset by an increase in advertising expense of $535,000 stemming from brand awareness and customer acquisition campaigns in the fourth quarter, an increase in off-balance sheet reserves of $239,000 and an increase in consulting fees of $219,000. The increase over the prior year period was primarily attributable to an increase in salaries and benefits of $1.8 million and insurance expense of $611,000. Salaries and benefits increased due to the addition of several key management and business line staff, and severance and other related charges, while insurance expense increased primarily due to higher FDIC assessment rates, additional coverage under the Temporary Liquidity Guarantee Program (TLGP) and an overall increase in assessable deposits. Further increases over the prior year period included additional off-balance sheet reserves of $276,000 and problem loan costs of $225,000. Total operating non-interest expense for the year ended December 31, 2009 increased $11.6 million, or 12.6%, to $103.9 million over the prior year 2008. Salaries and benefits increased $4.4 million due to the addition of several key management and business line staff, severance and other related charges and an increase in health benefits. Insurance expense increased $4.8 million primarily due to higher FDIC assessment rates, additional coverage under the Temporary Liquidity Guarantee Program (TLGP) and an overall increase in assessable deposits. In addition, cost of real estate owned increased $1.8 million as a result of the write-down of two properties for a total of $950,000 combined with an overall net gain of $589,000 recognized on the sale of four other real estate properties during 2008.

·	The income tax benefit is a result of the pre-tax loss in combination with the relatively large levels of tax-free income earned on tax-exempt securities and BOLI policies.

·	The Company’s ratio of tangible equity to tangible assets was 6.25% at December 31, 2009, as compared to 6.45% at September 30, 2009, and 6.10% at December 31, 2008.

·	The Company’s capital ratios continue to remain strong and Sun National Bank is “well capitalized” by all regulatory standards. At December 31, 2009 Sun National Bank’s total risk-based capital ratio is approximately 10.80% and the leverage capital ratio is approximately 8.62%.

The Company will hold its regularly scheduled conference call on Thursday, January 28, 2010, at 11:00 a.m. (ET). Participants may listen to the live Web cast through the Sun Bancorp Web site at www.sunnb.com. Participants are advised to log on 10 minutes ahead of the scheduled start of the call. An Internet-based replay will be available at the Web site for two weeks following the call.

Sun Bancorp, Inc. is a $3.6 billion asset bank holding company headquartered in Vineland, New Jersey. Its primary subsidiary is Sun National Bank, serving customers through 70 locations in New Jersey. The Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. For more information about Sun National Bank and Sun Bancorp, Inc., visit www.sunnb.com.

The foregoing material contains forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

SUN BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)
	For the Three Months Ended						For the Year Ended
	December 31,						December 31,
	2009			2008			2009			2008
Profitability for the period:
Net interest income	$	28,068		$	25,472		$	100,157		$	99,661
Provision for loan losses		19,479			7,617			46,666			20,000
Non-interest income		5,541			10,076			17,070			32,299
Non-interest expense		25,594			22,712			103,928			92,640
(Loss) income before income taxes		(11,464	)		5,219			(33,367	)		19,320
Net (loss) income		(6,254	)		4,253			(17,045	)		14,894
Net (loss) income available to common shareholders	$	(6,254	)	$	4,253		$	(22,396	)	$	14,894

Financial ratios:
Return on average assets (1)		(0.70)	%		0.49	%		(0.47)	%		0.44	%
Return on average equity (1)		(6.86)	%		4.71	%		(4.42)	%		4.09	%
Return on average tangible equity (1),(2)		(11.28)	%		7.94	%		(7.06)	%		6.92	%
Net interest margin (1)		3.64	%		3.26	%		3.18	%		3.30	%
Efficiency ratio		76.15	%		63.89	%		88.66	%		70.20	%
Efficiency ratio, excluding non-operating income and non-operating expense (3)		75.37	%		71.89	%		83.58	%		72.24	%

Earnings per common share (4):
Basic	$	(0.27	)	$	0.18		$	(0.97	)	$	0.63
Diluted	$	(0.27	)	$	0.18		$	(0.97	)	$	0.62

Average equity to average assets		10.15	%		10.38	%		10.69	%		10.72	%

	December 31,
	2009		2008
At period-end:
Total assets	$	3,578,852		$	3,622,126
Total deposits		2,909,268			2,896,364
Loans receivable, net of allowance for loan losses		2,657,694			2,702,516
Investments		457,192			453,584
Borrowings		146,193			154,097
Junior subordinated debentures		92,786			92,786
Shareholders’ equity		356,654			358,508

Credit quality and capital ratios:
Allowance for loan losses to gross loans		2.21	%		1.36	%
Non-performing assets to gross loans and real estate owned		3.86	%		1.78	%
Allowance for loan losses to non-performing loans		62.56	%		79.69	%

Total capital (to risk-weighted assets) (5):
Sun Bancorp, Inc.		11.31	%		11.37	%
Sun National Bank		10.80	%		10.84	%
Tier 1 capital (to risk-weighted assets) (5):
Sun Bancorp, Inc.		10.05	%		10.17	%
Sun National Bank		9.54	%		9.64	%
Leverage ratio (5):
Sun Bancorp, Inc.		9.08	%		9.58	%
Sun National Bank		8.62	%		9.10	%

Book value (4)	$	15.29		$	15.57
Tangible book value (4)	$	9.19		$	9.20

(1) Amounts for the three months ended are annualized.

(2) Return on average tangible equity is computed by dividing annualized net income for the period by average tangible equity. Average tangible equity equals average equity less average identifiable intangible assets and goodwill.

(3) Efficiency ratio, excluding non-operating income and non-operating expense, is computed by dividing non-interest expense for the period by the summation of net interest income and non-interest income. Net interest income for the year ended December 31, 2008 excludes the write-off of $791,000 of unamortized costs on redeemed trust preferred securities. Non-interest income for the three months and year ended December 31, 2009 exclude a net impairment loss on available for sale securities of $351,000 and $7.1 million, respectively. Non-interest income for the three months and year ended December 31, 2008 excludes a net gain of $11.5 million on the sale of branches and bank property and an impairment charge of $7.5 million on available for sale securities. Non-interest income for the year ended December 31, 2008 also excludes a gain on redemption of Visa stock of $207,000. Non-interest expense for the year ended December 31, 2008 excludes a $250,000 executive sign-on incentive and $72,000 in lease buyout charges.

(4) Data is adjusted for a 5% stock dividend issued in May 2009.

(5) December 31, 2009 capital ratios are estimated, subject to regulatory filings.

SUN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands, except par value)
	December 31,
	2009			2008
ASSETS
Cash and due from banks	$	53,857		$	31,237
Interest-earning bank balances		5,263			26,784
Federal funds sold		-			412
Cash and cash equivalents		59,120			58,433
Investment securities available for sale (amortized cost of $435,267 and $444,628 at December 31, 2009 and 2008, respectively)		434,738			423,513
Investment securities held to maturity (estimated fair value of $7,121 and $13,601 at December 31, 2009 and 2008, respectively)		6,955			13,765
Loans receivable (net of allowance for loan losses of $59,953 and $37,309 at December 31, 2009 and 2008, respectively)		2,657,694			2,702,516
Restricted equity investments		15,499			16,306
Bank properties and equipment, net		53,246			48,642
Real estate owned, net		9,527			1,962
Accrued interest receivable		12,235			12,254
Goodwill		127,894			127,894
Intangible assets, net		14,316			18,769
Deferred taxes, net		20,706			16,707
Bank owned life insurance (BOLI)		77,753			75,504
Other assets		89,169			105,861
Total assets	$	3,578,852		$	3,622,126

LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits	$	2,909,268		$	2,896,364
Federal funds purchased		89,000			71,500
Securities sold under agreements to repurchase - customers		18,677			20,327
Advances from the Federal Home Loan Bank of New York (FHLBNY)		15,215			42,081
Securities sold under agreements to repurchase - FHLBNY		15,000			15,000
Obligations under capital lease		8,301			5,189
Junior subordinated debentures		92,786			92,786
Other liabilities		73,951			120,371
Total liabilities		3,222,198			3,263,618

SHAREHOLDERS' EQUITY
Preferred stock, $1 par value, 1,000,000 shares authorized; none issued		-			-
Common stock, $1 par value, 50,000,000 shares authorized; 25,435,994 shares issued and 23,329,271 shares outstanding at December 31, 2009; 24,037,431 shares issued and 21,930,708 shares outstanding at December 31, 2008		25,436			24,037
Additional paid-in capital		362,164			351,430
Retained earnings		(4,512	)		22,580
Accumulated other comprehensive loss		(149	)		(13,377	)
Deferred compensation plan trust		(123	)		-
Treasury stock at cost, 2,106,723 shares at December 31, 2009 and 2008		(26,162	)		(26,162	)
Total shareholders' equity		356,654			358,508
Total liabilities and shareholders' equity	$	3,578,852		$	3,622,126

SUN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except share and per share amounts)
	For the Three Months Ended December 31,								For the Year Ended December 31,
	2009				2008				2009				2008
INTEREST INCOME
Interest and fees on loans	$		33,324		$		38,050		$		131,811		$		154,154
Interest on taxable investment securities			3,286				4,043				14,627				15,976
Interest on non-taxable investment securities			1,034				822				3,729				3,256
Dividends on restricted equity investments			223				187				832				983
Interest on federal funds sold			-				31				-				265
Total interest income			37,867				43,133				150,999				174,634
INTEREST EXPENSE
Interest on deposits			8,225				15,677				44,357				65,852
Interest on funds borrowed			550				527				2,061				3,407
Interest on junior subordinated debentures			1,024				1,457				4,424				5,714
Total interest expense			9,799				17,661				50,842				74,973
Net interest income			28,068				25,472				100,157				99,661
PROVISION FOR LOAN LOSSES			19,479				7,617				46,666				20,000
Net Interest income after provision for loan losses			8,589				17,855				53,491				79,661
NON-INTEREST INCOME
Service charges on deposit accounts			3,150				3,263				12,440				13,918
Other service charges			85				82				331				317
Gain on sale of loans			603				204				2,352				1,325
Gain on derivative instruments			50				411				262				2,578
Investment products income			497				688				2,669				3,041
BOLI income			600				661				2,249				3,017
Net gain on sale of branches			-				11,454				-				11,454
Net impairment losses on available for sale securities (1):
Total impairment losses		(2,615	)			(7,497	)			(9,379	)			(7,497	)
Portion of loss recognized in other comprehensive income (before taxes)		2,264				-				2,264				-
Net impairment losses recognized in earnings			(351	)			(7,497	)			(7,115	)			(7,497	)
Other			907				810				3,882				4,146
Total non-interest income			5,541				10,076				17,070				32,299
NON-INTEREST EXPENSE
Salaries and employee benefits			12,415				10,643				51,748				47,623
Occupancy expense			2,797				2,919				11,403				11,683
Equipment expense			1,732				1,609				6,574				6,421
Data processing expense			1,021				1,120				4,063				4,459
Amortization of intangible assets			921				1,178				4,453				4,710
Insurance expense			1,512				901				7,804				3,043
Professional fees			713				745				2,193				2,335
Advertising expense			786				849				2,453				2,368
Real estate owned expense (income), net			28				(116	)			1,155				(628	)
Other			3,669				2,864				12,082				10,626
Total non-interest expense			25,594				22,712				103,928				92,640
(LOSS) INCOME BEFORE INCOME TAXES			(11,464	)			5,219				(33,367	)			19,320
INCOME TAX (BENEFIT) EXPENSE			(5,210	)			966				(16,322	)			4,426
NET (LOSS) INCOME			(6,254	)			4,253				(17,045	)			14,894
Preferred stock dividends and discount accretion			-				-				5,351				-
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS	$		(6,254	)	$		4,253		$		(22,396	)	$		14,894

Basic (loss) earnings per share (2)	$		(0.27	)	$		0.18		$		(0.97	)	$		0.63
Diluted (loss) earnings per share (2)	$		(0.27	)	$		0.18		$		(0.97	)	$		0.62
Weighted average shares – basic (2)		23,223,463				23,323,693			23,134,424				23,647,009
Weighted average shares – diluted (2)		23,223,463				23,410,606			23,134,424				23,958,224
(1) For the three months and year ended December 31, 2009, the OTTI is recognized in accordance with the new guidance impacting Financial Accounting Standards Board Accounting Standards Codification 320-10, which was adopted on January 1, 2009. The OTTI for periods prior to January 1, 2009 are recognized based on guidance in effect prior to the adoption of the new guidance. (2) Data is adjusted for a 5% stock dividend issued in May 2009.

SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands)
	2009			2009			2009			2009			2008
	Q4			Q3			Q2			Q1			Q4
Balance sheet at quarter end:
Loans:
Commercial and industrial	$	2,249,365		$	2,234,616		$	2,240,368		$	2,243,698		$	2,234,202
Home equity		258,592			261,206			265,407			268,122			274,360
Second mortgage		68,592			71,578			73,856			78,589			84,388
Residential real estate		75,322			72,292			79,627			69,971			67,473
Other		65,776			70,072			74,714			77,638			79,402
Total gross loans		2,717,647			2,709,764			2,733,972			2,738,018			2,739,825
Allowance for loan losses		(59,953	)		(46,067	)		(44,316	)		(39,406	)		(37,309	)
Net loans		2,657,694			2,663,697			2,689,656			2,698,612			2,702,516
Goodwill		127,894			127,894			127,894			127,894			127,894
Intangible assets, net		14,316			15,237			16,414			17,592			18,769
Total assets		3,578,852			3,545,639			3,561,110			3,635,697			3,622,126
Total deposits		2,909,268			2,932,880			2,875,502			2,930,084			2,896,364
Federal funds purchased		89,000			6,000			87,500			-			71,500
Securities sold under agreements to repurchase - customers		18,677			21,018			17,398			14,170			20,327
Advances from FHLBNY		15,215			15,512			15,805			16,096			42,081
Securities sold under agreements to repurchase - FHLBNY		15,000			15,000			15,000			15,000			15,000
Obligations under capital lease		8,301			8,343			8,383			5,171			5,189
Junior subordinated debentures		92,786			92,786			92,786			92,786			92,786
Total shareholders' equity		356,654			362,457			360,660			447,984			358,508
Quarterly average balance sheet:
Loans:
Commercial and industrial	$	2,238,579		$	2,247,234		$	2,236,745		$	2,229,016		$	2,195,218
Home equity		260,382			263,494			268,276			268,921			275,791
Second mortgage		69,844			72,830			75,967			81,854			85,530
Residential real estate		75,890			76,626			75,812			70,868			62,481
Other		66,698			70,790			75,133			79,324			81,426
Total gross loans		2,711,393			2,730,974			2,731,933			2,729,983			2,700,446
Securities and other interest-earning assets		433,706			486,274			491,348			527,318			476,305
Total interest-earning assets		3,145,099			3,217,248			3,223,281			3,257,301			3,176,751
Total assets		3,590,339			3,593,037			3,611,679			3,644,558			3,483,145
Non-interest-bearing demand deposits		480,080			476,478			431,836			397,237			407,151
Total deposits		2,886,322			2,946,281			2,975,358			2,936,452			2,916,153
Total interest-bearing liabilities		2,652,540			2,663,226			2,705,069			2,694,326			2,679,673
Total shareholders' equity		364,531			365,440			370,196			445,040			361,513

Capital and credit quality measures:
Total capital (to risk-weighted assets) (1):
Sun Bancorp, Inc.		11.31	%		11.48	%		11.62	%		14.32	%		11.37	%
Sun National Bank		10.80	%		10.99	%		11.15	%		10.99	%		10.84	%
Tier 1 capital (to risk-weighted assets) (1):
Sun Bancorp, Inc.		10.05	%		10.23	%		10.37	%		13.07	%		10.17	%
Sun National Bank		9.54	%		9.74	%		9.90	%		9.74	%		9.64	%
Leverage ratio (1):
Sun Bancorp, Inc.		9.08	%		9.21	%		9.29	%		11.81	%		9.58	%
Sun National Bank		8.62	%		8.78	%		8.88	%		8.80	%		9.10	%

Average equity to average assets		10.15	%		10.17	%		10.25	%		12.21	%		10.38	%
Allowance for loan losses to total gross loans		2.21	%		1.70	%		1.62	%		1.44	%		1.36	%
Non-performing assets to total gross loans and real estate owned		3.86	%		3.46	%		2.70	%		2.34	%		1.78	%
Allowance for loan losses to non-performing loans		62.56	%		54.58	%		69.82	%		73.76	%		79.69	%

Other data:
Net charge-offs		(5,593	)		(14,486	)		(2,040	)		(1,903	)		(4,428	)
Non-performing assets:
Non-accrual loans	$	87,882		$	80,333		$	55,801		$	50,481		$	42,233
Loans past due 90 days and accruing		7,958			4,067			7,675			2,945			4,587
Real estate owned, net		9,527			9,667			10,620			10,834			1,962
Total non-performing assets	$	105,367		$	94,067		$	74,096		$	64,260		$	48,782
(1) December 31, 2009 capital ratios are estimated, subject to regulatory filings.

SUN BANCORP, INC. AND SUBSIDIARIES
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands, except share and per share data)
	2009			2009			2009			2009			2008
	Q4			Q3			Q2			Q1			Q4
Profitability for the quarter:
Tax-equivalent interest income	$	38,425		$	38,413		$	38,276		$	37,894		$	43,574
Interest expense		9,799			11,426			14,017			15,600			17,661
Tax-equivalent net interest income		28,626			26,987			24,259			22,294			25,913
Tax-equivalent adjustment		558			521			475			455			441
Provision for loan losses		19,479			16,237			6,950			4,000			7,617
Non-interest income excluding net gain on sale of branches and net impairment losses on available for sale securities		5,892			6,404			6,290			5,599			6,119
Net gain on sale of branches		-			-			-			-			11,454
Net impairment losses on available for sale securities		(351	)		(1,928	)		(4,558	)		(278	)		(7,497	)
Non-interest expense excluding amortization of intangible assets		24,673			25,690			26,472			22,640			21,534
Amortization of intangible assets		921			1,177			1,178			1,177			1,178
(Loss) income before income taxes		(11,464	)		(12,162	)		(9,084	)		(657	)		5,219
Income tax (benefit) expense		(5,210	)		(5,620	)		(4,450	)		(1,042	)		966
Net (loss) income		(6,254	)		(6,542	)		(4,634	)		385			4,253
Net (loss) income available to common shareholders	$	(6,254	)	$	(6,542	)	$	(8,780	)	$	(820	)	$	4,253
Financial ratios:
Return on average assets (1)		(0.70)	%		(0.73)	%		(0.51)	%		0.04	%		0.49	%
Return on average equity (1)		(6.86)	%		(7.16)	%		(5.01)	%		0.35	%		4.71	%
Return on average tangible equity (1),(2)		(11.28)	%		(11.81)	%		(8.23)	%		0.52	%		7.94	%
Net interest margin (1)		3.64	%		3.36	%		3.01	%		2.74	%		3.26	%
Efficiency ratio		76.15	%		86.83	%		108.36	%		87.69	%		63.89	%
Efficiency ratio, excluding non-operating income and non-operating expense		75.37	%		81.74	%		91.94	%		86.80	%		71.89	%
Per share data (3):
(Loss) earnings per common share:
Basic	$	(0.27	)	$	(0.28	)	$	(0.38	)	$	(0.04	)	$	0.18
Diluted	$	(0.27	)	$	(0.28	)	$	(0.38	)	$	(0.04	)	$	0.18
Book value	$	15.29		$	15.63		$	15.59		$	15.72		$	15.57
Tangible book value	$	9.19		$	9.46		$	9.35		$	9.41		$	9.20
Average basic shares (3)	23,223,463			23,162,992			23,103,975			23,043,056			23,323,693
Average diluted shares (3)	23,223,463			23,162,992			23,103,975			23,043,056			23,410,606
Operating non-interest income:
Service charges on deposit accounts	$	3,150		$	3,150		$	3,096		$	3,044		$	3,263
Other service charges		85			85			79			82			82
Gain on sale of loans		603			711			693			345			204
Gain on derivative instruments		50			-			85			127			411
Investment products income		497			894			756			522			688
BOLI income		600			575			561			513			661
Other income		907			989			1,020			966			810
Total operating non-interest income		5,892			6,404			6,290			5,599			6,119
Non-operating income (4):
Net gain on sale of branches		-			-			-			-			11,454
Net impairment losses on available for sale securities recognized in earnings		(351	)		(1,928	)		(4,558	)		(278	)		(7,497	)
Total non-operating income		(351	)		(1,928	)		(4,558	)		(278	)		3,957
Total non-interest income	$	5,541		$	4,476		$	1,732		$	5,321		$	10,076
Operating non-interest expense:
Salaries and employee benefits	$	12,415		$	14,154		$	13,216		$	11,963		$	10,643
Occupancy expense		2,797			2,689			2,782			3,135			2,919
Equipment expense		1,732			1,619			1,685			1,538			1,609
Data processing expense		1,021			980			1,052			1,010			1,120
Amortization of intangible assets		921			1,177			1,178			1,177			1,178
Insurance expense		1,512			1,519			3,330			1,443			901
Professional fees		713			595			507			378			745
Advertising expense		786			251			871			545			849
Real estate owned expense (income), net		28			854			93			180			(116	)
Other expenses		3,669			3,029			2,936			2,448			2,864
Total operating non-interest expense		25,594			26,867			27,650			23,817			22,712
Total non-interest expense	$	25,594		$	26,867		$	27,650		$	23,817		$	22,712
(1) Amounts are annualized.
(2) Return on average tangible equity is computed by dividing annualized net income for the period by average tangible equity. Average tangible equity equals average equity less average identifiable intangible assets and goodwill.
(3) Data is adjusted for a 5% stock dividend issued in May 2009.
(4) Amount consists of items which the Company believes are not a result of normal operations.

SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (Unaudited)
(Dollars in thousands)
	For the Three Months Ended December 31, 2009							For the Three Months Ended December 31, 2008
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial	$	2,238,579	$	26,939		4.81	%	$	2,195,218	$	30,604		5.58	%
Home equity		260,382		3,139		4.82			275,791		3,694		5.36
Second mortgage		69,844		1,130		6.47			85,530		1,396		6.53
Residential real estate		75,890		971		5.12			62,481		962		6.16
Other		66,698		1,145		6.87			81,426		1,394		6.85
Total loans receivable		2,711,393		33,324		4.92			2,700,446		38,050		5.64
Investment securities (3)		425,637		5,099		4.79			428,159		5,417		5.06
Interest-earning bank balances		8,069		2		0.10			34,299		76		0.89
Federal funds sold		-		-		-			13,847		31		0.90
Total interest-earning assets		3,145,099		38,425		4.89			3,176,751		43,574		5.49
Cash and due from banks		97,729							51,709
Bank properties and equipment, net		53,147							48,247
Goodwill and intangible assets, net		142,778							147,380
Other assets		151,586							59,058
Total non-interest-earning assets		445,240							306,394
Total assets	$	3,590,339						$	3,483,145

Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	1,175,432		2,703		0.92	%	$	1,012,525		3,808		1.50	%
Savings deposits		299,055		673		0.90			318,720		1,309		1.64
Time deposits		931,755		4,849		2.08			1,177,757		10,560		3.59
Total interest-bearing deposit accounts		2,406,242		8,225		1.37			2,509,002		15,677		2.50
Short-term borrowings:
Federal funds purchased		94,366		53		0.22			9,810		17		0.69
Securities sold under agreements to repurchase - customers		20,508		10		0.20			29,989		33		0.44
Long-term borrowings:
FHLBNY advances (4)		30,316		349		4.60			32,890		382		4.65
Obligations under capital lease		8,322		138		6.63			5,196		95		7.31
Junior subordinated debentures		92,786		1,024		4.41			92,786		1,457		6.28
Total borrowings		246,298		1,574		2.56			170,671		1,984		4.65
Total interest-bearing liabilities		2,652,540		9,799		1.48			2,679,673		17,661		2.64
Non-interest-bearing demand deposits		480,080							407,151
Other liabilities		93,188							34,808
Total non-interest bearing liabilities		573,268							441,959
Total liabilities		3,225,808							3,121,632
Shareholders' equity		364,531							361,513
Total liabilities and shareholders' equity	$	3,590,339						$	3,483,145

Net interest income			$	28,626						$	25,913
Interest rate spread (5)						3.41	%						2.85	%
Net interest margin (6)						3.64	%						3.26	%
Ratio of average interest-earning assets to average interest-bearing liabilities						118.57	%						118.55	%

(1) Average balances include non-accrual loans.
(2) Loan fees are included in interest income and the amount is not material for this analysis.
(3) Interest earned on non-taxable investment securities is shown on a tax equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustment for three months ended December 31, 2009 and 2008 was $558,000 and $441,000, respectively.
(4) Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY.
(5) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets.

SUN BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS (Unaudited)
(Dollars in thousands)
	For the Year Ended December 31, 2009							For the Year Ended December 31, 2008
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost
Interest-earning assets:
Loans receivable (1),(2):
Commercial and industrial	$	2,237,940	$	104,713		4.68	%	$	2,119,795	$	123,693		5.84	%
Home equity		265,240		13,219		4.98			269,336		15,574		5.78
Second mortgage		75,084		4,845		6.45			83,348		5,433		6.52
Residential real estate		74,823		4,235		5.66			55,598		3,509		6.31
Other		72,946		4,799		6.58			84,575		5,945		7.03
Total loans receivable		2,726,033		131,881		4.84			2,612,652		154,154		5.90
Investment securities (3)		442,868		21,114		4.77			433,226		21,707		5.01
Interest-earning bank balances		40,029		83		0.21			15,967		260		1.63
Federal funds sold		94		-		-			15,279		265		1.73
Total interest-earning assets		3,209,024		153,008		4.77			3,077,124		176,386		5.73
Cash and due from banks		60,687							56,104
Bank properties and equipment, net		50,522							48,179
Goodwill and intangible assets, net		144,461							149,150
Other assets		145,015							69,855
Total non-interest-earning assets		400,685							323,288
Total assets	$	3,609,709						$	3,400,412

Interest-bearing liabilities:
Interest-bearing deposit accounts:
Interest-bearing demand deposits	$	1,073,337		10,672		0.99	%	$	874,463		14,355		1.64	%
Savings deposits		297,820		2,937		0.99			395,288		7,632		1.93
Time deposits		1,118,120		30,748		2.75			1,110,941		43,865		3.95
Total interest-bearing deposit accounts		2,489,277		44,357		1.78			2,380,692		65,852		2.77
Short-term borrowings:
Federal funds purchased		39,607		114		0.29			18,370		421		2.29
Securities sold under agreements to repurchase - customer		17,997		42		0.23			34,976		478		1.37
Long-term borrowings:
FHLBNY advances (4)		32,178		1,439		4.47			50,582		2,127		4.21
Obligations under capital lease		6,788		466		6.87			5,221		381		7.30
Junior subordinated debentures		92,786		4,424		4.77			92,781		5,714		6.15
Total borrowings		189,356		6,485		3.42			202,020		9,121		4.51
Total interest-bearing liabilities		2,678,633		50,842		1.90			2,582,712		74,973		2.90
Non-interest-bearing demand deposits		446,713							422,388
Other liabilities		98,339							30,919
Total non-interest-bearing liabilities		545,052							453,307
Total liabilities		3,223,685							3,036,019
Shareholders' equity		386,024							364,393
Total liabilities and shareholders' equity	$	3,609,709						$	3,400,412

Net interest income			$	102,166						$	101,413
Interest rate spread (5)						2.87	%						2.83	%
Net interest margin (6)						3.18	%						3.30	%
Ratio of average interest-earning assets to average interest-bearing liabilities						119.80	%						119.14	%

(1) Average balances include non-accrual loans.
(2) Loan fees are included in interest income and the amount is not material for this analysis.
(3) Interest earned on non-taxable investment securities is shown on a tax equivalent basis assuming a 35% marginal federal tax rate for all periods. The fully taxable equivalent adjustment for years ended December 31, 2009 and 2008 was $2.0 million and $1.8 million, respectively.
(4) Amounts include Advances from FHLBNY and Securities sold under agreements to repurchase - FHLBNY.
(5) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets.