The Sun’s Shining On This Bank!

Ask anyone what they think about the financial industry, and normally you’ll get a glum look. Over the last few years, no industry has been more hated by the stock market than the financial. While many deserve the evil eye… a few deserve a closer look.

Here’s an exciting company poised for a great future. Take a close look at Sun Bancorp, Inc. (NasdaqGS: SNBC)

 

QUICK FACTS
Ticker:                                     SNBC
Industry:                                  Banking
Recent Price:                           $3.62
Market Cap:                             $286m
Shares Outstanding :                79.2m
Average Volume:                      111,327
Dividend Yield:                          N/A
Website:                                  www.sunnb.com

 

BUSINESS ANALYSIS

Sun Bancorp is… you guessed it, a bank. They’re based out of Vineland, New Jersey, and they operate a subsidiary called Sun National Bank. They have a wide variety of services for both commercial and personal banking at their 56 branches.

Sun National is a certified ‘Preferred Lender’ by the Small Business Administration and the New Jersey Economic Development Authority.

They do all the normal bank stuff. On the commercial side Sun National provides checking accounts, cash management, electronic banking, sweep accounts, lock boxes, remote deposits and such.

On the private consumer side Sun National offers checking, savings and money market accounts, as well as residential mortgages, construction loans, home equity, and installment loans.

Sun Bank has been listed on Forbes Magazine’s “Most Trustworthy Companies” for the past five years. Having $3.4 billion in assets certainly helps to inspire trust. .

 

FINANCIAL ANALYSIS

Look folks, the banking industry hasn’t been the best place to operate over the last few years. Yet those companies that survive these tough times are going to come out the other side of this long dark tunnel much better off.

Sun National made a lot of loans in the real estate industry, and now those loans are causing problems. But the company is taking the right steps to right the ship.

They’re selling off troubled assets and they went out and raised additional capital. It’s a difficult step to take, but it’s the right thing to do.

Let’s cut to the chase…

Last quarter was ugly for the company. They generated $25 million in interest income, had almost $28 million in interest expenses and took a $67 million write-off. When it was all said and done, the company posted a loss of just over $67 million.

Here’s the key.

The company is purging bad debt, and raising capital. Just last quarter they added $81 million in capital from a share sale. And they were able to sell off $174 million of bad debt.

The economy might still be shaky but Sun’s business is definitely bouncing back. Their commercial loans are the strongest they’ve been since 2009. The company also enacted a home equity sales campaign which they credit for doubling revenue generated from their customer applications in that department.

Best of all the company has $3.3 billion in assets making them money every day! Any way you slice it the future is looking brighter for the company.

 

KEY METRICS ANALYSIS

Trailing P/E:                                      N/A
Price / Sales:                                    1.9x
Return on Assets:                             -7.3%
Insider ownership:                              49.3%
Short Ratio:                                       2.1x
Current Ratio:                                    N/A
Total Debt To Equity:                          N/A

 

RECENT EVENTS

Wilbur Ross, a longtime investor worth nearly $2 billion, recently bought huge chunks of SNBC twice. Once in late March and again in April according to SNBC’s 13-d filings. His hedge fund, Invesco Private Capital, owns 12.5 million shares of SNBC, valued at nearly $58 million. That’s a big show of faith from an experienced investor.

In Q1 they closed a huge public offering of nearly 29 million common shares. Mostly to Ross and his associated funds. Those sales brought in $81.4 million.

 

MANAGEMENT TEAM

Thomas X. Geisel – CEO & President
Bernard A. Brown – Chairman
A. Bruce Dansbury – Executive Vice President and COO
Robert B. Crowl – Executive Vice President and CFO

 

STOCK ANALYSIS

 

 

 

 

 

 

 

Chart Courtesy of stockcharts.com

 

As you can see, SNBC stock bounced off recent lows of just over $3.00 a share and is now flirting with the 50-day moving average. If the stock climbs above this resistance level, it’s a great positive signal for the stock.

Watch these indicators closely for any sign of moving higher… a positive sign for the company.

SNBC’s 52-week low was $3.00 and the 52-week high was $5.58. Right now the stock is trading at $3.62, just below the 50-day moving average near $3.69 a share and below the 200-day moving average of $4.33. The company has a market cap of $286 Million and 79.2 million shares outstanding.

 

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