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10 Bank Acquisition Targets

Company Profile

Shares of Sun Bancorp (SNBC) of Vineland, N.J. closed at $5.08 Wednesday, returning 35% year-to-date.

The company received quite a boost and its shares soared in July when an investor group led by Wilbur Ross agreed to invest $100 million in the company, in a deal expected to be completed over the next several months after regulatory approval.

Income Statement

Sun Bancorp reported a second-quarter net loss of $81.2 million or $3.46 a share, mainly resulting from a non-cash goodwill impairment charge of $89.7 million. In comparison, Sun lost $762 thousand or 3 cents a share in the first quarter and reported a net loss to common shareholders of $8.8 million or 38 cents a share for the second quarter of 2009, when the company repaid TARP in full for $89.3 million.

Balance Sheet

Sun Bancorp had $3.5 billion in total assets as of June 30. The company estimated that the $100 million in new capital would boost its tier 1 leverage ratio to at least 11.75% and its total risk-based capital ratio to at least 14.00%.

Sun's nonperforming assets ratio was 3.62% as of June 30, rising from 2.08% a year earlier. The net charge-off ratio for the second quarter was a low 0.52%.

Stock Ratios

The shares were trading for just 0.5 times the company's June 30 tangible book value, as of Wednesday's close, according to SNL.

Analyst Ratings

Out of five analysts covering the share, four rated the company a buy, while one recommended holding the shares, according the Thomson Reuters.

Sun Bancorp shows that our approach of "letting the chips fall where they may," can highlight a company looking to acquire, rather than one considering a sale. Ross's investment shows that the company's low valuation made it attractive. With shares trading for just above half the company's liquidation value, the vote of confidence from Wilbur Ross and the prospect of expansion through cheap acquisitions, Sun Bancorp looks like an excellent growth opportunity for investors willing to go in for the long haul.

>>Sun Bancorp: How to Play It
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