NEW YORK (TheStreet) -- Shares of Sun Bancorp Inc. (SNBC) are gaining 5.87% to $4.33 in early trading on Thursday after the lender said it will eliminate its home loans and commercial specialty business units, and accelerate disposition of $96 million of so called, "problem loans," plus cut 38% of its workforce, as part of a restructuring plan.
The restructuring will result in a second quarter charge of about $20 million, the firm said.
Sun Bancorp's board has also declared a one-for-give reverse stock split effective August 11 for shareholders on record as of August 8.
Separately, TheStreet Ratings team rates SUN BANCORP INC/NJ as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SUN BANCORP INC/NJ (SNBC) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, SNBC's share price has jumped by 28.38%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for SUN BANCORP INC/NJ is currently very high, coming in at 89.02%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.44% is in-line with the industry average.
- SUN BANCORP INC/NJ has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SUN BANCORP INC/NJ continued to lose money by earning -$0.11 versus -$0.59 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$0.11).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has significantly decreased by 177.7% when compared to the same quarter one year ago, falling from $2.45 million to -$1.91 million.
- Net operating cash flow has significantly decreased to $3.98 million or 91.73% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: SNBC Ratings Report