Sun Bancorp. Announces Restructuring Plan; To Reduce Overall Workforce By 38%

(RTTNews) - Sun Bancorp Inc. (SNBC), and its subsidiary Sun National Bank, announced a series of significant initiatives designed to improve performance in its credit, operational and profitability metrics. It expects to reduce its overall workforce by 38% or 242 full-time employees after completion of the restructuring plan, which is expected to generate an annual cost savings of about $16.8 million.

The company said that it aims to accelerate and improve branch efficiency by selling or consolidating 30% of branch locations, and eliminate non-core business units including Sun Home Loans and Commercial Specialty business units. It plans to accelerate disposition of $96 million of problem loans to improve efficiency and drive risk substantially lower.

The company expects that it will record a one-time charge of about $20 million in the second quarter of 2014 as a result of the restructuring plan.

The strategic restructuring once completed is expected to reduce non-interest expense to approximately $20 million per quarter, and it is expected that non-interest income will be approximately $3 to $4 million per quarter and net interest income will be approximately $18 to $20 million per quarter.

Meanwhile, the company stated that Thomas O'Brien has been officially appointed as President and CEO of the company and the bank.

The Board has declared a one-for-five reverse stock split with an effective date of August 11, 2014 for shareholders of record as of August 8, 2014. The reverse stock split will reduce the number of outstanding shares from approximately 86.8 million as of March 31, 2014 to approximately 17.3 million shares.