Sun BancorpInc.'s turnaround story continues as the bank selects credits andrelationships that have surfaced as a result of merger disruption along itsfootprint, management said during the bank's second-quarter earnings call onJuly 26.

The bank has picked up "a few good commercialaccounts" and believes greater opportunities could be forthcoming as aconsequence of M&A disruption in the Philadelphia and Camden County area, aswell as other spots in northern New Jersey, an executive said. Additionally,some banks that have high commercial real estate concentrations have scaledback their operations because of regulatory pressures, creating someopportunity for Sun Bancorp to grow.

"But competition still remains really tight. It's verycompetitive on both financial terms and covenants and valuations," anexecutive said.

Asset quality at the bank continues to improve, even as itmoved a $1.2 million loan into nonperformers. President and CEO Thomas O'Briensaid the credit has always performed as agreed, but management elected torestructure the credit with an "aggressive" amortization schedule,reducing the rate and charging off "a few" hundred thousand dollarsthat will be recovered over the next three years.

O'Brien noted that the second-quarter call aligns with thebank's unofficial turnaround anniversary of July 2014, a process that"hasn't always been a picnic in the park." However, the bank remainson its articulated path and its robust capital levels and ratios convincedmanagement to declare a modest dividend of one penny per share — its firstever. Management had considered a stock buyback but said that at the statedtangible book value of the stock, it is not as financially attractive as adividend.

Sun Bancorp reported net income of $3.0 million, or 16 centsper share, in the second quarter, compared to net income of $826,000, or 4cents per share, a quarter ago and net income of $2.8 million, or 15 cents perdiluted share, a year ago.