Sun Bancorp to Acquire Sentry Trust Co., One of First Trust Firms Serving Credit Unions

LEWISBURG, Pa.- Touted as being among the first trust companies to serve credit unions when it launched nearly six years ago, Sentry Trust Co. will be acquired by Sun Bancorp Inc. in a move that will fold the bank holding company’s wealth management and retail investment departments into Sentry’s existing operations. Under the terms of the acquisition, which has been approved by the companies’ board of directors but awaits regulatory and Sentry shareholder approval, Sun Bancorp will pay $16.8 million in stock and cash for Sentry Trust, with at least 60% in the form of common stock. Sun Bancorp is a $1 billion company with 23 offices and 45 ATMs in six counties here. “We will have the resources of a larger organization in areas like finance, human resources, marketing and facilities, which will provide us with more time to do what we do best – meet the needs of our clients,” said Charles Nelson, president/CEO of Sentry Trust, who emphasized that the firm is not having financial problems. Sentry Trust launched in 1997 as a non-depository financial institution and has approximately $400 million in assets under management providing wealth management, estate planning and settlement, employee benefit programs, trust services and brokerage services through its broker dealer UVEST. The company has 1,300 trust clients and 3,000 brokerage and insurance clients. In addition to serving two area banks, Sentry serves members at Patriot Federal Credit Union and Community of Healthcare Employees Credit Union. As the only credit union shareholder in the CUSO – and the largest among 17 others at the time when Sentry initially formed – Patriot FCU would eventually have to divest its 20% share because after Sentry acquired the trust departments at Fulton County National Bank in 1999 and First National Bank of Greencastle in 2001, NCUA’s “50 plus one” regulation kicked in, which requires CUSOs to serve a majority credit union member base, Nelson said. The additional bank clients led to Patriot having to divest last year, he said. For Peggy Bosma, Patriot’s president/CEO, compliance with NCUA was a “long, arduous and expensive” process as the credit union sought to increase member use with Sentry. Patriot has 45,000 members and $280 million in assets. While she would not reveal the payout Patriot will receive for its shares, Bosma said she is “very happy with the price.” “Quite frankly, we fell out of compliance,” Bosma said. “Sentry had been so successful in building its business in non-credit union areas. We had members using Sentry’s services but not enough to meet 50 plus one.” Nelson said “we’ve had a good relationship (with Patriot) over the years. “They were a major part of our founding with initial capital and marketing. We’ve grown really fast over the years. It was never our plan for this to happen, but there was really nothing we could do further because of the (NCUA) regulatory requirement.” Nelson said Sentry “will still have the ability to serve members,” but it will ultimately be up to the credit unions to decide if they want to continue existing account relationships during and after the acquisition process, which is scheduled to be completed by late August or early September 2003. Sentry’s 150 shareholders will vote on the merger in July. “Credit unions by far, are an untapped market for trust services and the nice thing about Patriot is they proved that different sectors of the community – banks and credit unions – could come together to provide services,” Nelson said. Sun Bancorp intends to retain all 30 of Sentry’s employees with the trust company remaining in its current headquarters, Nelson said, adding the acquisition will see at least eight Sun Bancorp employees transitioning in. In addition, the company will still operate as Sentry Trust Co. with Nelson continuing to oversee operations. The deal will also expand Sentry’s presence from two to eight more counties here. Sun Bancorp President/CEO Robert McCormack said “the Sentry team clearly enhances our company’s ability” to “continue to focus on serving as a trusted advisor to our clients and providing the expertise to meet their long and short term needs.” -